
Cryptocurrency Evolution - rrecuero
http://blog.ycombinator.com/crypto-evolution/
======
paulsutter
The linked article from Nassim Taleb is fascinating. He's discussing Lebanon
vs Syria, but he could just as easily be talking about bitcoin vs the
traditional financial system:

"Simply put, fragility is aversion to disorder. Things that are fragile do not
like variability, volatility, stress, chaos, and random events, which cause
them to either gain little or suffer. A teacup, for example, will not benefit
from any form of shock. It wants peace and predictability, something that is
not possible in the long run, which is why time is an enemy to the fragile.
What’s more, things that are fragile respond to shock in a nonlinear fashion.
With humans, for example, the harm from a ten-foot fall in no way equals ten
times as much harm as from a one-foot fall. In political and economic terms, a
$30 drop in the price of a barrel of oil is much more than twice as harmful to
Saudi Arabia as a $15 drop.

"For countries, fragility has five principal sources: a centralized governing
system, an undiversified economy, excessive debt and leverage, a lack of
political variability, and no history of surviving past shocks. Applying these
criteria, the world map looks a lot different. Disorderly regimes come out as
safer bets than commonly thought—and seemingly placid states turn out to be
ticking time bombs.

~~~
cableshaft
I'd recommend reading Antifragile, although read it with a bit of a grain of
salt. I read it for the first time earlier this year, and I was drawing all
sorts of comparisons to cryptocurrencies (as well as how I should approach my
professional career) while reading it.

That being said, the part that really threw the rest of the book into question
for me was that Taleb is very anti-academia and spends several pages in the
book claiming that academia had basically zero involvement in the development
of computers, which just sounds like he'd never heard of Alan Turing, Charles
Babbage, Ada Lovelace, John von Neumann, John McCarthy, and many others.

It really made me wonder how much of the rest of the book he was claiming to
be an authority on could be trusted, even though most of it seemed to make
sense intuitively.

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bousaid
I really don’t understand the point of this article. It’s quite rudimentary
without much insight or new analysis.

~~~
ilaksh
The point is that there are still many people who don't understand or
appreciate the value of cryptocurrency forks.

I think these people are holding society back. So I hope that they will read
articles like this.

~~~
geetfun
So serious question here. I kind of see myself as someone who doesn’t
understand crypto currency. At the same time, I’m also quite experienced in
investing, business, spotting trends, etc.

I’ve read a bit on crypto currencies over the past 2 years to try and wrap my
head around all of this.

Reading articles like this, it seems like the whole thing is more
philosophical in nature versus utilitarian.

A currency’s role is to function as some mechanism for the transfer of value
from one person to another. But in order for this transfer to occur, both
parties must recognize the underlying asset.

With cryptocurrency forks, it seems this doesn’t seem to offer enough
stability most people would transactionally want.

Other than the obvious speculative desires by the parties involved, how will
crypto currencies evolve into becoming mainstream?

~~~
trypt
-People used to barter raw goods

-Then people used placeholders instead of goods to barter, like precious gems or sea shells

-Then people used gold coins

-Then people used government approved gold coins

-Then people used government approved fiat currency backed by gold

-Then people used government approved fiat currency backed by nothing

-> Now comes the fancy technology

-Then people don't even use paper anymore they use credit cards, essentially moving numbers around in files or computers

-Then people don't even use credit cards anymore they use accounts like PayPal

...but all of these are fundamentally transferring around fiat USD currency

Well the next iteration is for them to skip fiat and transfer around digital
currency so no governments control you at all. Cryptocurrencies are truly
global currencies, the only ones that will ever matter. There have been
proposals in the past to introduce global fiat currencies, but that's an age
long gone - it's too late for anyone to bother with anything but
cryptocurrencies

They are decentralized, non-censorable (just make a new wallet, buy crypto in
person, then use Tor), deflationary (fixed supply = rising in price over time,
the opposite of fiat)

The list of benefits goes on and on. It's a foregone conclusion that
cryprocurrencies are the future, it's only a matter of time. The technology is
not yet mature but once someone makes a venmo-like app that the normies can
use to easily utilize crypto, it's game over for every other system, period

Swiss bank account on your flash drive, swiss bank account in your BRAIN if
you memorize your wallet seed phrase. The utility is indescribably large and
we will have to fundamentally change our entire government and taxation system
to be consumption based (sales taxes not income taxes) once this becomes
mainstream, there is no stopping it

------
grandalf
For someone who already owns cryptocurrency A, isn't there a perverse
incentive to fork it into A', A'', A''', etc., because doing so multiplies the
person's wealth.

I'd expect that a fork will exist if: a) it has a nontrivial chance of
survival, and b) if there is an exchange mechanism for cashing out.

Another way of looking at it, what scenario creates an incentive for a fork to
die once it has been created? There's no such thing as free money.

On the other hand, forking is a way of bootstrapping a new cryptocurrency
variant without becoming a billionaire like Satoshi and needing to worry about
would-be adopters questioning your motives.

The "exploit" of forking to generate a wealth multiplier generates a lot of
wealth, just not Satoshi level wealth.

In a sense, forking is a signal of too much centralization, as those
benefitting from that centralization fork to cash out on their accumulated
influence.

With such a large percentage of cryptocurrency economic activity being
speculation, the incentive to fork is ripe. On the other hand, if Satoshi
wanted to sell of all his Bitcoin Cash and sink it, he could easily do so to
protect his original creation, so perhaps we learn more about Satoshi's
stewardship intent by watching what he doesn't do rather than what he does.

~~~
wmf
_isn 't there a perverse incentive to fork it into A', A'', A''', etc.,
because doing so multiplies the person's wealth._

As the article says, this worked once but don't expect it to work
indefinitely. Arguably forks that allow new use cases (e.g. Bitcoin Cash is
supposed to re-enable low-value transactions) create value while other forks
(e.g. Ethereum Classic, Bitcoin Gold) should be more zero-sum.

 _what scenario creates an incentive for a fork to die once it has been
created?_

Looks like the death process is low exchange volume -> delisting -> zero
liquidity -> zero value. [https://medium.com/@EthereumRussian/why-
cryptocurrencies-get...](https://medium.com/@EthereumRussian/why-
cryptocurrencies-get-delisted-tenx-bitshares-digix-monaco-
iconomi-66b32cda4c24)

------
lifeformed
Bitcoin is such a UX nightmare. I finally got my funds transferred to a
MultiBitHD wallet, after a lot of effort. I had to pay some service $20 to
accelerate my transaction because my other fee of $20 was taking weeks to go
through? Now I'm trying to claim my Bitcoin Cash. How do I do this? According
to the internet, I need to transfer it to a different kind of wallet first?
There's a bunch to pick from, but make sure it's not a scammy wallet. Also I
need to extract my private keys with some command line stuff (MultiBit doesn't
use normal keys) and run some weird programs to convert them? Then I need to
move the funds around again to get it working in a new kind of wallet. Also
make sure to do all of this on a clean computer in case these unvetted
programs are stealing your keys. Don't forget to pay an extra $40 if you want
the transactions to not get stuck forever. Oh and I have to do a bunch of
other steps again if I want to get Bitcoin Gold or whatever new fork is going
on.

I could eventually figure it out with enough time, but how any of this is
supposed to be adopted by laymen baffles me. You'd think something with this
much developer support would just let you click one button and have it all
done.

~~~
bdamm
Raw cryptocurrency is definitely not for the layman.

Really it's for the financial processors. Personally I view the benefit of
Bitcoin and its ilk to be the efficiency, transferability and accountability
that comes with the blockchain. Those willing to invest time and energy can
also carry raw bitcoins in their safe if they so choose, but this is a far way
away from being accessible to the layman.

Think HTML. How many laypeople know HTML? Yet they get the benefit of the web
thanks to all of the developers that have built services using it. Those
services wouldn't be available without it.

~~~
CGamesPlay
Can you give an example? I'm having a lot of trouble following your comparison
to HTML. HTML is a material which composes documents, and I don't have to
understand the material to understand the value of the resulting document.
What will bitcoin build that will be useful to me without needing to own
bitcoin directly?

~~~
bdamm
Making intra-bank transactions more efficient is one; the floor of money
transfers will be both cheaper and faster. Wire transfers are expensive and
can be very slow (sometimes more than a day) for example. Bitcoin being a real
transaction mechanism between institutions that is cheaper than wires and
faster than wires (works on Sunday!) puts pressure on the banks to either
compete or adapt. Another example is enablement of micro-payments (perhaps on
side-chains) where conventional money transfers don't scale well - someone,
not your (artists) preferred broker, is holding your money until it aggregates
up to a transferrable sum. Now there's pressure to make that sum smaller and
the transfer frequency greater.

And, although not everyone needs this, for those of us that have been in the
situation of doing international money transfers, they are a huge pain,
unreasonably expensive, and slow too. Bitcoin puts pressure on all this, and I
believe we're already seeing companies pop up that offer transfers in your
preferred currency but are using Bitcoin behind the scenes to settle the
transfers.

------
gtrubetskoy
What about the argument that the only chain that deserves to be called Bitcoin
is the one that is completely backwards compatible to all the versions of
software dating back to the genesis block?

~~~
thescriptkiddie
That chain no longer exists. Bitcoin has had several hard forks in the past
that broke backwards compatibility.

~~~
kobeya
It has not. You have been misinformed.

~~~
blusterXY
It has had forks which have produced blocks which: (1) would not have been
produced by any previous nodes in the network, and (2) forced the updated
software to ignore the original majority chain. If you check the software,
you'll see explicit checkpoints at which the client is told to ignore certain
blocks (identified by their hash).

Breaking the ability of the network to follow a valid majority chain is
breaking backward compatibility. It's disingenuous to claim otherwise simply
because the forked version eventually ended up with the longest chain.

~~~
kobeya
Point me to the code. I think you will find it does not exist.

------
rrecuero
I'm happy to answer any follow-up questions.

~~~
CJefferson
I don't understand the long-term aim of bitcoin. It currently costs
$40/transaction, that seems far beyond any reasonable idea that bitcoin could
ever be useful. How is this not a ponzi scheme, help up by mining fees?

~~~
rrecuero
One of the main use cases of Bitcoin is becoming a store of value. For that
use case, transaction fees matter a lot less. If you want to store/move
millions of dollars and protect them against inflation, those fees don't
matter. Gold, also a store of value, has high transaction fees as well.

~~~
atarian
It's difficult to see mass adoption of Bitcoin from a purely store-of-value
use case because most people don't (directly) own gold and probably don't
think about hedging against inflation.

I'd argue instead that the main use case is to buy a cup of coffee with
Bitcoin anywhere in the world without having to deal with fees and red tape.

So using your analogy of evolution, transaction scaling is probably going to
be the biggest driver of who gets to be at the top of the crypto food chain.

~~~
nradov
Owning gold is not an effective hedge against inflation. If it was then we
would see that gold returns would consistently be correlated with inflation
rates, but in reality that hasn't happened. And there's no reason to expect
that Bitcoin would be an effective inflation hedge either.

If you want to actually hedge against inflation then TIPS or stock indexes are
usually better choices for most investors.

------
lowglow
Hack Days talks a lot about this and how Bitcoin mirrors Linux in a lot of
ways @ the 59 minute mark:

[https://www.facebook.com/hackdays4all/videos/545598169119184...](https://www.facebook.com/hackdays4all/videos/545598169119184/)

~~~
tramGG
I really enjoyed watching that and I'd like to join next week if I can

~~~
lowglow
For sure! Come on out, we film every Sunday at ~2pm. We're at Noisebridge in
SF near 18th + Mission Street.

------
cyphunk
Oh my, if it is valid to compare crypto forks to biological evolution, then
I'm left to wonder how awesome humans would have been today if all the great
forks didnt get killed off by lousy first-network effects.

------
ghostbrainalpha
I was a little confused by the abrupt inclusion of a quote from Nassim Taleb.
Is he so well known in this space he can referenced without introduction?

~~~
rrecuero
It has a footnote but the introduction could have been smoother

------
CrunchGo
This is a great read!

------
fro0116
I don't have anything against bitcoin and cryptocurrencies in general, but I
wish the cryptocurrency community would stop trying to co-opt the term
"crypto".

It's a well-established (understatement of the century) shorthand for the term
"cryptography", that no honest cryptocurrency enthusiast can claim in good
faith to be ignorant of, because cryptography provides the technological
foundations on which all cryptocurrencies are built.

Conflating these terms can cause undue confusion that breeds disdain for the
very technology you're trying to promote. I, for one, was expecting to read an
article on the history of cryptography as it evolved over the years when I
clicked the link.

Despite all this, I just wanted to say the article itself was an interesting
read, but you're doing yourself and the cryptocurrency community a disservice
by unwittingly pulling a bait and switch like this on so many potential
readers.

At the very least, please avoid using it as a shorthand in contexts intended
for communication to those outside your community.

~~~
Walkman
I clicked the title hoping to read something interesting about cryptography.

~~~
nerdponx
"Crypto-powered" is the new "AI-powered".

------
baby
I'd suggest changing the title as I thought this was related to Cryptography.
Cryptocurrencies is more appropriate than just crypto.

(Note that there are a bunch of cryptographers and cryptographer wannabes
(like me) on HN who are not just (or not at all) into cryptocurrencies).

~~~
sctb
Thanks! Yes, we've tacked on a "currency" to clarify.

------
loup-vaillant
Crypto _currency_ evolution, dammit!

