Money is a social invention, it can never be apolitical. It very much reflects societal structure and contracts, explicit or implicit.
This (very early / prescient) critique of bitcoin is not casting a harsh enough light on the inadequacy of its design.
But maybe now that the concept of designed and programmable money is on the table people can think of what type of monetary/credit system befits a good society.
Bitcoin it aint and out bizarre private bank money perennially backed by the collective it aint either.
A lot of cryptography is based on non repudiation, while contract law is built on repudiation. Trading goods for services or even other goods is an implicit or explicit contract.
The people who think cryptocurrency is only for crime are partially right, but not strictly for the reasons they think. Less drugs and more fraud.
Handing over some bank notes also has the property of "non-repudiation" but that doesn't mean that just because I paid you in cash you get necessarily get away with not upholding your end of our agreement. Bank transfers also have this "non-repudiation" property in practice as well. That hasn't stopped us from using them for payment while also enforcing the terms of contracts.
> Bank transfers also have this "non-repudiation" property in practice as well.
No and that's a nasty, nasty surprise when you find out it's not true. There are plenty of ways for big bank customers to claw back payments made to private individuals, long after you or I would consider the transaction settled. And people get in trouble with their banks when they've spent the money and reversing the charges results in your accounts being overdrawn. The closest thing you have to this power is Visa, which is why the little Robin Hood in my head makes me encourage people to use it whenever they can.
There's the old saying, "I'll believe it when I see it."
There's a cheeky variant, "I'll believe it when the check clears."
There's the experienced, "I'll believe it ten days after the check clears."
And there's the jaded, "I'll believe it 30 days after the check clears."
Yeah, it cuts both ways. I have a friend who lost $2M through a business email compromise. In practice it might as well have been bitcoin, all of that "the banks can just reverse it" is just not true. All of those thefts just become an issue of insurance, if you have coverage for that sort of thing.
With crypto I guess at least you know for sure where you stand.
cryptography is based on non repudiation, but cryptocurrency is just human-written codebases. You can very much fork/modify/influence/introduce bugs in/backdoor/etc. code. It fails to promote cryptography's qualities to a higher sphere, as the more cryptocurrencies become harmful to society, the more they become governed by contract law. This has been the trend for the last decade, at least.
I suspect you need to create a good society first and then decide on a resource/status hierarchy system for it. Trying to do it the other way around is unlikely to work.
Bitcoin was always financial libertarianism. No accountability, no records, and - most of all, but only potentially - no taxes.
Inevitably it turned into Ground Zero for anyone with a scam to upsell.
Bitcoin literally uses voting to on which branch to use as it's consensus tie break mechanism. It depends on the value of the network incentivizing people to vote in a way that keeps the network trustworthy. I don't know if you can get more overtly political than that.
It isn't voting in the usual sense because preferences don't come into it. Nodes follow the "longest" chain and if there's a tie they use a simple heuristic to break it.
Well, which chain is the fork? Who's rules are you using as the arbiter? What kind of node you run and what it outputs has a direct effect on what is perceived as being "Bitcoin", as opposed to "a fork of Bitcoin". Humans are the final arbiter of which one is the fork, whether it's by the nodes they run or by the code they decide to merge into the core repo (sometimes after much very political deliberation).
> Merriam-Webster: The meaning of political is of or relating to government, a government, or the conduct of government.
Also, there is no such "voting on which branch to use", I'm not sure what you are referring to or if you're mixed up with another cryptocurrency. In Bitcoin, the valid branch is the one with the most proof of work. There is no concept of voting.
You vote for consensus rules with your node. A chain with more proof of work, but that is violating the rules that nodes have formed consensus on, is ignored.
That's incorrect. Non-mining nodes are passive, they do not cast votes.
> A chain with more proof of work, but that is violating the rules that nodes have formed consensus on, is ignored.
That is correct. Non-mining nodes are programmed to reject invalid blocks... or they can accept them if they want. It's of no importance because what they do has no influence on the rest of the network.
> That's incorrect. Non-mining nodes are passive, they do not cast votes.
Well you're right in that it doesn't look like casting a ballot in a box, but in practice they very much do "vote" in the sense that they decide on what rules are valid or not. This is what prevents miners from colluding and changing the rules of Bitcoin, the nodes would reject their chain. This is also what prevents developers from introducing a backdoor into the network by releasing malicious code. Node operators can vote to reject a change by not upgrading their nodes.
Inversely, if there is a rule change and the nodes of the network go along with the rule change (by their decision on what to reject or accept), then this is akin to a motion passing. The validity of blocks is not some ethereal thing, and neither are Bitcoin rules written on stone tablets by God. These things are the result of very human deliberation and code commits (by humans).
Well, now we've reached the "every decision is a vote" argument. Is HTML political because browsers reject malformed HTML? When my browser refuses to render a page, does it "vote"? When I am watching a movie, am I voting against TV?
> very much do "vote" in the sense that they decide on what rules are valid or not.
Yes, they decide for themselves. Their decision is irrelevant and ignored by the network, at protocol level. It doesn't prevent anyone from running modified versions of Bitcoin (in fact, there are tons of those running as we speak). Nor does it prevent miners from mining invalid blocks.
> The validity of blocks is not some ethereal thing, and neither are Bitcoin rules written on a tablet by God.
They are, more or less. I think the last time a hard fork occurred was over 10 years ago for a small bug fix.
Like I was saying, your argument is basically that "everything is political". You are using "vote" in the most abstract and metaphorical sense. Yes, people "vote" for Bitcoin by using it. Just like I'm "voting" for HN by commenting here. That's just not how people typically think of "voting" and "politics". That "vote" has very little in common with the traditional "vote" that is counted and used to reach a decision.
We'll have to disagree. My observation is that nodes have, historically (see 2017), been used as a way to decide which miners were mining "Bitcoin" and which miners were mining "some other thing". The whole point made by Core developers was that "proof of work does not equal consensus if your policy is invalid, and what is valid is what is accepted by all these nodes".
As such and unlike your TV and browser, nodes have been used to influence policy, so I reject your "everything is political" straw man.
There are many forks of Bitcoin, like Bitcoin Cash or BSV. When core developers suggest "what is valid is what is accepted by all these nodes," they're referring to the fact that nodes ultimately determine which cryptocurrency they acknowledge as valid for transactions. This could range from Bitcoin, its various forks, to even Ethereum and beyond. It's not a part of the protocol itself but a kind of very metaphorical vote, akin to how you "vote" for Canadian dollars by accepting them as a form of payment.
> nodes have been used to influence policy
Which policy are we referring to? There is no centralized authority here. Each participant has the autonomy to decide which blockchain to support. If a Bitcoin fork appeals to you, you're free to use it. The only semblance of "politics" that emerges is the debate over semantics, the "true Bitcoin," but this isn't dictated by the protocol. It evolves in a decentralized and organic manner, devoid of any formal political process or voting.
It bears very little resemblance with typical notions of voting and politics. It's only political in the broadest sense of the term, when starting from the axiom "anything involving humans is political". Which dilutes the significance of the term 'political' - a trend that I personally find very irritating, hence my initial snarky comment.
> It evolves in a decentralized and organic manner, devoid of any formal political process or voting.
Just because the voting mechanisms are generally informal if we exclude the formal BIP voting process, that doesn't make them not voting mechanisms. I'll grant you that the politics of Bitcoin can be chaotic and hard to follow (this is intentional), but in times of crisis, the obfuscated leadership structure usually emerges from the darkness. Another example is what happened in the 2013 crisis, where light was cast on where the power in Bitcoin truly lied: https://freedom-to-tinker.com/2015/07/28/analyzing-the-2013-... . In this example, a couple devs took charge and had the miners abandon the longest chain.
If all these things are not politics to you, in that they are not specifically about governance, power, or voting, again we'll have to disagree. I am definitely not saying "everything human is political" so again we can drop that straw man.
Yes, it's just not what we mean when we say Bitcoin is apolitical. What we mean is that it's not subject to political influence nor does it require government to operate. In contrast to fiat money.
The world ran on a depoliticized money for thousands of years: gold. This experiment with government money is just over a hundred years ongoing, and really only fully realized since 1971. It would appear to me that it has been an abysmal failure; many countries have experienced hyperinflation, financial instruments have become monetized and bubbles have been pumped full of paper money, peoples savings are 1% of what they were when this all started, at best.
The author gets a whole lot wrong about bitcoin (an algorithm that sends ones and zeroes from one device to another?) and clearly doesn't understand it. But that doesn't matter; this is a critique of the larger "fantasy of apolitical money", not a technical critique of bitcoin itself.
What is it about an "industrial society" that requires a government to control the money? This is glossed over, but is at the crux of their position.
Entire civilizations (e.g., Incas) ran without currency (they used gold for ornamental jewelry, not transactions).
> many countries have experienced hyperinflation, financial instruments have become monetized and bubbles have been pumped full of paper money, peoples savings are 1% of what they were when this all started, at best.
Please list these "many countries".
And of the ones that I'll bet you will list, they have specific causes:
> There are differences in details and emphases, but the basic story of outside coercion, losing a war/civil war, internal corruption, incompetent/bad economic education/bad policies on banking/currency, elite minorities clinging to power, foreign denominated debt, collapse in real production etc. are the same in Weimar and Venezuela as in Zimbabwe.
> As always, the “printing” is the result, not the cause.
And in the pre-Gold Standard (<1870) there was the Tulip bubble, South Sea Bubble, canal mania.
> What is it about an "industrial society" that requires a government to control the money? This is glossed over, but is at the crux of their position.
It has been found (in the US) that it helps with financial stability, especially post-Fed creation:
> The designer of bitcoin’s algorithm tried his damnest to emulate gold. Just like gold, which one presumes to be in fixed supply under the Earth’s surface, bitcoin is also limited, artificially (through the design of its algorithm) to a plateau of 21 million units.
Yet Bitcoin's emission is quite unlike that of gold. Every next generation gets to mine 32x less bitcoin. Over gold's millennia long history, every generation mines a roughly similar amount of gold as the next.
I think you’ll find that if you plot the mines gold versus available gold you’ll see that the percent of new gold introduced is asymptotic.
It’s true that he doubled down, but I also suspect he anticipated what actually happened, which was that the price of bitcoin spurred custom hardware, which ramped up the capacity to mine coins past what Moore’s Law would have predicted. It also ruined PC gaming for the lower- and middle-middle class for a few years.
Whether that’s prescient or just an artifact of a logarithmic drop off in the available key space is anyone’s guess. I don’t fix problems I don’t see as problems that often, and most of my peers are even worse.
What do you mean by that? The key space is either 2^160 for hashed keys, or about 2^256 for unhashed or Schnorr keys.
The number of keys appearing on-chain is not limited by emission but by the block size limit of 4M weight units (each new key contributing a few hundred weight units).
so you're saying that there are more bitcoin that there are bitcoin addresses/wallets???
(more precisely you might be saying how it happens that which I'm asking if that's what you're saying happens.... I mean I'm asking my question because I'm a bit confounded)
We can change Bitcoin's code to keep emitting beyond 21 million units. The consensus isn't there, yet, but nothing physical is preventing that from ever happening... Bitcoin's supply limit is a policy (ie. political), not a physical limit.
He doesn't really dig into what he means by apolitical, and what bitcoiners mean by apolitical.
One of the big risks with fiat currency is that your government might do "something stupid" or "something corrupt" with monetary policy and cause the fiat currency to crash in value.
The most popular cryptocurrency (Bitcoin) has a monetary policy that's set in stone. You're protected from an incompetent / corrupt government who either accidentally or deliberately break the money supply.
That's what bitcoiners mean by apolitical.
The article then goes on to point out how the monetary policy of bitcoin is not very good monetary policy. He's right when he says this, but you can only have good monetary policy if you've got a competent government. A lot of people don't have a competent government.
Is the bitcoin "government"-equivalent competent? My impression is that it's not, because Satoshi basically left control of the software & network (and thus currency) in the hands of a bunch of randos of questionable competence. The result was all the infighting over stuff like block size changes. It hasn't collapsed at least...
The idea is that no governance is required because the rules will never change. That has mostly held so far but it will be interesting to see what happens long term.
The bitcoin "government" is truly democratic by compute. Infighting is good (for now) because it creates stability (which is arguably the same reason why democratic/representative governments are good in general).
From my understanding speculation is one of the reasons bitcoin works as a payment mechanism.
If bitcoin was literally worth 0, any one company could decide to make money on it by using Bitcoin as their personal stablecoin. That would be enough to facilitate payments: one person buys BTC from the company above the fixed price, the other person sells below the fixed price.
But thanks to decentralization any other company can jump in and start doing the same, compete on the spread of prices.
If the price of BTC is too low at a certain time, all of available BTC gets tied up in transactions. There is more demand for BTC-minutes in that hour than there are BTC-minutes. So the companies can temporarily raise the price when they see it happening.
This makes the price of BTC float above the peg depending on the amount of BTC available for sale and the load on the Bitcoin-as-payment-mechanism network. And if the peg is low enough, it is never really reached.
If this theory is close enough to truth, then the instability of Bitcoin really is fundamental: less of a design flaw, more of a (rather severe) trade-off.
Though I wonder if it's possible to construct a stable derivative based on future estimates of the load on the network: a unit that can be used to compare prices of BTC-minutes at different times in the future.
- A globalized world needs a global money. In recent times, this has been $USD. $USD beats gold because it is more portable.
- Money is too large of a concern for any government to do well. There is too much at stake. Too much incentive to do be a poor steward. Too much buddying up to the money printer.
So what's left? Gold and Bitcoin. Gold for deep wealth and Bitcoin for global commerce.
Digital money is also backed by bombs and blood[1], it just introduces a lot of technology and an additional parasitic class of early-adopters and middle-men, on top of all the ones that already exist.
[1] No form of private property can exist without those things.
Exactly! You need laws and a monopoly of force to enforce those laws in order for property to exist. Otherwise bitcoins can be freely stolen via rubber-hose cryptanalysis.
> No, there are two insurmountable flaws that make bitcoin a highly problematic currency: First, the bitcoin social economy is bound to be typified by chronic deflation. Secondly, we have already seen the rise of a bitcoin aristocracy
These two issues are surmountable by other cryptos and unrelated to the idea of an apolitical currency.
He goes on to describe the circumvention of the natural constraint of the gold standard with the rise in derivatives of those assets but that too does not seem to be a nail in the coffin for an apolitical form of money.
Although maybe the existence of the "bitcoin aristocracy" at all points to the core of the problem with any form of currency we might create.
Honestly, I find it weird that such a relatively old take on cryptocurrency is making it to the top of hacker news today?
Love it or hate it, there's a whole lot of much more interesting available data and information, and arguable insight, on the issues raised here -- especially the former of "inflation" and so forth;
E.g. if the world wants what crypto has to offer, the limited deflation and/or environmental waste issue has already been solved by other cryptocurrencies, with significant activity and years under their collective belt to prove it.
That's not how Bitcoin works, and the article doesn't make any claim to the contrary. Neither Bitcoin owners nor Bitcoin miners control the rules of the network. If they were to unilaterally change the rules, their (now forked) Bitcoin wouldn't be accepted by sellers any more than I can use Monopoly money to buy a meal at McDonalds.
Contrast with Ethereum, which with its Proof of Stake switch does give some level of control to Ethereum holders.
This (very early / prescient) critique of bitcoin is not casting a harsh enough light on the inadequacy of its design.
But maybe now that the concept of designed and programmable money is on the table people can think of what type of monetary/credit system befits a good society.
Bitcoin it aint and out bizarre private bank money perennially backed by the collective it aint either.