From iang@iang.org Fri Jul 6 02:41:56 2018 From: Ian G To: cypherpunks-legacy@lists.cpunks.org Subject: Re: [cryptography] bitcoin scalability to high transaction rates Date: Fri, 06 Jul 2018 02:41:56 +0000 Message-ID: <172289084243.3849117.8972890277338615259.generated@mail.pglaf.org> MIME-Version: 1.0 Content-Type: multipart/mixed; boundary="===============3924876319089696915==" --===============3924876319089696915== Content-Type: text/plain; charset="utf-8" Content-Transfer-Encoding: quoted-printable On 20/07/11 9:08 PM, Eugen Leitl wrote: > On Wed, Jul 20, 2011 at 11:56:06AM +0200, Alfonso De Gregorio wrote: > >> I'd better rephrase it in: expectation to have "money backed by >> bitcoins" exhibiting all the desirable properties of a perfect >> currency (ie, stable money) are greatly exaggerated. > > The question is not whether it's perfect, but whether it's good enough. The question is whether it is even close. It's pretty clear it can never=20 be stable enough to be a currency. Pretty much all currencies lean on some=20 form of stability; BitCoin does not, and suggests "when it's big enough,=20 supply v. demand will stabilise it..." Only gold/silver has ever pulled off that trick, and emulating gold is not=20 what you'd call a winning strategy. Actually there's a name for it: =20 alchemy. BitCoin is cryptographic alchemy. > BTC is basically a global version of http://en.wikipedia.org/wiki/Local_cur= rency > or http://en.wikipedia.org/wiki/Alternative_currency and hence > isn't something completely new. Sure, and those things have rules too. Local currency is local; BitCoin is=20 not. The difference is that in local currencies we can rely on the trust=20 and reputation networks to stop people stealing. In BitCoin, we can't. In=20 local currencies, when the currency moves outside the very tight trust=20 circle where everyone knows each other, they fail, because someone moves=20 into the currency who has no reputation to lose. (Alternative currency is just a term used by the regulated currency =20 people, it doesn't really tell us anything.) > It would be intesting to see whether BTC's successors > could improve the scheme, by allowing a (subexponential) > growth, built-in devaluation to encourage circulation and > discourage hoarding (this would be probably hard to > do), and so on. Not really. It's problem isn't its mathematics or its release rate, but =20 that it has no ground to stand on. Which is to say, if people want to bid=20 it to the sky, they can. If people want to dump it to the bottom of the=20 ocean, they can too... With a currency that is backed on something stable, the stable commodity =20 forms an anchor around which value gyrates. So, it is worth holding if =20 the price goes up too low, because you can always use it for its stable =20 thing. E.g., in US of A, the american people are quite happy to hold $$$=20 because they can pay their taxes with it. They really don't care that much=20 what the exchange rate is doing, up or down. This anchor means USD is a=20 good currency. Possibly what people don't realise is that it is very easy to corner a =20 market. However, the fundamental value of the unit (the commodity) will =20 stabilise and punish the speculator who corners the market. With BitCoin=20 there is no underlying anchor to punish the person cornering the market, so=20 the games will be excessive, and volatility will be too high to be=20 "current." iang PS: having said all that negative stuff, I quite like BitCoin. If it got=20 the econ right, we'd be having different conversations :) _______________________________________________ cryptography mailing list cryptography(a)randombit.net http://lists.randombit.net/mailman/listinfo/cryptography ----- End forwarded message ----- --=20 Eugen* Leitl leitl http://leitl.org ______________________________________________________________ ICBM: 48.07100, 11.36820 http://www.ativel.com http://postbiota.org 8B29F6BE: 099D 78BA 2FD3 B014 B08A 7779 75B0 2443 8B29 F6BE --===============3924876319089696915==--