BTC in the PP

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Arthur Boe Nansa
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Re: BTC in the PP

Post by Arthur Boe Nansa » Sat Aug 28, 2021 6:24 pm

bitcoininthevp wrote:
Wed Aug 25, 2021 8:02 am
seajay wrote:
Tue Aug 24, 2021 8:40 pm
Security: Bitcoin involves counter-parties whereas gold does not.
No.
seajay wrote:
Tue Aug 24, 2021 8:40 pm
Fundamentally bit coin is a pretend scarcity, no different to clackers, only remain scarce until circumstances direct towards expansion of numbers. With a physical finite scarce object/item there are physical limits on expansion.
This is "pretend scarcity" hand waving again. Please make a specific argument against the scarcity at least.

There is a lot of talk of gold in space.

Im not anti gold. To be clear, Im contrasting gold and bitcoin and think bitcoin "wins" in many regards. Gold also wins in some aspects. Im willing to admit this. Are you?
From a superficial sense BTC has no counterparties, but in a philosophical sense miners are the ultimate counterparty. They control the network. I love the "well I can always spin up a node" argument. If you're not proving work, you're irrelevant. Most people making this argument aren't proving work and also probably wouldn't even when push comes to shove. Also, despite how slim the chances are, a cataclysmic scenario makes the network useless. If computers aren't running then bits aren't moving. Gold is physical.

What more could be said about pretend scarcity? In general when something is made up, it's hard to prove it isn't made up...
The point is that for the same reason BTC maximalists believe BTC has value, every other crypto project has value- namely that scarcity exists and demand will drive its price up. In a funny money world this feels like it makes sense. But at the end of the day, value comes from the utility of something. BTC isn't special. It's network effect is special. As far as a 21M supply cap is concerned, why would that be better then a BTC ver. 2 with only 20M coins? Isn't that more scarce?

The real thesis of BTC is its memetics. As far as tech, there are better projects. Supply? Better projects. Utility? Better projects.

BTC is currently displaying the power of first mover advantage. Whether it holds it or not, I guess we'll see...
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Re: BTC in the PP

Post by vincent_c » Sat Aug 28, 2021 8:20 pm

If anyone legitimately has concerns about bitcoin or crypto in general but is interested, want to save some time, and approaches with questions rather than simply stating their personal potentially flawed views then at that point I’ll be more than happy to engage. In the meantime, there are those with more patience than me who might carry on the discussion.
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Re: BTC in the PP

Post by Kbg » Sun Aug 29, 2021 1:50 pm

Here’s one.

What does happen if electricity goes out? Realistically unless we are in Mad Max world the lights don’t go out globally. Does storage then become a function of the physical disk space where a token resides and getting it supplied with electricity?

So here’s a scenario not totally implausible either. All electricity from San Jose to south of Portland is out for two months. I live in that area and due to loss of employment l need to covert my BTC to 50k USD for immediate use.

What do I do?
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Re: BTC in the PP

Post by Mark Leavy » Sun Aug 29, 2021 2:07 pm

Kbg wrote:
Sun Aug 29, 2021 1:50 pm
Here’s one.

What does happen if electricity goes out? Realistically unless we are in Mad Max world the lights don’t go out globally. Does storage then become a function of the physical disk space where a token resides and getting it supplied with electricity?

So here’s a scenario not totally implausible either. All electricity from San Jose to south of Portland is out for two months. I live in that area and due to loss of employment l need to covert my BTC to 50k USD for immediate use.

What do I do?
I'll take a stab at this one...

1) Bitcoin can live in non volatile storage. So you may not have access to it without power, but it doesn't go away.
2) Not a good idea to rely on Bitcoin for emergency funds.

Full disclosure, I own zero bitcoin and have little interest in owning any. That's neither an opinion nor a recommendation.
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Re: BTC in the PP

Post by Kbg » Sun Aug 29, 2021 2:14 pm

Item #1 pretty much tells one most of what they need to know.

Can BTC be backed up which implies 1 or more copies exist?
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Re: BTC in the PP

Post by vincent_c » Sun Aug 29, 2021 2:17 pm

Kbg wrote:
Sun Aug 29, 2021 1:50 pm
Here’s one.

What does happen if electricity goes out? Realistically unless we are in Mad Max world the lights don’t go out globally. Does storage then become a function of the physical disk space where a token resides and getting it supplied with electricity?

So here’s a scenario not totally implausible either. All electricity from San Jose to south of Portland is out for two months. I live in that area and due to loss of employment l need to covert my BTC to 50k USD for immediate use.

What do I do?
So there’s two parts to this.

1) Is the entire BTC network dependent on power?

I would say that in practice the value stored in BTC does depend on power because it depends on the security of the network which requires nodes that function using power. If the number of nodes go to a small number due to power issues then the network will likely fail.

The thing you need to understand is that a token is not stored on disk space. It is stored “on the network” which isn’t in any physical location.


2) Do you have access to BTC if you don’t have access to power?

In this scenario you wouldn’t have access to your digital property but technically you also have not lost any value. I do think this is a good reason why we will always need paper money since this is the same reason why a credit card can’t buy anything if the power is out.


What I would like to know is that when you have these concerns, is it because you believe a store of value needs to be accessible in any situation or is that just another reason why we need to differentiate between short term and long term stores of value?
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Re: BTC in the PP

Post by Kbg » Sun Aug 29, 2021 2:33 pm

Well there’s no thing as a network that doesn’t have physical properties. If data exists it is at rest or in transit and if in transit a bunch of protocols are in play that say what happens on both ends when that specific piece of data completes its transmission.

The “cloud” is really a buttload of physical disk space existing in physical geographic locations with highly sophisticated sync protocols.

Honestly, my gut sense is BTC is a modern day tulip and it isn’t going to end well. But these questions are more like, is the tulip in a pot with good soil or is it cut and in a water vase I just got from the florist and it’s dead in 7-14 days (metaphorically).
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Re: BTC in the PP

Post by vincent_c » Sun Aug 29, 2021 2:53 pm

Actually, there is because what it actually is is many copies of a ledger such that a token exists on any of those copies. It’s different from the cloud because that could mean that it is stored in a smaller number of servers.

The better way to think about it is whether a piece of a pirated movie is stored in any one location if you understand my bittorrent analogy.
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Re: BTC in the PP

Post by vincent_c » Sun Aug 29, 2021 3:16 pm

Kbg wrote:
Sun Aug 29, 2021 2:33 pm
Honestly, my gut sense is BTC is a modern day tulip and it isn’t going to end well. But these questions are more like, is the tulip in a pot with good soil or is it cut and in a water vase I just got from the florist and it’s dead in 7-14 days (metaphorically).
Have you thought about what would need to happen for you to make up your mind one way or the other?
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Re: BTC in the PP

Post by l82start » Sun Aug 29, 2021 4:35 pm

vincent_c wrote:
Sun Aug 29, 2021 3:16 pm
Kbg wrote:
Sun Aug 29, 2021 2:33 pm
Honestly, my gut sense is BTC is a modern day tulip and it isn’t going to end well. But these questions are more like, is the tulip in a pot with good soil or is it cut and in a water vase I just got from the florist and it’s dead in 7-14 days (metaphorically).
Have you thought about what would need to happen for you to make up your mind one way or the other?
the day it can easily be used to buy "Pron" it becomes money and stable....
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Re: BTC in the PP

Post by vincent_c » Sun Aug 29, 2021 5:07 pm

l82start wrote:
Sun Aug 29, 2021 4:35 pm
the day it can easily be used to buy "Pron" it becomes money and stable....
I know this post isn’t kbg’s answer and I don’t see a question here after this response so let me just say that I will not further engage with posts that are not serious in nature and without questions or challenges even if I am quoted. I hope this does not disuade those who are serious in engaging in this discussion for the sake of your financial future.

Now navigating past the satire and getting to the substance of the post, if there was an implied question it would be whether BTC needs to be money in order to be stable. This is a fundamental misunderstanding of what BTC is because the notion of stability is relative.

Is the Yuan stable verus the US dollar? Can it be used for payments in the United States? Surely the point was not that BTC needs to track the USD in order to be considered stable.

So lets say that stability in this context is daily volatility not more than gold’s volatility priced in dollars. I don’t see that gold needs to be used for payments in order for it to be stable in this sense.

Does this also mean that daily volatility is an important criteria to someone trying to determine whether something is a fad or not? How about a history of recovering from huge crashes that regularly occur when the infrastructure and adoption was far smaller than what it is today?

A note for you guys that hope that this is a fad so you can remain ignorant, I will add that just because today’s price may be overvalued does not mean that a month ago it was. Just because it was undervalued a month ago does not mean that it wasn’t in a speculative bubble a couple months ago. Just because there is high volatility in BTC does not mean it can be ignored in portfolio construction.

Short term volatility is what is required to get to long term stability. I think the point where one personally must diversify gold with BTC is when one is convinced that with one’s personal time preference in mind, that BTC is not a fad and it will be very useful as a community to be able to identify when that is if you are not personally convinced so far.

I must admit, if I had to pull the trigger on this decision now, it would be much harder than when I made that decision even though I might argue that it should be easier. It could be that this decision will increasingly become harder to make in the future since the clearer the decision is, the more costly it would be if it failed later on after the fundamentals have improved.

By the time there is no risk, you would have already borne the full consequence of not reacting to some of the key assumptions you should be testing every day as a PP investor.
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Re: BTC in the PP

Post by l82start » Sun Aug 29, 2021 5:36 pm

vincent_c wrote:
Sun Aug 29, 2021 5:07 pm
l82start wrote:
Sun Aug 29, 2021 4:35 pm
the day it can easily be used to buy "Pron" it becomes money and stable....
I know this post isn’t kbg’s answer and I don’t see a question here after this response so let me just say that I will not further engage with posts that are not serious in nature and without questions or challenges even if I am quoted. I hope this does not disuade those who are serious in engaging in this discussion for the sake of your financial future.
this used to be a fun place to post..... no longer...

and in-spite if it being a quick toss off post with a hint of funny.. there is an underling truth to the idea that most of human development, advancement and commerce has been a result of our sexual instincts and needs.... human sexuality is a stable force.. if BC became commonly used in exchange for it ....
if VHS has porn and Beta-max doesn't ..... buy VHS...
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Re: BTC in the PP

Post by bitcoininthevp » Mon Aug 30, 2021 11:25 am

Kbg wrote:
Sun Aug 29, 2021 1:50 pm
Here’s one.

What does happen if electricity goes out? Realistically unless we are in Mad Max world the lights don’t go out globally. Does storage then become a function of the physical disk space where a token resides and getting it supplied with electricity?

So here’s a scenario not totally implausible either. All electricity from San Jose to south of Portland is out for two months. I live in that area and due to loss of employment l need to covert my BTC to 50k USD for immediate use.

What do I do?
If one area of the world loses electricity it will be hard to use your electric money. You still obviously own your bitcoins, but you cannot transact with them unless you are able to get some communication to the Internet (and thus into the bitcoin blockchain). For example a txt message, paper letter, satellite broadcast etc. Someone did a ham radio broadcast of a transaction which is interesting but not user friendly obviously: https://www.coindesk.com/markets/2019/0 ... ham-radio/

Radio and Satellite obv require some power but I included them since they could be powered locally and dont require Internet or power "grid".

If power went out completely world wide and no one could ever turn on a computer ever again Bitcoin would be dead basically.

If power went out completely world wide for "some" period of time, the network would be able to recover, even if off for days/weeks (or more really). This would likely result in some forks in the network as things come back online but eventually consensus on the longest chain with the most proof of work would happen and Bitcoin would carry on. It would be dangerous to try to receive transactions during a period like this.
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Re: BTC in the PP

Post by bitcoininthevp » Mon Aug 30, 2021 11:28 am

l82start wrote:
Sun Aug 29, 2021 4:35 pm
vincent_c wrote:
Sun Aug 29, 2021 3:16 pm
Kbg wrote:
Sun Aug 29, 2021 2:33 pm
Honestly, my gut sense is BTC is a modern day tulip and it isn’t going to end well. But these questions are more like, is the tulip in a pot with good soil or is it cut and in a water vase I just got from the florist and it’s dead in 7-14 days (metaphorically).
Have you thought about what would need to happen for you to make up your mind one way or the other?
the day it can easily be used to buy "Pron" it becomes money and stable....
I dont pron but grey/black markets are early adopters of new tech usually. Including silkroad and their successors on the drug side and backpage and other such sites for pron. I dont have data on crypto usage for such sites but it feels like a good use case due to "hide it from the wife" and potential censorship concerns (depending on where you live I guess).
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Re: BTC in the PP

Post by bitcoininthevp » Mon Aug 30, 2021 12:16 pm

Arthur Boe Nansa wrote:
Sat Aug 28, 2021 6:24 pm
From a superficial sense BTC has no counterparties, but in a philosophical sense miners are the ultimate counterparty. They control the network. I love the "well I can always spin up a node" argument. If you're not proving work, you're irrelevant. Most people making this argument aren't proving work and also probably wouldn't even when push comes to shove.
This isnt quite true in the sense I think you mean or imply it. Miners have some degree of control but only within following Bitcoin's protocol rules. For example, if a miner, or even most miners decide to reward themselves more bitcoins than the rules allow, the other nodes will reject that miners block, regardless of how much work was put into that block, and regardless of how many blocks other miners mine on top of it.

So within Bitcoin's rules what can miners do?

Miners can censor transactions, as "censorship" isnt really detectable/enforced at the protocol level.
Miners can mine empty blocks (no transactions in the block). This is similar to censorship mentioned above.

Miners can NOT add to bitcoins supply, steal funds, etc and still be complying with the Bitcoin protocol.

What would happen if miners started breaking with Bitcoin protocol rules? Well really it comes down to economic activity. Essentially there would be a fork, say 21M (original chain) Bitcoin and then 22M (22 million coin miner chain). Everyone who had coins at the time of the fork would have the equivalent coins on each chain.

So what could an individual person do? You could sell your 22M coins for 21M coins at the going exchange rate as your "vote" for 21M chain. Driving UP the price of 21M coin and DOWN 22M coin. Others might do the same.

This is basically what happened when the 2017 fork occurred, creating Bitcoin Cash. There were believers on each side of the fork that sold the opposing chain coins. The result? BTC/Bitcoin won out from a price perspective over BCH/Bitcoin-Cash. You could get 4 BCH for each BTC early in the fork. Now you can get nearly 80 BCH for each BTC.

I believe the BTC side won that battle as the economic majority wanted a monetary policy that changed LESS. BCH wanting to increase the block size was, IMHO for the majority, more risky option and thus gained less market traction. For more on the block size saga/war, this is a great book: https://www.amazon.com/Blocksize-War-co ... B08YQMC2WM

I think risks of forks will almost alway be won in the future by the more "conservative side" for this reason. Miners are aware of this risk of deviating from the protocol and I think risks of such miners going rogue are less, but of course not eliminated.
Arthur Boe Nansa wrote:
Sat Aug 28, 2021 6:24 pm
Also, despite how slim the chances are, a cataclysmic scenario makes the network useless. If computers aren't running then bits aren't moving. Gold is physical.
Given whats happening in the world, the future concern about atoms (humans, gold) moving seems greater than the concern about bits (bitcoin) moving. Lockdowns, physical restrictions, etc.
Arthur Boe Nansa wrote:
Sat Aug 28, 2021 6:24 pm
What more could be said about pretend scarcity? In general when something is made up, it's hard to prove it isn't made up...
The point is that for the same reason BTC maximalists believe BTC has value, every other crypto project has value- namely that scarcity exists and demand will drive its price up.
There is code that codifies the finite supply of Bitcoin, so in a "code" sense, the scarcity is clear. But at the end of the day, humans are the ones running that code (or not). People could decide to go run 22M bitcoin, its entirely possible, in theory. But the game theory and incentives here are against such changes as I outlined above. It would be like saying that silver could be better money than gold some day or some such argument. Sure it could happen but that doesn’t stop me from investing in gold.

But Gold and Silver have real differences and "bit coins" and other coins are all the same! See below:
Arthur Boe Nansa wrote:
Sat Aug 28, 2021 6:24 pm
In a funny money world this feels like it makes sense. But at the end of the day, value comes from the utility of something.
Ill keep repeating it. Value is subjective. Whatever "utility" means is just a subset of what humans value based on their preferences and environments. Controlling some # of digital tokens sitting in a ledger IS utility for some people. The ability to send such tokens is utility, etc.
Arthur Boe Nansa wrote:
Sat Aug 28, 2021 6:24 pm
BTC isn't special. It's network effect is special. As far as a 21M supply cap is concerned, why would that be better then a BTC ver. 2 with only 20M coins? Isn't that more scarce?
I think network effect is special too. But I think you are missing the bigger picture I mentioned before: the credibility of the monetary policy. Scarcity of the units is only part of monetary credibility. A HUGE super set of limited/unchanging supply is monetary policy.

A monetary policy that limits changes seems to be preferred over one that changes often. Not changing block sizes, not inflating (or DEFLATING!) units, adding in a bunch of features with potential security issues, has a large proof of work to secure it, etc.

In cases where Bitcoin does add features, it is done in a backward compatible way, a way that preserves and increases decentralization, and also it is done in a way that enhances Bitcoin's monetary properties (decentralization, fungibility, security, privacy, etc).
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Re: BTC in the PP

Post by bitcoininthevp » Mon Aug 30, 2021 12:35 pm

vincent_c wrote:
Sun Aug 29, 2021 5:07 pm
I know this post isn’t kbg’s answer and I don’t see a question here after this response so let me just say that I will not further engage with posts that are not serious in nature and without questions or challenges even if I am quoted. I hope this does not disuade those who are serious in engaging in this discussion for the sake of your financial future.
It’s a funny thing, us humans. It is really hard for us to state some assumptions that we have and then ask for feedback from other people.

Instead it comes out in "bit coins is beanie babies"-like snide remarks. But I do believe many people commenting here (and others not commenting!) are here to learn. Even the beanie babies.

In that spirit, Ill offer myself up. Ive stated my assumptions and opinions here, what is it that I am missing?

To try and put my thesis in a sentence: Bitcoin is the asset with the closest match to the monetary properties that humans value and is in process of monetizing.
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Re: BTC in the PP

Post by vincent_c » Mon Aug 30, 2021 12:42 pm

bitcoininthevp wrote:
Mon Aug 30, 2021 12:16 pm

Miners can NOT add to bitcoins supply, steal funds, etc and still be complying with the Bitcoin protocol.
I think he may have meant that miners/mining pools can collude can perform a 51% attack and double spend on the network. In the past there were worries that ISPs could spoof mining traffic to do the same. Does anyone view this as a serious concern that we need to discuss it?
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Re: BTC in the PP

Post by vincent_c » Mon Aug 30, 2021 12:57 pm

bitcoininthevp wrote:
Mon Aug 30, 2021 12:35 pm

In that spirit, Ill offer myself up. Ive stated my assumptions and opinions here, what is it that I am missing?

To try and put my thesis in a sentence: Bitcoin is the asset with the closest match to the monetary properties that humans value and is in process of monetizing.
I think there are a couple things here.

1) Gut feelings about an asset that looks overvalued

I think most people just can't understand that it is okay to overpay for something in the short term when in the long term the amount overpaid is insignificant. It's basically the reason why people don't understand exponential growth, not because they can't visualize it, but because if you tell most people that it is very likely that an asset will drop 50% shortly after they buy it then they will not buy it even if it is also very likely that it will rise by 500% later.

People see the 50% drop potential and think that they might as well buy it when it falls 50%, but they don't realize that at that point they might not be able to pull the trigger.

2) Disagreement with the idea that bitcoin is money

This is where I differ from bitcoininthevp because I think it doesn't help to frame bitcoin as being in the process of monetizing. The reason is because opponents to this thinking will just focus on the fact that they don't think bitcoin will ever become money since they don't see it.

By doing so they miss things that they might actually agree on, like there is a growing blockchain industry, that there will be public blockchains, that there will be a digital collateral asset, that bitcoin currently fulfills that role and we need to discuss the reasons why it may or may not ultimately be the gold equivalent in that blockchain industry. Only once there is agreement on the future landscape where we can begin to discuss whether bitcoin can be anything more than digital property that has monetary-like properties.
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Re: BTC in the PP

Post by bitcoininthevp » Mon Aug 30, 2021 1:27 pm

vincent_c wrote:
Mon Aug 30, 2021 12:42 pm
bitcoininthevp wrote:
Mon Aug 30, 2021 12:16 pm

Miners can NOT add to bitcoins supply, steal funds, etc and still be complying with the Bitcoin protocol.
I think he may have meant that miners/mining pools can collude can perform a 51% attack and double spend on the network. In the past there were worries that ISPs could spoof mining traffic to do the same. Does anyone view this as a serious concern that we need to discuss it?
The ISP concern doesn’t seem feasible regarding double spends if you are running your own node. The ISP would need to essentially mine those blocks in order to feed you valid blocks that your node would accept.

---

On the double spend topic for context for the thread. The idea here is that someone sends you $1,000,000 in BTC in a transaction and you see that transaction in the blockchain after a block comes in a few minutes. Then another block comes in on top of it. And another. So now you have 3 "confirmations" (blocks) for your transaction. You give the guy the plutonium he ordered for his bombs (since bitcoins for criminals ofc) and he leaves on his helicopter. Then he calls his Bitcoin miner buddies, and they stop their normal operations and work to essentially "redo" mining the last 3 blocks such that everything is basically the same except that his $1m transaction to you is no longer in the block chain. Poof, your payment is gone. This can be done all the back to the bitcoin first block in theory. In practice most people feel safe with large amounts after 6 confirmations, but you can read more on that here: https://en.bitcoin.it/wiki/Confirmation

This is in some sense another form of censorship per my previous post. Miners are not stealing money persay but censoring a recent transaction. It is a risk but this sort of thing basically never happens on Bitcoin and is mitigated by waiting more confirmations (blocks).
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Re: BTC in the PP

Post by bitcoininthevp » Mon Aug 30, 2021 1:34 pm

vincent_c wrote:
Mon Aug 30, 2021 12:57 pm
1) Gut feelings about an asset that looks overvalued
Im not necessarily trying to convince anyone to buy bitcoin so this isnt really a concern of mine. I think the big money will come from companies buying which has started, and then larger orgs and then governments.
vincent_c wrote:
Mon Aug 30, 2021 12:57 pm
2) Disagreement with the idea that bitcoin is money

This is where I differ from bitcoininthevp because I think it doesn't help to frame bitcoin as being in the process of monetizing. The reason is because opponents to this thinking will just focus on the fact that they don't think bitcoin will ever become money since they don't see it.

By doing so they miss things that they might actually agree on, like there is a growing blockchain industry, that there will be public blockchains, that there will be a digital collateral asset, that bitcoin currently fulfills that role and we need to discuss the reasons why it may or may not ultimately be the gold equivalent in that blockchain industry. Only once there is agreement on the future landscape where we can begin to discuss whether bitcoin can be anything more than digital property that has monetary-like properties.
I guess theres two things here:

1. Do I believe Bitcoin is becoming money
2. Is "framing" Bitcoin as becoming money the best way to achieve something else (convincing opponents, newcomers, etc)

I believe 1 and dont really have a strong opinion on 2.
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Re: BTC in the PP

Post by vincent_c » Mon Aug 30, 2021 1:41 pm

bitcoininthevp wrote:
Mon Aug 30, 2021 1:27 pm

The ISP concern doesn’t seem feasible regarding double spends if you are running your own node. The ISP would need to essentially mine those blocks in order to feed you valid blocks that your node would accept.
I just googled it and it seems like the ISP concern was regarding stealing funds from the miners/mining pools rather than the ISPs engaging in double spending.
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Re: BTC in the PP

Post by Arthur Boe Nansa » Tue Aug 31, 2021 12:48 pm

I'll clarify that i've been in the crypto space for a few years and i've already said that personally, I prefer BCH as the proper Bitcoin chain. However that's not the discussion here so i'll limit myself to discussing BTC's properties without making direct comparisons to other projects. You're very level headed about the discussion and hopefully we can continue it for others who may not be as well versed on the technical side of things (and how it may relate to the economic side of things).
bitcoininthevp wrote:
Mon Aug 30, 2021 12:16 pm
This isnt quite true in the sense I think you mean or imply it. Miners have some degree of control but only within following Bitcoin's protocol rules. For example, if a miner, or even most miners decide to reward themselves more bitcoins than the rules allow, the other nodes will reject that miners block, regardless of how much work was put into that block, and regardless of how many blocks other miners mine on top of it.
What do you mean "even if most miners decide"? If by most miners you mean most hashrate, then they are the Bitcoin chain. Other chains rejecting their block puts those that have rejected on the minority chain, not the other way around. That is enough to create serious rifts in the essential question of "which chain should be followed".
So within Bitcoin's rules what can miners do?

Miners can censor transactions, as "censorship" isnt really detectable/enforced at the protocol level.
Miners can mine empty blocks (no transactions in the block). This is similar to censorship mentioned above.

Miners can NOT add to bitcoins supply, steal funds, etc and still be complying with the Bitcoin protocol.
Again, in a 51% attack or majority shift in miner sentiment, it's not that they're not complying, it's that you're not complying. Code is law. ;)
What would happen if miners started breaking with Bitcoin protocol rules? Well really it comes down to economic activity. Essentially there would be a fork, say 21M (original chain) Bitcoin and then 22M (22 million coin miner chain). Everyone who had coins at the time of the fork would have the equivalent coins on each chain.

So what could an individual person do? You could sell your 22M coins for 21M coins at the going exchange rate as your "vote" for 21M chain. Driving UP the price of 21M coin and DOWN 22M coin. Others might do the same.

This is basically what happened when the 2017 fork occurred, creating Bitcoin Cash. There were believers on each side of the fork that sold the opposing chain coins. The result? BTC/Bitcoin won out from a price perspective over BCH/Bitcoin-Cash. You could get 4 BCH for each BTC early in the fork. Now you can get nearly 80 BCH for each BTC.

I believe the BTC side won that battle as the economic majority wanted a monetary policy that changed LESS. BCH wanting to increase the block size was, IMHO for the majority, more risky option and thus gained less market traction. For more on the block size saga/war, this is a great book: https://www.amazon.com/Blocksize-War-co ... B08YQMC2WM
I know. My point was less about the technical aspect of a chain split and more about the weak argument of "BTC has value because it has a capped supply." Anyone can make a carbon copy of the chain with less Bitcoins and have every quality Bitcoin has down to a T, but with less supply, thereby being objectively "scarcer" with the same qualities (well, except network effect, which i'll address at the end).

This was a nice unbiased recap of the chain-split. Unfortunately the book, while presented well, is not very unbiased and is good at "nudging the reader". People can read it for the main overview, but I recommend people interested in the subject to look at other sources as well.
I'll only say that while most people ultimately didn't want a block increase, it was less about their actual preference and more about "trusting the experts to make the best decision." Satoshi had clearly stated increasing block size would make sense when it was needed and Adam Back was originally in favor of steadily increasing the block size as well. Why it was slowly ignored as the preferred scaling solution is a different discussion...
I think risks of forks will almost alway be won in the future by the more "conservative side" for this reason. Miners are aware of this risk of deviating from the protocol and I think risks of such miners going rogue are less, but of course not eliminated.
Definitely agree here. That being said, miners ultimately do whats in their financial interest (even if users won't be happy about it) and can also be influenced by larger forces (that may or may not materialize, but the CCP telling some of their biggest businesses to "help out" with fiscal duties and their compliance with those demands isn't reassuring).
Given whats happening in the world, the future concern about atoms (humans, gold) moving seems greater than the concern about bits (bitcoin) moving. Lockdowns, physical restrictions, etc.
Disagree here. If things ever get real bad I think running away with smuggled gold makes a lot more sense then relying on lightning network hubs to broadcast transactions. Even if you did, who would provide you the physical things? We take it for granted, but we're still very, very reliant on the physical world. Your paradise in VR means nothing if you don't have a roof over your head IRL.
There is code that codifies the finite supply of Bitcoin, so in a "code" sense, the scarcity is clear. But at the end of the day, humans are the ones running that code (or not). People could decide to go run 22M bitcoin, its entirely possible, in theory. But the game theory and incentives here are against such changes as I outlined above. It would be like saying that silver could be better money than gold some day or some such argument. Sure it could happen but that doesn’t stop me from investing in gold.
The difference is silver and gold have physical properties you can use. Whether their values go up, down, flip or whatever is less relevant... the point is that they can do things people eventually need.
But Gold and Silver have real differences and "bit coins" and other coins are all the same! See below:

Ill keep repeating it. Value is subjective. Whatever "utility" means is just a subset of what humans value based on their preferences and environments. Controlling some # of digital tokens sitting in a ledger IS utility for some people. The ability to send such tokens is utility, etc.
Value is subjective. But it doesn't mean the term is totally meaningless when trying to justify/not justify the merit of things. Controlling some # of digital tokens isn't utility to people, the transfer of their perceived value is. The ability to send such tokens isn't utility, the transfer of their perceived value is. The great irony is that most people enthusiastic about crypto don't even hold their own coins. They like to say they can if they want to, but they don't. But that's the point of the decentralized, permissionless ledger in the first place! So what value are they really interested in? The properties of Bitcoin or the "perceived value and reflected dollar price" of the properties of Bitcoin?
I'm not belittling the strides crypto is making- to the contrary, i'm very excited about it, but there's a present reality people like to ignore. Instead of addressing the issues head on, they use vacuous statements like "we're still so early" and "few understand this" to keep the momentum of the narrative alive and well, which leads me to my next point...
I think network effect is special too. But I think you are missing the bigger picture I mentioned before: the credibility of the monetary policy. Scarcity of the units is only part of monetary credibility. A HUGE super set of limited/unchanging supply is monetary policy.

A monetary policy that limits changes seems to be preferred over one that changes often. Not changing block sizes, not inflating (or DEFLATING!) units, adding in a bunch of features with potential security issues, has a large proof of work to secure it, etc.
Don't get me wrong, I also think the network effect is special. In fact, it's almost unbelievable.
But the network effect being special is not an inherent property of BTC, it's a startling outcome of the amalgamation of factors that have helped push BTC to the moon. Whether that push continues or not is anyone's guess, but such a strong network effect (when the underlying fundamentals are competitively weak) are both a blessing and a curse.
In cases where Bitcoin does add features, it is done in a backward compatible way, a way that preserves and increases decentralization, and also it is done in a way that enhances Bitcoin's monetary properties (decentralization, fungibility, security, privacy, etc).
Predictability in project direction is certainly comforting, but I don't think it's enough to make BTC the "clear winner" as far as a future money or future store of value amongst the competition. Time will tell.


Parting words: I'm not trying to tell people what to do, i'm playing devils advocate and so long as people stay diversified for changing macro conditions they should be fine.
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bitcoininthevp
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Re: BTC in the PP

Post by bitcoininthevp » Tue Aug 31, 2021 8:11 pm

Arthur Boe Nansa wrote:
Tue Aug 31, 2021 12:48 pm
bitcoininthevp wrote:
Mon Aug 30, 2021 12:16 pm
This isnt quite true in the sense I think you mean or imply it. Miners have some degree of control but only within following Bitcoin's protocol rules. For example, if a miner, or even most miners decide to reward themselves more bitcoins than the rules allow, the other nodes will reject that miners block, regardless of how much work was put into that block, and regardless of how many blocks other miners mine on top of it.
What do you mean "even if most miners decide"? If by most miners you mean most hashrate, then they are the Bitcoin chain. Other chains rejecting their block puts those that have rejected on the minority chain, not the other way around. That is enough to create serious rifts in the essential question of "which chain should be followed".
There is a disconnect here. Bitcoin isnt the chain with the most proof of work, it’s the chain with the most proof of work that is valid. Miners that follow the existing Bitcoin protocol, which all current Bitcoin Core nodes run and enforce, can "misbehave" (for lack of a better word) in limited ways. Censorship of transactions, mining empty blocks, or 51% attacks are examples of this. These are all valid-in-the-existing-protocol ways to misbehave as a miner. These are valid behaviors because the existing Bitcoin protocol allows them.

There are other, invalid-in-the-existing-protocol ways for miners to misbehave as well. For example, rewarding themselves 1,000,000 BTC in a single block. This is invalid regarding the existing Bitcoin Core software/Bitcoin protocol that the network runs. If all miners, right now, started rewarding themselves 1,000,000 BTC, there would immediately be a fork in the network.

This is basically what I already outlined in my "22M Bitcoin" fork example previously. All mining power is on the 22M chain, but the credible monetary policy, which economic actors value, is on the 21M chain. So everyone sells 22M coins and buys the 21M coins, driving up 21M price and down 22M price. That leaves 22M chain with all the miners fighting over less and less revenue, and eventually losing money. And leaves 21M chain with its easy mining, a huge financial incentive for miners to defect from 22M chain, or huge incentive for new miners to join the 21M chain.

So what is important in such a split is where the economic majority will go, not where the miners choose to go.
Arthur Boe Nansa wrote:
Tue Aug 31, 2021 12:48 pm
My point was less about the technical aspect of a chain split and more about the weak argument of "BTC has value because it has a capped supply." Anyone can make a carbon copy of the chain with less Bitcoins and have every quality Bitcoin has down to a T, but with less supply, thereby being objectively "scarcer" with the same qualities (well, except network effect, which i'll address at the end).
You and I can spin up NansaCoin tonight with the same code, but what would be missing is the credible part of the credible monetary policy as I refer to it. NansaCoin has no developers, a weak hashrate, no lindy effect, no supporting application ecosystem, etc. Its not scarcity, as you point out, its credible monetary policy.

Arthur Boe Nansa wrote:
Tue Aug 31, 2021 12:48 pm
I'll only say that while most people ultimately didn't want a block increase, it was less about their actual preference and more about "trusting the experts to make the best decision."
Their preference was to trust the (perceived) experts.
Arthur Boe Nansa wrote:
Tue Aug 31, 2021 12:48 pm
...miners ultimately do whats in their financial interest (even if users won't be happy about it) and can also be influenced by larger forces (that may or may not materialize, but the CCP telling some of their biggest businesses to "help out" with fiscal duties and their compliance with those demands isn't reassuring).
In an extreme example you have the 22M CCP-backed chain forked off from 21M chain. Basically what happened in 2017.
Arthur Boe Nansa wrote:
Tue Aug 31, 2021 12:48 pm
The difference is silver and gold have physical properties you can use. Whether their values go up, down, flip or whatever is less relevant... the point is that they can do things people eventually need.
I dont really understand where this is going, you’re arguing that golds non-monetary uses (1% of golds value? 2%?) means its somehow significantly better than Bitcoin in some way? Because if gold is de-monetized your rock is worth a few bucks and if Bitcoin is demonetized you end up with zero instead? This doesn’t seem like an important point but maybe Im missing it.
Arthur Boe Nansa wrote:
Tue Aug 31, 2021 12:48 pm
Value is subjective. But it doesn't mean the term is totally meaningless when trying to justify/not justify the merit of things. Controlling some # of digital tokens isn't utility to people, the transfer of their perceived value is. The ability to send such tokens isn't utility, the transfer of their perceived value is.
I think it’s a bit of a spectrum. From a price perspective, people seem to prefer stronger store of value-ish tokens with a weaker transaction mechanism. After all we have 100s of different ~free transaction apps (venmo, zelle, paypal, etc) and tons of credit/debit card choices for easy transactions.
Arthur Boe Nansa wrote:
Tue Aug 31, 2021 12:48 pm
The great irony is that most people enthusiastic about crypto don't even hold their own coins. They like to say they can if they want to, but they don't. But that's the point of the decentralized, permissionless ledger in the first place! So what value are they really interested in? The properties of Bitcoin or the "perceived value and reflected dollar price" of the properties of Bitcoin?
I cant comment on behalf of others, but self custody is opt in and that seems ok. I think this will be solved as the space matures with better apps, usability, and services for multisig.
Arthur Boe Nansa wrote:
Tue Aug 31, 2021 12:48 pm
Don't get me wrong, I also think the network effect is special. In fact, it's almost unbelievable.
But the network effect being special is not an inherent property of BTC, it's a startling outcome of the amalgamation of factors that have helped push BTC to the moon. Whether that push continues or not is anyone's guess, but such a strong network effect (when the underlying fundamentals are competitively weak) are both a blessing and a curse.
I agree regarding network effect/first mover advantage. But as I said I think its sub part to the credible monetary policy.
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Re: BTC in the PP

Post by vincent_c » Tue Aug 31, 2021 9:41 pm

To make things simple, people should know that the type of blockchain bitcoin is is considered more secure than most of the newer blockchains that are mostly some version of proof of stake. At the end of the day, encryption is probabilistic and it is secure enough for most people, I think that is a fair statement.

If you are concerned about bitcoin’s security then the conversation is over.

If you are concerned about hardfork, I’ll say this isn’t 2017 and I’m very sorry for you if you supported BCH all this time. The thing is, people should understand the one key thing about forks which is that when a blockchain forks the token holders get both coins in the fork and you don’t lose anything. The market will sort out which is the blockchain that retains the most value and it doesn’t affect you at all.

Why does BTC have value? It’s because everyone knows BTC and trust is difficult to accquire. Not a lot of people even know ethereum and if someone can name a project that is looking to be a store of value blockchain then let’s hear it because if I can’t think of one and I’m in the space both as an investor and in business then how well known can it be?

The blockchain industry needs capital in order for blockchain projects to be funded. That capital has to get into the crypto industry somehow and whether you like it or not, the tool that is being used is the BTC blockchain. Is that even controversial?
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Re: BTC in the PP

Post by Arthur Boe Nansa » Wed Sep 01, 2021 6:00 am

bitcoininthevp wrote:
Tue Aug 31, 2021 8:11 pm
There is a disconnect here. Bitcoin isnt the chain with the most proof of work, it’s the chain with the most proof of work that is valid. Miners that follow the existing Bitcoin protocol, which all current Bitcoin Core nodes run and enforce, can "misbehave" (for lack of a better word) in limited ways. Censorship of transactions, mining empty blocks, or 51% attacks are examples of this. These are all valid-in-the-existing-protocol ways to misbehave as a miner. These are valid behaviors because the existing Bitcoin protocol allows them.

There are other, invalid-in-the-existing-protocol ways for miners to misbehave as well. For example, rewarding themselves 1,000,000 BTC in a single block. This is invalid regarding the existing Bitcoin Core software/Bitcoin protocol that the network runs. If all miners, right now, started rewarding themselves 1,000,000 BTC, there would immediately be a fork in the network.

This is basically what I already outlined in my "22M Bitcoin" fork example previously. All mining power is on the 22M chain, but the credible monetary policy, which economic actors value, is on the 21M chain. So everyone sells 22M coins and buys the 21M coins, driving up 21M price and down 22M price. That leaves 22M chain with all the miners fighting over less and less revenue, and eventually losing money. And leaves 21M chain with its easy mining, a huge financial incentive for miners to defect from 22M chain, or huge incentive for new miners to join the 21M chain.

So what is important in such a split is where the economic majority will go, not where the miners choose to go.
Yes and no. You've again dipped into this idea of "credible monetary policy", but you keep blurring the lines between code and "efficient market participation that seems so obvious and that everyone would follow it." Is segwit a credible monetary policy?
For more on hard/soft forks and the notion of credible monetary policy in upgraded software, I recommend people also read this: https://medium.com/@octskyward/on-conse ... a050c792e7

The point i'm trying to make is that (user activated) soft forks don't really mean what people think they mean as far as the code is concerned and the philosophical fundamentals that are supposed to make Bitcoin superior. In almost prophetic words, the end of his article is this:

Can hard forks destroy bitcoin?
No. If it were the case then literally anyone could kill Bitcoin by just mining a block or two with different rules. The entire purpose of the block chain algorithm is to ensure that this cannot do any damage!
The idea that “contentious” hard forks could cause bitcoins to “permanently lose their value” appears in the bitcoin.org policy, but it’s actually the other way around. To demand that any change must have 100% agreement (or 99%), as at least one Bitcoin Core developer wants, just means anyone can hold the entire community to ransom by refusing to agree unless they get what they want. No actual piece of infrastructure works this way. If Bitcoin did, it could never evolve and eventually would become worthless.


The reason it feels like Bitcoin is far from becoming worthless is less about his analysis being wrong and more that "the game has changed" e.g. Funny money and the ever shifting ideology of what Bitcoin is and does.
You and I can spin up NansaCoin tonight with the same code, but what would be missing is the credible part of the credible monetary policy as I refer to it. NansaCoin has no developers, a weak hashrate, no lindy effect, no supporting application ecosystem, etc. Its not scarcity, as you point out, its credible monetary policy.
Is this a proposition? Let's do it! :)
And I'm glad we agree scarcity isn't really a fundamental of Bitcoin, rather credible monetary policy (which i've briefly expressed my doubts about above and below)
Their preference was to trust the (perceived) experts.
Amen.
In an extreme example you have the 22M CCP-backed chain forked off from 21M chain. Basically what happened in 2017.
Eh, i'd say both sides had enough China backing to make their ulterior motives questionable. But we'll keep the discussion economical.
I dont really understand where this is going, you’re arguing that golds non-monetary uses (1% of golds value? 2%?) means its somehow significantly better than Bitcoin in some way? Because if gold is de-monetized your rock is worth a few bucks and if Bitcoin is demonetized you end up with zero instead? This doesn’t seem like an important point but maybe Im missing it.
Correct. I think the "floor" of base metals is an extremely important part of their store of value thesis. I'm not against a digital store of value (with theoretical zero intrinsic value) I just think we need to be humble enough to realize that we're not technological advanced to do it well yet. If it doesn't arise organically, it's speculation as far as i'm concerned.
If you don't see it as an important point we'll just agree to disagree on this one.
I think it’s a bit of a spectrum. From a price perspective, people seem to prefer stronger store of value-ish tokens with a weaker transaction mechanism. After all we have 100s of different ~free transaction apps (venmo, zelle, paypal, etc) and tons of credit/debit card choices for easy transactions.
They do seem to prefer that, but I think its more of a play to the narrative than an actually rational position. I feel comfortable making this claim as it simply reflects user behavior: most people keep their coins on custodial exchanges, from a code perspective UASF doesn't make much sense, and the fact that the Whitepaper was literally titled "Bitcoin: A Peer-to-Peer Electronic Cash System" and that fairly fundamental aspect of the network has gone by the wayside for some kind of SoV. The shift in narrative feels less like a calculated decision and more like an inevitable conclusion to a system that has trouble innovating. If you have an oven (=Bitcoin) that's supposed to be multipurpose for lots of different dishes (=handle many transactions, at scale, for a low fee with adequate decentralization and permissionlessness), but the oven doesn't rise to a high enough temperature (=scaling issues), sunk cost fallacy makes the idea of relabeling the use case of the oven (=narrative shift) much more attractive than deeming it a bad oven (=admitting its failure) or spending the time, energy, effort, and money to make big changes to it that can also make certain people upset (=finding "compromises" that "change" parameters of the code).
I cant comment on behalf of others, but self custody is opt in and that seems ok. I think this will be solved as the space matures with better apps, usability, and services for multisig.
Sure it's okay, i'm not gonna tell people what to do with their money haha. I was just highlighting the discrpency between that action and the touted benefits of a decentralized and permissionless network that's "always available".
I certainly hope for everyone's sake that the space matures.
I agree regarding network effect/first mover advantage. But as I said I think its sub part to the credible monetary policy.
We'll leave it to people to decide what constitutes a credible monetary policy for them, the best advice I can give is to just keep the mind open and read as much as possible.

I think we covered enough ground, if there's anything else you want to say feel free.
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