Merged Bitcoin - Part 3

[psionl0]

The original white paper was entitled "Bitcoin: A Peer-to-Peer Electronic Cash System"

Yes. It was NOT titled "Bitcoin: A system to replace other currencies".

 

[jeremyp]

Yes. It was NOT titled "Bitcoin: A system to replace other currencies".

What else was it for?

 

[dirtywick]

according to it’s mythical origin story, it was created in direct response to the 08 financial crisis as an alternative and superior financial system to fiat.

2007–2009—The Global Financial Crisis And The Birth Of Bitcoin

An excerpt from Bitcoin: The Honest Money explains how the 2007–2009 financial crisis exposed the fragility of the fiat system and set the stage for Bitcoin’s creation.

bitcoinmagazine.com

Bitcoin was, and still is, the answer to a fragile financial system: to uncontrolled money printing, to willful denial of reality, but also to the unfair and socially unjust expropriation that accompanies money creation.

The cap of 21 million bitcoin and the lack of central control make a policy of inflation impossible. Someone who holds bitcoin cannot be dispossessed by the uncontrolled printing of even more bitcoin.

Nor can they be dispossessed by banks that go bankrupt or deny access to bitcoin, provided they hold their bitcoin in a self-hosted wallet and thereby manage their own access. No central authority can revoke that access.

The timing of Bitcoin’s launch was no coincidence. It was the reaction to a financial system that would have collapsed had money not been printed in a pretty much uncontrolled manner.

Bitcoin is sound money — a response to a broken financial system. It is a system that is not imposed from above. Participation is voluntary and open to anyone. No one with a computer or smartphone and an internet connection can be excluded from it. For many, it’s a lifeline out of the fiat money system that is not sustainably viable.

In contrast to an inflationary and opaque system, Bitcoin is decentralized, transparent, and fundamentally honest.

of course you should notice that doesn’t describe a fun gambling game

 

[jeremyp]

according to it’s mythical origin story, it was created in direct response to the 08 financial crisis as an alternative and superior financial system to fiat.

2007–2009—The Global Financial Crisis And The Birth Of Bitcoin

An excerpt from Bitcoin: The Honest Money explains how the 2007–2009 financial crisis exposed the fragility of the fiat system and set the stage for Bitcoin’s creation.

bitcoinmagazine.com

of course you should notice that doesn’t describe a fun gambling game

Your quote is hilarious in its utter stupidity.

The cap of 21 million bitcoin and the lack of central control make a policy of inflation impossible.

A policy of at least a small amount of inflation is a Good Thing. Apart from the fact that it encourages people to invest money instead of hoarding it, it means that debts relatively get smaller as time goes by. This is good because it is the poor people who have debts nd the rich people who have money.

The timing of Bitcoin’s launch was no coincidence. It was the reaction to a financial system that would have collapsed had money not been printed in a pretty much uncontrolled manner.

This is the funniest part. It claims that the financial system would have collapsed if money had not been printed in an uncontrolled manner. Firstly, I'd say it wasn't uncontrolled. Secondly (and this is the part they didn't think about and is the funniest bit) they are saying that printing money saved the financial system. If money couldn't be printed (e.g. if it was Bitcoin), the financial system would have collapsed. How is that a good thing?

Participation is voluntary and open to anyone.

Super

No one with a computer or smartphone and an internet connection can be excluded from it.

Ah, so not available to "anyone". What are the chances, if the financial system has collapsed, that your ISP is still in business?

Anyway, the article both refutes Psionl0's assertion that BTC was not designed to replace other currencies as well as all his other arguments that it would be a good idea if it did replace other currencies.

Bitcoin is a busted flush. It will remain in existence for some time, but just as a vehicle for gambling and as an interesting technological dead end.

 

[psionl0]

What else was it for?

It couldn't replace all other currencies because of its limited transaction rate (a function of the block size and rate of block generation) which is microscopic compared to the volume of financial transactions in the world. Libertarians might be too stupid to realize this but Nakamoto would certainly have done the maths before releasing the code and generating the first block.

So why would Nakamoto launch a digital currency with such a limited transaction rate? I believe that he released it as a "proof of concept". It fulfilled the need he set out in his white paper: "What is needed is an electronic payment system based on cryptographic proof instead of trust,allowing any two willing parties to transact directly with each other without the need for a trusted third party". His memo on the genesis block suggests that he also saw the a need to prevent currency dilution (which bitcoin also fulfilled).

It is not known if he anticipated the prices that people be would willing to pay for bitcoin nor the enormous amounts of energy that would be used to mine bitcoin. Maybe he planned to develop a digital currency that could rival global currencies pending the results of his bitcoin trial but we will never know. He doesn't exist any more.

 

[dirtywick]

this tangent came about last page when you took issue with jeremyp calling it a failure, but that seems to be what you're describing. failed as a proof of concept and became a speculative gambling game, failed to produce a proper protocol

 

[psionl0]

this tangent came about last page when you took issue with jeremyp calling it a failure, but that seems to be what you're describing. failed as a proof of concept and became a speculative gambling game, failed to produce a proper protocol

The price or transaction volumes of bitcoin (which jeremyp used to justify calling bitcoin a "failure") were never part of Nakamoto's original specification.

He proved that the technology for a "peerless" transfer system can be made to work. That is the very definition of success.

 

[steenkh]

A policy of at least a small amount of inflation is a Good Thing. Apart from the fact that it encourages people to invest money instead of hoarding it, it means that debts relatively get smaller as time goes by. This is good because it is the poor people who have debts nd the rich people who have money.

Variable interest loans seem to void this argument.

 

[Gulliver Foyle]

according to it’s mythical origin story, it was created in direct response to the 08 financial crisis as an alternative and superior financial system to fiat.

2007–2009—The Global Financial Crisis And The Birth Of Bitcoin

An excerpt from Bitcoin: The Honest Money explains how the 2007–2009 financial crisis exposed the fragility of the fiat system and set the stage for Bitcoin’s creation.

bitcoinmagazine.com

of course you should notice that doesn’t describe a fun gambling game

It's amazing how the makers of the "perfect" money got everything about what money should be wrong.

 

[dirtywick]

The price or transaction volumes of bitcoin (which jeremyp used to justify calling bitcoin a "failure") were never part of Nakamoto's original specification.

He proved that the technology for a "peerless" transfer system can be made to work. That is the very definition of success.

it proved that the software functioned, but big deal. it failed in it's application even at a small scale

 

[psionl0]

it proved that the software functioned, but big deal. it failed in it's application even at a small scale

But it fulfilled his stated application precisely. Whatever libertarians had to say about "applications" is irrelevant.

 

[dirtywick]

But it fulfilled his stated application precisely. Whatever libertarians had to say about "applications" is irrelevant.

are you saying the only criteria you're considering for calling bitcoin a success is functional software?

 

[psionl0]

are you saying the only criteria you're considering for calling bitcoin a success is functional software?

No i am neither labelling bitcoin a "success" nor a "failure". Such terms depend on the criteria you use and are highly subjective.

What I am saying is that Satoshi Nakamoto successfully proved that a peerless internet based transfer mechanism can be made to work. Some people claim that Nakamoto had other aims for bitcoin that didn't pan out but they are generally discussing claims made by other people (usually libertarians) and not Nakamoto himself.

 

[dirtywick]

but you do have a problem with someone else labelling it a failure and are refuting that label based on that criteria

 

[dirtywick]

besides, we can quote the white paper

Commerce on the Internet has come to rely almost exclusively on financial institutions serving as trusted third parties to process electronic payments. While the system works well enough for most transactions, it still suffers from the inherent weaknesses of the trust based model.

Completely non-reversible transactions are not really possible, since financial institutions cannot avoid mediating disputes. The cost of mediation increases transaction costs, limiting the minimum practical transaction size and cutting off the possibility for small casual transactions, and there is a broader cost in the loss of ability to make non-reversible payments for non-reversible services. With the possibility of reversal, the need for trust spreads. Merchants must be wary of their customers, hassling them for more information than they would otherwise need.

A certain percentage of fraud is accepted as unavoidable. These costs and payment uncertainties can be avoided in person by using physical currency, but no mechanism exists to make payments over a communications channel without a trusted party.

What is needed is an electronic payment system based on cryptographic proof instead of trust, allowing any two willing parties to transact directly with each other without the need for a trusted third party. Transactions that are computationally impractical to reverse would protect sellers from fraud, and routine escrow mechanisms could easily be implemented to protect buyers. In this paper, we propose a solution to the double-spending problem using a peer-to-peer distributed timestamp server to generate computational proof of the chronological order of transactions. The system is secure as long as honest nodes collectively control more CPU power than any cooperating group of attacker nodes.

idk how you can read that and conclude it wasn’t designed with an intent to address a problem, and look at whether or not it was successful in doing so

 

[psionl0]

but you do have a problem with someone else labelling it a failure and are refuting that label based on that criteria

The claim was that bitcoin was a "failure" because the price has dropped significantly - a claim that has been made many times before. (Then there followed a series of posts about how the word "because" wasn't in the claim and it was really about transaction volumes). Had jeremyp simply declared that "failure" meant that the price varied frequently and widely, there would have been nothing to argue about.

besides, we can quote the white paper

idk how you can read that and conclude it wasn’t designed with an intent to address a problem, and look at whether or not it was successful in doing so

I can and have read it. Bitcoin successfully addresses the needs identified in that paragraph. That doesn't mean that it was the final solution. For a crypto to be able to replace international currencies and financial institutions (something the white paper doesn't say is needed), it would have to handle a transaction rate far greater than that of bitcoin.

 

[dirtywick]

The claim was that bitcoin was a "failure" because the price has dropped significantly - a claim that has been made many times before. (Then there followed a series of posts about how the word "because" wasn't in the claim and it was really about transaction volumes). Had jeremyp simply declared that "failure" meant that the price varied frequently and widely, there would have been nothing to argue about.

i'd re-read the claim and following exchanges again if i were you, because i don't think you got it right.

I can and have read it. Bitcoin successfully addresses the needs identified in that paragraph. That doesn't mean that it was the final solution. For a crypto to be able to replace international currencies and financial institutions (something the white paper doesn't say is needed), it would have to handle a transaction rate far greater than that of bitcoin.

i don't think so at all

 

[psionl0]

i don't think so at all

Transaction volumes is only part of the requirements of an international currency. But since I am not advocating replacing global currencies with crypto, I don't see the need to expand on the requirements.

 

[dirtywick]

it doesn’t seem like you’re advocating for much of anything

anyone can read the white paper and assess whether or not bitcoin addresses the problems it explains in the introduction. i would say it did not and on those grounds had failed

 

[psionl0]

it doesn’t seem like you’re advocating for much of anything

Do I have to?

anyone can read the white paper and assess whether or not bitcoin addresses the problems it explains in the introduction. i would say it did not and on those grounds had failed

Of course you would say that. But all I can see in that introduction is that the "trust based model" (of financial transfers) has problems and we need a system that doesn't rely on trust.

If you see anything else in that introduction that bitcoin didn't successfully address then quote it and I will happily read it.