This type of thinking is pure toxin because it essentially reinforces exactly what you don't want.
If Peter did in fact work hard and now he's stripped of the results of his labor while being told that probably he only managed to accumulate capital because he was just exploiting others, what incentive landscape does that create.
Is a lot of profit a function of factors much less commendable than creating value for others? Sure. But by lumping in the productive people with the parasites, you are undermining those people who deserve your protection the most.
I can tell you what kind of incentives such a system promotes: different ones!
In particularly a welfare system gives incentives to people who want to create something out of intrinsic motivation, not because of financial motivation. Many of the things the most profitable companies use are actually but on tools and mathematics that were created without any financial freedom.
So I would rather reserve the word "toxic" rather for the current system consisting of purely financial motivation to hoard money that your are so vigorously defending.
Nobody, at least in the US system, gets very wealthy just by working hard.
At the very least, you have to start out with wealth or a strong support system (which is down to luck in your input conditions), or get fantastically lucky in your first(-ish) attempt at starting something.
Then, if you want to make the kind of money that, say, Bezos or Musk makes, you have to make the kinds of decisions that many of us simply would never make, because they're morally reprehensible. I wrote another comment about this [0] on an article about a week ago, but basically, in the very best case scenario, once you're past the point where more money would make no material difference in a healthy lifestyle (which is going to happen, at the very latest, somewhere in the millions), if you're using the excess to make yourself more money, rather than help improve other people's lives, you are being selfish at a level that makes you effectively indistinguishable from evil.
Nobody anywhere gets very wealthy just by working hard. Otherwise the world would be filled with millionaire janitors.
> if you're using the excess to make yourself more money, rather than help improve other people's lives, you are being selfish at a level that makes you effectively indistinguishable from evil.
If you're using your business to create value for millions of people, you are in fact improving millions of lives by the amount of value created. If you capture a little bit of that value for yourself and become fantastically rich, good for you and good for the system that enabled this whole thing. Even better for you if you decide to give some of it away, but to call you evil if you don't? I suppose your own belt could be tightened a bit more so that you could give more away?
Other than what arises from rent-seeking behavior, profit is not inherently immoral.
If you use your business to make life easier for millions of people, that's good.
If you take enough profit to make billions of dollars for yourself, that's bad.
Because no one person (or family) can ever realize anything resembling a proportionate benefit from that money, all you're doing is raising your dollar-denominated high score, at the expense of all the other people you could be helping more if you invested that money back in your business, or paid it in taxes, or invested in other local businesses, or any of a thousand other ways to make it work for the world instead of just being a selfish Number Go Up for you.
When someone becomes rich through this path, they aren't rolling around with a billion dollars in a vault Scrooge McDuck style. Almost all of their wealth that isn't taxed is already tied in their own business or in investments in other businesses, so they're already doing the things that you say will make it work for the world. Even the little bit of liquid money they keep in the bank is loaned out to other profit-seeking entrepreneurs.
Once again, profit is not immoral. It serves as an important signal for capital to be directed in the value-creation cycle that ends up producing wealth for everyone. In the words of Isabel Paterson: "Production is profit; and profit is production. They are not merely related; they are the same thing. When a man plants potatoes, if he does not get back more than he put in, he has produced nothing."
You are saying that if a man who planted potatoes harvests them and keeps some for himself above and beyond what he needs to subsist, he is evil. I'm really not sure how you justify that position.
> You are saying that if a man who planted potatoes harvests them and keeps some for himself above and beyond what he needs to subsist, he is evil. I'm really not sure how you justify that position.
I don't, because that's not what I'm saying.
If you actually read my post, I did not say that taking any profit was evil. I said taking enough profit to make you a billionaire was evil.
The scale of what it takes to become a billionaire is absolutely mind-boggling. I might, if I am lucky, make enough in my lifetime to have a million dollars saved up.
I would have to work a thousand of those lifetimes to get a billion dollars.
And yes; someone who is a billionaire keeps that money in stocks and things, and it's true that it's not just a pile of cash...but that doesn't actually mean that it's usefully "in the economy". It's still theirs. (And remember, unless you buy it as part of a direct issuance from the company, buying stock doesn't actually put more money in their pocket.)
Can confirm. Lived a very frugal early retirement lifestyle in Austria because it was practically impossible to build wealth (high taxes, comparatively very low tech salaries, little entrepreneurial support/incentives).
Moving to the US I was able to 5-6x my income (from what I could have realistically made) , while reducing my tax burden by 15 percentage points, and so I've been happily living a workaholics' lifestyle since.
Looking back, it really boggles my mind how much engineering potential is squandered in Europe. You'd have to be an idiot to want to work hard given how raw of a deal you are getting (work for almost 2 decades as an engineer just so you can afford the average one family home - what a joke!) and people understand that intuitively (hence pushing for ever fewer work hours or even days because what else is there if your salary is essentially capped and you quickly hit a 50 % tax rate (when combining income tax and social security) for every additional hour worked).
> (work for almost 2 decades as an engineer just so you can afford the average one family home - what a joke!)
I really don't understand this take. Why so many engineers feel entitled to have more than the average working Joe? If you are employed, our work is not risky, doesn't consume all your energy or your time, and so on.
I fully understand the _economics_ behind our salaries, but I am more than happy to give 45% of it to the society as a whole, so also who cannot afford the economy of scale (e.g., nurses, teachers), can still have a decent life.
I really cannot grasp the individualism about "I know how to write code, I deserve a better life than 95% of the population".
> I really cannot grasp the individualism about "I know how to write code, I deserve a better life than 95% of the population".
You're missing something here. You can omit the first sentence. People already believe they deserve a better life than 95% of the population, even without being able to code specifically.
But I don't think it's sad. The desire to have more for ourselves and our children (why else would they be talking about buying a family home?) is a large part of the reason why living standards keep rising.
If everyone desires to be above average and strives to produce more, earn more, then over time the average will rise. This is good.
And this is why I say that I understand the economics behind it.
Still, it doesn't mean I _deserve_ a high salary: I totally get why I get it, but I don't work harder, or studied harder, or really did anything more special than 95% of the population.
So, while I am able to earn more, I am happy to share part of it with the society as a whole, and this is why I am happy about my level of taxes, compared to the services provided.
There are wastes? Of course there are! So many! But the solution to "governments waste money" is not "less money to the governments", is "more accountability".
This is of course my view of the world, but I still haven't found anybody that explains why my job deserves to be in the top 5% earner in my country, apart from being just a consequence of the fact that my job scales to billions of users due its very nature (that is completely inconsequential from the choices I have made), while other jobs have physical limits and they don't scale.
On a practical level you probably did work/study harder, do something more special, had more resources, been luckier than the vast majority of the population; that's why you're in the position you occupy.
On a more ideological level it feels like you're looking for some sort of moral or "greater truth" behind the economics, but I'm not sure it's there. You've shared your personal beliefs and motivations, and seem to have lots of conviction to guide yourself, so why ask someone else to convince you there's a deeper cause? Just use your results to act how YOU want to impact the outcomes of others.
>Still, it doesn't mean I _deserve_ a high salary: I totally get why I get it, but I don't work harder, or studied harder, or really did anything more special than 95% of the population.
I don't think any other (widely popular) work occupies so much of a one's mind as software engineering.
Because we are the gateway to exponential free work. Program once, run on x machines, supply all 8 billions with a service, for defacto nothing. From these hands flows cornucopia..
Just because the nano machinery is invisible, doesent mean it cant spin great things from nothing. Half the giants you see today, were nothing one generation ago.
Not OP but I think if you're gonna earn an average salary then tech is a pretty bad choice due to the constant shifting base of knowledge, lack of security (dot com type bubbles) and ageism prevalent in the industry. Being something like a government worker or teacher makes much more sense then.
And unsurprisingly, in Europe a huge part of GDP is created by the government. Software developer roles in Europe are dominated by immigrants for much of the same reason - locals don't see these jobs as such a lucrative career path.
The average Joe in the US earns $60-70k, same as an average software engineer in the EU.
The difference is not that US workers earn more on average, but that being an engineer doesn’t make you automatically rich in Europe like it does in tbe USA.
I agree with your point about Europe squandering engineering talent.
Overall, it's a trade-off, though. You are right about the US opportunities, but there are downsides, too:
- crime (you get crime everywhere, but the US has a particularly and unnecessarily high level of serious crime like gun crime - e.g. school shootings happen pretty regularly);
- not everyone has good healthcare & social services (I am aware you will not personally be exposed to that, as you will have private healthcare; but it even bothers me if people around me are ill and cannot afford to get cured. I don't want to live somewhere where I can get a regular check at the Mayo clinic and my neighbor cannot afford their emergency dentist);
- low average education level (people generally don't know much of the world, history, literature).
- cultural life (theater, classical music etc.) is very uneven distributed.
Also, US taxation isn't that low in general, it dramatically depends on the state you live in (TX 0% state tax versus NY, MN etc. >40%).
There are places in Europe that have small tax rates (CH, LU), but they are not the best places to live for everybody. Everyone needs to weigh their priorities and match with the overall "package" (e.g. Canada is a good compromise: near-US salaries but Europe-like education of the general public) - and in any case, not everyone is free to leave where they currently reside.
Austria in particular has rather low salaries (but also low rents) - but places like Vienna have a magic feel to it that just doesn't exist on other continents. In comparison, in neighboring Switzerland are very high (anyone with a tech Master's degree would be on a six digits salary), but with a huge salary gap between locals and expats for doing the same job.
All the problems you listed as US-specific problems exist in my corner of Europe too, except gun violence. And on top of that we have fewer jobs, lower salaries, higher taxes and high unemployment.
I love Europe: its history, its music, its art, its architecture, its legacy - yes! the good and the bad -, its food, its cultures. But from my point of view we are killing ourselves, choked in an endless decay, metastasizing bureaucracy, and never-ending hopelessness.
I'm sure the Nordic Country are happy though, and that's the problem: American tend to compare the worst of their country with the best of our continent.
> American tend to compare the worst of their country with the best
Everyone does that. There seems to be a type of bragging that works by emphasizing how much more dangerous one's own country/state/town/village is than someone else's.
I'll be lucky if I can afford a single family home after 20 years of software engineering in the US. halfway there now, we'll see. Moving to a senior position has helped but I feel like a lot of people forget that the compensation in SV is not normal in other places.
SV is an outlier in both income and housing costs.
Here in DC metro, a mid-career developer should be able to afford a home without much trouble. Many of the best jobs are well outside the city (Tysons to Ashburn corridor) where housing costs aren’t terrible.
> and so o I've been happily living a workaholics' lifestyle since.
That is one key aspect. I'm not a workaholic and most other people aren't either. I do somewhat enjoy my work, but I work to pay for my live, not the other way around. I make a decent salary and work 35h/week with 36 days of vacation. I do pay a lot of taxes, but I live in a city with pretty good and affordable public transit, I got my university education for free (okay, I admit, I paid a total of 600€ for my bachelors), etc.
In a well governed country, you don't only pay taxes but also receive something in return.
> work for almost 2 decades as an engineer just so you can afford the average one family home - what a joke!
This isn't necessarily a result of high taxes, its also a result of Europe being much denser populated than the US (or Australia), limiting the supply side for construction land. The kind of the construction also plays a role, the average newly built European home is substantially more solidly constructed than the reference in the US.
> hence pushing for ever fewer work hours or even days because what else is there if your salary is essentially capped
Have you ever considered that many people would much rather have more free time than more money? Beyond a certain level, increased income doesn't correlate with increased happiness/wellbeing. Where this level is certainly depends, but it is much lower than many people anticipate.
Not all of Europe runs on a 50% tax rate though. My tax rate as company director in the United Kingdom is somewhere around 25%, and I can afford higher salaries than the rest of Europe while still enjoying the basic safety net of public health care.
But I'm originally from Italy, and the tax rate is exorbitant down there as well, with ridiculously low salaries.
You do you, but there is more to life than gross income from your employer. This is why I'd rather stay in this continent.
>work for almost 2 decades as an engineer just so you can afford the average one family home - what a joke!
If you're lucky. The salaries in my country are so abysmal that nobody in my generation can buy a house: the only one with houses inherited them or have rich parents.
Inflation all by itself is already effectively creating a cashless society over time, at least if no new notes with larger denomination are being printed (and historically speaking, the trend has even been the opposite, namely there used to be 500, 1.000, 5.000 and 10.000 dollar bills up until 1969 [1]).
So this has been a long time in the making, really.
You're assuming the crypto is flawless and forever hard, even with new computational paradigms.
We've shown time and time again that our undefeatable algorithms aren't.
Would you be comfortable if the Blockchain was frozen in time for a hundred years, after which you could withdrawal your balance? Would it be impervious over that time frame?
> Any application that could be done on a blockchain could be better done on a centralized database. Except crime.
After all as we all know: If you've got nothing to hide, you've got nothing to fear.
And look at how inefficient all these permissionless, trustless protocols are! What a waste! Let's just all trust a central authority and think of the savings and the children.
Yeah, this is what I don't understand from the naysayers. Anyone who says blockchain-driven assets don't have intrinsic value seems to ignore the value of trust - the ability to trust that the ledger is accurate seems extremely valuable.
The author of the article skips over the question entirely, maybe he's addressed it elsewhere, but if the crypto skeptics continue to ignore one of its primary value propositions, I have to assume either ignorance or bad faith.
But that ledger isn't accurate. It's just distributed and difficult to change.
I technically am the owner of (quite a few) bitcoin that were being processed by MtGox when they imploded.
The wallet they were in at the time was emptied and no longer exists.
I still receive the relevant court documents as the case continues still.
As far as the ledger is concerned - they are no longer mine.
---
So question to you: How do you reconcile the theft of my property with the ledger at this point?
It turns out I have no ability to do so at all. The ledger is distributed and impossible to meaningfully change.
So while I trust that the ledger can't be changed easily - I don't trust the ledger to accurately reflect ownership (it can only represent possession, not true ownership).
So now what?
Now it turns out I have to turn around and trust a central authority anyways! That authority being the government that is handling the prosecution of MtGox for fraud and theft.
“I don't trust the ledger to accurately reflect ownership (it can only represent possession, not true ownership).”
Possession is ownership on the Bitcoin network. Not ownership in the sense of it is written down in some legal document somewhere but ownership in the sense that you have the power to perform a transaction with what you say you own.
You were trusting a central party all along. If you didn’t you wouldn’t be in the position you are in.
But the alternative here is that you have to place all your trust in an unknown and untrusted 3rd party to ever actually make an exchange.
Even the silk-road used an escrow service that required that the seller trust the buyer, and both parties trust the silk-road. (a buyer places coins in escrow with the silk-road, the silk-road confirms it has the coins to the seller, the seller ships the product, the buyer unlocks the coins escrow upon receipt)
So the whole things boils down to "trust" and it turns out that the ledger can't actually provide any trust.
After enough confirmations a transaction is final and I can trust that the transaction is final and my account balance on the ledger is correct.
Present forms of digital cash do not offer this. A payment can be reversed if the buyer claims the transaction was fraudulent and the banks involved agree to reverse the transaction. Money can be accidentally withdrawn from my account and I have to ask the bank to return it. In both these cases if the institutions involved refuse to return my money then I have to take the issue to court and I am deprived of using or investing this money in the meantime.
If consumer protections are your concern these laws exist in many countries regardless of the payment medium.
But the trust that a bitcoin transaction is final isn't enough trust to make an exchange!
Lets say you and I decide right now that we're going to use these comments to make an exchange. I will give you $5 of bitcoin in exchange for you mailing me a postcard.
Now what? How do we proceed in a meaningful manner?
How do we go about making that exchange happen if we assume that either party is self-interested, and not interested in actually completing the deal?
If I send the bitcoin first? - the second it hits your account you know for sure it's yours: No need to bother sending the postcard - that's just cash out of your pocket.
If you mail the postcard first? - Well, job's done for me, no need to send any bitcoin at all.
What if we both agree that we trust Bob, and you send him the postcard, and I send him the bitcoin, and he only forwards them along after he gets both? - Oops, now Bob can do all those things you complained about letting the bank do! He can send that bitcoin back and I won't ever get a postcard. He can mail the postcard back and you won't ever get any bitcoin (Transaction reversed!). Worse, he can take anything you give him and do what he wants while he has it (like disappear!) - or hold them much longer than you'd like after he gets them. (Freeze it).
How do you get your stuff back from Bob? Same way you would from a bank - appeal to the government.
Basically - Bitcoin without enforcement is only a ledger. The thing that keeps it in check with reality is an appeal to an authority somewhere, who provides trust that both parties in an exchange aren't getting screwed.
"But the trust that a bitcoin transaction is final isn't enough trust to make an exchange!"
Correct. Who said it was?
"How do we go about making that exchange happen if we assume that either party is self-interested, and not interested in actually completing the deal?"
We don't make that exchange in that case. Or like you mentioned we both acknowledge that we don't trust each other and get a trusted third party involved who we both trust more that the each other. No payment method is immune to this. Notice though that regardless of how much trust that we have or don't have for each other we can both trust that if you do send me $5 of Bitcoin I will receive it. Provided I've taken the necessary steps the transaction will not be reversed. Also note that if I wish I can also be certain that no one can erase whatever I rightfully claim is mine from the ledger or transfer it to another address once I have received it. This cannot be said for any non crypto digital payment system currently.
Bitcoin is a shared digital ledger hosted on a transaction network that is not controlled by a single trusted third party. The thing that keeps the ledger in check with reality is the correctness that it guarantees to those who are using the network to send and receive payments.
If you say you are going to send me a 1700 sats to post a postcard to you and I deliver as promised but in reality you don't perform your part of the deal the ledger is still correct. You still owe me 1700 sats according the deal we made and I can confirm this by checking the ledger. The ledger itself does not know about the deal we made but we both know we made a deal and according to that deal you still owe me 1700 sats. Now with a traditional bank what happens if you claim you sent it and the bank says you didn't. How can I verify that the transaction took place? I can't. I have to trust what you or the bank tell me and I don't know who is telling the truth. Maybe the transaction got lost. Maybe you didn't send it. There is no way to discover the reality of the situation without having to make an uninformed choice about who I trust.
At present Bitcoin is still clunky and has many issues both technical and non-technical to overcome. It is unknown whether these issues can or will be overcome. It has a far way to go if it is to realise the creators vision in a meaningful way by gaining mainstream adoption and use as "digital cash".
> The ledger itself does not know about the deal we made but we both know we made a deal and according to that deal you still owe me 1700 sats. Now with a traditional bank what happens if you claim you sent it and the bank says you didn't. How can I verify that the transaction took place? I can't. I have to trust what you or the bank tell me and I don't know who is telling the truth. Maybe the transaction got lost. Maybe you didn't send it. There is no way to discover the reality of the situation without having to make an uninformed choice about who I trust.
Because the bank is acting as the (government approved) escrow service! Basically - The bank is arbitrating the dispute to resolve it (whether you like how the bank resolves that dispute is mostly irrelevant here).
Let me ask you to follow up, given what you've said:
> If you say you are going to send me a 1700 sats to post a postcard to you and I deliver as promised but in reality you don't perform your part of the deal the ledger is still correct. You still owe me 1700 sats according the deal we made and I can confirm this by checking the ledger. The ledger itself does not know about the deal we made but we both know we made a deal and according to that deal you still owe me 1700 sats.
Now what? Fill me in on how we resolve this situation in your mind, once we've reached this point.
"Now what? Fill me in on how we resolve this situation in your mind, once we've reached this point."
In the example you gave whether we chose to transact in cash, wire-transfer or bitcoin the result would be the same. I would have to rely on layers, civil or criminal courts, police, insurance companies, debt collectors, thugs or myself to physically retrieve the funds (or equivalent) if possible. If that was not possible some form of fair physical or financial punishment would be dealt to you or not. Honestly for that amount of Bitcoin I wouldn't be bothered and wouldn't follow it up. I would just never do business with you again and from that point forward never relinquish physical custody of goods for sale prior to receiving payment.
"Because the bank is acting as the (government approved) escrow service! Basically - The bank is arbitrating the dispute to resolve it (whether you like how the bank resolves that dispute is mostly irrelevant here)."
Trusted third parties will always be an issue where there is no trust between the buyer and seller. Sure multisig helps but the difference is Bitcoin gives us power to choose who we involve in the transaction. I and the other party I am transacting with combined are not forced to involve any one individual, company or nation state in the transaction if we do not wish them to be part of it.
I think you are conflating trust in the Bitcoin network with trust in the humans transacting over the network. Regardless of the medium of exchange in order for transactions to occur we as humans need some level of trust in the party we are transacting with, trust in the network we are using to perform the transaction and trust that other humans are going to continue to value the medium being exchanged. Not everyone's level of trust in these aspects are going to be the same and people are going to value some aspects more than others.
Personally I think if bitcoin doesn't overcome some of its hurdles soon it will probably just turn into a form of the existing banking network through legislation. It's already beginning to look like that with most individuals storing their Bitcoin on exchanges. Private wallets will be banned, transacting with non KYCd entities will become impossible using regulated custodians and any Bitcoin received from (or linked to) non KYCd addresses will be automatically seized by the government. At that point the supply can be artificially inflated. The number of Bitcoins in your account doesn't actually have to reflect the amount of bitcoin the custodian holds for you. The surveillance apparatus will become hyper focused on the Bitcoin network and everyone interacting with it. Like Ross Ulbricht you may be able to resist seizure of your Bitcoin but it will just result in a lengthy prison sentence. It may not stay like this forever though.
> Personally I think if bitcoin doesn't overcome some of its hurdles soon it will probably just turn into a form of the existing banking network through legislation.
Ok - I think we're pretty closely aligned here.
I'm further along that trajectory than you, mainly because I think this isn't really an optional outcome that might be avoided, but rather the only functional end state of a currency: The currency is only as good as the government that mediates its exchange.
If mediating that exchange incurs costs, then the government will take steps to either stop mediating those exchanges (ex: China - where all crypto exchanges are illegal by default, so the legal system can no longer be used to offset the cost of those exchanges at cost to itself) or it will bring that currency under control so that it can make those costs predictable and acceptable (ex: The US - where crypto is getting "all the bad bits" added back through legislation)
Which means the original intent of crypto only works in this honeymoon period (which I actually think ended not too long after the silk road went down) where it happens to get treated as an asset by a government that hasn't yet found out that they're essentially mediating exchanges in a foreign currency for free (not something most governments want to do).
"The currency is only as good as the government that mediates its exchange."
That's an interesting way to conceptualise it but I see it from a different broader perspective: A government is only as strong as its ability to issue/acquire meaningful amounts of a valued currency.
Anything that negatively affects these activities will be killed or subjugated to contribute towards them. Bitcoin in its intended form is detrimental to both of these activities so it will be sabotaged by governments one way or another until it is not.
Bitcoin has unique properties that drive it's adoption but all these properties can be diminished or undermined by laws.
"Which means the original intent of crypto only works in this honeymoon period"
If Bitcoin had managed to gain widespread adoption and a large enough percentage of its users held their private keys then it would have been too difficult and unfavourable for governments to start attacking it.
The unsolved technical issues hindered adoption so Bitcoin has been relegated to a volatile store of value giving government the time to realise the threat and act accordingly. Regardless of how unreasonable, harsh or onerous a set of laws are they can be effectively implemented if the portion and power of people they affect is small enough.
You're overlooking defi, this is the thing being revolutionized right now; you can make all the transactions you can afford to pay transaction fees for, trade hundreds of assets, swap tokenized USD for tokenized EUR, all without an intermediary.
To be candid, you are generally trusting the contracts you're interacting with to be bug free, but you are able to audit the code just as easily as anyone else, and verify that the contracts are as advertised. Unlike dealing with a bank portal, all the logic running on the blockchain is visible and verifiable.
Not your keys not your coins. Unless you trust some central authority to take care of you, which you should by now understand that doesn't always work, and when it doesn't work, it's usually a spectacular failure.
So to answer your questions. Although possible, no reconcile is the pure spirit of a trustless network. Now? you make sure to avoid custodian services and keep your keys safe. or stay away from crypto until/if it becomes as ubiquitous as the Internet.
So we both agree - the ledger is "accurate" only in the sense that the ledger matches... (drumroll) the ledger.
Which is entirely true, and there are some useful properties to that, but the whole thing falls down the second you have a real dispute over the trade of goods for value (which I might remind you, outside of the pure speculation/gambling that occurs in bitcoin pricing, is the point of actually holding a currency).
So how do I go about safely spending these things? Oh - it turns out that still only works in the context of a central authority and the legal system they support.
the dispute concern is long solved. it happens every day with cash, but also with other form of payments. freight shows interesting practices. and, escrow is still an option.
Spending these things? I can show you how to hold securely some wallet with your own private keys (no custody), receive then "spend" these things for a few pennies per transactions and with the guarantee nobody will interfere with our exchange. from wherever you happen to reside. there is no central authority able to (practically) control many of the blockchain networks out there.
> Spending these things? I can show you how to hold securely some wallet with your own private keys (no custody), receive then "spend" these things for a few pennies per transactions and with the guarantee nobody will interfere with our exchange.
Yes, and because no one can interfere in the exchange, no one can prevent either party from abusing the other, and no third party can later reconcile the dispute without an outside framework.
I find it pretty unbelievable how comfortable the crypto crowd is about just dismissing reconciliation, when it's literally some of the oldest history have, and one of the more important roles of a functioning government (we literally have 4 thousand year old stone tablets dealing with this: https://en.wikipedia.org/wiki/Complaint_tablet_to_Ea-nasir)
No idea is perfect. I find that one preferable over the other popular alternatives where a few people's whim are the law.
Note: code is law doesn't imply it can't evolve, adapt, improves. the idea of code is law is the same as being against retro active legislation.
>Now it turns out I have to turn around and trust a central authority anyways! That authority being the government that is handling the prosecution of MtGox for fraud and theft.
In theory, DeFi can solve this. In practice it is hampered by poor UX and high transaction/gas fees. I think in the far future, the idea of ever having "your" assets in a wallet whose key you don't control will be seen as a ludicrous archaism. Sorry for your loss btw, that really sucks
You and me both - 41 bitcoin at $4.17 a piece. Admittedly, if they hadn't been stolen I was planning on buying a 1/4 of weed with them, so I probably wouldn't be rich either way... shrug
Fun story though - I can honestly say I spent more than USD 10 million in bitcoin on weed in college. Only about $500 at the time.
Not your private keys, not your coins. You CHOSE to gamble with your property when you gave it to someone else. Whether you understood this before you lost your property or not, is irrelevant. I've not lost any of my coin UTXOs associated with my own private keys. Unregulated, foreign Magic The Gathering trading card exchange use was never a wise choice from the day Jed McCaleb started that garbage database.
I see your perspective. There's another perspective from which you could look at the details of your situation.
You deferred to a trusted party to secure your wealth and because that third party was untrustworthy, you have to defer to an intermediary.
Had you deferred to yourself to secure your wealth you wouldn't be in this situation. The ledger would be the canonical one of ownership and possession, and you wouldn't have to defer to anyone.
Basically, you kept your bitcoin in a traditional, legally enforceable arrangement instead of the bottom layer, algorithmically enforced environment and now have to defer to the traditional system to restore possession.
I owned no bitcoins at the time I desired to trade bitcoins for a physical product (in this case: ~7g of Cannabis)
What recourse do I have that does not require trusting a third party?
I do not own the required compute power to mine it myself (not technically true at the time, although certainly true today)
I'd like to have you walk me through the exact set of steps to acquire my bitcoin and use them to purchase that physical good, where I can magically avoid placing any trust in a 3rd party.
When you're ready to spend it, spend it. Those places where you were looking to buy cannabis have escrow services, at the time you'd have had to trust the platform only upon purchase, nowadays multisig escrow is standard, which requires significantly less trust in a single party.
Any time you make a purchase, of anything, you're trusting the seller. Leaving it in their custody is where you screw up. Imagine you bought bitcoin from me, but then asked me to hang on to it for you for free. Or a car. Or anything. It's absurd.
Ok, so we're in a spot where trust is literally required - but the ledger cannot be updated to reflect when that trust was broken or misplaced (at least not without falling back to an external power - namely: government).
So again - the entire value of the medium is predicated on having a legal system you can use to resolve these disputes.
Following - that legal system requires all sorts of control to actually resolve those disputes: Many of the things bitcoin advocates actively rail against are just methods of reconciliation (Funds freezing, reversed transactions, 3rd party control of assets, etc).
So either
1. The legal system will stop supporting exchanges of that medium (see: China)
or
2. The legal system will add back all those controls (see: Legislation in the US)
Basically - My entire point is that bitcoin only has value if current governments support its exchange, and they WONT do that if it's a negative to them (and it is, unless they can tax and control it).
They want you to go back to frontier days before specialization in the economy, you are supposed to hoard your wealth yourself and protect your family with a gun
This exactly! (not to mention only ever making exchanges in person, because remote exchanges require trust)
Which is hilarious. Because that's actually all that bitcoin was good for: black market deals/trades, where enforcement is left up to you anyways.
Unfortunately, that makes it a (fucking terrible) medium of exchange for absolutely anything else, unless you add back in all the government regulation that the crypto folks hate.
You could have reduced the risk substantially by transferring off their wallet to yours right after purchase. You still could have purchased your weed too.
There was no holding. It wasn't an asset I was interested in holding, it was a medium of exchange to purchase a good I couldn't otherwise get.
The coins would sit in the wallet for as long as it took me to figure out how to place an order on silk-road again, where I would buy down to as small an amount of bitcoin as I could.
I got unlucky the last time through and hit it right when the service went down.
Which is funny - because the attitude that I should be hiding my coins away as tightly as possible is exactly why I'm so non-plussed on bitcoin: It's no longer an medium of exchange, it's a speculative asset with price completely unhinged from utility (which in my opinion is basically just buying black market goods).
Sure, but value without an enforcement mechanism is not very useful.
People usually want to trade stored value in exchange for goods and services (at least in a functioning value store - I don't really believe bitcoin serves that purpose at the moment).
So lets say we agree that I pay you 10k in bitcoin in exchange for you remodeling my bathroom (and ignore how unlikely this scenario is with real crypto currencies). I pay you 50% up front (to purchase materials), and 50% on completion.
Then you run off with my initial 50%.
Now what?
----
Every solution I've seen is riddled with pitfalls and gotchas
- Use escrow? Wait - now we're just trusting a central authority again.
- Use Eth contracts? Well, maybe - but it requires a perfectly written contract or you're open to all sorts of strange edge behavior and side effects.
- Sue over the theft? Now the central authority is just the government again, and we're back at square one!
You see the disconnect I'm getting at? Eventually, if disagreements occur about how value was traded, there has to be a reconciliation mechanism. Right now, even in modern crypto - that reconciliation mechanism is still a central authority: Your government.
You're conflating two issues with each other. One is having a decentralized currency with a fixed monetary policy. Another issue is the counterparty risk.
Bitcoin is not designed to solve the counterparty risk, it's just a digital cash that has a fixed emission schedule. It can be stolen just like regular physical cash can be.
Smart Contracts try to solve the counterparty risk issue, but it's just an extra layer around cryptocurrencies, that has it's pros and cons.
See, I think you're disconnecting two issues which are inherently related.
Fraud is not going anywhere anytime soon. If you have no proposed mechanism to reconcile fraud, I'd argue there's not any true value stored.
If the proposed mechanism is "just use the existing government" then the whole house of cards in built on the back of that central authority enforcing ownership for you anyways in which case why not just use the currency that authority already sponsors and has a proven track record of enforcing?
The reason I am disconnecting those issues is that Bitcoin was never designed to solve the type of fraud you're talking about. There is no proposed mechanism to solve it, because it's outside of it's scope.
It was designed to solve a specific set of frauds related with having a central authority though: censoring people from financial system, seizing your savings from your bank account and debasing the currency for the benefit of the political elite.
Counterparty risk is real, but there are other ways to solve it, besides having a central authority that has the power to revert transactions, which comes with it's own risks.
But now we're back to a spot where bitcoin doesn't work as a fungible good without an appeal to an outside authority of some sort. Whether that's escrow/insurance/legal contract/etc.
We started with:
"Anyone who says blockchain-driven assets don't have intrinsic value seems to ignore the value of trust - the ability to trust that the ledger is accurate seems extremely valuable."
Except the ledger doesn't actually provide any remedy to counter-party risk at all - I still have to trust a 3rd party at the time of exchange.
So the value of bitcoin is entirely dependent on the risk of the counter-party (because I have to pay to offset that risk, whether that's insurance, a private militia, legal contract enforced by a gov that I pay taxes to, simply eating the lost coins, etc)
Which means the intrinsic value of bitcoin is dependent on my ability to offset that risk - which I realistically (as a law abiding citizen) have to rely on the government to do, because the government has a monopoly on violence and imprisonment.
Which means the intrinsic value of a bitcoin is entirely at the whim of government control anyways. (which we already have an intuitive understanding of - this is why the price will fluctuate so much when news about government regulation or enforcement breaks).
The ledger gives you a guarantee that only you can spend the BTC that you have access to. Nobody can "freeze" your UTXO or forbid you from accepting transactions.
Sure, the state can declare that the Bitcoin you own is not legitimate. It might do so because you're unable to prove the source of funds or maybe because it doesn't like your race or something else about you.
The cool thing about Bitcoin is that it is money that is separated from the state, the same way like Gold is. So as long as you can find a jurisdiction that considers your funds valid, you can escape your state violence. Of course this has it's pros and cons, but that's how it works when you separate money from the state.
This is the 5th comment that I'm making with this throwaway account, after which, I believe, I'm going to be rate-limited and unable to reply for a day. So, sorry for not being able continue this conversation :D
> The cool thing about Bitcoin is that it is money that is separated from the state, the same way like Gold is. So as long as you can find a jurisdiction that considers your funds valid, you can escape your state violence. Of course this has it's pros and cons, but that's how it works when you separate money from the state.
But this is true of all assets!
Bitcoin's only tangible value is that it weighs nothing (which is actually a nice property if you're fleeing your current government - gold is heavy!). But I don't think that's enough to make it a good long term value store for the amount of capital pouring into it.
And just like other assets - I believe its value is entirely based on having a government somewhere that will enforce a code of conduct around exchanges of that asset, and a definition of ownership.
The government issues the currency because the government is able & willing to do absolutely anything in order to resolve disputes between parties that involve real assets - up to and including killing people, killing corporations, or even trying to kill other governments.
Without that commitment, bitcoin sits in a really strange place. I don't believe it will hold value if the governments of more major economies stop supporting it.
Either way - Appreciate the conversation! Thanks for helping fill some time on an otherwise boring afternoon before the holidays!
Not sure why you're being downvoted for providing a good answer here. When you use Bitcoin, or cash it is solely your responsibility to protect that counterparty risk via your own means. Without a contract and receipt, the same would happen to your cash if you walked into a business and the owner decided to keep a small sum of your money with no record of transaction. If you gave a shop owner or autobody mechanic $50-500 cash with no receipt he could very easily just keep your cash. You have no recourse. Call the police? Doesn't matter in real life because you have no receipt or contract. It's your word against his. Since I see that you've just replied and still want "recourse" if someone steals your money I'll just clearly spell that out for you. You cause the level of recourse of your stolen money that you require. Whether via violence or a counter-theft and damage to the thief equaling what was stolen from you. It's left up to you with Bitcoin. If you can't stand the heat, get out of the kitchen. We don't want government intervention.
Except you just wrote a long comment telling me that I should be using government intervention if I want to actually trade bitcoins for goods or services.
You hinted that somehow a general user of bitcoin might have the power to influence or extort a third party to offset risk - but the reality of the situation is that the only entity I'm in contact with that can provide the resources to influence or extort a 3rd party is my government (doubly so if we assume I'm still bound by my local laws and rote violence isn't an answer).
> the ability to trust that the ledger is accurate seems extremely valuable
Maybe it "seems" valuable, but why exactly is it valuable? For what use case and which situation (besides crime)?
I think the issue is that many don't see value in its "primary value proposition" because the features they want from banks are already there (stability, FDIC insurance). The only thing I personally see missing is no/low-fee instant transfers, but crypto hasn't solved that either (too slow and/or high fees).
One IMO realistic use-case is providing a wealth preservation mechanism for people living in a country with a corrupt government that's experiencing hyperinflation, for example Lebanon.
> One IMO realistic use-case is providing a wealth preservation mechanism for people living in a country with a corrupt government that's experiencing hyperinflation, for example Lebanon.
Sure, but (like it or not) that's covered under the umbrella of "crime".
In that case, I think the point is that some "crime" is ethically justified and worth supporting technologically. The OP's statement implies that all crime is bad.
> One IMO realistic use-case is providing a wealth preservation
Any other fiat currency already provides this such as usd, euro, Israeli currency etc and they are at least currently far easier to aquire and done have any gas feeds other than consumption tax if any
On Lebanon where electricity is unreliable seems like a particularly bad idea to use any sort of Crypto, let alone the user friction as a consequence of network gas prices
On real world scenarios, if a country is having issues relating to inflation or is a small market to begin with, consumer prices are denominated on Usd or some other currency anyway
True but opening foreign bank accounts is difficult and like western countries physical cash can be legally seized by authorities even if it was acquired legally.
This is only if the end user allows seizure. If I have only a 12-word seed in my memory and not a single private key written down anywhere in my house and no bitcoin wallet installed on any computer, you have absolutely no way of confiscating anything. It's something that a lot of outsiders do not even realize. Bitcoin is actually entirely un-confiscatable. If someone commits private keys to memory or entirely encrypts and off-sites private keys, exactly how can the money be confiscated? It cannot be confiscated. Any human in the world can move freely about the globe at this point in time with billions of asset value solely residing inside their brain. Import that memory into any mobile or desktop client wallet anywhere in the world, or recite the key secretly to someone else they trust anywhere in the world.
People living under a corrupt government and experiencing hyperinflation are no safer or necessarily better off with cryptocurrency. Conducting cryptocurrency transactions requires a non-trivial amount of infrastructure. Even "offline" transactions with a Rube Goldbergian number of mesh network components needs all those components to work.
A fortune in Bitcoin in a conflict/disaster zone is no more useful than a fortune in dollars in a bank if you can't access it readily. Your fortune means shit if you can't buy a loaf of bread.
Even if you can access the infrastructure necessary to spend cryptocurrency to buy a loaf of bread they provide no protection against localized inflation. Prices of goods in a conflict zone increase significantly due to dangers/difficulty associated with the supply chain or lack thereof. Sometimes they increase due simply to greed. Transacting in a cryptocurrency doesn't help at all with this. Your Bitcoin fortune can be wiped out just feeding your family since your only other option is to starve to death.
First you have to define "crime." If by "crime" you mean "any activity outside the purview of regulatory authorities" then you're defining everything that isn't a bank account as crime. It is circular logic. "Its only use case is crime because using it is crime." If you more narrowly define crime as criminal acts besides just unregulated financial activities, then you can start to see the value proposition.
That is a straw man. This is not my definition of crime, I was thinking things like money laundering, tax evasion, ransomware payments, and blackmarket purchases.
I'm genuinely not sure what a use case for unregulated financial activity would be that doesn't fall into those buckets.
Someone mentioned retaining assets in countries with hyperinflation. To me it appears a central bank digital currency would be more appropriate there.
Banks can give your money away without your knowledge. Happens all the time, and people have little recourse. Worse yet, it's seen as the victim's responsibility and not the bank's.
A blockchain doesn’t provide trust, though. A person who doesn’t understand technology doesn’t trust a distributed ledger, but they do trust their centralised bank because it’s regulated.
It provides "distributed trust", in the sense that you know no single person or group is in control and you trust the distributed consensus, in terms of ledger state and algorithm accuracy.
Current PoW chains, yes. Some other consensus schemes have higher threshold requirements to pull off a similar sort of attack, in particular you can look at Casper FFG and other byzantine fault tolerant PoS schemes.
There are some with lower threshold tolerance of these attacks based on the idea that they're unlikely and the added threshold doesn't actually add security. I don't know about that but some people seem to think so.
Maybe no single entity is literally in full control but large mining pools and the developers of the software both have extreme influence over the chain.
Less snark would be preferred to elicit a response, but yes- there are more cheap computers than people in the world, and smart phones are near ubiquitous even in very poor places. You simply don't have the life experiences to make this criticism. i.e. PRIVILEGE
Don't forget enough tech expertise to be able to use any of this crap in any "decentralized" way (if they all just use coinbase, where is that decentralization?)
The article discusses pseudo-money, not generic decentralized databases. The main point is that even if a blockchain distributed database technically "works" it is highly inadequate for many practical money-like applications, particularly because trust has to include the real world.
In some context I would agree, there is theoretical value to a decentralized trustless ledger[0]. What I can't agree with, however, is that entries in a decentralized trustless ledger are inherently valuable as cryptocurrency proponents would like us to believe. The entries in the ledger have no inherent meaning, they're just a number associated with another number and the only reason anyone equates that with a monetary value is that, for the moment, they can find someone else[1] to give them money to shuffle those numbers around. I think that, at best, one could say that BTC is backed by hype and speculation. I am not convinced that is a useful basis for a currency[2].
This is in contrast to fiat currencies which their various governments offer guarantees that they will honor.
NFTs, on the other hand, make even less sense to me. They seem like they are just cryptocurrency in disguise trying to fool people who otherwise question the concept of inherent value by claiming (falsely) that they are equivalent to ownership of digital goods[3].
[0] I have yet to hear a use case for which they are actually better than traditional alternatives, but I can imagine that one might exists.
[1] read: greater fool.
[2] Leaving aside all the energy wasted on PoW.
[3] And that's before we get into my conviction that attempts to force artificial scarcity into a post-scarcity space are backward and perverted.
You must have missed a significant portion of my post if you do not see why I do not believe those are equivalent.
I'll reiterate: the number in the database represents an amount of tokens guaranteed to be accepted by the government of the country I live in. Cryptocurrency 'coins' carry no such guarantee, only the possibility of greater fools.
That argument doesn't work with currency, because money requires trust by definition (as opposed to immediate barter), and, as a backup -- enforcement.
In the end, it's just a question of whether you trust a centralised authority that's ultimate accountable, however imperfectly, or decentralised authorities that are accountable only to themselves and have no enforcement power.
If you give me bitcoin and I don't give you goods in exchange, or vice-versa, aren't you going to run to that central authority?
The same can be said about NFTs: you must verify their authenticity off-chain, you must trust that off-chain authority, or sue people off-chain if they infringe on your off-chain property rights...
I'll give you a bad review in a venue where your reputation is more valuable than the trade or I wouldn't trade with you to begin with. Or I would insist on an escrowed bond.
There's many other ways than inserting a monopoly on violence dispensing political authority into the loop and still ensuring that transactions are suitably reliable.
That only strengthens the article's author's point. Cyber currency just serves as a vessel for a fringe political group's beliefs, which, however strong, are not popular.
Is the author's point that the political views in question are not popular? I thought he was attempting to make the point that the economic system personified in the execution of those political beliefs is not efficient.
Which if the last decade plus of cryptocurrency has taught us anything, we ought to be able to thoroughly discard by this point in time.
I am aware that the political orthodoxy of the time is popular and the view that it should be discarded is unpopular, aside from observing that this would be true of basically any time and place, I have no further comment on that. My point is that the alternative simply flat out works better. I have zero care or interest in what is popular.
This is why I always have thought that election voting would be a perfect use case for a blockchain.
Imagine a way that you could look up the blockchain with your key (SSN?) that is somehow one-way-hashed to show you the result of your vote. The value param would be plain-text. Someone else wouldn't be able to see your vote without your key, but you could confirm yours was recorded properly. Anyone could tally the values to get the final value.
Because the blockchain is trustless and distributed, you wouldn't have to worry about an election machine flipping your vote.
Apart from currency, this seems like a great use-case! Are there any flaws in this basic structure?
First of all, what you're talking about more resembles a Merkle Tree rather than a blockchain, because the "chaining" property is really useless in this scenario. Each election can publish the Merkle Tree of its results and you can be sure that your vote was properly registered. Or frankly, just publish the list of one-way hashes and their vote, and you can dispense with all the Merkle-ing.
But what about a Sybil attack? How do you ensure "one person == one or zero votes"? I could submit a jillion votes for Donald Duck and how would you ever know that those votes were all cast by the same person? Any sort of election scheme has to deal with messy real-world identity, and there's no cryptographic solution to that, only various weak social network approaches that are pretty much the norm.
A Sybil attack in this case is just a reveal (once again) of the oracle problem - a blockchain doesn’t provide proof that you are you. Therefore, it cannot provide proof that you cast only one (or no) vote.
Verifying your identity is outside the blockchain. Thus it can provide no value for voting.
As to your first point, I'm not familiar with Merkle Tree's, so I'll learn about that before I respond. Thank you for the insight.
To the second point--I would imagine you would vote in the same way we do today for MVP, in-person / mailing, etc. So the main function would be to verify that your vote was properly recorded and counted.
Voting is intentionally designed for it to be impossible to verify what your final vote is so that it's impossible for someone to use that to hold you to a particular vote. A classic example being a household all being forced to vote one way by the head of that household. With no verification possible you can freely vote without influence from others who would use that verification for their own ends.
This is also why taking a picture of your ballot will nullify it if you're caught doing so. Not as punishment, but so you can vote again with potentially different choices and a valid excuse for having no verification.
It generally won't, because the systems are designed to make it difficult to nullify a specific person's ballot after the fact. In some jurisdictions, though, there are specified criminal penalties for doing this.
Of all the things you could do with a blockchain, it's probably the worst.
The legitimacy of voting outcomes depends critically on everyone understanding and in principle being able to verify how it works, and it being resistant to tampering at scale.
Very few people would understand a blockchain based voting mechanism well enough to really verify, and any implementation error could give an attacker complete and untraceable control over the results.
You telling me everyone understands computerized voting machines? Because I don't think there's that much of a gap between people who know about those vs people who know about block chains
Is rubber-hose cryptanalysis the concept of extracting info by torture? I guess... I mean, if you're willing to beat someone to get their SSN, you could probably do a lot more harm already just using that info to apply for CCs and loans in their name.
Maybe I'm mistaken or confused here, but in that specific case you could just give any random 9-digit sequence and it would suffice? A non-SSN voter ID would work just as well for a key.
Are people threatening others based on their votes these days?
EDIT: /u/ninjanomnom brought up a good point regarding heads-of-households, which I hadn't thought of before. I suppose some sort of method would be necessary to obfuscate your vote in some situations.
Right so the problem is that you want to be able to verify your vote, but you don't want anyone else to be able to verify your vote. Your SSN is semi-public and lots of people likely already know it (e.g. employer, who is also a prime candidate to try to buy/coerce your vote). But even with a private key, you have to assume you can be coerced into giving it up.
So any system that allows you to verify a vote needs to come not only with a way for you to validate it, but also with deniability built in. Because if it's not then you can a) sell your vote or b) be intimidated into showing how you voted (which may result in a firing/beating if you did it wrong).
There are, I think, one or two ways to achieve this, but it's a non-trivial problem.
There are a number of attempts to accomplish this goal by using homomorphic encryption, without needing blockchain. For example, https://en.wikipedia.org/wiki/Helios_Voting
Practically speaking these can just be anything from conflicting jurisdictions (buying weed in a state where it's legal but the Federal government is skeptical), to "crimes" like circumventing KYC or AML -- things that look like structuring (like sending > $10k) even if they are not in furtherance of criminal activity.
I was really puzzled for a while, trying to figure out how a different floor could at all effect the cooking (and whether I would want to eat any food from a shop where it does) until I figured out that it was a typo and that it was supposed to spell floUr... :)
> Of course, the above assumes that risk of death from injury won't drop as medical technologies improve, which is wrong, but as long as it's non-zero, there is still going to be a statistical limit on the length of life. No hanging around till the heat death of the universe for you.
Technically, this is not correct.
If your chance of dying drops exponentially (perhaps not very realistic, hence 'technically'), your probability of survival converges to something greater than 0.
I made a rather long (2 hours) YouTube video that explains the fundamentals of our current economic system - perhaps it is helpful to someone who wants to get a better understanding of the issue:
From my personal experience I can tell you that colleagues at the company I previously worked for in Vienna, Austria made about 42 k / year with a several years of experience and a masters in computer science. But pay was always an issue there.
Hey, I am also living in Vienna (or at least close to it) and I want to get self employed as well - any tips how to start? (already have a few years of programming experience under my belt and soon a master in mathematics)
If Peter did in fact work hard and now he's stripped of the results of his labor while being told that probably he only managed to accumulate capital because he was just exploiting others, what incentive landscape does that create.
Is a lot of profit a function of factors much less commendable than creating value for others? Sure. But by lumping in the productive people with the parasites, you are undermining those people who deserve your protection the most.