
The problem Bitcoin solves - glassworm
https://www.spectator.co.uk/2018/11/the-problem-bitcoin-solves
======
man-and-laptop
Interesting idea about Bitcoin being a "settlement system", as opposed to a
payment system like Visa or Paypal.

I think of Bitcoin as being a Gold 2.0. Reasons:

1\. It's like gold, but it removes some of its technical shortcomings.

2\. It's also not a fiat currency, because it's not possible to just print new
money.

Those two properties are, I believe, its defining properties.

Not being able to print new money might be a good thing, or it might be a bad
thing. It could very well be that the control that central banks have over the
money supply might not be a good thing. Or it may indeed be a good thing. Who
knows.

Krugman might think the control that governments exercise over the money
supply is benign - but Krugman and his fellow economists are not scientists.
There are equally compelling arguments that fiat currencies encourage people
to put their money into fractional reserve banks, creating lots of risky debt.
The banks themselves end up being too big to fail, needing periodic bailouts,
creating moral hazards that result in future risk, and making ordinary people
pick up the tab.

A bitcoin economy, in contrast, will presumably not have such cheap access to
credit. It will probably be a "deflationary" currency, encouraging people to
save up their money, rather than lend it out, avoiding needless debt. Whether
or not this is a good thing is unclear.

Full disclosure: I have 200 GBP in Bitcoin. Treat these things like lottery
tickets.

~~~
empath75
It’s exactly like gold except that you can’t do anything at all of practical
use with it.

~~~
hondadriver
And you can create unlimited forks of it, which is kinda hard with gold.

For me this makes the real value zero, but I am already proven wrong for more
then 10 years.

~~~
sidko
The value of Bitcoin comes from social consensus. You cannot fork that. You
can only fork a code repository. End of the day, it is just a bunch of 1s and
0s without a social consensus of value.

~~~
richk449
> The value of Bitcoin comes from social consensus. You cannot fork that.

Can’t? Perhaps it is difficult, but not impossible. I can think of some
examples of forking social consensus: x11-wayland, Debian-Ubuntu, star office
- open office - whatever office it is now.

------
sharkbot
From the article: “What he omitted to mention was that bitcoin has been
operating successfully for almost ten years now, with no confirmed cases of
fraudulent transactions.“

I think you have to stretch the definition of “fradulent transaction” to the
breaking point to be able to make that claim with a straight face. At best, we
have a definitive record of every fradulent transaction ever committed with
Bitcoin, which is progress of a sort.

~~~
decentralised
In this context, I believe the "fraudulent" means a double-spend or any other
attack that fundamentally altered the supply. After all, that's the problem
that is solved by the blockchain.

~~~
b_tterc_p
Technically correct. Practically misleading.

~~~
hanniabu
I'm not seeing how it's misleading, can you expand on that?

~~~
b_tterc_p
Let's assume the average reader knows nothing about cryptocurrency besides it
being 'digital money' nor do they care about the technical details. Telling
people there have been no fraudulent transactions in the history of the
currency is disingenuous. There have been numerous instances in which A's
money moved to B without A's consent. Technically writing that off as non-
fraudulent might be correct, in that it abides by the rules of the system, but
it is likely not what the average reader is using to interpret it. The nature
of the system is that it is more vulnerable to fraud than in traditional
banking systems, and worse, when you are defrauded in most conventional
banking systems, there are remedies you can seek. You get nothing with crypto.
There are of course things you can do to avoid most of the gaping security
holes many people have fallen into but that misses the point for the mass
market and does nothing to address certain edge cases, e.g. robber hitting you
with a wrench and demanding a private key.

To hit the whole article more generally, the author claims that men with guns
can't guarantee fiat currency remains valid. True. But if men with guns say
your crypto is now illegal, the utility of crypto for the common individual is
now (value - expected cost of committing a felony on a public ledger). You
might still find a use for it, but the majority of layperson use cases to
mitigate hyperinflation just went down the toilet.

~~~
decentralised
Maybe I'm misreading, but can you give one "instance in which A's money moved
to B without A's consent."?

I suppose you mean phishing attacks or some form of hack on an exchange or end
user.

~~~
b_tterc_p
Sure. Those qualify. I also like to highlight the opportunity for violent
physical crime. I have no idea if this story is true but it is at least
representative. [http://altdigitalcurrency.com/police-arrest-gang-that-
kidnap...](http://altdigitalcurrency.com/police-arrest-gang-that-kidnapped-
wealthy-bitcoin-holders/)

I'd bet that the police were unable to recover anything that the gang members
robbed. Crypto introduces a weird situation in which you either: A - keep all
of your private keys at home which is effectively just like keeping all of
your cash at home, but in easily distributable packages or B - trust some
third party entity to hold and protected your assets from what looks like
fraudulent transactions. I would imagine a world in which everyone has crypto
as their currency would have a lot more physical crime, home break ins, and
robberies.

~~~
decentralised
Those would not qualify actually. IMHO, the class of attacks on humans is
never solvable at protocol layer and the statement you made that funds from A
can be moved without A's action is both technically and practically incorrect.

I come from a family of policemen and consider that cryptocurrency adoption
will lead us to a scenario where your assets can't be taken away from you
because they can't be linked to your physical identity in the first place. The
idea that others will protect your personal property on your behalf actually
puts you and your assets at danger in more sinuous and violent ways, either by
theft or injunction or even by clerical mistake.

~~~
b_tterc_p
They are already solved, or at least safeguarded against to a highly useful
degree. If you try to withdraw all of your money at an ATM, the ATM will say
"no, that looks fraudulent." If you try to transfer your savings account to an
unknown individual, the bank will say "no, that looks fraudulent". At worst,
bank transfers are sent to people with verified identities, which makes crime
hard. If you do this with crypto, it will say "ok".

If crypto is the main currency then it will be tied to your physical identity,
because you will "use" it- and whatever medium you're using to convey that
payment, be it a QR code on a physical card or a phone app, has significantly
increased risk if lost or stolen or forcibly abused.

Much of the benefits of crypto for non major financial transactions can be
solved with cash and a shady hoody. But laypeople still use banks, because
what they really want is risk reduction, and for 99% of the population, banks
provide that.

~~~
decentralised
"Much of the benefits of crypto for non major financial transactions can be
solved with cash and a shady hoody."

Just the other day some guy on HN was adamant that bitcoin was "only" useful
to buy drugs without having to meet shady people. I thought he was short
sighted but you can't even see the benefit in _that_ specific
disintermediation...

In all honesty, when I read things like what you just wrote, it doesn't make
me want to spend my time showing you a different point of view because I don't
believe you are able to learn from the experiences of others.

------
prolikewh0a
Keeping the blockchain going requires enormous amounts of electricity, which
contributes to Climate Change greatly. Unless it can solve this issue, it must
be shut down for the survival of humanity.

~~~
cromon
World energy production: 168,519TWh

[https://en.m.wikipedia.org/wiki/World_energy_consumption](https://en.m.wikipedia.org/wiki/World_energy_consumption)

Bitcoin mining energy consumption: 73.12TWh

[https://digiconomist.net/bitcoin-energy-
consumption](https://digiconomist.net/bitcoin-energy-consumption)

Percentage: 0.0433897661%

I wish people would actually do some research before making hyperbolic
statements like this.

edit (percent fix and formatting)

~~~
prolikewh0a
Do you know how large 73TWh is? 0.04% is huge when compared to __total
__energy consumption

~~~
cromon
I don't find it large compared to other uses of electricity that waste large
amounts, or other forms of pollution that don't provide any use to the world.

If you find it useless then sure vilify it, but not everyone feels that the
creation of an entire industry that has allowed certain people financial
freedom is a drain. I feel there are much bigger fish to aim an ecological
spear at.

(updated the previous comment to show production not consumption btw)

~~~
prolikewh0a
I'm not singling out Bitcoin at all. I think all polluters need to become
carbon neutral or quit existing. It's a part of the problem, no matter how
small of a percentage of pollution it is.

------
smacktoward
_> Perhaps the most compelling argument for bitcoin is the completely
apolitical and predictable monetary policy it operates within. Bitcoin cannot
be used for quantitative easing, for example. You can’t just print more of it
when the whim takes you._

Bitcoin eliminates the _possibility_ of inflation by replacing it with a
_guarantee_ of deflation. Deflation comes with its own sets of economic and
political problems, some of which can be just as thorny as the ones that come
with inflation.

There is a school of thought that holds that inflation is so bad that its
opposite must inherently be good. How much Bitcoin appeals to you will depend
a lot on how close this aligns with your own thinking.

~~~
LyndsySimon
As a long-time proponent of Bitcoin and other cryptocurrencies, I agree.
Bitcoin is and was intended as a political tool. It may yet transcend that
use, but it’s yet to be seen if that will be the case.

------
_nalply
> There was never an example of hyperinﬂation when economies operated a gold
> or silver standard.

And the price revolution about 400 years ago? While this is not a
hyperinflation, this introduced inflation to a world which didn't know it, and
the cause was the influx of gold and silver from the New World to Spain and
indirectly to the rest of Europe.

[https://en.wikipedia.org/wiki/Price_revolution](https://en.wikipedia.org/wiki/Price_revolution)

My point is that even gold and silver could undergo inflation pressures and
that it already happened.

------
mrb
The problem Bitcoin solves is that fiat currencies fail all the time due to:
debasement, hyperinflation, counterfeiting, wars, coups d'état, etc.

It occurred to me that someone should make a sister site to the (satirical)
[https://99bitcoins.com/bitcoinobituaries/](https://99bitcoins.com/bitcoinobituaries/)
except it would list _real-world_ occurrences of fiat currencies "dying" of
these various causes.

------
menotyou
All money come in existence by issuing a credit. Notes are debt obligation
with no interest issued by the central bank. Other forms of money are coming
into existence by commercial banks when issuing credit. Refer to autonomous
money creation.

Bitcoin is no money unless banks (central or commercial) can create it at
will.

Money creation is an essential prerequisite for capitalism. With no money
creation through credit there is no capitalism any more.

Bitcoin does not solve any problem, but it creates new ones.

Your currency is not supported by "men with guns". Your currency is supported
because you have to pay you taxes in that currency. The state want to have
currency, not Bitcoins. You Bitcoins are only of value as far as the can be
converted to fiat currency at the time your taxes are due. You are completely
depended on someone else to give you something of value (currency) against
something without value (Bitcoin).

