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Is bitcoin really important? I think most people have no practical use for it.



2B+ people do not have access to banking or trade. They are poor because we do not trade with them.

I couldn't pay someone in South Africa rural area for something worth $2 without bitcoin.

Many other people are censored.

Billions more have their wealth devalued via inflation.

Bitcoin is a way for people to be free without any state taking their money (see Greece)


So these people are essentially poor and don't have access to trade and Banking, but they are going to have access to the blockchain, hardware wallets, and the various other technologies they need, and this will all happen before banks or mobile app payment systems are able to capture the market?

Call me a skeptic.


It's staggering to think that these bitcoin enthusiasts have never heard of M-Pesa or other similar systems. Note that these systems work with dumbphones, which is useful because (I believe) almost all of the mobile phone penetration in places like Africa are dumbphones, not smartphones.


You've never visited Africa, have you?


Yes. The implication is that the 2B unbanked will get access to a cheap Android, and therefore ability to trade instantly with anyone anywhere with no fees, before the banana state fixes their massively corrupt government.


> ability to trade instantly with anyone anywhere with no fees

Neither of those statements has ever been true and in recent years they've been ludicrously untrue — affluent people in developed countries were complaining about the transaction costs and they're supposed to be transformative for people in a developing country?


Ethereum and Litecoin among others offer fast and cheap transactions today, and efforts are underway to solve this problem for Bitcoin (e.g. Lightning Network).

There will likely be a trade-off or balance of trust against transaction speed and cost. We're still working out how to build it and so we're not there yet, but my belief holds; the banana governments are not going to disappear anytime soon.


Fast and cheap are still not synonyms for instant and free but that’s at least possibly closer to one day being competitive with the existing mobile systems.

Those existing systems are also useful for evaluating the claims that this avoids bad governments, which is to say that it’s limited to bypassing antiquated banks. A networked system can’t avoid a sovereign state unless that state is completely inept, at which point everyone will be using a neighboring currency or USD anyway.


A lot of the world lives on less than $2 a day.

You can buy a cheap refurbished Android phone for $5.

And you have SMS cointext.io to transact for instance.

You do not need a hardware wallet, only to memorize the 12 word seed phrase.

Just look at the set of users who have phones without adequate banking. You will see this is measured in the billions of people.

The best hope to lift people out of poverty is for us to transact and deal with these people.


The amount of your transactions doesn't matter. If chains can't give people individual transactions in a trustless environment WITHOUT just recreating a new set of banking networks to bridge you onto the lightning network, all we've done is rotate the moneyhandlers.

Maybe that's great for your pocketbook. To me it seems pointless and worthy of scorn.


Bitcoin is sooooo important that everyone has devised an alternative off-chain protocol that actually does peer-to-peer scaling and in no way actually needs bitcoin except as a reconciliation strategy.

Yeah wow, we're all impressed.


What's wrong with off-chain scaling?


Nothing, unless you have an agenda to make the blockchain relevant. I don't, so I do all my scaling off-chain.


I'm confused by this, as well as by your parent comment. Could you make your claims more directly so I can understand them?


What's the point of having a chain at all? It's not a unqiue or prigiledged BFT solution. It has some nice but not essential properties.

If you end up scaling off-chain, then one asks why you have the PoW chain and it's phenomenal cost at all.


> What's the point of having a chain at all?

Different people answer differently, but many would give censorship-resistant currency as a use case. My personal answer is more complicated.

> If you end up scaling off-chain, then one asks why you have the PoW chain

Let me generalise slightly to include PoS, which I greatly prefer but which is also pretty expensive, and suffers from the same fundamental inefficiency problems. Obviously, you need on chain consensus and guarantees so that the payoff matrix for the offchain game is setup correctly so that honest behaviour in the offchain game is a Nash equilibrium. So that when I "pay" you some money in a payment channel you really have received it in a certain sense, and offchain payments are basically as secure as on chain ones.


> Different people answer differently, but many would give censorship-resistant currency as a use case. My personal answer is more complicated.

Nothing about blockchains prevents censorship.

> Let me generalise slightly to include PoS, which I greatly prefer but which is also pretty expensive, and suffers from the same fundamental inefficiency problems.

Most literature I've read suggests potentially a hundredfold increase in throughput with Proof of Stake when executed correctly.

The only fundamental inefficiency problem PoS shares, by my reading, is the broadcast mode limitation where every node needs the full chain to be broadcast before it can move forward. However, PoW systems are nowhere near that rate limit.

I'm certainly happy to be shown this is wrong. Got resources?

> Obviously, you need on chain consensus and guarantees so that the payoff matrix for the offchain game is setup correctly so that honest behaviour in the offchain game is a Nash equilibrium.

You're right, the offchain game needs to be set up so that honest behavior is the optimal behavior. But this is where the cart is firmly planted in front of the horse. What you need is not a blockchain, what you need is trust that controls are in place to resolve a dispute equitably. The blockchain is a methodology not for eschewing trust, but contracting it out in a novel way. A blockchain, folks with guns, an escrow service with a good API, international banking: they all serve the same purpose here.

We should use these tools when they serve us. But what I've seen is that for an actual daily-use currency all that's going to happen is a million little token vendors which can negotiate lightning channels to one another will show up and we'll just have new banks that are like the old banks, but with the threat of a chain resolution which may or may not occur. The practical outcome will be indistinguishable from a healthy banking system, won't actually stop fraud, will be subject to the exact same controls that other physically rooted banks are subject to, and also be a lot more confusing.

I think lightning is solid; in that it will work. I also think it reduces a play at fundamentally restructuring commerce into a flashy buzzword pitch to reshuffle the existing players on the board somewhat.

Having been deeply in the (somewhat broken) American banking system, I can tell you that the system desperately needs to be reworked from the ground up and that can only happen with a truly distributed, truly transparent (an often undersold or ignored aspect of Bitcoin but a truly phenomenal property), truly and fundamentally new way of performing commerce.

We don't have that.


> Nothing about blockchains prevents censorship.

The decentralization of block producers helps. For instance we saw a few years ago that a few payment processors could decide to not support wikileaks donations, meaning that the only non-cryptocurrency way to donate to them was to mail them cash in an envelope. A government seeking to do the analogous thing would need to effectively make the network soft-fork a rule in disallowing payments to wikileaks addresses, something much harder to do.

> I'm certainly happy to be shown this is wrong. Got resources?

I have never seen any legitimate public blockchain claim 100x improvement from PoS over PoW. I'd be surprised if it were more than 3x for ethereum.

One very powerful upper bound in any non-sharded blockchain without validator delegation is that every full validator must process all transactions, and we want validators to be able to do so with relatively weak hardware (e.g. a Macbook Pro). Certainly, a 100x increase in ethereum TPS would violate this upper bound; for instance, the current state size (2GB) is not designed to fit into RAM, and hence every transaction must do a random disk read and write onto a hard disk. The actual computation can be pretty expensive too, e.g. I've seen a benchmark that ECDSA verification takes 500ms on an i5 processor.

The "broadcast mode limitation" you mention imposes another upper bound, but I do not think it is sharper than then validation upper bound.

> The practical outcome will be indistinguishable from a healthy banking system, won't actually stop fraud, will be subject to the exact same controls that other physically rooted banks are subject to

So this is more subjective but I have to disagree here, depending on what you mean by "healthy banking system". We've learned from history that to have banks run on fractional reserve yet not be subject to frequent bank runs, we have to make them hold reserves in some central bank. And even if you just set up an "anti-escrow service" you have anti-fraud and AML laws to comply with. The end result is that there are huge capital requirements to create new banks most places in the world and fraud still occurs; the capital requirements lead to an oligopolistic industry that doesn't actually provide the consumer services it exists to provide very well. This seems pretty backwards to me. I think in the near-term, payment channel hubs will be much cheaper to stand up than banks and the trust model will be the same as on-chain payments: if you accidentally pay someone off-chain you have no recourse. It seems that building fraud protections on top of this base is more sensible.


Right, people buying something for $2 in rural Africa can afford to pay a $30 fee to make that transaction happen. They definitely don't use something like M-Pesa instead.


What are you buying from rural South Africa that's worth $2?


It's none of your business.

But there was some music I paid for online because I liked the sound.

It's awesome that I'm able to support artists and creators across the globe and make a difference in someone's life (as they made a difference in mine).

Transaction cost? 1 cent with Bitcoin Cash. They kept $1.99




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