I would suggest also taking a look at the annotated version of the whitepaper on Fermat's Library:
I wrote some of the annotations and tried as much as possible to make it so that this annotated version would provide a motivated reader with all the resources needed to truly understand the bitcoin protocol.
Michael Nielsen's blogpost about Bitcoin (http://www.michaelnielsen.org/ddi/how-the-bitcoin-protocol-a...) is also a great read.
Found it: https://medium.com/cryptomuse/how-the-nsa-caught-satoshi-nak...
there is even a faucet (pretty much the site sends you a few pennies worth of BCH for free) and instructions to setup a wallet.
When I finally (recently) did I was dumbstruck by its simplicity.
This was a big lesson for me: I should always at least try to understand these big ideas even if deep understanding will probably elude me.
Along similar lines (complex topics explained beautifully and simply by their creators), I recommend Relativity: The Special and General Theory by the man himself. It's a great explanation of relativity without the need to have a strong math background. He explains it in the form of thought experiments, as only he could do. "What if you were in a cage in space with a rope tied to the top and it was being pulled upward by a giant at a constant acceleration (simulating gravity)? How would you perceive the world?" (Spoiler: This is gravity.) "What if you were on a spinning disk and had a ruler and tried to calculate pi?" "What if you were on a train moving really fast and two lightning bolts struck at the same time?"
I read one of Albert Einstein's popular science on the same topic and folded when a completely paradox statement was justified by saying, welp you'll surely agree on this.
Like we don't already have enough problem with trolls on other sites, we now have them on HN. Sigh
So it's a theory, but one could say that it is much more useful than Bitcoin.
Btw, Bitcoin also works based on mathematical theories. If someone were to prove P = NP, Bitcoin doesn't work any more, because I can now steal all your money.
The current belief is P != NP, that's why people trust bitcoin, and crypto in general. But it's still a theory.
When I first started learning about Bitcoin, I automatically assumed that the whitepaper would be filled with all kinds of fluff like most other research papers, so I never read it.
Instead I tried to learn from all the "Learn Bitcoin in 10 minutes", "Build your own Blockchain in 200 lines", and all that stuff, all of which are nothing more than a shallow scraping the surface type of pop-sci content.
The problem with these Medium articles and "intro to Bitcoin" posts is that they're trying too hard to abstract out something that's already simple, that the abstraction itself is much more complex than what it actually is. Not to mention the fact that after reading all that stuff, all you come away with is some abstraction, not the actual Bitcoin.
Anyway, so I thought why not just take a look at the whitepaper. And I was blown away. I've never seen a "research paper" with so little fluff. The whitepaper helped me understand Bitcoin much better than all the weird analogy intro blog posts that litter the web.
I recommend anyone to just start from the whitepaper.
OT: This paper is produced using a wordprocessor; my PDF reader says it is produced by OpenOffice.org 2.4. The word spacing and justification of paragraphs makes me think that this is not LaTeX, nevertheless it looks professional. Tex experts have also come to this conclusion . But is it the original PDF or someone's version/copy of it?
 : https://tex.stackexchange.com/questions/306754/was-anything-...
If anyone wants to collaborate on a TeX version, let me know!
Unfortunately there is no reward for researchers taking the time to write tutorial and survey papers that give more readable explanations of particular lines of work.
This is really great, I didn't know about this.
To be fair, even Satoshi apparently didn't understand the applications of blockchain beyond currency.
> The phrase "smart contracts" was coined by Nick Szabo in 1996, and reworked over several years. Szabo's first publication, "Smart Contracts: Building Blocks for Digital Free Markets" was published in Extropy #16, and then later reworked as "Formalizing and Securing Relationships on Public Networks."
Also, your prior shouldn't be too high: although Szabo is well-known from his writings now, they didn't come out of nowhere. He previously worked for Agorics, Inc., which was founded to develop these ideas: https://e-drexler.com/d/09/00/AgoricsPapers/agoricpapers.htm... which I think of as more fundamental than Szabo's smart-contracts paper. (Admittedly I never finished slogging through that one.) If you think of smart contracts as emerging from nowhere then it probably seems more likely for Nick Szabo to be the lone genius behind it all.
The only thing that people should recognize is that it doesn't really try to explain the game theory behind it. It is a technical paper. When it all sinks in, it becomes clear that it is pure genius, but that certainly took me a while to grasp.
I read the paper about 2 years back, after reading Nathaniel Popper's book 'Digital Gold...' which presents the history of cypherpunks, leading upto Satoshi's white paper. The book was enjoyable to read. And the paper's brilliance was stunning.
That said, when I think of it deeply, it does seem to me similar to pyramid schemes. The early adopters have a unfair advantage.
Also, its better that an alternative to proof-of-work is found. Although the argument is support of that, is that, it perhaps takes more energy to sustain the present financial system, the base of which Bitcoin intends to replace.
So I find myself in a curious position of being in the Blockchain camp, and unwillingly though. Which is because people who typically are in that camp, say the tech is good, but Bitcoin is not. But I believe Bitcoin by itself is a fantastic and disruptive thing. Without that app there is no platform (blockchain) evolution.
But of course Bitcoin has flaws, and we could be in a big bubble. But no half baked Tulip bulbs analogy please+.
Another flaw which I find with Bitcoin is the ownership is very fragile, compared to real world ownership. In these days of phone cameras, all it takes is an accidental photo of my secret 12 words, for my satoshis to get compromised. Or there is no alternative, if I lose my private key. Real world banks have ample ways of addressing the identity and tend to offer more robust possession safety.
+ - I have not seen that analogy on HN, thankfully, but its there every where. Yesterday, I saw a respected VC making it on LinkedIn.
That's absolutely true but consider this: early adopters always have an advantage, in fact just being born earlier than someone else gives you an advantage. Family wealth, real estate ownership, rent seeking, tenure and so on are all linked because of this.
Largely from the same people who complain most loudly about inequality. You can lead the horse to water, but you can't make it drink...
Explain please how it would be possible to create something like bitcoin which does not in some way or other favor early adopters over later ones, I really can't see it so this is a genuine question. Not 'pre-mining' is roughly equal to simply not adopting it at all. I see it analogous to a founder not believing in their product to the point that they will not use it. Of course 'Satoshi' could have not pre-mined as much but who is to say whether those coins are even accessible today?
And anybody that joined in later than that already lost that early adopters advantage compared to those that joined earlier.
Which probably means that (wild hyperbolic assumption following) if you haven't done anything with it so far you'd look at me and my miserly number of coins as an 'early adopter' whereas I was - and still am - pretty skeptical about bitcoins long term viability.
I didn‘t say that there wouldn‘t be any favoring towards early adopters... a „better system“ will by definition always favor early adopters at least through efficiency gains accrued through the usage of the system over users who have not yet adopted. BUT bitcoin is crazy in terms of „value“ increase that is not related to any real gains in practice. People buy tokens because people invest money to find tokens because people buy tokens. And because everyone seems to be „making money“ from that things just continue... It‘s like with the rat who can control its own cocain supply...
So what I meant to say is - this specific system design is madness!
DLT in general is very interesting and I am playing around with some ideas regarding currency pegged tokens that increase in value if empirically verifiable achievments/improvements have been made. The goal is to create common-interest communities that are rewarded for realizing real-life impacts. So even people not participating profit. People who join in profit a little more. The goal is to have sustainable growth and predictable prices.
With a proper 12-word phrase, each is randomly chosen from a list of 2048 words for 11 bits of entropy per word. That's 132 bits of entropy, which is not crackable. (With a 24-word phrase you subtract 8 bits for a checksum; I'm not sure about the 12-word format, but 124 bits of entropy isn't crackable either.)
Not really; it only serves to validate the beliefs of people who already agreed with the basic premise that money is something that can exist without central authority. That view was already common long before the Bitcoin paper. Plenty of libertarians believe that money is an emergent phenomenon of free markets, something which arises on its own as the market converges on a common currency as its medium of exchange.
On the other hand, if you are aligned with the mainstream of economics, the entire premise of the paper is easily dismissed. In that view, money can never be separated from banks, the paper is basically nonsense.
let me fix that for you: "Money is an emergent phenomenon of markets, markets are a fundamental feature of libertarianism, therefore money has everything to do with libertarianism."
So, did banks invent gold? Or did gold give rise to banks?
How can banks even exist in the first place unless we already have a common medium of exchange (gold), which can deposited into said banks?
The problem arises when depositors can’t redeem their medium of exchange for the commodities they originally deposited, or something of equivalent value.
By the way, I’m convinced Bitcoin will not function without credit instruments, just like was the case with gold. I’d argue there’s a huge difference between redeemable and irredeemable credit instruments, though. The latter being an artifact of government regulation.
Sort of; at that time it the boundaries were less clearly defined between what was governmental and what was private. The basic economic structure was for a large temple to store the various goods people produced, and to give the goods out to people as necessary. For example, a farmer would deposit grain, and the grain would be redistributed throughout the city-state; the farmer would receive other things from the temple, like clothes and tools. The record-keeping served two purposes: to keep track of what was available for distribution, and to keep track of who was contributing what. This was the "palace economy:"
The bible makes reference to such a system in the story of Joseph (which is ancient enough that palace economies still existed when the story was first written), who was the administrator of such a system in Egypt:
"I assume people voluntarily deposited commodities in exchange for a common medium of exchange."
Not originally and not universally. It was more like a system of 100% taxation in some of the early palace economies, where everyone deposited everything they produced with the temple, and then received things as they were needed. You were basically not allowed to live in the city without contributing something (he who does not work shall not eat), though a person could always work for the temple itself e.g. as a sacred prostitute. Of course the specific laws and economic organization varied from city to city, and plenty of people lived far outside the cities and had their own ways to manage goods; the specific details varied with different places and periods of time.
What you received for your deposit was often just an update to the temple's ledgers clearing a debt you owed the temple (i.e. indicating you paid your taxes; often referred to as "offerings" in the biblical legal code) and possibly offset future taxes. If you were unable to make good on that obligation, your land could be seized and you could become a slave until the king declared a general amnesty (not uncommon in the ancient world; the biblical legal code requires slaves to be given amnesty after 7 years of service, and a similar amnesty provision is in the code of Hammurabi). The story of Joseph also indicates that this exact scenario had played out under Joseph's administration in Egypt: the farmers were forced to turn their lands over to the government during a famine (I am not suggesting that the bible is historical; rather, in ancient Israel at the time that story was written, people were familiar with the situation).
As the economies became better developed and the scale increased, money (i.e. a single unit of account that serves as a common medium of exchange) and markets (i.e. trade between inhabitants of the same city) began to replace the temple economy system, at which point private banking enterprises became more clearly defined. For example:
You can use this "nonsense" money right now. And nothing that any economist says about it can stop you.
PS. Every standard sized bitcoin transaction bar the past three days (and those will too), that people paid over 5c for has been committed to the blockchain.
Oh wait, no it didn't.
How's education costing these days, anyway? Healthcare?
If the person from Europe comes to US, goes to McDonald's, buys a meal whose price is denominated in USD with his European credit card and tells me he made the purchase with Euro, I would consider that a false statement. To me, he made the purchase in USD, his credit card company just will make the FX conversion for him and accept EUR from him when he pays his credit card bill.
Converting BTC to fiat currency on the spot is not really the same thing as using Bitcoin to pay your bills, any more than selling some shares of stock and using the money to buy a house is the same thing as buying a house using shares of stock.
People think that banks hold their money: they don't. The bank simply owes you your money but they don't hold it for you. What you get in return for your money is a statement from the bank what debt they owe you and a device to convert that debt into goods whenever you feel like it. That device is not the same as the underlying money, it is merely a proxy for your debt.
Which you'd find out about in a hurry if your bank ever went under and your card stopped to work.
All the cards I've seen when I looked into it a bit ago converted into fiat at the time of charging the card with BTC (ie, you send BTC, that got converted into fiat immediately (at pretty mediocre rates), and then you could use that fiat to purchase stuff or withdraw cash (at pretty mediocre rates, again)).
All the remarks about the skyrocketing fees can be cut short by pointing out that Bitcoin Cash (which is much closer to the Bitcoin described in the white paper than Bitcoin Segwit [BTC]) doesn't have this problem. Just like Satoshi Nakamoto said that the block size limit could be raised once blocks started to get full, the developers of the Bitcoin Cash software also say the current max. block size of 8 MB can be raised if the blocks get full.
Look at the price. Going bananas.
Not sure there's any response possible for that one. "I don't know how it works, but I think it's dumb."
> Now the transaction fees are exorbitant.
Every standard sized bitcoin transaction bar the past three days (and those will too), that people paid over 5c for has been committed to the blockchain.
Replace by fee is a thing, as long as the tx is unconfirmed it could be replaced. You're effectively saying the wait time is now 3 days unless you want to pay a fee of several dollars. So that rules out most transactions.
How do you pay for anything given those restrictions?
Then you don't understand how bitcoin works, so it's probably best you refrain from commenting on bitcoin architecture.
Lightning network hasn't been rolled out yet. It has nothing to do with our conversation.
(And of course, if I can pay my taxes and mortgage, how can anyone claim to have removed the central authority from money? Just like the gold standard, nothing would prevent a government from changing its mind about whether or not to accept Bitcoin for tax payments.)
Like I said, if you already believe that money can exist without a central authority, Bitcoin simply serves as validation. Otherwise it does not really change anything, because if you accept mainstream views of money, then the premise of Bitcoin makes no sense at all.
You think Bitcoin is a decentralized store of value? Tell that to all those people whining about the Mtgox bankruptcy proceeding, which is being resolved by paying for the lost BTC according to the price in Yen at the time Mtgox declared bankruptcy which is a tiny fraction of the current prices. When push comes to shove the "value" being stored is measured in fiat currency, with all its associated central authorities.
That is a gross misrepresentation and a misunderstanding of the point of a decentralized store of value. "All those people whining about the Mtgox bankruptcy proceeding" were not using a decentralized store of value. They were using a centralized broker that handled things for them. If they kept their own private keys and managed their coins directly, in a decentralized way, they would be still whole today.
Not sure what your point is, dollars(cash) can be stolen as well.
In other words, even if you think Bitcoin acts as a "store of value," that still does not make it "money" according to the law. You can have 1BTC or 100BTC, but the law is only concerned with the monetary (i.e. fiat currency) value at some particular time (not necessarily right now).
That belief structure is being challenged as we speak.
> Tell that to all those people whining about the Mtgox bankruptcy proceeding
The only thing that proved, is that you can't trust a bank.
Reading history is fun and can help one understand the present. I'd highly recommend it. "Debt: The first 5000 years" is a great book and a good start at trying to understand what money is/has been.
In itself, that always existed: it's called gold and gems. It's the most primitive store of value ever- modern economies were born when we went past it.
Name-calling cryptocurrencies "primitive" when they're clearly not doesn't lend a lot of weight to your argument.
> Name-calling cryptocurrencies "primitive"
I called gold primitive as a currency. And made an argument for bitcoin (specifically) being similar to gold.
Edit: btw, gold 500 years ago had the same exact property of bitcoin today: it was immediately transferable to anybody you were in contact with and could buy goods from. That didn't make it better.
not necessarily related to this thread.
for you own good. this is straight from satoshi. I know you hate him. I don't care.
If there is something Satoshi Nakamoto didn't seem to understand, is money. He designed a system that, being capped to a max amount of units, is intrinsically deflationary, and thus cannot serve as money. You don't transact with something that was worth x last year and 2x this year (not to mention 10k last week and 17k this week), it's just dumb.
It is hard getting out of the inflationary currency mind-set, I recognize that.
> it's just dumb.
It's great. The money put on my debit card card a few months ago means that the beers I buy today are 1/3 of the price of what they were relative to the time the money was put on the card. And you know what's better than beer? Good beer on special.
(be sure to play around with the "inflation adjusted" checkbox)
For that matter, would you even buy beer now, when you could instead invest the money risk-free in US govt. bonds so you could buy more beer in future?
However, with technological items there was always another side: the new ones were so much better than our current ones, ours were actually getting old faster, and we were driven to buy. The same won't happen with the other goods on the market.
The interest of gov bonds or of any other financial instrument afaik represents (and is proportional to) a risk of not getting repaid.
But you still purchased it eventually. In that sense a deflationary currency might change the balance of consumer spending vs saving in favour of more saving, but that doesn't mean a continuous downwards spiral in spending, it could just be a new equilibrium.
>Imagine how companies loved that, and imagine extending it to just everything, from food to housing.
Personally I'd absolutely love if house prices halved every year, as at the rate they're currently increasing it'll be a long time before I could afford even a tiny apartment anywhere near where I work.
>However, with technological items there was always another side: the new ones were so much better than our current ones, ours were actually getting old faster, and we were driven to buy. The same won't happen with the other goods on the market.
Would it be bad thing if it did happen to other goods on the market? If e.g. a 2005 car was better than a 2000 car to the same degree that a 2005 computer was better than a 2000 computer.
>The interest of gov bonds or of any other financial instrument afaik represents (and is proportional to) a risk of not getting repaid.
I was referring to https://en.wikipedia.org/wiki/Risk-free_interest_rate : "In practice, to infer the risk-free interest rate in a particular situation, a risk-free bond is usually chosen—that is, one issued by a government or agency whose risks of default are so low as to be negligible."
For the reasons I explained, and that apply only to a small subset of goods.
> Would it be bad thing if it did happen to other goods on the market?
That is definitely not decided by the currency.
> risks of default are so low as to be negligible
Those have also negligible interest rates, that is, ones that only repay you of the inconvenience of not spending your money now. You know, there's also a non negligible risk that you'll die before you get your money back.
You explain the importance of monetary policy, why the gold standard is problematic, why this means Bitcoin will not replace modern currencies, yet they don't really hear. They just don't like "The System" and want to subvert it.
Bitcoin is great, but it will not change 'the system'. It is a novel and ingenious asset, nothing more.
Gold has existed for thousands of years, surely this commonly accepted idea is based on more than one or two heavily flawed data-points.
Things do not endure merely because some social engineer has a tortured explanation for them he trots out at every opportunity to justify the construct.
Bitcoin is that systems reckoning.
Edit: do we know if economies really behave like this under these conditions? Are we really using a scientific approach on this? Or are we holding these models as divine truth?
The relationship between productivity plus inflation (both measurable) and economic growth is similar. It’s the bedrock of modern macroeconomic theory, which has largely been successful in both explaining and predicting the effect macro policy has on economic growth. The history of North American and Western European economies after going off the gold standard, and asian and Eastern Europe economies more recently all show these same correlations. Outside of external influence, economies which stray outside of the ideal parameters end up either stagnating (lack of investment) or experience dramatic boom-bust cycles (excessive poor investments). I’m on mobile but there’s a fair number of reports by Fed and other central banks justifying their choice of interest rate based on historical examples, and with the purpose of achieving certain productivity (capital investment) and price inflation (money supply). You could also pick up just about any macroeconomics textbook and chase the footnotes and references or spend some time on Google scholar.
So what you're saying is that it's all based on one data point, the second world-war. Gold existed for thousands of years, why is this incredibly bizarre period of history used as a proof of anything about the gold-standard?
Even worse, the gold standard wouldn't have collapsed if it weren't for the widespread use of fractional reserves banking, along with many government policies at the time that significantly worsened the situation.
The 40's, 50's and 60's were a period of unprecedented growth for the US, which was on the gold standard during that whole period, but no one tries to claim that the gold standard was responsible for that.
Decentralized can have many meanings. What is important is that you can transact with anyone without a third party having any say. For that 99% of all coins could be in the hands of a single person as long as there would be enough left for others to use.
> Add this to the obvious fact that the vast majority of new bitcoins mined are from china, which due to the scale of processing power now has a monopoly due to capital barriers
As long as they do not collude to destroy or disrupt the network it has no relevance at all.
> This has become nothing more than a pyramid scheme that adds no value whatsoever to the world. Not cryptocurrency as an idea, but bitcoin's current iteration and implementation.
As Bitcoin is practically useless due to high fees and congestion, I agree. But not because the reasons you gave.
I understand the premise of decentralised transactions, it's just that if the value of the currency can be manipulated by small group, it is not removing the need for trust, just shifting it...
> As long as they do not collude to destroy or disrupt the network it has no relevance at all.
I thought the point of decentralisation was to remove the need to trust others...
> As Bitcoin is practically useless due to high fees and congestion, I agree. But not because the reasons you gave.
AGREE! 7tps vs Visas 4,000tps with a peak capacity of 56,000 tps...
I think there's different aspects to "manipulated".
Large holders or exchanges can always manipulate the price, this is true for cryptocurrencies, the stock market and other things as well. Cryptocurrencies is however much less mature and more easily manipulated, but I foresee it to stabilize in the years to come.
If we're thinking of the miners to manipulate the coin I think the real genius of Bitcoin is they are heavily incentivized not to. All miners are heavily invested in Bitcoin's success so it's in their best interest not to destroy Bitcoin's value.
> I thought the point of decentralisation was to remove the need to trust others...
To be clear: what miners can do if they collude is try to revert transactions or block new transactions. If this happens it would be obvious and Bitcoin's value would be severely damaged.
There is trust yes, but it's more trust in the incentives behind Bitcoin than to specific miners themselves.
Lightning Network will far exceed 56,000 tps.
I disagree here. Gold is very expensive to get into and out of on a percentage basis, also requires careful storage, and is more difficult to exchange (manual pickup/delivery or insured registered mail). And yet it is worth eight trillion dollars.
In addition, believing that Bitcoin is dead for transactional uses because of temporary issues may be a mistake. It is simply software after all, and there are now hundreds of billions of reasons for the developers and users to get it right. My thought is that the alt-coins are simply testing “improvements” to the core technology, and if any updates are sufficiently proven and begin to threaten Bitcoin they will simply be stolen by Bitcoin’s users and eventually co-opt the alt-coin’s value due to Metcalfe’s law.
The problem is uncertainty if your transaction goes through, because it's practically impossible to predict if the fee you just paid will be enough, and that Bitcoin cannot support more users.
Gold does not have these issues. Gold also has other usage but what is the use of Bitcoin if you cannot move it?
> In addition, believing that Bitcoin is dead for transactional uses because of temporary issues may be a mistake.
Agree. I should say that Bitcoin is practically useless right now when the fees and confirmation times are skyrocketing.
This is because you're not only competeing against the transactions in the mempool but also against future transactions which may enter after you make your transcation and before more blocks are found.
The idea that money should be distributed more broadly than 1000 people controlling 40% of it sounds really nice, but it is missing the level of formalism that Bitcoin brings to the question of money.
Haha. Where do you get that? If a random guy says you so, don't believe in him.
You can pretty easily tell which cryptographers read the whitepaper and which ones did not. :)
If only I had given up “just a few hours” back in 2009...
Put another way, if you had sold your desktop and invested all the proceeds in Amazon stock in 1997, and held that stock until now, you would have a 66000% return; basically you would have become a millionaire by now. Of course you would have had to held those shares through two big market crashes and the recessions that followed.
On the other hand, how could anyone have known that 20 years ago Amazon was going to be the winner? You might have invested all the proceeds in some company that did not survive the dot-com crash. Likewise, in 2009 most people doubted Bitcoin; even today there is plenty of doubt about the long-term prospects. There is no point in kicking yourself over a failure to invest in a big winner, especially when that winner defies all the wisdom on valuations.
Nobody knows what the future fortunes of any venture will be, anyone who claims to have known the future success of Bitcoin all along is lying, or they would have sold their blood and worldly possessions to snag as many coins as humanly possible in anticipation.
They frequently seem so obvious after-the-fact, like "how did we miss this?" Like, here, stated in just a few pages, is an idea that so many smart people have been chasing after for years. And it's presented so well that it seems intuitive, when in reality it was a very difficult challenge.
If anyone is wondering, the answer is that the academics had blinders on in their search for a cryptographic solution to the problem of decentralized transaction ordering, an impossible thing. Satoshi's solution is to accept that impossibility and use economic incentives to achieve eventual consensus instead, and it turns out eventual consensus is good enough.
There was also some work on hashcash money, but it made the economically naive and inaccurate assumption that value of the currency must be linked to the cost of production, which is also explicitly not the case in bitcoin.
Reality check: nothing conclusive has been proven yet.
IFF we get to the VISA network level of activity, then it has "turned out" to be "good enough".
Less computational energy and the least amount if users produced the most coins (for minimal external capital input).
Satoshi could have used a linear curve anticipating network growth matching minting and computational increase, but instead choose to exploit late adopters.
Early adopters will attempt to psychologically exploit new users by selling their asset for more than the cost of production and acquisition.
This has directly created the situation where utility is not in use but in exploitation of passing the hot potato to greater fools.
ecash should not exploit new users.
Giving an award for Bitcoin right now would seem more like giving an award to the financial institutions that created securitized loan products before the housing crisis. Right now it seems more like a novelty technology that hasn't yet made itself relevant for long-term innovation except to generate excitement about it.
And you underestimate that you still can't give someone an award who does not exist to receive it.
> And you underestimate that you still can't give someone an award who does not exist to receive it.
Which is what baffles me. I thought we should be honouring ideas and the people who created/discovered them (whether or not they exist to receive the award). It's weird that people get more precedence over ideas. What's worse is that the prize isn't awarded posthumously as well!
It would justify a Nobel in software engineering, not economics.
If there was no new economics in Bitcoin, can you explain why the paper would be nominated for Nobel Prize for Economics in the first place? https://bitcoinmagazine.com/articles/satoshi-nakamoto-nomina...
It's quite clear that the nomination was rejected on flimsy grounds of not awarding the Prize for "unknown people" because there is no such "precedence".
The main innovation was the combination of ledgers with proof of work to prevent Sybil attacks in the face of a system with unidentified participants.
If you've studied electronic cash systems and/or cryptographic systems before, the paper is quite easy to read. Otherwise it's a challenge. At least that's what I found.
Here's a companion article that fills in some of the blanks.
There's plenty of people who understand the blockchain quite well who have a pretty ... imaginative understanding of monetary theory.
The way bitcoin was approached seemed to ignore the idea that the boom/bust cycle is mitigated through regulation and control. It isn't eliminated, but instead dampened. While economic miracles and bull runs seem great, if they are followed by devastating crashes, the market instability and "whiplash effect" of this occurring in rapid succession can slow attempts at economic recovery at best, and spark revolutions at worst. Austrian economists love the idea of "letting the chips fall where they may", but that reductive thinking ignores the social and political upheaval that the previous centuries have taught us result from instability.
The financial safeguards that we've been putting in (and unfortunately removing over the past 30-40 years) are there for a reason.
There are also plausible-sounding arguments to be made in the opposite direction: Fractional reserve banking allows money to be created and destroyed adaptively to support the economy, which makes the economy run more smoothly overall.
Do you see how stupid what you are saying is yet?
You have CBOE offering futures on it. The prez of JPMC pro bitcoin. You have so many exchanges.
This ain't the era of mtgox, $10m pizzas and running your own full bitcoin node and joining a mining pool.
Bitcoin is out of it's infancy.
Jamie Dimon, CEO of JP Morgan, famously called Bitcoin "a fraud" that "won't end well" and is "worse than tulip bulbs."
You must be thinking of something/someone else?
The futures are a nice touch, but they are cash settled so they will drift from spot.
We still do not have a spot market with swaps from companies you can trust.
Due to this, negative exposure is still difficult to replicate, hence why some brokers will not offer short side on the futures.
I could go on about the summations and other advanced math symbolics in this paper but you seem very out of touch with the knowledge base of most people so I'm not sure it matters.
A slightly more apples-to-apples comparison: would it make sense for you to become an early investor in a new futures exchange, claiming it'll do "a new kind of futures trading", without having read any papers or textbooks on futures trading?
Actually though, the principles behind refrigeration are also refreshingly simple.
1. Compress gas (it heats up as a consequence.)
2. Expose the warm air to the atmosphere (it cools down.)
3. Decompress gas (it cools down even more.)
4. Expose cold gas to the area to cool.
Seriously went over your list expecting to find something I didn't know - but I can explain them all, without needing to look up wikipedia.
I may read too much.
Knowing how something works cannot be a prerequisite to using it. That is one of the purposes of division of labor in society.
I have control of my money and bitcoin is within the realm of learnability, so I'd say it should be required. It is intimate knowledge of a protocol with many working parts that will have a direct effect on your earnings.
If Bitcoin wins, we'll become subservient to an algorithm we have no incentive to change.
It will only take a few more 10x increases before people stop smiling at this possibility. The time to plan for subverting Bitcoin is now, not later.
I'm deeply concerned about the potential of Bitcoin to become a financial black hole. I've written about this twice before:
The discussion was interesting, but not useful. We need plans, and we need them now, while there may still be time to do something about it.
The central question: If the entire resources of all world governments were brought to bear on the task of destroying Bitcoin, what would be the most effective way to do this?
I can't think of anything, and no one else has been able to either. Satoshi's email is prescient: http://satoshi.nakamotoinstitute.org/emails/cryptography/4/
>[Lengthy exposition of vulnerability of a systm to use-of-force
>You will not find a solution to political problems in cryptography.
Yes, but we can win a major battle in the arms race and gain a new territory of
freedom for several years.
Governments are good at cutting off the heads of a centrally controlled
networks like Napster, but pure P2P networks like Gnutella and Tor seem to be
holding their own.
Why should you worry? I've articulated some of the concerns here: https://news.ycombinator.com/item?id=15867841
Ultimately, it may be hopeless to try to solve this. But I can't shake the feeling that we're staring at a 0.1% chance of life as we know it changing forever. We will lose all monetary controls.
Doomsday prophecies have a long and sordid history, but the dinosaurs only had to look up at the sky at the right time to see theirs approaching. And, like the meteor, Bitcoin keeps growing bigger and brighter.
Look at https://i.imgur.com/h0giZzF.jpg We won't be able to deal with cases like the 2008 crash. If the basis of the worlds' wealth becomes crypto, what will we do?
Madness of Crowds is worth reading: https://vantagepointtrading.com/wp-content/uploads/2010/05/C...
It was now that the frenzy of speculating began to seize upon the nation. Law's bank had
effected so much good, that any promises for the future which he thought proper to make
were readily believed. The Regent every day conferred new privileges upon the fortunate
projector. The bank obtained the monopoly of the sale of tobacco; the sole right of
refinage of gold and silver, and was finally erected into the Royal Bank of France. Amid
the intoxication of success, both Law and the Regent forgot the maxim so loudly
proclaimed by the former, that a banker deserved death who made issues of paper without
the necessary funds to provide for them. As soon as the bank, from a private, became a
public institution, the Regent caused a fabrication of notes to the amount of one thousand
millions of livres. This was the first departure from sound principles, and one for which
Law is not justly blameable. While the affairs of the bank were under his control, the
issues had never exceeded sixty millions. Whether Law opposed the inordinate increase
is not known, but as it took place as soon as the bank was made a royal establishment, it
is but fair to lay the blame of the change of system upon the Regent.
What you're promoting is using the power of criminal law to govern the private choices of other individuals.
I'm not even going to address the faulty assumptions that go into your conclusion that voluntary adoption of Bitcoin would be economically harmful and would destroy wealth, because that's a separate issue from the fact that neither you, nor me, nor 51% of the population, have a legitimate right to use force to dictate how others choose to represent wealth and interact economically with each other.
Why else would the creator remain anonymous, unless they were truly a good Samaritan or feared for their safety. This feels like an experiment and an example as much as anything.
I suspect there is much more to this story than we know, but who knows, that could just be the conspiracy theorist in me talking!
Every single argument that you've mentioned, is a benefit, not a detriment.
Your arguments about how Bitcoin will prevent the government from printing money, and stealing it from people via inflation, is a pro, not a con.
I cannot think of a better pitch in favor of Bitcoin, than that you have provided.
This should terrify you. Think of a world in which you cannot collect taxes, and that not even prison can strip the wealthy of their coins. The wealthy will be able to do whatever they want.
How long until it becomes a crime to speak out against bitcoin? Or if not a crime, so socially backwards that you're looked at with the same contempt that the Chinese general population looks at their political activists? If you dare say this might be a bad approach, and you don't swallow the same madness that has overtaken everyone else, will you be shunned, left behind, or forced into it? The latter is the most worrisome; you won't want to keep your money in fiat, and the last billion people to switch will be subservient to the first ten thousand.
Should I be scared now, posting this here? For trying to say that we should launch a coordinated effort to stop this madness in its infancy? I run a very real risk of this following me around the rest of my life. Communism was once in its infancy too, and those who agitated for it or against it were penalized or rewarded by the waves of chance.
This disease -- the desire to get wealthy -- has been the basis of so much misery, and so much creation. It's as human as laughter. We'll never get rid of the lust for wealth. The only way we can manage it as a species is to control it. And Bitcoin removes this control.
The state can exert control over all real estate, and can control the flow of physical goods within its jurisdiction (and into and out of its jurisdiction), whether or not it has control over the flow of money. Taxes will never disappear. They will just decline.
I share Friedman's view that the effect that electronic cash will have, of reducing how much the government taxes, will be beneficial to society:
If we don't impose non-political checks on government power, it will continue to grow, to the detriment of the economy:
> Should I be scared now, posting this here?
You seem to be the only one who wants to take freedoms away from other people. The bitcoiners don't want to take away YOUR rights. That would go against the entire concept of bitcoin, which is resistance to censorship.
Bitcoin removes control, it does not add to it.
That's the problem. That's exactly what is already happening. The rich already don't pay tax, and neither do the corporations they control. The only thing that is being changed is that the oversight of the masses is now being removed, because banks can no longer be trusted to look after the interests of their clients over the interests of the state.
I suspect the only viable taxes in future will be consumption taxes, property taxes, and estate taxes. If ya wanna eat, ya pay tax. If ya wanna buy something, ya pay tax. If ya wanna live somewhere, ya pay tax. If ya die, your assets are divided, the state collects its portion, and then everyone goes on their merry way again. It's no surprise that these are resisted, because they are the only taxes that are effective against wealthy people.
If anything Bitcoin and other crypto currencies are going to allow you to hide and transfer wealth even more. Yes Bitcoin isn’t truly anonymous, but it’s so much different to a traditional bank where you need to prove your identity and they actively report large transactions to the authorities.
And as for the taxes you mentioned, it’s pretty easy to avoid those too. If I live in Russia and I buy an iPhone in Europe I’ll have to pay VAT (consumption tax) of around 20%, but when I go back home, which is outside the EU, (home being where I am a tax resident, not necessarily where I live on a day to day basis) I can claim that 20% back. The same applies for visitors to the US.
I think that cryptocurrency might be an example of what futurists are always talking about with regard to exponential change. In that regard, it's very much like AI (and maybe CRISPR) and a bunch of other things that we aren't even paying any attention to right now. But almost overnight, these things could basically turn all of civilization upside down, or end it as we know it. I think it unlikely for any one of them, but you only need 1. And while they might be good in themselves, I think it's the shockingly fast shift that may cause issues.
With cryptocurrency, there are a few things that give me pause though.
The first is the question of what makes cryptocurrency fundamentally different in this take-over-the-world scenario from gold? Why hasn't gold or some other precious commodity spiraled up in price to the point where it's the most valuable thing in the universe?
The second is that the USD (and other currencies) isn't going away, because you have to pay your taxes in it. So doesn't that provide an upper bound on the value of Bitcoin? Whether I'm getting paid in dollars or in BTC, the government wants 30% of it in dollars, so that's going to create a demand for dollars that keeps them from going to hyperinflation, right? I'm clearly not a macroeconomist :)
Also, isn't the price somewhat limited by how much wealth there is in the world? Not that it'd be great if BTC was worth a few million, of course, but it couldn't reach billions could it?
What actually worries me more is what happens if Bitcoin goes to $1mm or $10mm. For that to happen, a large portion of the world's wealth would have to have shifted to BTC, and the value of other currencies would drop in that case, right? It just seems very destabilizing in ways that are hard to predict. To go from something being 0% of the world's wealth to 50% or something in a decade with a totally different (and probably even more unequal) distribution of that wealth seems like it would result in a lot of nasty things.
Anyway, enough rambling, maybe cc will be fine, who knows. But I think that there's a good chance that in 100 years (assuming anyone is around to look back), things like 9/11 or Trump or nuclear war with North Korea might just be a relative footnote, and something like AI or cryptocurrency or CRISPR will prove to have been far more important and a huge inflection point in the evolution of humanity.
Where that money goes in the end? Some goes to speculators, and the rest goes to lots of ASICS, graphics cards, electricty bills and food for miners. But none of it is every actually really stored in Bitcoin.
Buy a bunch of hardware to own 51% of the network and make a bunch of illegal transactions which will destroy trust in the system. The US has a federal budget of $3.8 trillion. That's pocket change to them. Or if it's china just force the companies with ASIC's to do it for you: https://medium.com/@homakov/how-to-destroy-bitcoin-with-51-p...
Actually, I wonder if in the long run governments will be the miners.
Bitcoin is gearing up to be the biggest financial disaster in all of human history. If it shows signs of winning, people all across the world will rush to transfer all of their currencies to BTC. What kind of upheaval do you think that will cause?
More broadly, when your grand experiment encroaches on our ability to have a solid basis of wealth -- one that has worked for centuries -- what should we do? Are we supposed to sit here and watch you gain power and legitimacy without thinking of ways to stop it, rather than merely profiting off it?
If the BTC bubble pops, it will be a massive relief. But it will only sit dormant, waiting years for speculators to pick it up again and form another bubble that gets the world excited. Someday, that bubble might encompass everyone.
When it emerges that Satoshi has passed his coins to his family, and they become the next world leaders (by power if not by politics), what should we do when we don't agree with their methodologies? When we can't collect taxes? Or divert wealth to social programs like UBI?
So the bankers caused the problem in the first place and then we have to thank them because they convinced politicians to inject money?
Prove me wrong by spending, lending or investing your Bitcoins.
The reason being is that the owners of Bitcoin.org are actively trying to rewrite the white paper even against the larger community’s wishes. I believe sometime in the near future the owners will go ahead with their plans anyways as they seem to do that when it comes to other issues too.
SHA-256 could be more broken than SHA-1 and it would still serve perfectly well for mining.
If you don't reuse addresses then even if ECDSA is broken then your coins are still safe. And ECDSA being broken is pretty much the darkest scenario. In which case it can simply be replaced with something else starting at specific block.
RIPEMD-160 just hides your public key.
Sure, but the block header only commits to the double-SHA256 hash tree of transactions. If SHA-2 was broken I could create a single block header that commits to two different valid histories, allowing arbitrary double-spends and irreconcilable divergent views of the network.
Not to mention being able to spend anyone's coins by finding alternate pub keys or hashes that collide with their committed p2pkh or p2sh outputs.
I'd say that's pretty broken.
Regarding the second one, google bitcoin address collision, it was repeated so many times with great analogies that I'm not going to try to do it here yet another time.
All arguments about collision and preimage resistance are based on the assumption of SHA-2 doing what we think it does. A catastrophic break of SHA-2 would destroy the bitcoin ledger.
The FUD surrounding this is built upon a poor understanding of how these algorithms are implemented in Bitcoin.
It does happen that two blocks are found at nearly the same time, before adjustments can be made. In those cases one of the two ends up getting 'orphaned', it's relatively rare compared to normal blocks though.
Now, probabilistically, you'd occasionally get lucky and get the full (big) mining reward, in proportion to your fraction of total hash power.
The alternative is that you join a mining pool, and then receive the same amount (in expectation), minus the pool fee, but with much smaller variance, as the larger pool will much more frequently get lucky and then distribute the reward (minus the pool fee) to the contributors in proportion to their hash power.
But either way, your expected reward will be approximately the same, whether or not you work in a pool (modulo the pool fee), it's just whether you get a large amount very rarely or a small amount very often.