
Bitcoin study: Period of exclusivity encourages early adopters - InInteraction
http://news.mit.edu/2017/bitcoin-study-period-exclusivity-encourages-early-adopters-0713
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gtirloni
I have a hard time reconciling the social justice goals of some
cryptocurrencies with this initial period where people are basically creating
wealth out of thin air by doing useless computations at the cost of enormous
electricity.

How are we any better for it? A select group gets rich, there is rampant
speculation and fraud... but we're fighting "the man" so it's all good?

I can't see how society is better for this (or ever will be).

I've mined some BTC and ETH while thinking about these issues and I can't see
a future where anything is different so I've stopped. It seems we'll replace
bankers and oil millionaires with miners and early adopters... and the average
Joe is where it was always.

Sorry for thinking out loud all these disconnected thoughts. I really want to
believe but I'm having a hard time.

Meanwhile, it seems I'm doing better for society if I donate my spare
resources to some distributed computing project to research cancer, AIDS, etc.

Where do you see the future in 50-100 years if cryptocurrencies take off for
good?

~~~
DINKDINK
>where people are basically creating wealth out of thin air by doing useless
computations at the cost of enormous electricity

The only way this statement is different than how the Federal Reserve works is
that Bitcoin is voluntary (You only join the economic model that you desire to
participate in) / non privileged (you don't have to be born into certain
groups to participate in how the system works), the system parameters
(inflation, etc) are not coercible (The US President can't nominate a Federal
Reserve Chairperson to bitcoin to favor policy that favors one special
interest group).

>creating wealth out of thin air

The Federal Reserve literally creates money out of nothing for the Treasury
Department. Due to seigniorage, Fed banks make money on the inflated currency
before the last man on the street can.

>doing useless computations at the cost of enormous electricity

The thousands of servers that run FedWire, ACH, VISA, MasterCard Paypal,
Venmo, ApplePay and the Cash-transport Trucks, Physical banks, all waste
energy preventing people from trying to steal money too.

How is the current monetary policy better?

Relevant reading: Nothing is Cheaper than Proof of Work 04 Aug 2015
[http://www.truthcoin.info/blog/pow-
cheapest/](http://www.truthcoin.info/blog/pow-cheapest/)

~~~
return0
> The Federal Reserve literally creates money out of nothing

I hear this often, but while it's a literal fact, maybe it's not that simple.
Central banks create money out of the Trust that people put on them, and the
trust has been built by the state for years or centuries.

~~~
hidenotslide
The primary mechanism that "creates" money is ordinary banks loaning money in
the fractional reserve system. The Federal Reserve does not have as much
control as people think.

~~~
RobertoG
You are right. Central banks can only influence the process, but what really
decide the creation or "extinction" of money is the demand of credit in
commercial private banks.

In a way, the system is self-regulated.

In fact, all the "fractional-reserve" thing is a myth. Banks loan when they
see the opportunity of profit, and then they search for reserves. Not the
other way around.

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module0000
Bitcoin has come a long way... 7 years ago I was writing perl scripts to
cobble together a depth-of-market program that operated on the mtgox API. I
would get excited scalping coins from $17-19 USD back then. No SEC/CFTC, no
regulation, no anything, just good old fashioned auction market theory -
combined with a sucker being born every moment and winding up on the other end
of a mtgox trade. The sky was the limit, it was an exciting time if you were
an oddball breed of programmer crossed with day trader.

Fast forward.... WTF is going on now? Regulated exchanges for bitcoin, dozens
of btc clones, new exchanges being birthed/destroyed each month, and the
dinosaurs of finance adopting it 10 years too late. It's a crazy mixed up
world.

~~~
adventured
> the dinosaurs of finance adopting it 10 years too late

The monoliths of finance will set the legislation that will determine
everything about crypto-currencies in all major economies. And if their
extreme political power isn't enough, they already by far own the most patents
relating to blockchain tech.

Bitcoin + Ethereum = $58 billion.

JP Morgan = $330 billion. That's one "dinosaur" with $25 billion per year in
net income.

The notion that they're dinosaurs and they're ten years late, is laughable.
Along with all the other banks and central banks, they'll dictate the terms by
which crypto-currencies will exist (the only alternative to being controlled
by the banksters that control everything related to finance, is to remain a
niche that never goes big / mainstream).

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corporateslave2
Why do you say they will dictate the terms? They will own the mining? The
whole point of bitcoin is decentralization (unless some large entity owns
mining majority).

~~~
rtpg
The cynical example:

\- People live in countries

\- countries levy taxes to be paid in "real money"

\- banks deal with the "real money"

\- BTC exchanges have to work with these banks + gov't

~~~
kneel
This assumes that future commerce will always revert back to 'real money'.

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palunon
Commerce is irrelevant.

At the end of the day, you need to pay your taxes - presumably in your
national currency.

Suppose you had a commerce that only accepted bitcoins. How will you pay your
taxes ?

~~~
polyomino
a good thought experiment. I think it's likely that the government forms a
symbiotic relationship with Bitcoin if things get that far.

If the public does not want national currencies, then governments need to make
them wanted. Physical force is an obvious approach, but probably impractical.

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basseq
I'm struggling with the findings here. From the article: all late adopters
("NLAs") and non-delayed early adopters ("NEAs") had a cash out (or
abandonment) rate of ~10%. (Ironically, higher for NEAs at 11%, but likely not
statistically significant.) But _delayed_ NEAs cashed out at 18%, and at even
more significant rates where social ties were stronger (e.g., dorms). And
these delayed NEAs can affect NLA adoption in the long term.

Separately, we could say that general exclusivity schemes (e.g., gmail,
facebook) can accelerate _broader_ market demand. But, of course, it's not
causation: plenty of "exclusive" products never gain traction.

So this suggests there's a certain class of people who care deeply,
potentially more about "status" of being an early adopter than the underlying
tech, and will be toxic if they don't get what they want. So... identify these
people carefully?

~~~
tom_mellior
> But delayed NEAs cashed out at 18%, and at even more significant rates where
> social ties were stronger (e.g., dorms).

One possible explanation that immediately came to my mind was that these
"delayed NEAs" were thinking something along the lines of "we were promised an
instantaneous peer-to-peer payments system, but it was not instantaneous at
all; screw this, it is obviously broken" and got out for this reason. There is
no detail in the press release about what explanation for the delay was given.
It's hard to judge people's motivation without that.

> exclusivity

The press release tries to make this about exclusivity, but I don't see how
their far-reaching guesses follow from the data.

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wyldfire
Paper from Science [1] (registration or scihub required). Not clear to me
whether "cash out" means that they sent funds from a MIT-controlled wallet
into any other wallet or if they took it to addresses known to be exchanges.
If the former then another explanation is that they were just being prudent to
truly control the money.

[1]
[http://science.sciencemag.org/content/357/6347/135](http://science.sciencemag.org/content/357/6347/135)

~~~
sputknick
My first thought as well. These NEAs probably already had a mechanism for
managing their coin, and so wanted to consolidate, rather than have a separate
"MIT wallet"

~~~
wyldfire
If a prerequisite for getting the funds from MIT was establishing your own
wallet somewhere and providing a deposit addr, then perhaps they could
designate "cash out" to mean "move from that initial deposit address to
anywhere else". Aside from some bias caused by sweeping, it's a more
reasonable way to draw these conclusions.

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EGreg
The value of money is the aggregate feeling of each person that a seller will
agreeto accept it in exchange for something they need.

The more people do this, the more the network effect.

In a sense, money is like an app that spreads through a population. Just
another app :)

It can be local currency in a community. So paying in this currency helps keep
the community vibrant.

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freeflight
I'm not a coder so my understanding of the technology is very limited, but
couldn't we use the blockchain to P2P host something besides a crypto
currency, something like a public discussion platform that's tamper/censorship
proof? The crypto currency feature could still be kept in place as a payment
for people doing the actual hosting, but it would only be there to help
facilitate the platform itself and not it's sole purpose.

Is that idea even viable or am I vastly misunderstanding the technology behind
BC?

~~~
n3x10e8
That totally works today. Its one of the many applications of blockchain tech
due to its "immutable ledger" property. Egs: ipfs.io Besides this there are
even many cool applications such as "golem.network- airbnb for computing",
"filecoin.io - airbnb for storage" ,"ethereum dapps" etc.

~~~
freeflight
After a quick glance ipfs.io looks exactly what I've been thinking about but
in a much more dry way.

As I see it, right now there is an opportunity window for a P2P hosted social
discussion platform. That's because many big social media companies have been
increasingly cracking down on user submitted content, leaving a lot of people
to wonder where they could participate without having all their content at the
whims of some commercial third party, which can be bullied to censor/delete by
state actors at any point in the future.

One could argue Thor offers such a place, but imho in terms of usability Thor
is far off from something everybody can use easily.

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londons_explore
It's only at MIT where an experiment like this can hand out effectively 400k
in cash, just to see how participants react...

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nebabyte
Also known as the late gmail study

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DiNovi
like facebook only accepting university email addresses.

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The3rdHand
"More than 50 percent held on to their bitcoins ... The $100 in Bitcoin they
were given in 2014 is now worth more than $700"

HODL!!!

