
Why Bitcoin is a significant breakthrough, but perhaps not as a currency - dpkendal
http://dpk.io/blockchain
======
rthomas6
I am convinced that many problems with Bitcoin would be solved if we could
come up with a way to tie mining difficulty to the currency's demand instead
of only to the mining computing power. Instead of ensuring a predictable
generation rate, this could ensure a predictable _value_. When demand wanes,
the currency is harder to mine and becomes more scarce, and when demand
surges, the currency becomes easier to mine and more available. This would
stop some of the volatility in BTC prices. You could plan the rough change in
value over time, and build it into the algorithm, perhaps making gains
unlimited at first, then making it very deflationary for several years, and
gradually easing gains to something like 0-2% deflation per year. A currency
with a known long term future value is obviously very useful, and a stable
value is also more useful.

I can't think of a decentralized way to measure demand, though, so maybe this
is not possible.

~~~
swalsh
I proposed a way of tying the difficulty level to the quantity theory of money
a while ago on economics and alt currency forums of bitcoin talk.

I think if you're going to be successful, you'll have to find a different set
of early adopters. Bitcoin is as much ideological as anything, and while some
people don't want to see another alt currency because of their level of
investment, others just generally don't believe there's anything wrong with
the system today.

Anyways, i'd love to actually develop the idea... but I didn't want to spend
time on "just another altcoin" unless I had faith it might get some adoption.

~~~
rthomas6
I did toss out a less thought-out version of the idea on bitcointalk and
/r/bitcoin a while back, and you're right, they were not interested. Those
communities seemed to think that a non-predetermined amount of coins meant the
same thing as a fiat currency. But maybe if something like this is actually
built, people that believe in more mainstream economic ideas would get
attracted to it and start to use it?

~~~
XorNot
Once you acknowledge mainstream economic thought (or at least mainstream
academic economic thought) might actually be a useful field of study, you've
pretty much defeated the point of running Bitcoin with a non-central bank
model.

Bitcoin appeals to people who have decided it's outrageous they have to invest
their money in productive enterprise to get more of it, and it specifically
appeals to greed which says "get in early and get rich easily!"

~~~
dragonwriter
> Once you acknowledge mainstream economic thought (or at least mainstream
> academic economic thought) might actually be a useful field of study, you've
> pretty much defeated the point of running Bitcoin with a non-central bank
> model.

Perhaps the _specific_ non-central bank model used by Bitcoin, but there could
be alternatives to a traditional central bank that might be used in an
alternative currency that wouldn't have the same problem, so I wouldn't rush
to say that that acknowledgement rules out non-central bank models
_generally_.

------
fragsworth
I think we almost all agree that cryptocurrency is a revolutionary thing. It's
difficult to see _how_ revolutionary, because we are only beginning to
understand what can be made possible by it.

I often see it compared to the advent of the early Internet in the 1980s, when
nobody really knew how big it would get, just that it was "revolutionary" and
would become huge.

This may be an overestimation caused in part by bitcoin stakeholders trying to
promote the idea. But a very similar thing happened in the 90s when everyone
was buying tech stocks.

~~~
BlackDeath3
The difference between the 1980s and now is that people now can use the
Internet to learn about Bitcoin for themselves, from the source, instead of
basing all they know on hype. It's a shame that so many people seem to love to
talk more than they learn.

~~~
fragsworth
Yeah, that difference definitely exists now, and accelerates the learning
process quite a bit.

I think most people don't generally go to the source when learning about
something, though, even today when it's easily possible. Usually what people
do is learn what is fed to them from whatever outlets they prefer (TV, news
websites, reddit, etc.) and hear about stuff in passing.

~~~
BlackDeath3
Well, while we're on the subject, for anybody who _is_ interested in going to
the Bitcoin source: www.bitcoin.org/bitcoin.pdf

------
gwern
> This realization raises interesting questions about the political
> motivations of Satoshi Nakamoto in presenting their creation as a digital
> currency when they must have known that they had solved this far more
> important general problem.

He was well aware: he posted a short essay to bitcoin.org explaining how
Bitcoin is a general solution to the Byzantine Generals problem, and if you
read his early cryptography/p2presearch ML threads, he specifically says that
digital money is but the earliest and most obvious application, and that far
more could be built on top of it, and he hoped there would be, and included
the dangerously-complex scripting language specifically to support more
complex functionality than simply a global ledger.

It's not his fault if everyone else was more interested in applying Bitcoin to
financial transactions than exploring approaches like Namecoin.

------
aaron-lebo
I think this article is on to something really important. It is way too easy
currently to get caught up in the frenzy over the specuation surrounding
Bitcoin.

This idea of the Bitcoin protocol as a decentralized, secure, and transparent
storage system has all kinds of applications, whether Namecoin, smart property
or something else.

I played around with using Namecoin as a more consumer-friendly form of drm.

[https://github.com/aaron-lebo/dissent](https://github.com/aaron-lebo/dissent)

~~~
wmf
Check out this article on software licenses as securities:
[http://jordanpollack.com/softwaremarket/](http://jordanpollack.com/softwaremarket/)

Ultimately I think this level of efficiency would probably destroy most
developers who used it (especially games).

------
andrewla
I don't think the author realizes how uninteresting a decentralized
transaction store is without the currency element.

The trick was to line up economic incentives so that securing the network and
accepting transaction fees are the same thing.

The fact that bitcoin serves as a centralized document store is one of the
biggest defects in bitcoin as it stands now, and when bitcoin does fall, it
will fall to a system that treats the transfer of currency units as a first-
class citizen rather than a side effect of a script.

~~~
fragsworth
The currency aspect _has_ to remain, because mining would not exist without
it. The devs know this, so they'll do their best to preserve this aspect.
However, having the protocol support documents as well is pretty amazing:

Suppose it's 15 years from now. Many cars can drive themselves.

Suppose someone designs a mechanism that allows you to control your vehicle
(remotely) only if you own a specific "ownership item" (colored coin, whatever
people are calling it) on the bitcoin network. You prove this to the vehicle,
and it goes to wherever you tell it to. The item on the bitcoin network means
you "own" the vehicle.

Now you can tell your vehicle to go to a public place where someone might
inspect it with the intent of purchasing it. That person tells you "OK, I'll
buy it for 0.1BTC" and you perform an exchange of your ownership document for
0.1BTC over the bitcoin network.

You don't have to trust anyone with anything. The exchange happens
_atomically_. You don't even have to go anywhere to perform the exchange.

~~~
maxerickson
The buyer has to trust that the mechanism is sufficiently tamper proof.

(and once you have that, escrow service anyway becomes cheap)

------
wildbunny
This article misses the true breakthrough which bitcoin represents which is a
_trustless_ , decentralised store and exchange of value.

~~~
praxeologist
On that note, I want to point people to Protoshares and the concept of DACs
(Decentralized Autonomous Corporations):

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

[http://letstalkbitcoin.com/bitcoin-and-the-three-laws-of-
rob...](http://letstalkbitcoin.com/bitcoin-and-the-three-laws-of-robotics/)

[http://letstalkbitcoin.com/dacs-that-spawn-
dacs/](http://letstalkbitcoin.com/dacs-that-spawn-dacs/)

The use of the word "corporation" is kind of wonky to me and the whole concept
took me a little time to wrap my head around it, but these are the types of
things we can expect to see with blockchain technology and hopefully IMO
eventually the abolition of states worldwide.

~~~
fragsworth
> hopefully IMO eventually the abolition of states worldwide.

These kinds of comments do nothing to help promote bitcoin as a legitimate
technology and only increase the risk that cryptocurrencies become generally
illegal to use. I'm really disappointed with the anti-government garbage
spouted by so many people in the community.

~~~
praxeologist
Bitcoin is inherently libertarian: [http://rudd-o.com/archives/bitcoin-
without-the-politics](http://rudd-o.com/archives/bitcoin-without-the-politics)

If all the libertarians who are into bitcoin suddenly cut down the rhetoric,
you think that this will "make bitcoin legitimate technology"? What does that
even mean? You mean that governments are going to suddenly be more friendly to
bitcoin users? That seems like an incredibly naive belief, sorry.

In general, it is disappointing that people still hold to backwards and
primitive beliefs such as democracy and state worship. Statism is
institutionalized violence and injustice writ large. I totally understand how
your perspective on this can be different, but please understand that what you
are calling garbage I see as a call for justice.

~~~
XorNot
Yeah people having a say in their government - how silly. We should simply let
the free market determine policy. See the richest and strongest will decide
what our social, economic and foreign policies are and it will be a golden age
of serfdom!

~~~
praxeologist
I don't want to play a role in an ongoing crime... but I think that is naive
to believe you even have a say in your government. You have a greater chance
of dying in a car wreck on the way to the polling station than your single
vote swinging an election. Democracy really doesn't work unless you have the
option to opt out and it is at a very small scale where you are actually able
to judge the character of the people to choose from.

What you are advocating is what you then go on and complain about; it's total
akrasia. You are suffering from Stockhom syndrome in believing freedom from
your serfdom would be serfdom. Democracy is a very persuasive idea because it
seems like you have choice, but then in reality the political elite rule.
2/3rds of Americans oppose the Iraq war; would you say this is an example of
having a say in policy?

Governments are, across the board, a failure and a drain on society. Every
service, including things like providing a "social safety net" can be better
provided through market processes.

~~~
snowwrestler
You really need to review U.S. history before you write stuff like this. The
past 100 years is full of examples of citizen action overpowering moneyed
interests, including huge movements like labor, environmentalism, and civil
rights. Each of these movements grew public support until it was large enough
to leverage government power to achieve their goals.

You're right that each person's vote, by itself, is only a tiny drop in the
bucket. That's not a flaw; that's the whole point of a democracy: it biases
the government toward action that will please the most number of citizens. The
lone whims of one person should not carry the day in a democracy.

For example: the Iraq war was very popular when it was started. Then, when it
became obvious what a mess it was, and become unpopular, the American people
voted for a change in government. Now we're not at war in Iraq anymore.

~~~
praxeologist
I know history bud, want to get into some detail? For every one big name
movement like you are talking about I can name 10 (probably 100+ if I had to)
examples of the US government beginning to encroach on new areas to interfere
with.

The fact that you mention labor as some sort of success shows that you buy
into the common narrative and haven't really looked at the situation. The 2002
study by Vedder and Galloway put the damage to the economy over the previous
50 years at $50 trillion dollars by unionism. Unions increase wages where they
can restrict entry or have special privilege to intimidate employers but help
to reduce wages overall.

Libertarians aren't actually opposed to unions if all a union is doing is
organizing to protect rights of workers, but that isn't in truth how they
operate. You can find more details on the study I mention and many more
reasons why unionism is destructive here:
[http://mises.org/daily/1685](http://mises.org/daily/1685)

The US government is also the worst polluter on Earth, yet somehow you believe
it has accomplished some triumph of environmentalism?:
[http://ivn.us/2012/04/18/the-number-one-worst-polluter-on-
ea...](http://ivn.us/2012/04/18/the-number-one-worst-polluter-on-earth-is-the-
u-s-federal-government/)

The government fails in its own task of enforcement in notable cases like the
BP oil spill. There was legislation before this spill limiting liability for
accidents like this. I think this was then sidestepped because of the severity
of this spill, but it is an example of legislation actually protecting
corporate interests and aiding their ability to pollute. When companies
pollute, more often they end up paying a fine to the government rather than
compensating victims. The common law mechanism whereby people can sell off
their claim to a tort, no matter how minor, has been destroyed in modern,
authoritarian systems.

The US government makes illegitimate claims to large areas of land and then
takes money for leases on mineral/timber/other rights. This temporary
ownership creates an incentive problem. When a company has no long-term stake,
the tendency is to strip mine or clear cut a forest. Where instead a system of
ownership is upheld, you see a tendency to have more sustainable treatment of
land because there is a stake in the long term value of the property.

The same sort of structural incentive problem exists for democracy in general
vis a vis systems like feudal monarchies (which, note, I do not advocate still
either). When a king permanently "owns" his territory, there will often be
some restraint in over-taxation or overly aggressive military adventures
because the king is interested in passing on the kingdom to his heirs. In a
democracy, temporary rulers have the incentive to make use of their power and
"get in while the gettin's good".

The Iraq War may have been popular when Bush started the new salvo but this
was based on false information crafted by this administration in order to
plunge them into war. It's a problem that the system you advocate even puts a
person in the position to manufacture terror like this. Public sentiment was
at 2/3rds+ since at least 2006 against the Iraq War and the pullout could have
happened swiftly long ago. The idea that these politicians are basing military
policy on public opinion is ludicrous. You are clearly totally blinded by your
worship of democracy. BTW, there are still at least 20-25K military and
contractors in Iraq.

Look at the history of opinion on Afghanistan:
[http://www.gallup.com/poll/116233/afghanistan.aspx](http://www.gallup.com/poll/116233/afghanistan.aspx)

That's 65-82% opposed every year except the dip to 54% in '05\. I guess in
your world of doublethink, this would be an example of democracy accomplishing
the "pleasing of the most number of citizens".

Elections are mere popularity contests. These politicians do not represent you
in the same way I would represent you if you handed me $5 and sent me to the
store to get something specific. At times, politicians will react to public
opinion or there are very slow movements towards ending their criminal
policies like the Drug War. If pot was legalized at the federal level, would
you add this to your list of great accomplishments? I'd list it as a failure
due to the years of unjust policy previously, the millions of captives kept
for victimless crimes now, the families and neighborhoods which would still be
destroyed by the prohibition on other drugs.

Your statist ideology is outmoded. Information now flows more freely and the
crimes of states will be laid bare. Once the "great western democracies" fully
implode, people will question these types of systems and look for new
solutions. That is what we are building now with things like blockchain-based
tech, libertarian legal scholarship, etc.

~~~
snowwrestler
I didn't say unions, I said labor, which encompasses laws that are still
popular today like child labor laws, breaks to go to the bathroom and eat
lunch, overtime pay, fire exits and sprinkler systems, workplace safety,
minimum wage, etc.

The poll numbers you cite on Afghanistan are public opinion of the country
itself. If you will look at the next chart down you will see that even in 2013
a majority of Americans do not believe it was a mistake to go to war there
after the September 11 attacks.

------
api
A bit reason I think Bitcoin is a fundamental innovation is that nobody quite
seems to know what it is. It's clear to me that it is not a currency in the
classical sense in that it does things that no classical currency does, but
it's also not just a payment mechanism or a wire service or anything else
simple and easy to define.

~~~
chipsy
I agree; the narratives surrounding Bitcoin examine small facets and magnify
their importance. It is like the "blind men and the elephant" parable.

------
emin-gun-sirer
Let me use this opportunity to point out [http://virtual-
notary.org](http://virtual-notary.org), an online witness to facts that can be
checked online, where these facts are recorded in the Bitcoin blockchain.
These go beyond the types of document proof of existence cited in the article,
and can cover facts such as exchange rates, DNS address ownership, WHOIS info,
weather conditions, housing prices, employment status, etc.

This article describes the usage scenarios in detail:
[http://hackingdistributed.com/2013/06/20/virtual-notary-
intr...](http://hackingdistributed.com/2013/06/20/virtual-notary-intro/)

------
bachback
Anyone interested should study the script system and Namecoin.

"Restricting transactions to such a simple form would restrict Bitcoin to
exactly the possibilities traditional currencies had (though decentralized).
However, Satoshi saw the potential to allow it to do more, and introduced a
script system. He wasn't around anymore to bring it to practice, but Mike
Hearn wrote down some of the things Satoshi had in mind on the Contracts page
of the Bitcoin wiki."

------
jere
>This realization raises interesting questions about the political motivations
of Satoshi Nakamoto in presenting their creation as a digital currency when
they must have known that they had solved this far more important general
problem.

Why oh why must every mention of Nakamoto imbue him/them with certain
politics? We're led to believe Nakamoto is a subversive anarcho-capitalist
libertarian who wants to overthrow governments.

There are certainly hackers driven by ideals and politics (e.g. rms), but
there are plenty more who solve a problem _just because they can_. The Morris
worm wasn't published in order to promote anarchy. Quicksort wasn't invented
as a metaphor for classism.
[http://dl.acm.org/citation.cfm?id=358561](http://dl.acm.org/citation.cfm?id=358561)

It seems far more likely that Nakamoto saw an existing problem, solved it in a
clever fashion, and published the result.

~~~
richcollins
Pretty sure Satoshi had political motivations:

[https://en.bitcoin.it/wiki/Genesis_block](https://en.bitcoin.it/wiki/Genesis_block)

~~~
jere
Perhaps, but that's kind of thin:

>This was probably intended as proof that the block was created on or after
January 3rd, 2009, as well as a comment on the instability caused by
fractional-reserve banking.

------
ggchappell
So, BTC might fail as a currency, but succeed as -- say -- a basis for the
kind of persistent URN scheme that the W3C & others have been mumbling about
for a couple of decades. An interesting thought.

------
gremlinsinc
One of the biggest problems with bitcoin as a currency that i see, is that
everyone still deals in usd amounts and comparison when offering products,
when webhosting is a flat btc price regardless of market fluctuations and when
people buy and sell items based on their btc price without first translating
it into a fiat currency equivalent, that is when bitcoin will truly be
mainstream.

------
lifeformed
Sorry to be a bit off-topic, but is anyone else's browser having difficulty
rendering the text on this page?
[http://i.snag.gy/SK7NX.jpg](http://i.snag.gy/SK7NX.jpg)

I've noticed this on a few sites, and I'm wondering if the problem is on my
end, or if it's a problem with the website.

~~~
coderzach
You're probably on chrome for windows, which does a really poor job of
rendering webfonts.

[https://code.google.com/p/chromium/issues/detail?id=137692](https://code.google.com/p/chromium/issues/detail?id=137692)

~~~
Joona
Do people not test their sites on the most popular browsers?

(I have the same problem with Opera 12.16.)

~~~
coderzach
I think the issue is that most front-end developers test on chrome for Mac
first, and then assume that it works the same on windows.

------
T-A
Naive question from total outsider to both contexts, popped up while reading
this: has there been any speculation that Aaron Swartz = Satoshi Nakamoto, or
are there good reasons to exclude it?

~~~
SwellJoe
It's not a theory I have ever heard, and I think there's sufficient reason to
rule it out. Swartz never really professed an interest in currency or monetary
policy, etc. that I am aware of. He was an extremely prolific individual who
worked on many very public projects. Transparency was clearly one of his core
values, and never exhibited more than passing general nerd interest in
cryptography, anonymity, or the technolibertarian ideal that seems to have
been a driving force for Satoshi. Also, he was already pretty damned busy in
2008-2009. I doubt he would have had time to do the huge amount of design work
that went into Bitcoin without somebody noticing what he was working on.

So, Aaron was a brilliant dude, who did a lot of cool stuff. I just don't
think the personality matches up, at all, with whoever created Bitcoin. If
Swartz created a cryptocurrency, which I don't think he would have, I doubt it
would look like Bitcoin. (There's also several people much higher on the list
of "might be Satoshi".)

~~~
bachback
Who are on your list?

Nick Szabo. Mike Hearn. Hal Finney. Wei Dai.

~~~
ninguem2
Nick Szabo and Wei Dai appear to be mythical creatures just as much as Satoshi
Nakamoto and therefore saying that, say, Szabo is Nakamoto provides no
information. The other two appear to be real people.

~~~
arundelo
I believe these are both meatspace identities.

Nick Szabo is a "former law school professor at George Washington University"
according to Wikipedia.

Wei Dai has attended SIAI/MIRI workshops in person:

[http://lesswrong.com/lw/ig9/outside_views_and_miris_fai_endg...](http://lesswrong.com/lw/ig9/outside_views_and_miris_fai_endgame/9noj)

("Wei Dai" could be a pseudonym but if so I haven't seen him mention that on
Less Wrong.)

