On Sat, Jun 18, 2011 at 05:12:53PM -0700, Jon Cox wrote:
> > Currencies are consensual belief systems.
>
>
> No they are not.
>
> Example:
>
> In the USA, I *must* pay taxes in USD,
> not bitcoins, regardless of my level
> of belief or consent in either.
Obviously, the belief propagation cascade hasn't
reached the ISR yet. I'm sure if you're producing
sufficient income stream in BCs the government won't
be long in demanding a piece of the pie.
Meanwhile, you can convert the currencies with those
who share your belief, and render upon Caesar what is
his (or so he thinks).
>
> > Bitcoin will remain useful as long as there are
> > no effective attacks against the cryptosystem and/or
> > the infrastructure, and people continue
> > to believe in it.
>
>
> The idea of Bitcoin is grand; however, it seems deeply
> flawed on many levels.
That's okay, the currency systems it competes with also have
many flaws.
> For these reasons, it doesn't bother me at all that Bitcoin
> is a "fiat" currency per-se, but it *does* bother me that
All currencies today are fiat currencies.
> it is not a proxy for something with intrinsic local value
> to someone somewhere.
I presume by intrinsic values you mean something pretty low in
Maslow's hierarchy of needs (water, food, clothing, energy,
shelter, etc.). Any currency systems are just a more or less
convenient accounting systems, or proxies for things people
value.
> Essentially, we are asking people to barter things the
> make or do that have intrinsic local value for something
> that has none at all -- without the force of law twisting
Right, just like regular fiat money.
> their arm to do so (as the US government does when I pay
> my taxes in USD).
Money doesn't need a particular blessing. The only reason
alternative currencies are springing up is because the
entity in charge of its stewardship is doing such a piss-poor
job of it.
> Further, Bitcoin is encouraging the production of useless items
> (ie: key block solutions) merely because of the mathematically
Pigmented dead tree is remarkably useless.
> easy with which they can be verified, and the apparent difficulty
> of faking them.
Right, and unlike just firing up the printing press (or directly
tweaking bits, actually) nobody can shortcut the process without
doing actual work (which is environmentally pretty benign, unlike,
say, cyanide ore leeching).
> To do that robustly in the context of a computational arms race,
> Bitcoin makes these blocks harder to solve as things go along,
> thereby effectively *centralizing* the process of mining coins.
How are millions of invidual graphics accelerators spread around
the world centralized? No government can match that resource base,
particularly as energy required to run them won't ever ROI.
> It all comes down to blocks/$ efficiency, so if you can't compete
> with Exxon access to cheap energy, or the Fed for cheap USD to buy
> energy/computers, then you can't economically mine coins in the
> long run.
Nobody can economically mine coins on the long run, unless the
invidual value will jump sky high and continue rising monotonously
to match rising difficulty.
And I have no beef that the government might choose to mint
cash of their own. That's the idea of decentral mint: everybody
can do it.
> This argument leads to a very sobering conclusion:
> centralized mining is implicit in the trust model Bitcoin uses.
> Ouch.
Doesn't compute.
> Why would I want a purely faith-based "color" in this
> barter Petri net anyway, if I could just as well get
> one with some intrinsic value? I'd prefer to trade in
There is no such thing as an intrinsic, observer-independent
time-invariable value. Apart from atoms, and Joules.
> proxies for something with easily convertible worth
> outside the system during both the bootstrapping
> phase and afterwards.
Bits are bits. Atoms are atoms. They're not interconvertible,
other than using bits as accounting systems for atoms (or Joules).
>
> What Bitcoin mining looks like to me is a computer-science-only
> solution to a verification problem that has some extremely
> robust solutions outside of the world of computer science:
> multiple independent audits.
>
> While it's true that someone might pay off N auditors
I presume you mean abstract auditors? Not actual humans?
Because humans are quite useless for the niche that fine-grained
realtime digicash transactions occupy.
> (thereby creating fraudulent receipts for barter),
> lawsuits and insurance have already solved this problem
> fairly well in the real world of commodities markets,
Just code up a client implementing your solution, and let
it compete against BC, then. May the better system win.
> and in a way that does not count on some hashing cipher
> never being broken. Decentralized webs of trust could
> make a system like this extremely resilient to fraud.
Web of trust can be pretty easily gamed.
> Note that if the "colors" in a barter Petri net are proxies
> for commodities, then you really *do* have a robust way of
> auto-scaling currency supply to market size, and a decentralized
I realize that limitation of total volume is built-in. However,
BC is fractionable down to 8 decimal values, or so, and of course
there *will* be alternative currencies, should the current one
saturate into unusability.
As to auto-scaling, there is no way to measure the economy size without
introducing a yet another, easily gameable metric (vide GDP, inflation,
and such).
> system of currency production (ie: audited receipts for commodities)
> that encourages the production of things with intrinsic worth
> according to their actual market value.
I don't see how a currency need to have an encouragement for production
built-in. I presume future digital currencies will have a circulation
velocity accelerator built-in, to discourage hoarding.
> Bitcoin has none of this.
BC is just an ad hoc solution to address particularly glaring
deficiences of centralist fiats that are being run by crooks.
As is, it's damn good for that.
> Bitcoin's choice of trust model for mining seems to make it not
> very different from the USD fiat currency we have today:
> controlled by energy/finance oligarchs, inherently worthless,
> and divorced at point of injection into the system from
> meaningful market signals.
I think you're exactly describing the USD fiat there. BC is
decentral, also inherently worthless (duh, you can't produce
Joules by rearranging bits), and is immune to manipulative
injection to socialize the losses.
>
> > Bitcoin is unlikely to be it, but it will have successors and
> > competitors.
>
> Yes, I agree.
>
> -Jon
>
>
--
Eugen* Leitl <a href="http://leitl.org";>leitl</a> http://leitl.org
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