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"Code is governance" -- the article does support the idea of cryptocurrency as fiat money because the laws, in this case, are the code. The developers and miners, no matter their good intentions, do hold power over the currency that everyday investors do not have. No matter how egalitarian the distributed ledger set up looks on paper, we'd be remiss to think the power structures behind cryptocurrencies are so radically different from the fiat currencies developed in the past and used at present. With time, especially if the cryptocurrency bubble pops, we'll be sure to see those structures made more explicit than they seem now.



Yes, that's the distinction. With Bitcoin, a codebase prevails if it attracts enough miners, merchants and users. Those parties in aggregate have "fiat power".

It's arguable that fiat power for each state similarly reflects preferences of banks, merchants and users. However, some of us doubt that money policy typically favors users.

With government fiat, forking isn't really possible, without a revolution, no matter how unhappy users are. But with Bitcoin etc, that is possible.

It's a common misconception that miners drive Bitcoin policy. In my opinion, miners are parasitic. When I first started using Bitcoin, there were virtually no professional miners. Users did all of the mining, locally. So difficulty was very low. Now, with so many professional miners, difficulty is very high. However, blocks get solved in 10 minutes on average, just as they did in the beginning.

Anyway, it's true that Bitcoin is a fiat currency. But governments aren't in control, and that's a good thing.


So you're telling me that government money, where everyone gets a say in policy through republican institutions, is worse than a system where the most wealthy users get more control of the currency. Um, okay. I guess the oligarchy is more explicit in the cryptocurrency.


If you really think you have a say in monetary policy, I suggest you read Barofsky's Bailout.


You have a say in it in principle. In contrast, you have in principle no say what others do with their private property. That's the difference, and it's an important one.


It's interesting how so many people want government to be run like a business while hating it most when it runs like a business. Business is opaque, secretive, with no oversight and loyalty only to the bottom line. Well run government institutions are none of these things.


You can't control what miners do, sure. But you can fork code that changes the game for them.

Contrary to all the noise, Bitcoin does not need commercial miners. They are parasites. Allowing them to dominate mining was a serious bug. It's users who should be mining.


I mined a little in the early days, but it kept my CPU pinned into the red and frankly all the people online patting themselves on the back on the size of their mining operation were offputting. I'm interested in cryptocurrencies because of their potential to liberate the mass of people from financial bullying by governments and corporations, not as a speculative vehicle to easy riches.

This will seem pointlessly ideological to most people, but I'm struck by the fact that the bitcoin blockchain is held up as 'proof of work.' There's no work involved besides that to understand the system initially and any code contributions made to the source tree. The actual calculation is carried out by machine. So mining is basically a game for capitalists to invest in industrial hash table production. People who learn about it later and comprehend it in full but don't have any large sums of capital to invest in mining equipment or as a speculative investment don't really derive much benefit from it.

Don't get the idea that I consider it a bad thing because of this - its mere existence speaks to the fact that we've run out of accessible natural frontiers where the curious might stumble upon a fortune, and so we are forced to invent them.


It's not about need. If it is profitable to mine, professional miners will exist. You can't create an incentive structure and then call it a "bug" when somebody optimizes for it.


So you can create a disincentive for non-user mining.

What would be the downside?

This is supposed to be a distributed system.


What kind of discouragement do you have in mind?


One could limit share of hash power. Perhaps by IP address. Or through blockchain links to previously-solved blocks.

The Tor Network, for example, has mechanisms for excluding bad participants. There's the bad exit flag, for relays that snoop traffic. Relays that harvest onion hostnames get banned. So do relays that attempt traffic analysis.

There's even a policy of discouraging new relays in commonly-used AS. There's no exclusion mechanism. But I don't see why there couldn't be, if there were too much concentration.

Edit: See https://trac.torproject.org/projects/tor/wiki/doc/ReportingB...


Although I still see it as a difference, I think it's good to remember you DO have a say in 'private property' .... there's nothing magical or natural about private property. Private property is whatever society/the government says it is.


It’s not really government money though, is it? It’s bank money.


I don't think that it's necessarily the wealthiest users. There could be a fork with lots of interest, no particularly wealthy users, and no non-user miners. One could probably impose the "no non-user miners" rule in code.

But even then, I prefer it, because with enough interest, it can always be forked. And that's much easier than changing governmental monitary policy. That is clearly dominated by the wealthy.


Just download a mining program and run it on your computer. Voilà, you now have "a say" that is exactly equivalent to your say in the policy of republican institutions.


Don't be silly, that's like saying that incorporating a one-person business automatically puts you on-par with the lobbying power of major industries.


No, it's as silly as suggesting that a single voter has any say what so ever in the policies of republican institutions.


1 vote for a poor person = 1 vote for a rich person (ideally). In mining, the more mining power you have, the more "say" you have. One stays constant, the other scales. Don't you think that is an important distinction?


In a way it's a pretty naive view. The rich person will have more influence over other people that will give him effectively more than 1 vote.


OP's point is the big mining rig will have more influence than the numpty rig one boots up on their laptop.


Sure, each has one vote.

But it's not your one vote that makes any difference, It's how many votes you can influence. And that's all about privilege and money. Campaign funding. Lobbying.


So you're saying, cryptocurrency and fiat currency are the same, because you don't have a meaningful say in either one, unless you have a lot of money. Yes. True.


>where everyone gets a say in policy through republican institutions

You clearly have no idea how money is "created" or how the Federal Reserve works.


In the specific case of the united states, the money is controlled by the Federal Reserve which is a private bank.


Most private banks aren't established by an act of Congress and run by people appointed by the President and approved by the Senate.


No, but in order to get access to the Fed, the bank link systems and so on and so forth, they need to get government approval.

In order to be bailed out, which is a necessity, they even need contacts as high up as the president.

And even that is ignoring the long history of the government making specific laws specifically to benefit or destroy a single bank.

Nope, no government role here at all. This division simply results in privatizing the profits, nationalizing the losses in trade for having politicians name the owners.

it is if you want to be a reserve bank of course, which is why anyone wants to have a bank in the first place.


> the Federal Reserve which is a private bank

Not true. Literally by design actually. This is a common misconception about Central Banks and it's one the US system makes worse by being explicitly public but functioning extraordinarily similarly to a private company.

This particular structure was actually a compromise between various other possible implementations.

But seriously, it's not a private bank. Repeating that just makes you looking like you get your information from websites that put their titles in all-caps and have dodgy grammar.


Your assertion depends on what you mean by "government". There are groups of people who are in control. The ability to fork peacefully is not unique to Bitcoin--see the governments of the UK, Canada, and Australia. And given high enough stakes, there's no reason to believe that the interested parties in the Bitcoin blockchain would not resort to violence to protect their interests from forkers who would impact their profits.


Forking is totally possible for states. Different factions are constantly vying for power and many revolutions are quiet shifts that occur behind the scenes. This is very true in complex democratic republics but is even still true in monarchies and dictatorships. Monarchs have power by consent of a whole hierarchy of people and they are subject to overthrow or silent sidelining.

Gold is still the closest thing to a true non-fiat money but even gold has a value based on a consensus and any monetary form of gold will typically come as some kind of coinage for convenience and quick assessment. You can't eat gold.

Money is a social construct.

You could argue that crypto currency promises a form of fiat that is more transparent, auditable, accurate, and open in general but IMHO that remains to be seen in practice. The shitshow that is most exchanges and the majority of flimsy ICOs is not encouraging. All economic systems have corruption and dumb sheep like speculation but this is ridiculous.


Ethereum's upcoming Proof of Stake mechanism is supposed to put more power into the hands of investors compared to miners.


That doesn't really help. Early adopters get huge sums of ETH compared to those who join after the price rises. The distribution of coins is massively unequal.


In the short term, yes. Not in the long run as early investors sell their coins.


This is a big misunderstanding of bitcoin, and if you believe it I can understand why you might think bitcoin is not special.

The truth is that the everyday user gets full control over the law of their currency simply by running a full node. Your node will reject any transactions that do not comply with the rules of your node.

The soveirgnty of bitcoin comes from knowing that the devs can't force an update upon you or the network, if you do not consent you can always reject the change.


Without massive investments in ASIC's you have effectively zero influence. Until you have 51% of the hash power you can't make any changes as you simply get ignored unless you follow the exact same rules as the majority.


> Until you have 51% of the hash power you can't make any changes as you simply get ignored unless you follow the exact same rules as the majority

This is exactly their point. This applies to everyone and all organizational entities.


Well, "whoever is in power makes the rules" applies to everyone and all organizational entities, too. In this case, we're talking hash power, but same thing, isn't it?


A huge amount of hashpower was behind the desire for bitcoin cash, and that didn't work out.

Think some underestimate firstmover advantage and end-user inertia.


Actually, even with 51% of hashpower, you cannot force all the other nodes to forward or propagate your invalid blocks if you decide to start changing the rules.

This is a common misconception about bitcoin. Every single node on the network validates every single block, not just miners.


Thank you. I see this argument pop up on HN all the time and can't understand why it's so common. You'd think if a 51% attack were such a threat to Bitcoin it would have at least been attempted by now, after so many years.


Why do you think that?

Being able to fake blocks isn't significantly more useful than being able to double spend. I don't see why that would be the tipping point.

The reason you don't see these attacks is that they are difficult and very expensive and they would ruin the value of the coin so you can't even profit off it.


That is precisely my point


The point is not that you can set rules, it's that you can prevent other people from changing the rules without your consent, even if they are the majority.

You still have freedom to pick the rules to a small degree though - you choose which blockchain to use. Don't like bitcoin? Try bitcoin cash/ethereum/ethereum classic/litecoin/dogecoin/Monero/siacoin/decred/etc etc.

A common misconception is that miners can pick the rules, but they can't. They can only choose to enforce additional rules (which is powerful), they can't ever violate the original rules.


Wouldn't you be creating your own fork? A fork of one where peers would then reject every message from you?

No man is an island, unless he wants to completely devalue his bitcoin.


They wouldn’t reject messages from you so long as they are valid on their nodes.


Right and thus consensus exists. And that consensus consolidates to a single set of rules (and any major deviations result in forks).


A 51% plutocracy is still a form of state governance that qualifies as fiat money and effectively can destroy the value of your coins if you resist.

It is really no different than the government fining you for disobedience.

There are philosophical theoretical arguments against this, not pragmatic ones.


A 51% attack means a lot of bad things can happen to bitcoin. Its value would probably crash if an individual got 51% of the power just because it is no longer truly decentralized, even if they don't abuse that power.

Bitcoin was made with the idea that a 51% attack would be unlikely and unfeasible; as long as that holds, I'm not sure what value your comparison has. You might as well make a comparison to any other possible disaster. ("A solar flare is a form of state governance that will destroy the value of your coins...")


The top four pools have ~55% of the total hashing power. They could orchestrate a 51% attack with a conference call. As we've seen with the BTH/SegWit2X fiasco, Bitcoin is anything but democratic or decentralised. A cartel is every bit as dangerous as a monopoly.


And what exactly do you think a 51% attack can do? I'll tell you what: censor transactions and make double-spends.

Not exactly end of Bitcoin danger, is it?


If someone had unrestricted ability to double-spend, getting around any attempted countermeasures, they would be able to turn every exchange into a money printing machine. It's hard for me to see how it wouldn't be the end of Bitcoin.


> A 51% attack means a lot of bad things can happen to bitcoin. Its value would probably crash if an individual got 51% of the power just because it is no longer truly decentralized, even if they don't abuse that power.

That already has happened which is why people forked. You can live in denial of that fact if you wish but a minority "lost" the "vote" and forked Bitcoin.

http://fortune.com/2017/08/07/bitcoin-cash-bch-hard-fork-blo...

The BTH/SegWit2X fiasco shows Bitcoin isn't "more" decentralized than an oligopoly, an oligarchy, or a plutocracy.

> Bitcoin was made with the idea that a 51% attack would be unlikely and unfeasible; as long as that holds, I'm not sure what value your comparison has. You might as well make a comparison to any other possible disaster. ("A solar flare is a form of state governance that will destroy the value of your coins...")

The fact pro-bitcoin people swear up and down that isn't the case doesn't change the fact that they are effectively the Bitcoin state and that 2-3 of them + a number of smaller people can effectively "vote" to pass "laws" that are enforced against your BTC regardless of your wishes.

Simply because they don't outright steal your BTC doesn't change the fact you have to comply to retain the value of your BTC.


What does bitcoin cash have to do with a 51% attack? Forks are a different type of thing than 51% attacks.


Why would someone destroy all the value of their money and all the money power to mine just to troll?

Sure a government might do that, but they could point a gun to every full node owners head and tell them to stop it just like China did. It would also be much cheaper.


Step 1: purchase, borrow, or steal enough hash power to reach 51% for a short while

Step 2: use this power to force enough transactions to make yourself rich enough to keep 51% power indefinitely

Step 3: profit


51% hash power lets you doublespend coins. It does not let you steal from wallets or change the block reward rules.


Which is sufficient to allow you to do what I suggested. Spend coin once on paying for everything, and again on yourself to keep all the money to spend again later.


So you become like a government, able to print more currency at will?


According to this definition, is there any possible form of widely-used money that isn’t fiat money?


> According to this definition, is there any possible form of widely-used money that isn’t fiat money?

There used to be 100+ years ago such as gold and silver coins where if you were able to remove them from Country A to Country B, then Country A could no longer enforce such financial penalties against you. This is what many of the cryptocoins _wanted_ to be.

It needs to be a hard currency that leaves you immune to monetary policy and fines unless you are physically within the jurisdiction of the country.




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