<nettime> The Monetary Future: How Bitcoin Is Being Destroyed

[Eugen Leitl]

On Sat, Oct 27, 2012 at 11:46:36AM +0200, John Haltiwanger wrote:

> > It doesn't rely on processing cycles for maintaining the log of
> > transactions. It needs some processing for the distributed mint,
> > but adaptively so (difficulty goes down if mining rate goes down)
> > and processing cycles are fundamentally egalitarian.
> >
> 
> How can something that inherently favors those with pre-existing capital to
> invest in computing architecture be "fundamentally egalitarian" ?

You need a cheap online computer to transfer BTC. You will need a bigger
online computer to make BTC.

You don't need to be a central bank to issue BTC. You don't even need
a banking license, and a connection to SWIFT in order to transfer.

All you need in a lousy smartphone. I think that levels the playing
field quite a bit.
 
> Those with the money to invest in the most hardware get the most bitcoins.
> Hardly seems like an equal opportunity cost to me.

I'm pretty sure that if you're trying to find a hair in the soup
hard enough, eventually you will. However, I find this dish
palatable enough as is. Your mileage might vary.
 
> > You were late to the party, and by that time you probably needed
> > GPU clients (which will be soon useless, since ASIC miner rigs
> > are ante portas) participation in a mining pool.
> >
> 
> I should have clarified that the mining client speculated that it would
> take two years. I immediately shut it down in disgust.

When I'm trying to form an opinion about something, I try to research 
it first. In general I did not care about minting other than a means
to obtain play money to test transactions. I find this curious that
so many are focusing on the most irrelevant aspect of a P2P monetary
system, the distributed mint, and expect a personal, handsome profit 
from seigniorage. There's a reason that difficulty is adaptive.
The system is supposed to homeostate so that the rate of production
is limited. This is by design.
 
> > This is a currency based on scarcity, just like gold or cowry shells.
> > If you intended to become rich by mining, you should have been a year
> > or two sooner to the party.
> >
> 
> I downloaded the client within months of the launch of Bitcoin. And what

You obviously did something wrong, then. 

> you are saying proves my point about the stupidity of building a currency
> on scarcity: it's not going to lead us to anywhere new 

I understand when inventors and patent holders of cryptocurrencies scoffed 
at the first cryptocurrency to succeed wildly, by solving the issue of double spending 
without resorting to centralism, and hence a single point of failure. A simple
case of sour grapes.

What is your track record, so far? 

> or 'revolutionary'.

If you figure out a tamper-proof way of measuring underlying economy
and a tamper-proof way of issuing a matching volume without any
single point of failures, feel free to publish. It will make quite
a splash, I assure you.

> You have to 'get there first' and 'mine harder/smarter'. What stupid
> advice, "oh you should have been there earlier".

Look, I just pointed out the problem with where you focus and your approach.
If you think that issuing P2P currency with the intent to make a personal
profit is stupid, I agree.  
 
> 
> >
> > The value of bitcoin is ability to do P2P transactions in real time without
> > requiring a third party, using a naturally deflationary monetary system
> > which however is highly frangible.
> >
> > That by itself is of obvious enough utility.
> >
> 
> That is about the only interesting thing about it, yes. But the ability to
> engage in P2P transactions is hardly a result of the means of the

Why are you so focused on production?

> currency's production, nor is it a feature unique to bitcoin itself.

As compared to which successful digicash system, exactly?
 
> Also "naturally deflationary" in the scope of something that is more

Deflationary in the sense is that the total amount is limited, and will
be approached asymptotically.

> hoarded than traded seems like a misnomer to me. Since there are a limited

If you want the currency to be useful, you need to grow the underlying economy,
so people are more incited to spend than to be unable to spend.

So what kind of business that is accepting BTC are you running, personally?

> number of bitcoins, there is a "natural" tendency to hold on to as many of
> them as possible. That way when the pie is all spoken for, one's slices

Nobody prevents you from designing a P2P cryptocurrency with built-in
demurrage.

You're hating on an experiment. As I understand the designer was unhappy
with the rate of adoption, it would be indeed been much better if the minting
craze didn't happen. I don't think that flaw needs to be fatal.  

> will increase in value as demand becomes satiable solely through trade.

----- End forwarded message -----
-- 
Eugen* Leitl <a href="http://leitl.org">leitl</a> http://leitl.org
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