

Why Bitcoin Is and Isn't Like the Internet - andrenotgiant
https://www.linkedin.com/pulse/why-bitcoin-isnt-like-internet-joichi-ito

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notahacker
It isn't like the internet _because electronic ledger technology and instant
money transmission services already exist_ , and indeed are used by basically
everyone that BTC is accessible to. If using the conventional banking system
occasionally seems like mailing floppy disks to people, the hurdles to
effortless universal payments are regulatory rather than technological

"Access to news, music and videos in minutes from anywhere in the world with a
computer modem" is a much more revolutionary pitch to the consumer than "but
see, not only is blockchain technology better than those old mainframes your
bank uses... it's _decentralised_... here's a CATO institute article.... yeah,
and you can convert it back to dollars too"

~~~
natrius
You're right in the sense that distributed ledgers are effectively an end run
around regulations and trusted parties who we pay for centralized ledgers
today. I think you're underestimating how important that is.

Transaction fees are going to zero.

Markets are moving to blockchains: securities markets, eBay-style markets for
goods, Uber-style markets for services.

Markets that have been regulated out of existence will now thrive. Drug
markets get all the press, but prediction markets will change the world.
([http://augur.net/](http://augur.net/))

We currently pay banks to keep our money safe and to make it digital so we can
swipe a card or enter some numbers to send money. Distributed ledgers combined
with current and future software do that for free. Today, everyone's money has
to be in a bank, so they get to keep almost all the profit from your money. In
the near future, your money will be safe, digital, and controlled by you. When
you decide to lend it to other people, you'll get paid more to lend your money
out.

Most countries have currencies that harm their economies and/or decrease in
value rapidly. Distributed ledgers and the financial derivatives that can be
built on top of them will give the whole world stable currency. This outcome
isn't just an end run around regulations or trusted parties: it's a new thing
that just wasn't possible before. We have better technology to build
currencies now.

It's definitely harder to pitch blockchains to consumers as revolutionary, but
if you think about it for a while and still conclude that it's not going to
have a huge impact on the world, I think you've missed something.

~~~
danbruc
Maybe there will be a successful cryptocurrency at some point but chances are
(very close to) zero that it will be Bitcoin. Bitcoin is dying.

EDIT: Read that [1] for my reasoning instead of blindly down voting opinions
you don't like or at least point out where I am wrong.

[1]
[https://news.ycombinator.com/item?id=8905475](https://news.ycombinator.com/item?id=8905475)

~~~
patrickaljord
> Bitcoin is dying.

[http://bitcoinobituaries.com/](http://bitcoinobituaries.com/)

~~~
danbruc
I am aware that I am not the only one convinced that Bitcoin will fail. Maybe
the Bitcoin price will even stop falling and rise again once more, but finally
it will fail. See the linked comment for my reasoning.

~~~
patrickaljord
The transaction fee argument is an old one, as the answers to your comments
say, it isn't what will make bitcoin fail.

~~~
danbruc
They argued about the exact numbers but they did by no means show that the
argument is invalid. Bitcoin has no important advantages over credit cards or
PayPal, besides the claimed low transaction costs. And this argument is not
true, not now and it is not obvious that it will become true in the future.

~~~
patrickaljord
The number one innovation from bitcoin is not its low transaction cost. Its
the blockchain, that is to say the possibility for two people to make a
transaction without a centralized third party involved.

~~~
danbruc
I said advantages, not innovations. Nobody cares about whether there is a
centralized authority or not. I never ordered something on Amazon and was
secretly concerned that paying with my credit card involves some central
authorities. It may be a nice goody but it is nothing average people care
about and therefore no reason for them to adopt Bitcoin.

~~~
patrickaljord
Innovations never look like huge advantages or more than "nice goody" until
people start using them in practical way. People used to say that the internet
was a nice goody but that fax was good enough. Yeah, right.

~~~
danbruc
But the Internet really made some things orders of magnitude easier or faster
or possible at all. But what could the advantages of having no central
authority be? There are some rare scenarios like the economy of a country
collapsing where being independent could be useful. Or when banks are
socialized. But do these scenarios justify all the hassle? Or am I missing
something? Where or when else is it advantageous?

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runeks
> The core Bitcoin developers are cypherpunks who do what they do because they
> don’t trust governments or the global banking system and are trying to build
> a distributed and autonomous system, one that is impervious to regulation
> and meddling by anyone at any time.

I don't think that's an accurate description the the core Bitcoin developers.
I know Gavin Andresen, Gregory Maxwell and Mike Hearn aren't like that, at
least.

There's really a lot of people in the Bitcoin community who are just
interested in the technology.

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aarondu
To date, crypto currency remains a technology topic. If you want to change
finance, first understand it. Take your corporate finance, capital market,
macro economics classes, and understand government's role in currency and
economy. Learn about the history of how commercial banking, investment
banking, currency and payment worlds have evolved over the last 100 years.

In short, figure out how bank and capital flows work before prescribing any
solutions like Bitcoin, otherwise it will just prove the rightful criticism -
that crypto may point to the right problem, but it in itself is just a
technology looking for a problem to solve, and that even if it eventually
finds its purpose, the chance that the problem will be small or a better,
simpler solution comes by remains high.

Financial system as it's built today is an equally sophisticated system vis-a-
vis the digital world. Most of those system designers (from say Banking Act of
1933) have left this world. Tech-hackers are many, finance-hackers are fewer.
Even fewer understands both. This is why if you ask the view on crypto, you
will have very conflicting views between the tech and the finance worlds. And
rest to be sured, we are dealing with a problem that's more finance (including
financial regulatory) than tech.

Almost anyone on hacker news understands how a full stack software system
works. But do you understand how a financial "full stack" works? If you're
interested in tackling the problem in a new way, we are hiring and welcome
your input.

HN sn = Gmail sn

------
wsxcde
Why do people keep repeating this myth that Bitcoin is "efficient"? It's not,
even hardcore bitcoiners like Peter Todd admit this. [1] And the most
important point is, it _cannot_ be, this is a mathematical fact underlying
trustless systems based on the blockchain.

If I give a $100 to you, a centralized entity like my bank just has to
subtract 100 from a database which contains my my account balance and 100 to
your account balance. And now the transaction is complete. In the case of
bitcoin, you still have to do this, but you also need to run a proof-of-work
competition among a whole bunch of miners. This proof-of-work competition has
to cost significant money in comparison to the amounts being transacted on the
network, because if it didn't, a 51% attack would become easy.

Suppose for the sake of argument that the cost of a bitcoin transaction, by
which I mean the money invested in mining equipment and cost of electricity of
the the mining network, is $1. Assume for simplicity that there's only one
transaction per block. Now suppose I'm a malicious actor who just paid you
$1000 through the bitcoin network and would now like to execute a double-spend
attack. Amassing more hashpower than the rest of the network and "overtaking"
the longest chain after 6 confirmations is, on average, only going to cost me
7 * $1.01. In other words, this network with a cost per transaction of $1 is
insecure for transacting amounts like $1000. The point is, the mining rewards
+ transaction fees on the btc network, which in turn are equal or slightly
greater than the the cost per transaction block, have to be roughly similar to
the amounts being transacted on the network for it to be secure.

The TLDR is this: for a secure btc-like network, transaction cost ~
O(transaction amount). For a centralized ledger (bank): transaction cost ~
O(1). By no means can you call this "efficient."

I'm not saying bitcoin is useless. It is a very clever trustless distributed
ledger, but this trustlessness comes at a significant cost.

[https://twitter.com/petertoddbtc/status/513195104023359488](https://twitter.com/petertoddbtc/status/513195104023359488)

~~~
DoctorBit
The organization that administers the centralized ledger could be bribed with
a value greater than the transaction amounts. One could say "yes, but
regulators..." \- then one has to add the cost of the regulators, courts,
jails, etc... It would be interesting if it turned out that the technical cost
of a safe bitcoin network was the same as the human cost for a centralized
network. I'm going to think about this some more.

~~~
wsxcde
No, there's a big difference between your bribing experiment and the thought-
experiment I described. The value 7 * 1.01 is the amount it costs _me_ to
conduct the attack. I don't need anybody to collude with me.

The bribe is an unknown quantity that has to be greater than the revenue the
operators of the centralized ledger forgo when they decide to collude with me
and attack their other users.

The equivalent to the bribing the centralized ledger would be me trying to
bribe the top 5 or so pools to conduct a 51% attack on _my_ behalf. This is
obviously going to cost me a _lot_ of money because the pools have little
interest in becoming accomplices in my criminal conspiracy.

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ArekDymalski
"It feels a lot to me like when we were arguing over ethernet and token ring
-- for the average user, it doesn’t really matter which we end up with as long
as in the end it’s all interoperable. What’s different is that there is more
at stake"

These big debates seem to be so critically important only from perspective of
today. I'm pretty sure that people arguing about technology are always
convinced that their discussion and goals are crucial for the future. But from
the perspective of time they aren't because the world and technology keep
going forward and once strategical debate comes out as just another milestone.

------
rndn
Since when does LinkedIn have articles?

~~~
freedombeer
When they realised the one trick pony was growing into a one trick nag
complete with tedious and pompous TED-style tones.

------
etchalon
Bitcoin is only like the internet in so far as it is something that can be
done on computers.

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vivivi
People need to start writing better title.

~~~
ionwake
Poeple need to start writing better comments.

~~~
freedombeer
People need to check their speling.

~~~
ant6n
reddit

