The gaslit asset class
blog.dshr.org160 points by zdw a day ago
160 points by zdw a day ago
I think there are a large group of techies who hold similar opinions and never really bought into the hype, but still sit and watch with amazement (and maybe envy) at how something that they believe is fundamentally flawed has passed the test of time and recovered through many boom-bust cycles.
That's me. If there's one thing I've learned about it, it's that we'll never get rich quick as over logical people.
Of course Dropbox is dumb when rsync exists. Of course og Twitter was dumb when group sms existed. Of course Bitcoin is dumb because...(waves hands in all encompassing disbelief). Wrong every time.
It doesn't pay to be the 'smartest guy in the room', as a figure of speech. It pays to be able to figure out how the everyman will act, no matter how much it pains you. And maybe those people who do are the real 'smartest people in the room.'
I think there's a difference between Bitcoin and Dropbox/Twitter. Even if you were skeptical about the latter products at first, with the benefit of hindsight, it's easy to make a retroactive argument for why they made sense (better usability, better network effects, etc).
But with Bitcoin, even with the benefit of hindsight, I still don't get it.
Bitcoin's success is extremely easy to understand.
Socially:
Some people don't trust governments to handle one of the most powerful collaboration technologies ever invented (money). All financial systems before Bitcoin were government controlled. Some have behaved in a trustworthy way, many have not. And over the longer term they all tend to mess it up eventually.
So these people set out to build an alternative that they believed governments couldn't control.
Technically:
The interesting key advance that made Bitcoin interesting and successful was coming up with an algorithm that solved the problem of getting parties that don't trust each other at all, to collaborate on maintaining a global ledger to everyone's benefits, without them having to even know about each other.
This is already a feature of money (I don't need to know about you to have indirect financial ties to you) but was not true of the financial system itself until Bitcoin.
> All financial systems before Bitcoin were government controlled
Company scrip, community currency, hawala have all existed for centuries.
Also Bitcoin is also government controlled. It lacks the anonymity required to protect participants making it trivial for nation states to influence. And it does nothing to prevent the centralisation of capital that causes so much manipulation in traditional currency systems.
> And over the longer term they all tend to mess it up eventually.
Over the long term the probability of failure of all systems is 1.
> Company scrip, community currency, hawala have all existed for centuries.
All of these have the problem of centralized and permissioned issuance, where one entity can arbitrarily inflate the supply without the knowledge or consent of others.
> Also Bitcoin is also government controlled
In what way?
> It lacks the anonymity required to protect participants
This is false and does not make it government controlled. I’ll concede that there are many ways for one to lose privacy when using Bitcoin though.
> And it does nothing to prevent the centralisation of capital
The ‘centralization of capital’ isn’t an issue Bitcoin aims to solve. One of the big problems Bitcoin solves is the unjust accumulation of capital via arbitrary issuance (IORB, RRP, loans via newly created bank deposits, etc.)
That explains why Something like bitcoin might emerge but not specifically bitcoin. Presumably first mover advantage etc.
Bitcoin is about moving large amounts of money around and evading taxes whenever possible.
Except it isn’t money at all; only suckers call it ‘money’.
It’s considered a security; a representation of value for sure. Move it around all you want until you’re blue in the face.
But money still has to come out of an exchange and through some sort of bank. So it’s all a shell game that’s decidedly not anonymous or protected at all.
That’s why so many have concluded that crypto is a scam; we might as well be smuggling Egyptian grave goods.
He who controls the arbitrary, controls the universe.
Money's capacity to organise labour is still very much real.
What organizes labor are the specifics. This is what math doesn't get, math isn't timeless, it's trapped in exact moments where it appears real. The arbitrary is simply a conduit metaphor, not only not real, but entirely illusory, prone to primate biases and exploitation. And all metaphors eventually fail, that's a bio-ecological certainty. Show me a currency from 700AD still traded on arbitrary markets. There are no limitless molecules or homeostatic climate. The system is already bust in numerous indexes, we're just riding the arbitrary fan out.
Also "banking the unbanked": giving financial infrastructure to anyone with internet access, even if local banking infrastructure doesn't exist or isn't accessible.
Which is great when applied to rural areas of underdeveloped countries. But realistically it's more about financial infrastructure for criminals, outcasts, scammers and rich people in counties with strict financial controls
You say this while completely ignoring the thriving p2p market for stablecoins in countries like Nigeria
Stablecoins are interesting, but they're closer to company scrip than to decentralised currency. Anyway, stablecoins are apparently becoming important financial infrastructure, so that's something.
Bitcoin is completely useless as a currency since its value does not decline with time, thereby making it an investment vehicle instead of a currency. An asset can't be good at being both a medium of exchange and an investment. Only criminals use bitcoin as currency, and they do it because the alternative for them is moving cash around in suitcases.
>, it's that we'll never get rich quick as over logical people. Of course Dropbox is dumb when rsync exists.
It's neither over-logical nor "smartest guy in the room" to equate Dropbox with rysnc. Instead, it's a category error.
Consider that rsync syntax is basically : rsync <src> <dst>
Before that command is run, that "<dst>" has to exist somewhere that's reachable by all client devices that want to see the same files. That means creating that "dst" target such as arranging a $5/month VPS at Hetzner, or a self-hosted NAS at home with Tailscale/CloudflareTunnels VPN, etc.
Dropbox takes care of the "<dst>". rsync does not. That makes a profound difference in usability for non-techies.
(One could use rsync only as a peer-to-peer sync between client computers with no "server" but that doesn't work well for a 1-to-many file sharing setup to facilitate a "Single Source Of Truth".)
Some people are smart in the sense that they are very logical. Others are great predictors of how people will behave, I would call those smart, too. I'm not in that group, but feels wrong to dismiss it as "not smart". Just different smart.
I don't think the first group is smart as all. Understanding human behaviour is pretty basic skill. Missing a basic understanding on how humans work is just stupidity. Being able to build great lego sets, but not being able to have a basic conversation with other human beings, is not smart, but autistic.
But then if you travel along the autism line until you reach turbo autism, doesn't it just loop back around to being smart again? Like Kim Peek or Scott Flansburg?
>Like Kim Peek or Scott Flansburg?
Interesting cases, thanks for sharing. I didn't know what real-life inspiration the movie "Rain Man" came from. However, the two people seem to be worlds apart socially. While Peek seems to be extremely "stunted" in his social development, Flansburg appears to be coping well with his position as a speaker, which I always thought to be rather unusual for people with autism spectrum disorder.
I was thinking the same thing, but I was watching his human calculator video [0] and there are moments where his mouth moves quicker than his brain and he has to catch himself a few times. My guess is he's given this talk and rehearsed the mannerisms so many times that he's on auto-pilot.
> Of course Dropbox is dumb when rsync exists. Of course og Twitter was dumb when group sms existed. Of course Bitcoin is dumb because...(waves hands in all encompassing disbelief).
Twitter/Dropbox offer more convenience to people: Bitcoin offers _less_. That's why people are using Bitcoin for two things: crime and speculation. People aren't buying houses with Bitcoin, they don't use it as a store of value (because it has extreme deflation), and they aren't doing their books using BTC as the currency.
What features/improvements does Bitcoin offer over the financial system? So far, the differences to me seem to be
- It's easy (or at least possible) to get a bank transaction reversed by going to court.
- If you forget your password, your bank can reset it and you don't lose all your money.
- When you transfer money using your bank, it arrives immediately in the recipient's account. When you transfer money using Bitcoin, it takes hours. The bank checks that the name matches the bank account number beforehand.
- If you get hacked, and the hacker tries to steal all your money, your bank's fraud detection system will kick in and stop this.
- Banks are regulated, and the currency is stable. This means that you can quote a price in USD, and do your accounting in USD, whereas very few people do their accounting in BTC.
- People have faith in fiat currencies because they have state backing, which means that the central bank will intervene to maintain price stability.
Yes, although while being smart about bitcoin hasn't allowed me to predict its price at all, it has helped me not waste time on "what if we did this on the block chain?"
One of them is in the class of "if enough people believe it, it's true", the other one is actually subject to logic.
This depends on what people mean when they say “Bitcoin is dumb”. Cryptocurrency as a speculative asset, regardless of whether it’s driven by the flocking of the everyman, is clearly capable of producing personal wealth the same way every other highly volatile speculative asset can. But usually people hawking cryptocurrency are talking about other applications than that, and those are almost always unrealized or just straight up scams.
Bitcoin is a negative-sum game. You can only get out what others put in and miners continuously have to pay for electricity and chips to keep the game going.
It is also a dump speculative asset. I'd even claim Tesla stock is better as speculative asset, at least it may be a positive-sum game.
Caveat: I am one of those people OP mentioned.
Maybe seeing you’re argument as a template will have you recognize the weakness of your argument:
{{currency}} is a negative-sum game. You can only get out what others put in and {{entities}} continuously have to {{maintain infrastructure}}.
An actual argument could be derived from the last point by asking whether the cost of maintaining the infrastructure is worth it. This is something the market decides.
My argument was specific to the use case as speculative asset. Currencies usually have other uses.
1. in terms of "proof", eg. "asset performance", it's proven its more capable 2. crypto as a whole is the riskiest investment on the market 3. speculative assets in general or in highly-notable abundance rn are performing abnormally well, better than assets have performed in the past by a few metrics, as though they're trying to compete or hopefully catch up with the anomaly of bitcoin's growth
Survivorship bias is significant though, it's hard to notice—or even find and enumerate—all the people who may have lost money or given up earlier with a similar business/product.
Exactly. History is written by the victors. I call them success stories (when they're not straight lies) but the word survivor is stronger and seems to indicate that the others don't survive.
It's common knowledge that one shouldn't pay back a low-interest loan faster than is expected, because it's better to have liquidity or to invest.
But it's real easy to look at the past and say "oh I could've invested in that". It's also very easy to look at success stories and forget that poverty is widespread and the poor don't talk about their misfortune.
Video games are interesting because you can count how many times your character dies before you actually manage to finish the game.
It’s because in investment it’s not about being right. Thats why I invested in it. Also gold is the same, makes no sense on paper, still works. Second effect is it made me lean left economically realizing how flawed are liberal economics basic assumptions about rational actors and efficient markets.
Or perhaps there are important properties about these things that you're missing. Something that’s causing you to conflate similar use cases as alternatives to these projects. Maybe the perception of being the ‘smartest guy in the room’ is really just hubris.
Bitcoin is kind of brilliant in a way - the first secure decentralised currency. The white paper is a good read. Twitter and Dropbox were much more obvious things.
The cynic always sounds smart and remains poor.
I think the issue is more that a lot of people weren't cynical enough. I knew Bitcoin was a shit currency when I first heard about it, and thought that was all there was to it. I didn't understand that while it was a shit currency, it was a great speculative asset. I thought people would look at it, go "that's dumb", and move on. Apparently I hadn't heard of, or understood the Dutch tulip mania and similar historical events. I presumed people would be better than they turned out to be, and that cost me a lot of potential capital gains.
The Cynic on the other hand knows how to enjoy life with just enough. He is free, a spy for the gods.
But he keeps writing and talking about people who have more than enough, and how they are wrong.
He points out their foolishness - he has what they will never have. Enough.
It takes no imagination or insight to see reasons why something wouldn’t work. It’s the default mental pathway for every risk-averse beast. Skepticism is not born out of contentment and abundance but out of self-preservation. It’s not correlated with feeling enough, but with feeling bitterness and envy of those who took risks and gained an advantage instead of suffering consequences.
People who are content feel less need to take risks by accepting dubious statements without proof. They have what they need so why risk it for more?
Sceptical people will be grounded by what we know to be true. They will explore new ideas but will not be swept up by them. We need people like that or we'll waste our time on flights of fancy. But we need the irrational optimists to explore new ideas too. It's a classic exploration vs exploitation trade-off.
Many people who have risked their money by placing it on Bitcoin likely had enough, and they risked the extra money that they had lying around. Why not place bets on something you think might be probable? Is there something morally wrong in making some extra buck? Is it morally superior just to keep your money lying on bank account or what?
To be honest I don't think the skeptical people thought bitcoin's success was probable and that's why they didn't bet on it. It's not really anything to do with them being content with what they have.
But it could be this too in some cases.
Some people do things unless they find a reason not to but so a skeptical person will only do things if they find a reason.
People who really feel they have enough might not see any reason to spend their time or effort placing bets, even on things they think are probable. But I don't think many people think that way.
To have enough by your definition and to feel like one has enough are two very different ideas of enough.
The Cynic has enough if he has his cloak and found some food in the garbage can. He feels like he has enough. You might feel like that's not enough.
Conversely I might think the richest man in the world (by net worth) has enough. He feels like he needs more.
> It takes no imagination or insight to see reasons why something wouldn’t work. It’s the default mental pathway for every risk-averse beast.
Quite the opposite: it takes a lot of strong will and risk to talk against a hype. A kind of risk-affinity that unluckily rarely makes you rich. :-(
"The market can stay irrational longer than you can stay solvent." True. But if you're invested in the market staying irrational, it can crush you when it abruptly becomes rational.
We may not get rich, but we may miss out on becoming poor, too.
It’s not because crypto is useful for the average person. It’s because demand for a place to safely store illicit assets is practically inexhaustible. Had I the foresight to realize that criminals would turn to it as an alternative to traditional forms of hoarding and money laundering, I would have invested in it ages ago.
Baffling that people make blanket statements like these without any real world experience of living in high inflation, poor countries. All the contractors I’ve hired from Philippines or Nigeria or Vietnam want to get paid in USD stablecoins because their currencies depreciate 5-15% against the dollar every year and stablecoins help them protect their capital
Same for friends living in high inflation LatAm countries - crypto stablecoins are a way to escape rampant inflation
You could pay them in USD fiat currency and the benefit to them would be the same. Or, you can pay them in local currency and they can immediately exchange it for USD.
They want cryptocurrency because it helps them avoid taxes and trading fees.
Again, have you ever tried paying people via wire transfers in countries like Nigeria?
In a lot of these places, things like Paypal don’t work. So you have to send wires. You get an awful exchange rate + fees for sending it. And they get an even worse exchange rate when receiving it
You easily lose 5-10% spread for every payment
And the “avoid taxes” part is, again, heavily western biased where for all their ills, the governments actually work for the people. I say as someone from a third world country - taxes are largely siphoned off by politicians and bureaucrats. Everything from public schools and hospitals and roads are unusable. Avoiding taxes is perfectly morally correct if all it does is feed an oppressive machine
I saw that potential as obvious from day one. I just thought governments would care. Usually when someone sets up a money laundry ring, someone tries to stop it.
My best idea, that probably gives governments too much credit, is that it's pretty useful to have a transparent record of illicit money flows, and that you can be OK with a bit of crime to get it.
Governments do care, they have developed heavy regulatory frameworks for cryptocurrencies, such as MiCa in EU. I think central banks have been giving (negative) comments about Bitcoin since 2011 or so when it first gained modest publicity.
Governments are huge and consists of many different institutions. I guess many would like to see Bitcoin stopped, but how to do that without fondling with the basic human rights, such as the right to free communication? So far the governments have been regulating it, trying to reduce the illicit use, which doesn't really stop it but actually makes it more legitimate.
You fundamentally misunderstand society, the state and law.
Most bitcoin users aren't storing illicit assets. They're hedging against the state doing something absurd.
I think the reason is that Bitcoin et al were sold as having practical uses but their ‘success’ has been as a vehicle for speculation. Though the two things are linked (hype for the former drives adoption for the latter) and it’s possible to both hold that crypto currencies are of no practical use and a great investment opportunity. (FWIW, with a long enough time span I believe neither of these is true)
[edited to correct a couple of typos]
I could never wrap my mind around the formation of the united states, over 200 years ago, based on people agreeing. There was basically no technology back then. Their "software" was the constitution.
The Continental Congress was famously held in secret. A small number of wealthy aristocrats waged war on their home country without the consent of the people they were governing.
I don’t remember the powhatan or Lenape (Virginia-MD-PA tribes that were exterminated in order to build the core of the US trade and political networks) being consulted on any of this.
What boom-bust cycles have there been since 2009?
I assume you're asking because there has only been one major crash of the financial markets since 2008, but there have been numerous cycles local to cryptoassets (eg the NFT/web3 driven cycle several years ago).
So, the answer is more or less "all of them," from dollar parity day to the latest all time highs.
It didn't take long before it became obvious that Bitcoin would revolutionize money laundering. I think this is more like the righteous vs. evil scale in D&D. Some people are OK with profiting off crime while others aren't. And techies are more likely to be on the righteous side, while bankers, traders, or CEOs are more likely to be on the psychopathic side. And if you look at how many times HSBC has been in the news for working closely with mafia, I'm not surprised that they're selling crypto ETFs now.
So i'm nodding along with most of this, but I don't understand how they can say something as strange and obviously nonsensical as this:
>The incentive for it to happen suddenly is that, even if Nakamoto's fix were in place, someone with access to the first sufficiently powerful quantum computer could transfer 20% of all Bitcoin, currently worth $460B, to post-quantum wallets they controlled. This would be a 230x return on the investment in PsiQuantum.
Thats some really bad accounting on the incentives and ROI available. You can't just start selling and expect the price to be stable.
But it does bring up a secondary question I've never seen any numbers on; How much money could you possibly make if you knew for certain the value of bitcoin magically went to 1% in a panic sell?
Are there any institutions open to selling a billion dollar put option?
Sure, someone on CME will gladly sell you these options. That futures market has open bets with notional value of more than 10 billion usd. How much money you can make? Depends on how much capital you're willing to bet and the used leverage.
https://www.cmegroup.com/markets/cryptocurrencies/bitcoin/bi...
These fiat-default takes are uninspired
Simply having possession of the bitcoin is valuable. You can borrow against, for other cryptos assets and for fiat. You can invest with it to someone else that also won’t sell it, either at all or all at once, you can obtain goods and services from people that wont sell it, and you can also sell it. Treasury companies are buying billions of BTC per week, for now.
Crypto facilitates bypassing financial regulations, drug trade, evading taxes, extorting ransoms, breaking sanctions and so on. I’m not at all surprised it’s popular. I’m surprised that even relatively sane US admin did not crush it.
Money is used in crime, nothing surprising there, and the most popular money for crime is the USD.
Well, USD has many other (legal) uses. I have yet to see a legal use for Bitcoin that was not better served by cash or traditional banking.
I have been saving in bitcoin since I understood it, and people who tell me bitcoin has no use simply make no sense to me. My purchasing power goes up in the long term, and much more than theirs even if they "invest" with traditional banking.
Ah, my apologies. You're right, financial speculation is also a prime use case for cryptocurrencies.
Personally I'm also against it, but you're correct that it's a legal use case.
It’s because we were promised cheap, fast, and decentralized and got the opposite.
It’s expensive as hell to use crypto to move money. It’s very slow, and I’m forced to use centralized coin exchanges which destroy the original decentralized nature of the currencies.
Why should we be excited about a product that is the opposite of what it sets out to do?
You want what was promised, but you use it in the way that's prescribed by the state, that's your failure. Besides, why do people keep pretending like lightning doesn't exist..
I find a good use in it via making legal, but otherwise “high risk” transactions traditional financial institutions either don’t touch or make very difficult to engage in.
Much easier for me to send a small amount of crypto to a VPN provider, or a custom parts supplier in a “strange” country where Visa/MC/bank wires are a huge hassle if available at all.
It’s not a huge use case, but it removes a ton of unnecessary friction from transactions traditional banking left behind as deemed “not worth the hassle” to them.
Or as I describe it: Digital cash. I don’t need the flea market vendor to need to be vetted by some financial provider to sell me their 3d printed parts collection.
Cross-border remittances is one. Making donations to organizations that are being actively persecuted/censored by the state is another.
Sometimes that's the right thing to do, but none of those examples sound legal.
Donating to Wikileaks is entirely legal. The blockade undertaken by Visa and MC at the behest of the USG was extralegal; there were no charges against anyone at the time.
Even had there been charges, donating would still have been legal.
Furthermore, your criterion was “not better served”; please don’t move the goalposts.
Remittances and cross-border donations are way better served by cryptocurrencies than any other mechanism, full stop. It’s faster, cheaper, and way more reliable than any other method.
Cross border remittances are not legal?
Of course it can be legal, but if someone is using cryotocurrencies for this purpose then they're probably skipping some necessary steps.
They could also just really like cryptocurrencies, but that's not a point in favor of the technology.
Maybe they don't like the high fees of the traditional financial system
The fees come from fulfilling legal requirements like detection of money laundering and terrorism financing, and also customer security features like fraud detection and multi-factor authentication.
There are fintechs for customers who want lower fees and don't need e.g. physical branches or phone support. That's perfectly fine.
But a fintech that didn't perform KYC would be shut down pretty quickly by the police, so there's a floor on how low fees can be while remaining legal.
Congrats, you went from it's not legal, to it's irrational, to it's more competitive because of government regulation, you've made progress.
> more competitive because of government regulation
That's the same as "not legal".
But I agree that it's still a useful technology, because the moral argument sometimes trumps the legal one. If a north korean defector uses Bitcoin to exfiltrate their life savings, I don't think anybody will complain how it was technically illegal under North Korea's law.
The only “necessary step” is sending the money. All of the other steps artificially imposed upon cross-border transfers in tradfi are unnecessary.
This is a common retort used by crypto proponents (of which I am one). It overlooks, however, that is it much, much, much easier to do large-scale financial crime using cryptocurrencies than it is to do so with USD due to the intense and robust controls applied to USD for precisely that purpose.
One need only look at the rapid rise of cryptocurrencies in criminal enterprises over the last 10 years or so to see the truth in that.
It's hard to crush. The whole design is made that way so if you shut it down in one country it continues in other ones.
Also it funnels money to the people running it which enables them to lobby etc politicians.
China, on the other hand, did.
[2017]: https://www.cnbc.com/2017/09/11/bitcoin-price-falls-on-repor... "Bitcoin price falls again on reports that China is shutting down local exchanges"
[2021]: https://www.cnbc.com/2021/06/22/china-crypto-crackdown-wipes... "China’s renewed crypto crackdown wipes $400 billion off the market as bitcoin slides"
You realize the irony of looking at those titles, and then at the present day price of bitcoin, which is 25x, 10x the price at the time of those articles.
Is that trade happening substantially in China and the Yuan?
If you are even remotely involved in crypto, you know how big crypto is in China. The biggest exchanges are Chinese or Chinese owned (Binance)
Some of his points overlap with Signal founder Moxie’s observations:
> “I don’t think it’s on a trajectory to deliver us from centralized platforms, I don’t think it will fundamentally change our relationship to technology, and I think the privacy story is already below par for the internet (which is a pretty low bar!), but I also understand why nerds like me are excited to build for it.”
> Bitcoin's ten-minute block time is a problem for real-world buying and selling
In practice, the risk of suffering a double spend if you accept transactions with zero confirmations is less than the risk of chargebacks if you accept credit cards.
I remember engaging in extensive discussions with folks and at the end we just agreed that the purpose of this is number goes up.
Maybe not for all who buy bitcoin, but certainly for a large majority.
Current levels working for all who have established a position before July 2025. Of course, it can go to 0 tomorrow. lol
Money means different things to different people. There are values that are always apparent and others. “We have inspired PageRank” is not money, it’s position. What values shall the next generation appreciate in us?
I stopped when he flubbed the first point. No, it’s not correct users have to just hope big miners will mine their transactions.
For two reasons:
1. They pay them. Do you trust “big grocery” will provide you food, or did you start a farm in your yard?
2. If that trust were ever broken, millions of bitcoiners who can easily afford to lose $10 a month can mine them. Despite there being no such censorship happening, these uneconomic miners are already a rapidly growing group. Bitcoiners are acutely aware of the state of the mempool.
Maybe read the rest of the article (where those points are addressed) before commenting.
And if I thought "big grocery" could make more money by not providing me food, I would definitely start growing my own food. It's got nothing to do with trust.
This is an interesting list of claims but it's hard to evaluate it as much more than that. I'm aware of several of these arguments and some of them are strong, others have merit but also have standard counter arguments that aren't mentioned here. A bunch of claims either sound implausible to my ear or I don't quite understand; there's a lot of links to research that is then distilled down to a single paragraph where it's hard to understand what exactly the claim is, whether it actually matches what the source says, and if course whether the source itself is strong. Then there's some claims that are just patently absurd like RSA-breaking quantum computers in 2027 .
There's some good stuff in there but it's just a kind of a gish galloping polemic, it raises some interesting questions but it doesn't do much to sway my opinion on the macro level.
Uff, reducing crypto as an asset class down to Bitcoin is "so 2005". Honestly, what's even the point here when doing so?
Stable-Coins are the first crypto product with global product-market-fit and real economic impact. That's just to start with.
Please take a look at Ethereum and adjacent tech (L2s, L3s).
I believe in a 1M qubit quantum computer when I see it.
> Unlike most people discussing them, I am not "talking my book".
Is another way of saying "I am not putting my money where my mouth is".
Don't make me tap the "Markets can stay irrational longer than you can stay solvent" sign.
Everyone always thinks they're right and the market is irrational. But taking the outside view, at least some of the people who think the market is irrational are actually just wrong and the market is right. And those are the people who will observe the market staying apparently-irrational the longest!
Yeah, markets can stay irrational longer than you can stay solvent. But also you can stay wrong longer than you can stay solvent. And it's much easier to be personally wrong about something than for the market in aggregate to be wrong about something. So you have to expect that, most of the time, if you disagree with the market, you are in fact wrong.
> Cynthia Dwork and Moni Naor
IIRC Dwork and Naor's work had a trapdoor (which the server used to cheaply validate the challenges) and would be unsuitable for any kind of decentralized public system. It's not "proof of work" in the same sense, or arguably proof of work at all to anyone but the server and parties that trust them.
This is the level of discussion and nuance about cryptocurrency that I wish was more common on hackernews
The discussion about the $460 billion bounty to take “lost” bitcoin in pre-quantum proof addresses and moved to post-quantum proof ones is worthy of many threads
the quantum-scare in crypto is very unnuanced - even crypto proponents handwaive it away - when the reality explains the original confidence in this system: it adapts. Post quantum addresses will be fine
And speaking of fine, the system is “good enough”. The decentralization is “good enough“, the development platform is “good enough”, the aggregate processing power of the execution environment doesn’t need to be more powerful than a $50 raspberry pi device as it’s “good enough” - you can use those nodes as microcontrollers in the cloud and there isn’t a similar offering and pricing strategy in non-distributed ledger cloud systems
For such a well written and cited article you sadly seem to make a mistake all to common with Bitcoin.
You assume Satoshi understood what he created.
The very basis for Bitcoins security is that the real users of the system, the people who have the monetary power to not value it at anything are running nodes.
If those people don't run nodes the rules of the system are just suggestions.
Satoshi never had the chance to understand this before leaving since it's not an obvious property of the system.
I reckon Satoshi understood quite well what he created. But what he quite possibly didn't understand as well, is how human behaviour would play out with his creation. He clearly believed that at least 51% of the node-grunt-power would be controlled by people who have good intentions - or at least by people in who's interest it is - to maintain the rules of the system. That has held up so far, but there's no guarantee it will always hold up.
This is an underappreciated point. Many people try to understand Bitcoin through Satoshi's writings but the street finds its own uses for things. The way Bitcoin is operated and used today isn't how Satoshi imagined. (And there's no evidence that building Satoshi's "original vision" would be successful either.)
Why attack someone like Satoshi who can’t/won’t defend himself on based only on your own hunches?
The “light” in “to gaslight” is a noun. Hence, the past participle is “gaslighted”.
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money is a weird topic - i don't know of another topic where people will say "i don't know much about that" and at the same time have an inviolable attachment to ideas like barter came first (it didn't, debt came first).
The other weird thing is attachment to models - and "schools of economic thought" more generally, when the monetary system operates under a system of legal constraints which describe exactly what is permitted to happen. We don't need macro economic models to describe the process by which banks lend money - we can literally just read the law, and what the law describes, is quite different from the theoretical models. The various schools of economic thought are remarkably uninterested in exploring the practical applications of banking. It's like programming computers to perform a task by speaking via an llm and pretending the generated code and the cpu architecture it runs on are unimportant.
Let me give a concrete example, treasury bond issuance. You or i cannot buy bonds from the government, a subset of 30 approved banks can. They don't buy them in dollars, the buy them using reserves, a kind of money that we can't use. They legally MUST buy these, the idea that a government debt won't be covered by a bond is a technical impossibility (it's also technically unnecessary but that's a whole other kettle of fish). The auctions happen every couple of days roughly but to ensure the panel banks do buy them, the treasury buys back previous bonds from them to give them the reserves to buy the new issuance. If you've read this far you should instead now go to the fed and legislation.gov and read from an authoritative source, not from a random comment on the internet. And especially not from an economist - they'll tell you the government borrows from the public which is just a model to simplify a complex topic, the legislation is quite clear about what exactly is permitted and what a reverse repo is.
It's simply the arbitrary as a conduit metaphor to the real, nothing more. ie how debt appears to precede barter. Of course that's not proven, we have no Time Machine to the quaternary. That we develop ever more complex ways of generating value from arbitrary from schema is simply a function of the primate capacity for bias as status. The arbitrary suborns this as a metaphor.
Well hot damn!
I'm sorry but this post is highly biased and serves as gaslighting in its own way, just for a different crowd. I don't know if it's deliberate or not, but it's very telling that it's on HN frontpage.
There's no mention of:
- The lightning network (bitcoin-native layer 2 enabling near-instant transaction speed)
- Role of mining in grid stabilisation, methane reduction, etc.
- How mining hardware is actually used by miners when cost of energy is nearly free.
- Bitcoin's difficulty adjustment algorithm
- Protocols like Cashu (Chaumian Cash based on Bitcoin)
And one last thing. Mixing in a big bag "crypto" and "bitcoin" is in itself just a very bad take. sigh.
As a side note, I highly recommend Lyn Alden's book Broken Money.
> The fascinating thing about cryptocurrency technology is the number of ways people have developed and how much they are willing to pay to avoid actually using it. What other transformative technology has had people desperate not to use it?
Regarding this juxtaposition between between advocacy that others buy-into the system versus, er, tactical-avoidance by advocates, I'll recycle a comment from earlier today:
> [Some proponents say] "That's fixed with private blockchain", which is the equivalent of "That's fixed with Segways that have a second set of wheels and the self-balancing is disabled."
> There's a bunch of people busy reinventing decades-old old tech/accounting, either because they never bothered to learn what was actually new about "blockchain", or because they can't bear to admit that the new stuff wasn't really good/necessary.
> [...O]utside of wild-west cryptocurrency, [unrestricted node membership] usually isn't necessary, nor even desirable when you consider the rest of the cycle-burning baggage and complexity that comes with it.
__________
> They are all either false or misleading. In most cases Nakamoto's own writings show he knew this. His acolytes were gaslighting.
Quibble: Nah, that would be classical lying. "Gaslighting" is more specific and involves trying to make someone doubt your own sanity, memory, or senses.
The author simultaneously claims that:
1. Crypto is a battleground where anything that can be exploited will be
2. Bitcoin is highly vulnerable to 51% attacks
Something's not right here. For all the theoretical speculation about a 51% attack on Bitcoin, it's never happened, so maybe the system is working as designed.
Bitcoin is relatively unchanged since 2009 by design, the author hardly mentions more modern consensus protocols like Ethereum's Proof of Stake + Slashing + LMD GHOST. Even in the most optimal scenarios the cost to attack Ethereum is astronomical.