In some sense, Bitcoin has already "won" in that it currently has a non-zero value. Anyone who says "Bitcoin can't possibly exist or hold value" already is known to be wrong, simply by Bitcoin's existence.
In the same way, I don't understand people like OP who say "No other cryptocurrency but Bitcoin can have value" because many of them already have a value and have "won" by some measures- Why do people keep trying to argue that dogecoin/litecoin/etc/etc don't have value, when people trade them for other currencies every day on open markets?
Near as I can tell, there will be (and already are) multiple "winners" in the cryptocurrency competition, filling different niches, just like there are multiple species on planet earth filling different niches.
B/c the majority of them care more about their investment than they do about cryptocurrencies as a technology and fear that competition of coins will hinder a successful (aka profitable) exit strategy.
I also think the OPs point about the highlander effect isn't well made - a coins mining pool only needs to be strong enough to protect itself from attacks that it's value incentivises.
Ask anyone that has been in a ponzi scheme or stocks that went to 0.
In particular, exchange value or market value can diverge considerably from utility, or "use value" - pathologically so in cases like that of the tulip bubble and so on.
> Ask anyone that has been in a ponzi scheme/stock that went to 0
Well, given that you're stipulating a value of zero then clearly you are unable to get someone to pay for it and it's value is zero, by definition.
> The value of something is "what you can get someone to pay for it." That is the only concrete, objective, and rational way to determine value.
Most if not all traded financial assets have conditional values, values that are fixed only at discrete points in time by actual transactions, and only in retrospect. Outside of that there's no guarantee that a stated value is concrete, objective, or rational at all.
The value of a given share of Bill Gates's MS stock for example is X if he attempts to sell a token amount today, and it's Y if he attempts to sell a large amount today. And X < Y all else being equal, a LOT less.
So tell me then, what is the concrete, rational, and objective value of Bill Gate's MS stock? The "correct" answer has to include a version of "well, it depends".
You claim that the value of something is "what you can get someone to pay for it" without realizing that by definition your measure of value is vague, indistinct, and subjective.
You could make an argument that the value of something is "what you actually got someone to pay for it at a specific date and time" but you didn't say that.
That's perfectly fine, after all value, whatever definition we use, is just a model, nothing that exists outside of humankind. The problem with the definition you prefer, though, is the substantial subset of the economy that will not be available on a market. An economy consists of significantly more production and consumption than what gets sold on a market and therefore gets a price. Examples: Producing free software in your free time, creating music, training kids in a sports club, raising your own kids, teaching for free via youtube channels or moogs or locally etc. All these thing create, well, value, I'd say. They boost both wealth and efficiency of the economy.
Just because some people can get out more than they put in doesn't mean a ponzi scheme has created any value for the economy as a whole.
You've shifted the goalposts there from "has value" to "value for the economy as a whole".
If I have money in a ponzi and can exit at that point in time, my stake has value. Later it might not, but at that point it does.
However, in general what currency has a value proportional to its benefit to mankind ? Any fiat currency are going to be out for the same reason than bitcoin is out, any traditional currency based on gold/silver/shells is out too for the same reason as Dutch Tulips: eg. value of gold is recursively determined by its own use as a currency, not by any actual industrial use for example - so its value is as much virtual as a fiat currency, with just a different behavior and control lever.
Other financial asset are more directly related to useful human activities, especially commodities, but at the end of the day they get traded and valued based on their capacity to generate one of the currency above rather than objective benefit to mankind. (eg. Amnesty International "shares" would not be based on its efficiency at improving human rights, but by its capacity to convert it into currency )
The only thing that I can think of, would the slaves as additional useful human being are objectively beneficial to mankind. I guess body part, blood, ... is a less gloomy alternative ?
I'm overthinking this :-)
You're right that Bitcoin by nature includes a huge energy cost, but when you take the narrow view that it's simply being thrown away, it's both short-sighted that it ignores the theoretical possibility that its heat "waste" could be channeled into something economically desirable (e.g. steam to drive turbines), as well as not an even-handed to comparison to the true costs of its alternatives.
Sure - the physical printing is just one of the many overheads of the monetary system. But the point is that these costs are small and, importantly, more-or-less constant. Whereas with Bitcoin the costs scale up (and inherently have to scale up) with the Bitcoin economy. Indeed, if we assume rational miners with accurate price predictions, then the amount wasted on mining Bitcoin always exactly equals the total value of bitcoins in circulation.
(So far we don't see this because the price is much higher now than it was when most of the coins in circulation were mined. On the other hand, if the Bitcoin price drops to e.g. $10, then the current expenditure on ASICs is going to look even more extravagantly wasteful).
> You're right that Bitcoin by nature includes a huge energy cost, but when you take the narrow view that it's simply being thrown away, it's both short-sighted that it ignores the theoretical possibility that its heat "waste" could be channeled into something economically desirable (e.g. steam to drive turbines)
Even if you find a way to use the heat, you're wasting the computational power that could be allocated to something more productive e.g. protein folding.
But even more importantly, and what I expected to be half the point of the article, the work put into validating the blockchain inherently has to be wasteful. If it isn't, the economic incentives against cheating no longer apply - you can just do a leveraged buyout of a huge turbine company, put their heat generators to work doing a 51% attack, and double-spend all your bitcoins.
Whenever someone comes up with a way to do hashing for half the energy, the Bitcoin network doesn't start using half as much energy - it starts doing twice as much hashing. The wastefulness is built-in and unavoidable.
Bitcoin is backed by an irrecoverable debt held by... an abstract math problem, because the original credit spent on computing answers (of no external use) to that arbitrary problem.
I'm arguing that non-Bitcoin CCs don't really add any marginal value to the CC ecosystem, and that it's inherently unstable for multiple CCs to coexist. Whatever rationalizations people are making to justify mining Litecoin and holding onto it (ignoring sunk costs of Scrypt ASICs) are inconsistent with reality.
They have value but it's much more based on speculation. If you look at Bitcoin, there's an ecosystem of millions of users, over 100 thousand merchants including some of the world's biggest companies like Microsoft, hundreds of bitcoin-focused VC-backed startups of which one had a valuation nearing half a billion dollars etc etc.
While it's obvious that bitcoins are overvalued in relation to this ecosystem (i.e. a substantial part of its price is based on speculation that the ecosystem will become massively important in the future), there already is a genuine ecosystem out there with decent growth rates.
Dogecoin or litecoin don't have that. They have communities that keep them alive but there doesn't seem to be a long term viability. This is different from bitcoin's early days (which didn't have any real ecosystem either at one point) in that bitcoin actually offered something radically new, while litecoin for example isn't innovative, it was the first me-too that didn't totally screw over its early investors in a pump & dump scheme so it's stayed around but it doesn't offer anything special. Does that mean they have no value? Absolutely not. They do. But 'me-too' companies also have value in the short-term. In the long term they usually don't survive. We're already seeing that, litecoin for example dropped insanely in price (like 90%) in the past year and that's not just because bitcoin readjusted after late 2013's hype cycle, it crashed against bitcoin itself, too, i.e. the market is already identifying that litecoin versus just bitcoin doesn't have a future in the long-run. And if there's ANYTHING you have to know about bitcoin is that it's almost always spoken about in a long-term frame of reference. If we purely look at the short term then yes, we can say dogecoin & litecoin have value and so does bitcoin, but we would also have to say that all three combined are absolutely insignificant, a drop in the ocean, the size of a mid-cap fund of which there are thousands. The short-term isn't interesting, in the short-term me-toos exist, in the long-run they don't.
In short, the reason people say litecoin has no value is not because it's not being traded: that's speculation. It's that it is said to have no utility value over bitcoin. Bitcoin can power any utility litecoin can, with more liquidity, more market participants, more open-source libraries & development, more funding, more security etc.
I don't think we'll all be using bitcoins necessarily, but I do believe we'll all be using bitcoin (or no cryptocurrency at all, of course, that's very possible, too). i.e. yes there are niches in digital currency, but the cryptocurrency niches will, I think, if they exist in the long-term, be served by products running on top of the bitcoin network. Anything litecoin or dogecoin can do, a bitcoin treechain or sidechain or payment channel can do but with the above mentioned benefits. It's like saying there are different niches in internet protocols, as if to say the internet may run on many different protocols that serve different niches in the long-term, instead of saying TCP/IP powers the internet and it has higher-level protocols that serve niches like http or smtp. Within that line of thinking, anything but TCP/IP has no long-term value and any niche in internet technology will be built on top of that one protocol. Similarly many who say 'litecoin has no value' think of bitcoin as being the protocol for value transfer, and anything having to do with transferring value (or titles, contracts etc) will be built on top of it, rather than along side it.
In short, the claim that litecoin has no value (despite having a market value) makes a lot of sense depending on what you believe about the future of cryptocurrency.
Dogecoin is not cheaper because of some innovation, it's cheaper because there are fewer mining revenues and thus it's less secure. That's not a pure benefit, it's a cost-benefit, bitcoin could be set to have 0 transaction fees tomorrow if it was wanted. Instead a dynamic pricing system is in development, a free market for transaction fees, which is the best and most elegant system of pricing conceived. Dogecoin doesn't have that innovation.
As for long-term equitable mining, that's not really an innovation, is it? It's just another choice. Today Dogecoin's inflation is 5% or so, for bitcoin it's 10% or so. A larger percentage of bitcoins are newly distributed than dogecoin, which I assume is what you consider more equitable. And this will remain true for years.
And in the long-term? In the long term they want to have a fixed supply forever, but if you have 100 coins and you add 5 per year, in 50 years that's less than 0.4% yearly inflation, i.e. next to nothing. A few decades later it's puny, it might as well not be there. In the long term their inflation is approaching that of bitcoin's long-term inflation: 0%. It's not all that much different.
To say it's more equitable because long-term dogecoin has slightly higher inflation than bitcoin is like saying Kenyan shilling are more equitable than dollars, and dollars more equitable than dogecoins.
If those are the two best examples of innovation of the 1st or 2nd most popular cryptocurrency after bitcoin, I think that's very telling on the lack of long-term value for anything but bitcoin.
In theory, sure. But defaults are important, simplicity is important.
> To say it's more equitable because long-term dogecoin has slightly higher inflation than bitcoin is like saying Kenyan shilling are more equitable than dollars, and dollars more equitable than dogecoins.
Both those things are true. Look at the Gini coefficient for wealth held in each currency. (There are downsides to high inflation, but not at the USD level).
But I think the stupidly-large size of the blockchain is a major hurdle, given the concurrent trend of miniaturization. Embedded devices like one might find in the much-vaunted "internet of things" (eyeball roll) can't really afford to be toting six SSDs just for storing 3 or 4 different blockchains, or even one big one.
There comes a point when it's just no longer practical to store the entire blockchain, but truncating the chain (or only storing some kind of "working set") isn't feasible either.
Not to mention the gargantuan download that's required for that initial setup to get up to date with the latest network transactions.
I think it's a great idea in theory but ultimately pretty annoying in practice.
I know it's centralisation and goes against one of the features of the blockchain, but having trusted hubs through which to interact would save a lot of wasted space, time and data.
I'm not sure why inserting a check-point and resetting the blockchain size to zero would not be possible - can someone please explain this? If the status at the checkpoint were agreed upon by 51% of all nodes then why not?
Not using cryptocurrency.
Even (real) strip mining at least produces industrially useful ore.
Blockchain technology as implemented in bitcoin is incredibly wasteful. The power used alone is in the tera-watt hours per year.
All of those massive farms of custom miners...all to process an astounding ~90k transactions a day.
The relative energy cost is astounding, considering that volume could easily be handled by a single server in a traditional architecture.
(10 TPS for TPC-B: http://raspberrypg.org/2013/11/raspberry-pg-server-some-benc...)
Moore's law doesn't help bitcoin. Because if we produce a miner that has 10x the power efficiency of a current mining hardware it just results into everyone using that miner. Total hashrate would be 10x but the electricity consumption would remain the same. The difficulty adjustment in bitcoin guarantees that regardless of the HW the profit from mining goes close to the electricity cost of it. Thus we can simply ignore Moore's law and focus on the fundamental point of bitcoin mining: Producing waste heat.
Having to continuously produce waste heat to secure the network is a fundamental flaw in bitcoin. An attack against the network (51% attack, using waste heat) must be sufficiently expensive compared to the gains of such an attack. The benefits of an attack scale with the amount of value transferred in bitcoin network. Thus the amount of waste heat constantly produced by honest people also must scale in order to keep it secure.
All of this because one person got the bright idea to solve Byzantine generals problem via unforgeable votes. What kind of vote is that? Waste heat. The guy just figured out how to verify that some other person has produced waste heat. And the whole network rests on the assumption that honest people buy more votes than the dishonest ones.
Actually, it's capitalism in general that has an exponential hunger for resource consumption, Bitcoin is simply the first decentralised capitalist system, and it's so simple it's clear.
But well, in the end capitalism will have to go too - lest we want eventually to be strip-mining the whole universe at close to light speed.
Storing some type of "working set" is totally feasible. Technically you don't even need to keep around all blocks, simply the resultant state that you arrive at after processing all blocks in order. This is called the Unspent Transaction Output set or UTXO set.
It's also possible to only keep around XGB of blocks, or the last 500 blocks, etc (a pruned log). The purpose of keeping around all blocks is to bootstrap the syncing of new nodes to the network, or optionally to full-chain wallets for re-scanning. Before pruned nodes are widely deployed, a system needs to be developed to allow a syncing node to efficiently identify and retrieve the relevant blockchain shards it needs so it can validate everything and arrive at the current state.
Also, with BitcoinCore 0.10, syncing takes about 4 hours if you don't have shitty a hardware or internet connection .
Well, it's a lot more likely in my eyes that it'd be a thin client operating against a server owned by its owner. Just as safe, and doesn't involve trying to figure out how to allocate enough money on a micro scale to all your individual devices so they don't run out.
Could I manually get it installed and running on another large-volume and slower speed drive where this wouldn't be an issue, of course. But why do I want to bother even dealing with something so user-hostile? The average Joe or Jill who isn't a computer nerd is just going to see this thing eating his/her hard drive and get rid of it.
It's especially endearing to me because it's my primary objection to anarchists (of whom I have several as friends)- that the system they envision just isn't stable, and we arrived at the system we have now for that reason.
Also, as Yvain pointed out in his excellent article, we might be fucking ourselves over big time with this drive towards decentralization and trustless systems. As we fight against corruption and abuse, we're building systems that don't allow us to coordinate even in principle. Today it's tax avoidance and buying pot on-line, tomorrow it will be untraceable trade of fissionable material and weaponized biotech.
Building trustless systems seems like a cool hack, but I think we'd be better off working on a way to improve coordination.
 - http://slatestarcodex.com/2014/07/30/meditations-on-moloch/
Many socialist and anarchist ideologists are/were perfectly fine with centralisation of production, as long as decision making is decentralised, and participation is a result of free choice and can be withdrawn.
The capability of decentralisation in Bitcoin is important because it acts as a safeguard against forced centralisation and coercion. As long as the capability remains, whether or not people for practical/efficiency reasons opts for centralisation ought not cause most anarchists any major concern.
I'm probably misunderstanding something, but isn't it more that blockchain technology allows decentralisation, while dominance of any particular deployment supports centralisation? As I understand it, once Bitcoin is centralised, the 51% can control it as they wish, and the only alternative is to set up a wholly separate Bitcoin2 chain, or another altcoin.
(Again resulting in cryptocurrency being a bad store of value.)
The lower level is centralisation into a small-ish pool of large services where no service exceeds 51%. That's what I was mainly thinking about.
We've seen in the past how Bitcoin has adjusted to the threat of 51% with people withdrawing capacity from large pools etc. in response.
In either case the point is that the existence and open availability of the technology acts as a deterrence to coercion because the act of trying to take advantage of a 51% attack will send people running for the hills (and the existence of altcoins makes that even easier).
We've seen people willingly pull back from potentially even "accidentally" exceeding 51% of the Bitcoin network in the past for that very reason.
The point is not absolute decentralisation at all cost (though some anarchist tendencies do want to maximise decentralisation), but the ability to withdraw consent and unilaterally decentralise.
Why would you have to? The point of decentralisation is not that everyone has a copy of the truth. It's that a sufficient number of nodes have a copy of the truth, such that you can check a number of them and easily verify the veracity of the data. Many blockchain applications run not by querying their own blockchain but rather querying a number of trusted sources via their API. Coinbase, Bitpay, Chain.com, Blockcypher etc all offer APIs to interface with their blockchain nodes and others.
It's like saying Facebook will never work because you can't possible store the worlds' photos on everyone's smartphones. You don't have to, Facebook stores it on their server. Similarly we will see, and already see, dedicated servers that store the blockchain, and as long as you have enough independent ones you can maintain decentralisation just as if you were hosting your own node.
There's absolutely no need to host the blockchain on small embedded devices any more than any other data, like music or photos we normally host on dedicated servers instead.
> but truncating the chain (or only storing some kind of "working set") isn't feasible either.
Yes it is. What makes you say it isn't? Pruning the blockchain is something that's currently being worked on.
The idea is that if I send you $1 a million times and you send it back $1m times, every day, for the next 1 billion years, we could either store terabytes and terabytes of data of all these transactions, or we could store the end result (= no change occurred) and the last couple weeks of transaction data. The rest can be pruned. Because each block has a hash of all its transactions, and this hash is used to mine the next block (hence a chain of blocks, blockchain), we needn't store each individual transaction, we have the hash to verify the truth of transactions.
We might have some universities saving all transactions for posterity & research, and some businesses for data mining, but the vast majorities of nodes that just need to secure the network can indeed, without security issues, not store long-spent outputs. (i.e. bitcoins that have already been spent many times over. e.g. if I give a dollar to you and you give it to the next guy, and he to the next girl, and so on 100 times, at that point there's absolutely no reason to store on every node the fact I gave a dollar to you for the security of the network.)
> Not to mention the gargantuan download that's required for that initial setup to get up to date with the latest network transactions.
Again, no need to have all redundant transactions. The pruned blockchain would currently be under a gigabyte large. Second, headers-first has already been implemented which made the initial setup much, much faster.
Beyond that, we mustn't forget that the average American makes 2 transactions a day. And one such transaction is about 400 bytes or so, in bitcoin. If you compare this to tweets, or an hour of netflix, it's puny. If you count up all the data, it's about $8 to store one day of all of US consumer transactions on a retail harddrive. Imagine the cost of storage for Mastercard for one of their nodes was $8, and instead of just powering a fraction of US retail, they'd literally handle every single transaction by themselves and store them all for $8. Even if you wanted to have thousands of nodes and store the last year of data (and given the velocity of money, you wouldn't have to as again, you can prune data after money has been spent a couple times), that's a puny amount of money to power an entire consumer financial system of the world's biggest economy. And given storage, like CPU and bandwidth, on a 50-60% yoy growth rate (Kryders, Moore's and Nielsen's laws), I think by the time bitcoin becomes important enough to run 100% of US retail (which is likely never, but hypothetically speaking), that $8 will have dropped to below $0.10 easily.
I know I'm taking big shortcuts here but this is just to illustrate the economics are extremely favorable today and in the future. I don't know if bitcoin will succeed or fail, but I'm pretty near certain it won't fail because storage/cpu/bandwidth isn't affordable enough for nodes to make it viable to run the network. I and many others have looked into this quite a bit and these aren't big problems. Bitcoin has big obstacles (no gigantic consumer benefits in a world of decent fintech like every OECD country to use bitcoin directly, is one), but storage probably isn't one of em.
So it makes much more sense to use bitcoin as your distributed consensus system, for whatever application you choose to place on top of it.
I'm not sure I agree with the premise, though - which is that people actually think that - I reckon that Sam Altman's comments might just be a way of saying 'Bitcoin is in the news a lot, I think it's a waste of my time, but I don't want to write it off just yet.' It's good, it makes him sound profound, everyone's kinda happy.
The question is: What non-currency applications would actually benefit hugely from being decentralised in such a way?
fact: people working on useful tools benefit us all
problem: incentive is only big-picture, feel good. money is, by design, ridiculously hard to come by for helpful projects. teachers, farmers, babysitters, soldiers and many other professions provide valuable service to society yet make only a fraction of what money-manipulators (bankers who specialize in generating $$ from $) or cross-cultural entertainment like motion pictures.
Patents, trade secrets, close source & government regulations all contribute to incidentally de-incentivize many projects built around benefitting a large chunk of humanity as opposed to localized (individual, corporate or nation-state) profiteering. << REWRITE
I ran into this recently designing <link CodeSwarm> - a distributed protocol where programmers receive escrowed bitcoins for an open-source project accepting their work, merging it into the master branch of the project. The payout system sounded promising, but the money had to come from somewhere and be managed to fund these projects!
So how can we, the people, reward people for doing good things, things we like?
"FarmerCoin", described below, is a thought experiment where local Farmers can receive fiat-by-consensus cryptocurrency in exchange for an independent third-party recording (both videographically and on a chain of signatures) the farmer's produce.
I propose the formation of semi-independent regulators for specific industries who accept payment of their choice to regulate a deed done. Regulators film their investigation and verification of the deed, publish to the protocol along with a signed message containing a hash of the video and a magnet link for nodes to torrent.
Once regulators have published a video, end-users known as "verifiers" or "voters" who have clients monitoring the network receive a notification that there is a verification to vote on. This would involve torrenting or finding the video online, verifying its hash, playing the video, then presenting a vote to the user. This vote would say "This is acceptable" or "This is not acceptable".
In "FarmerCoin", this plays out by the farmer showing regulators a bin of vegetables. 10kg of tomatoes, for example. Regulators film the weighing of the tomatoes then use a software to upload that video, a signature of its hash and farmer identity information to the network. If the tomatoes were rotten, the regulators are incentivized not to upload a video because their reputation may become damaged and farmers will not hire them (see next paragraph for why).
Farmer receives "FarmerCoin" for 10kg of tomatoes as the network approves it. If the network disapproves the quality of the tomatoes, the farmer receives nothing.
I admit - there is a flaw in this design. How much "FarmerCoin" is 10kg of tomatoes "worth"? I'm not sure. I don't know how to answer that. Maybe "FarmerCoin" should be generated per calendar year. Please discuss because I think this, at the time of writing, is the only missing link I see in the system.
Regarding the voters - trusting the internet as a whole to vote on if a farmer gets paid is ripe for exploitations. Instead, "FarmerCoin" could use votes only from public-keys the farmer has explicitly accepted to vote for them! Namely these are the farmer's regular customers at the market. This solves the trust problem on a human level. Trying to make this system "completely automated" ignores the fact that real-world actions are happening, which require intelligence. We don't have software to do this process so I think the best bet is to incentivize voters by also generating "FarmerCoin" for each vote they cast.
To be clear, YES "FarmerCoin" is generated by fiat. It is a more decentralized kind of fiat. For that reason and the reason that it is in the voters' -- who are customers of the farmer -- best interest to see the farmer receive accurate feedback on their produce so they grow better yields. ((FIRST REASON???))
As far as how does "FarmerCoin" have value or "Yet Anthoer Crypto Currency" - consider this. When people speak of "Bitcoin" as being "decentralized", they really are only referring to network logs and the theoretical potential to generate currency. In actuality, those who held existing fiat resources and hardware manufacturing quickly became juggernauts in the cryptocurrency world. I mention this because when I talk about the "fiat" of the above localized consensus I imagine many crypto-currency fans revolt and insist that no, only computationally generated cryptocurrencies are valuable because commerce should be "trustless". I feel that on an intuitive level striving for a trustless society is mal-incentivized. "FarmerCoin"(s) gives us another kind of cryptocurrency just like LiteCoin's alternative hashing algorithim co-exists with Bitcoin.
Besides the intrinsic value of whatever a cryptocurrency with a novel generation mechanism, "FarmerCoin" could be accepted by farmers for discounts on food that those same voters gave feedback on. I think this completes the incentive circuit quite nicely.
"FarmerCoin" could be Tomato Coin, Apple Coin. It could also exist for each specific farm, or region. This would be up to the farmers, regulators and community of voters to work together and decide. Having an exchange (centralized or not) for these currencies to trade could provide additional economic incentives to the voters and farmers. Even if "regular" cryptocurrency is not traded for FarmerCoin, community specific networks could trade eg plows, immunizations etc.
This concept can be applied to many real world actions. Making a work of art, patching a pothole, giving someone the finger, giving your cat a ball of yarn. Only if the community finds vaue in the "FarmerCoin" they are receiving and the farmer finds it beneficial to receive this subsidized fiat-by-consensus currency will the currency survive.
What farmercoin measures:
1) A farmer takes a picture of good produce (whether or not they sell said produce)
2) Verifiers / customers claim the produce looks good from only video evidence (did you know that you pinch the ends of cucumbers to check it? You knock on watermelons to judge their quality?).
3) The farmer gets a coin that is somehow more useful for trading than USD and the verifier gets discounts
What you want to measure: "Does the Farmer sell good produce"?
The market forces already gravitate towards the solving this problem. If I go to a farmer's market and one seller consistently gives me amazing tomatos and a second consistently gives me one rotten one per bunch, you can bet I'll "vote with my wallet" so to speak. Similarly, the farmer who sells better produce will be rewarded by people choosing his produce.
There's no need to try and force "Yet Another Crypto Crap" into something where it's not solving any problem.
As an added bonus, farmers are possibly one of the worst markets I could imagine to try and impose some meaningless techno mumbo-jumbo on. Many a farmer still refuses to use credit cards, preferring only cash, because cards are too complicated.
Today, we already have online reviews which people give out and consume for free on many sites, and that MUCH better fits this problem then some crazy akt-coin meant to proxy reviews.
"...the Bitcoin Blockchain cannot win without Bitcoin as a currency winning too, but if the Bitcoin price languishes, the incentive mechanism backstopping the Blockchain will be weak and therefore unreliable, ..."
Hasn't this already happened? I believe I heard something about a '51%' attack some time ago, which (I think) would mean that attacker could re-write history (I'd appreciate any corrections or clarifications).
Edit: Here's one story http://arstechnica.com/security/2014/06/bitcoin-security-gua... (not quite about rewriting history but double-spending becomes possible).
As far as "hasn't this already happened", some of the mining pools in aggregate have had or presently could combine to get 50+% of the Bitcoin mining power, but to perform the attack requires active coordination from all pool participants. If an attack like this were launched, it would be obvious to anyone viewing the blockchain, likely destroy the value of Bitcoin, and hence their investment, so is economically not a good idea for them.
> "...so is economically not a good idea for them."
This would imply that the trust model itself would have to undergo a fundamental shift (and likely has done). There are now entities you have to trust, rather than the system itself -- at which point the decentralised aspect is less of a defining feature.
Bitcoin has far from "won" in the sense of a currency and if another crypto-currency surpasses it's current popularity the faith in any crypto-currency being stable enough to move trillions of dollars each year is irreparably harmed.
People raising a few thousand dollars here and there in other crypto currencies is fun but it's not only paltry and not generally useful but can easily be attributed to entertainment more than economics. Once the novelty wears off, where will crypto currency stand. That's the most important question we need to ask ourselves. All these alt-coins aren't evidence of a thriving eco-system, they're evidence of the very reason why a cryptography based currency is inherently valueless.
The blockchain cannot last without bitcoin becoming massively more valuable. Many people already see bitcoin as being too valuable and alternatives too easy to create. What needs to be done to scale crypto-currency to the level of an actual currency? Government backing?
Bitcoin code, protocol and marshaling formats are a mess. Bitcoin blockchain and transaction data structures make too many hardcoded assumptions about underlying application - payments with a single token.
Bitcoin scripting language was designed for transaction validation only, which makes implementing a smart contracts with it a hack and requires external Oracles.
TL;DR: Bitcoin is a good PoC which gained a network effect.
Which is why people are working on e.g. Libconsensus.
There are dozens of functional Bitcoin clients based on entirely different codebases, which indicates that it's entirely possible to start from scratch.
>payments with a single token.
While the Bitcoin transaction format is a bit inflexible, you're wrong about the assumptions it makes. Even from the beginning, there has been in-protocol support for more advanced transaction types, like escrow transactions. You can even use a lot of these transaction types right now! There are still some transaction script opcodes that haven't been fully enabled yet, but that's just a matter of tweaking the consensus rules once we're sure that the opcode was implemented correctly and won't have any bad side effects. This has happened several times already with no major problems.
Writing a BIP to add a new opcode for every possible transaction type is not the answer. And still I don't see how multisig or P2SH can use something else than BTC tokens (colored coins require external asset registries).
Ah, Ethereum, the ultimate crypto-currency vaporware. When did vbuterin announce it, over a year ago now?
There's a reason the Bitcoin script is simple; because it does everything we want Bitcoin to do (facilitate economic transactions) and it's simple enough that we can be sure it works properly.
If Ethereum actually releases, I'll take that into consideration for my judgement of more complex script schemes.
Yes, Bitcoin is "single-token". What's the downside of this? Why do I care if I need an external registry for non-standard tokens? For tokens to have any effect in the real world (e.g. economic value), you need some form of "external asset registry" no matter what. In most cases, this comes in the form of the seller passing judgement on the value of the token.
The thing about bitcoin is there are a lot of things done "wrong" with it, that are impossible to retrofit into it. However, the network effect means that it's also impossible to switch to another altcoin without completely devaluing bitcoin, which would mean that the altcoin would be devalued because it could happen to the altcoin as well. I agree with that part. However, something that's pinned to the value of bitcoin like what I've read of the sidechain proposal would be a way to do that.
Which is obviously not true. Extra storage and bandwidth at the very least.
Also, presumably any bandwidth incurred by a sidecoin would have been incurred by bitcoin if the sidecoin didn't exist, so total bandwidth/storage would be similar.
What I'm hearing you describe is that the token used by a Sidechain is not one iota different from any other Bitcoin, except perhaps that its latest output script includes some new weird feature we haven't seen yet. It's like my sending you 1.0 Bitcoin through a vanilla BTC transaction and you telling me that I now possess 10e8 Satoshis, which are different that Bitcoin but always redeemable for Bitcoin pegged at that rate.
If tokens being used by Sidechains are permanently pegged to Bitcoin, and we assume merged mining, I withdraw my objection to the concept, and would instead direct my criticism toward how the concept was presented and its seeming suggestion that Sidechain tokens might one day detach and rise in value while Bitcoins potentially fall to zero.
It's not necessarily the case that it's permanently pegged to an exact bitcoin amount. Perhaps they way that miners of the sidechain are rewarded is by inflation/devaluing how much bitcoin the sidecoin can be burned for. The point is though, it's not market effects that are causing it.
Both groups are clearly 'talking their book', but this reads like little more than cheerleading/threatening aimed at himself and fellow speculators. For example:
If Cryptocurrency 2.0 ever replaces Bitcoin and all Bitcoins
become worthless, confidence in the category of
cryptocurrencies in general will be, I believe,
irreparably damaged. If Cryptocurrency 2.0 just replaced
Bitcoin, there's nothing stopping Cryptocurrency 3.0 from
replacing Cryptocurrency 2.0 and sending the value of its
tokens to zero. Ad infinitum.
How then to explain why people contribute to Wikipedia? Or volunteer at the local seniors centre? Or donate compute time to SETI@home (and other BOINC projects)? Or add map data to OpenStreetMap? Or test open source software? Yes, some of those people get paid, but many do not.
The incentive need not be economic.
This means that you will inevitably have massively funded efforts to subvert such a blockchain. One thing I know for sure is that simple financial self-interest is one of the most powerful things in the world. Every blockchain has that fact working against it. The reason they don't collapse is that on the other hand, they have that same force working for them as well. A volunteer blockchain like you propose wouldn't stand a whelk's chance in a supernova. Sorry.
A warp-drive is just a technology, but "colonizing the galaxy" is the application which will make people really use it.