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A bad idea run by someone who has no clue about what he's doing combined with another bad idea supported by people who have no clue about what they're doing? Si

A bad idea run by someone who has no clue about what he's doing combined with another bad idea supported by people who have no clue about what they're doing? Sign me up.

jafaku 13y ago
How is Bitcoin a bad idea, and how do we not know what we are doing?
- betterunix 13y ago
  1. Bitcoin has no rigorous security definition. 2. Bitcoin can be "attacked" (for some vague notion of what it means to attack a system that has no security definition) in polynomial time. 3. The economics of Bitcoin are extremely suspect and based on a poorly developed economic model, supported by neither the Austrian school nor by modern monetary theory. This is probably the underlying cause of the lack of a security definition, as the security definition of a digital cash system will almost certainly be driven by the system's economic model. These issues have been covered ad nauseam by many people, and have been largely dismissed by the Bitcoin community. All the while we have seen increasing amounts of energy sunk into Bitcoin mining, we have seen a major block chain fork that left transactions in question, and we have seen wild fluctuations in the value of Bitcoin currency.
  - jafaku 13y ago
    1. What do you mean? 2. Countries can be attacked too. I don't know what your point is here. If bitcoin survives its infancy, it could become more resilient than any other currency. 3. Could you explain it in practical terms? Because as long as it works, why should I care about what theorists say? Bitcoin's creator said himself that it was an experiment, and rightly so, we have never seen anything like Bitcoin taking off before. Seems like he nailed it on his design. Yeah, I have seen a lot of people raging. How is that evidence of anything, other than fear of the unknown?
    - betterunix 13y ago
      Typically cryptographers will define a security goal in rigorous terms, then prove that their system meets that goal (at least for "cryptomania" type applications like digital cash). There are good reasons for doing this: 1. It makes proofs of security possible, which make us a lot more confident about cryptosystems. 2. It allows us to be clear about what it means to "break" a system. If we are not clear about this, someone could claim that their system cannot be attacked by simply defining security to be the exact behavior of whatever they created. This is analogous to having a falsifiable hypothesis in a scientific experiment. The original Bitcoin paper did not have such a definition. I am aware of one attempt at making such a definition, but it resulted in a very weak notion of security that placed unrealistic restrictions on what an attacker could do (basically, the authors were trying to find some definition that Bitcoin could satisfy; see point 2 above). In general, Bitcoin's security is highly suspicious, since by design the honest parties must scale their work in proportion with the work done by the attacker. "Countries can be attacked too. I don't know what your point is here. If bitcoin survives its infancy, it could become more resilient than any other currency." If you are admitting the possibility that an army might attack a country, then you are allowing Bitcoin to be fractured by an army destroying the outgoing Internet connections of a country. In the past, countries have been cut off from the Internet by accident (e.g. anchors being dropped on undersea cables). You could keep an attacking army outside of your territory and still wind up unable to communicate with the rest of the Bitcoin network. This is not a highly convincing argument. Of course, this is all irrelevant, because a polynomial time attack is not the same as an act of war. There are a lot of organizations with the resources needed to perform the "51% attack" on Bitcoin and no compelling reason to think that a faster attack is not possible. You could attack Bitcoin by performing a lot of computation locally, without ever needing to step foot out the door. Bitcoin also does little to prevent attacks based on sending malicious messages into the network, despite the fact that cryptographers began developing techniques for dealing with that decades ago and despite the fact that almost all that work is freely available. "3. Could you explain it in practical terms?" Sure. Let's start with a thought experiment: I have something very rare, which has no practical uses but which is easy to give to others. Will you give me your car for a big pile of it? Unless you are crazy you would not give up your car. The reason is that you are receiving something that is useless in exchange, and that you would have to go find some other person willing to take a pile of useless (but rare) items. Would your landlord accept some of these rare items as a rent payment? Would the bank accept some as loan repayment? Would the government accept it as a tax payment (let's just pretend that you are a law-abiding citizen who pays their taxes)? How is Bitcoin any different? A lot of hype was generated about it, but at the end of the day you will not be able to pay your taxes with it, banks are unlikely to accept it for loan payments, and the majority of businesses that claim to accept Bitcoin payments actually accept payments in fiat currency via a Bitcoin exchange. Bitcoin currency has no practical uses (it is basically an energy sink) so the Austrian school does not support it, and it is not legal tender nor is it accepted for tax purposes by the government so modern monetary theory does not support it either. "why should I care about what theorists say?" For the same reason you should care about what cryptography theorists, physicists, and doctors have to say. "we have never seen anything like Bitcoin taking off before." That is because Bitcoin is the first of its kind. It is the first attempt to create a currency without a legal system. Even gold had value as currency because of a legal system. "Yeah, I have seen a lot of people raging. How is that evidence of anything, other than fear of the unknown?" You are calling the informed opinions of dozens of experts in cryptography and economics "raging" because they are saying that the system you love and support is based on dubious technical and economic ideas. It sounds more like you started out believing that Bitcoin is the future and are not willing to accept any argument that concludes anything else.
  - bpodgursky 13y ago
    Adding a few of my own peeves: 4. Bitcoin is inherently deflationary, which is an awful idea if you talk to anyone who knows anything about money 5. Bitcoin is fundamentally backed by pointlessly wasting CPU cycles and wasting energy trying to reverse hashes.
    - jafaku 13y ago
      4. Last time I checked, gold was still very valuable. And it has been used for what... Thousands of years? The economies of the world did just fine without forced inflation and consumerism. 5. Printing paper money wastes way more resources. And how is using energy to create something of value a bad idea anyway? Bitcoin doesn't even require that you use a contaminating type of energy, for all I know you could be hashing with solar energy.
      - dangero 13y ago
        Gold being valuable isn't the point. In fact, I think calling bitcoin deflationary indicates the belief it will actually be more valuable in the future. Question for you regarding your reference to forced inflation and consumerism: Do you believe there would be even a temporary economic collapse if the world were to suddenly move to a deflationary currency? If so, how many months/years would the collapse have to last before you would say that the transition to a deflationary currency isn't worth it? The reason I ask is because while fundamentally I have a lot of problems with our financial system, I've come to the conclusion that historically there were periods of recession that lasted hundreds of years. I just don't feel that my lifetime in a bad transition economy is worth the sacrifice of moving to a "better" financial system. I'd rather just keep the status quo as it slowly degrades to something worse and worse since I think that's the best outcome for me. It's a selfish outlook, but I have to believe it's the outlook of most people and that's why we are where we are right now.
      - bpodgursky 13y ago
        Most transactions now do not involve cash, and credit card transactions are in fact far more energy-efficient than bitcoin transactions. And it is not just using energy to "create something of value"--it is an artificial waste of energy barrier. Furthermore, there will be an energy cost to transactions even after no substantial number of bitcoins are mined, since just verifying transactions requires wasteful hashing. The solar energy part is totally irrelevant--if you happen to have a solar panel sitting around, you could just as easily use it for actual work (and offset coal burning) rather than computing hashes.
  - javert 13y ago
    It's hard to downvote a thoughtful comment from a smart person, but you're just plain, flat out wrong. Bitcoin is a heuristic for Byzantine concensus that requires 50% + epsilon of mining hash power to subvert. This is not explicitly stated in the original paper, but the original paper comes very close. I don't know what else you would want. Regarding economics: All you need for a functioning currency is a supply of speculators who will bet on its future value and thus prop it up. That is only sustainable if the currency is the best at what it does for some meaningful niche (e.g. untrusted digital transactions). This is not part of any proir school of economics, but it's close to common sense, and is strongly supported by the success of bitcoin thus far.
    - betterunix 13y ago
      You are already giving an unclear definition when you use terms like "mining hash power." What rigorous definition can you give for that term? What sort of model of computation are we working with (or is the definition based on information theory?)? For comparison, consider the definition of security used in this recently published paper: http://eprint.iacr.org/2013/443 http://eprint.iacr.org/2013/443 The definition is long, but very clear. Probabilistic polynomial time Turing machines are used as a model of computation; the adversary is given more power by being allowed to be non-uniform (i.e. the adversary can be a different machine for different security parameters). The security properties are clearly defined in terms of this model of computation, and a construction is given and proved to meet the properties (under certain hardness assumptions). Note that there is no possible way that Bitcoin could meet the security definition given in that paper, because that definition requires the existence of a bank that issues the cash. This is true of previous work on digital cash as well, including the work that preceded Bitcoin. That is why it is necessary to develop a security definition that makes sense for systems like Bitcoin -- digital cash systems in which there is no bank. That is the complaint I have: no satisfactory definition has been given. "This is not part of any proir school of economics, but it's close to common sense, and is strongly supported by the success of bitcoin thus far." Economics often defies common sense, so I would be wary of using common sense as the basis for a currency.
- 6d0debc071 13y ago
  If bitcoin circulation is, in practice, much lower than it's generally believed to be - “We isolated all the large (≥ 50,000 Bitcoins) transactions which were ever recorded in the system, and analyzed how these amounts were accumulated and then spent. We discovered that almost all these large transactions were the descendants of a single large transaction involving 90,000 Bitcoins which took place on November 8th 2010, and that the subgraph of these transactions contains many strange looking chains and fork-merge structures, in which a large balance is either transferred within a few hours through hundreds of temporary intermediate accounts, or split into many small amounts which are sent to different accounts only in order to be recombined shortly afterwards into essentially the same amount in a new account.” - Dorit Ron and Adi Shamir, Quantitative Analysis of the Full Bitcoin Transaction Graph. Then the perceived value and the actual value would be off significantly. So, while I might not phrase it in quite as strong terms as the person you're responding to does, I do find reason to be somewhat cautious about the whole enterprise.
  - simondlr 13y ago
    Don't recall who said it, but powerful disruptive innovations are overhyped in the short term but under-hyped in the long term. That's how I feel about Bitcoin. Circulation might not be a lot, and signs probably show that is not a lot, but it is disruptive. You also have to consider that perceived value is always reckoned into the 'actual' price. It depends on what market theories you ascribe to, but it is generally accepted that current prices reflect the market's capability to guess (and judge) futuer value. So, perceived value is often difficult to 'divorce' from the actual value, especially in the case with something like Bitcoin, where it is seen as both an asset and currency. Another thing is the continuing trend of providing off-chain transactions (through companies such as Coinbase en Inputs.io).
  - i_am_dead 13y ago
    Things have changed since 2010.
    - 6d0debc071 13y ago
      Study wasn't done in 2010. That's just when that transaction shell game showed up from the perspective of the study. Do you have an up to date statistical analysis of the bitcoin transaction record to share?
Widdershin 13y ago
Do you practice your negativity or does it just come naturally? What's wrong with this idea?
- crygin 13y ago
  Both nutrition and pecuniary economics are far more complex then Soylent and Bitcoin allow for -- additionally, the history of both of these fields is seeded with innumerable failures to couch each of their fundamentals in terms of simple concepts (for nutrition: protien/fats/carbs, vitamins, micronutrents, and so on -- for economics, Smith, Marx, Keynes, Laffer, et cetera). The idea that either, as a phenomenological consequence of human interaction, has a simple solution is technically possible but foolhardy. I don't deny that there may be a food that is easy to make but perfect for humans; or that there may be such a currency as well. But for any rational actor to believe it would require not only extraordinary evidence, but specific refutations of the previous failed attempts (rather, the theory would provide those refutations). Such a failure to both acknowledge and rebut historical failures in the same vein is strong evidence of crankism/crankitude/crankosity/I Can't Believe They're Not A Crank. Somewhat ironically, the foodstuff I might be most inclined to believe would satisfy this requirement is exactly what "soylent" should be -- complete raw human. Om nom nom.

A bad idea run by someone who has no clue about what he's doing combined with another bad idea supported by people who have no clue about what they're doing? Sign me up.

jafaku 13y ago

How is Bitcoin a bad idea, and how do we not know what we are doing?

betterunix 13y ago
1. Bitcoin has no rigorous security definition. 2. Bitcoin can be "attacked" (for some vague notion of what it means to attack a system that has no security definition) in polynomial time. 3. The economics of Bitcoin are extremely suspect and based on a poorly developed economic model, supported by neither the Austrian school nor by modern monetary theory. This is probably the underlying cause of the lack of a security definition, as the security definition of a digital cash system will almost certainly be driven by the system's economic model. These issues have been covered ad nauseam by many people, and have been largely dismissed by the Bitcoin community. All the while we have seen increasing amounts of energy sunk into Bitcoin mining, we have seen a major block chain fork that left transactions in question, and we have seen wild fluctuations in the value of Bitcoin currency.
- jafaku 13y ago
  1. What do you mean? 2. Countries can be attacked too. I don't know what your point is here. If bitcoin survives its infancy, it could become more resilient than any other currency. 3. Could you explain it in practical terms? Because as long as it works, why should I care about what theorists say? Bitcoin's creator said himself that it was an experiment, and rightly so, we have never seen anything like Bitcoin taking off before. Seems like he nailed it on his design. Yeah, I have seen a lot of people raging. How is that evidence of anything, other than fear of the unknown?
  - betterunix 13y ago
    Typically cryptographers will define a security goal in rigorous terms, then prove that their system meets that goal (at least for "cryptomania" type applications like digital cash). There are good reasons for doing this: 1. It makes proofs of security possible, which make us a lot more confident about cryptosystems. 2. It allows us to be clear about what it means to "break" a system. If we are not clear about this, someone could claim that their system cannot be attacked by simply defining security to be the exact behavior of whatever they created. This is analogous to having a falsifiable hypothesis in a scientific experiment. The original Bitcoin paper did not have such a definition. I am aware of one attempt at making such a definition, but it resulted in a very weak notion of security that placed unrealistic restrictions on what an attacker could do (basically, the authors were trying to find some definition that Bitcoin could satisfy; see point 2 above). In general, Bitcoin's security is highly suspicious, since by design the honest parties must scale their work in proportion with the work done by the attacker. "Countries can be attacked too. I don't know what your point is here. If bitcoin survives its infancy, it could become more resilient than any other currency." If you are admitting the possibility that an army might attack a country, then you are allowing Bitcoin to be fractured by an army destroying the outgoing Internet connections of a country. In the past, countries have been cut off from the Internet by accident (e.g. anchors being dropped on undersea cables). You could keep an attacking army outside of your territory and still wind up unable to communicate with the rest of the Bitcoin network. This is not a highly convincing argument. Of course, this is all irrelevant, because a polynomial time attack is not the same as an act of war. There are a lot of organizations with the resources needed to perform the "51% attack" on Bitcoin and no compelling reason to think that a faster attack is not possible. You could attack Bitcoin by performing a lot of computation locally, without ever needing to step foot out the door. Bitcoin also does little to prevent attacks based on sending malicious messages into the network, despite the fact that cryptographers began developing techniques for dealing with that decades ago and despite the fact that almost all that work is freely available. "3. Could you explain it in practical terms?" Sure. Let's start with a thought experiment: I have something very rare, which has no practical uses but which is easy to give to others. Will you give me your car for a big pile of it? Unless you are crazy you would not give up your car. The reason is that you are receiving something that is useless in exchange, and that you would have to go find some other person willing to take a pile of useless (but rare) items. Would your landlord accept some of these rare items as a rent payment? Would the bank accept some as loan repayment? Would the government accept it as a tax payment (let's just pretend that you are a law-abiding citizen who pays their taxes)? How is Bitcoin any different? A lot of hype was generated about it, but at the end of the day you will not be able to pay your taxes with it, banks are unlikely to accept it for loan payments, and the majority of businesses that claim to accept Bitcoin payments actually accept payments in fiat currency via a Bitcoin exchange. Bitcoin currency has no practical uses (it is basically an energy sink) so the Austrian school does not support it, and it is not legal tender nor is it accepted for tax purposes by the government so modern monetary theory does not support it either. "why should I care about what theorists say?" For the same reason you should care about what cryptography theorists, physicists, and doctors have to say. "we have never seen anything like Bitcoin taking off before." That is because Bitcoin is the first of its kind. It is the first attempt to create a currency without a legal system. Even gold had value as currency because of a legal system. "Yeah, I have seen a lot of people raging. How is that evidence of anything, other than fear of the unknown?" You are calling the informed opinions of dozens of experts in cryptography and economics "raging" because they are saying that the system you love and support is based on dubious technical and economic ideas. It sounds more like you started out believing that Bitcoin is the future and are not willing to accept any argument that concludes anything else.
- bpodgursky 13y ago
  Adding a few of my own peeves: 4. Bitcoin is inherently deflationary, which is an awful idea if you talk to anyone who knows anything about money 5. Bitcoin is fundamentally backed by pointlessly wasting CPU cycles and wasting energy trying to reverse hashes.
  - jafaku 13y ago
    4. Last time I checked, gold was still very valuable. And it has been used for what... Thousands of years? The economies of the world did just fine without forced inflation and consumerism. 5. Printing paper money wastes way more resources. And how is using energy to create something of value a bad idea anyway? Bitcoin doesn't even require that you use a contaminating type of energy, for all I know you could be hashing with solar energy.
    - dangero 13y ago
      Gold being valuable isn't the point. In fact, I think calling bitcoin deflationary indicates the belief it will actually be more valuable in the future. Question for you regarding your reference to forced inflation and consumerism: Do you believe there would be even a temporary economic collapse if the world were to suddenly move to a deflationary currency? If so, how many months/years would the collapse have to last before you would say that the transition to a deflationary currency isn't worth it? The reason I ask is because while fundamentally I have a lot of problems with our financial system, I've come to the conclusion that historically there were periods of recession that lasted hundreds of years. I just don't feel that my lifetime in a bad transition economy is worth the sacrifice of moving to a "better" financial system. I'd rather just keep the status quo as it slowly degrades to something worse and worse since I think that's the best outcome for me. It's a selfish outlook, but I have to believe it's the outlook of most people and that's why we are where we are right now.
    - bpodgursky 13y ago
      Most transactions now do not involve cash, and credit card transactions are in fact far more energy-efficient than bitcoin transactions. And it is not just using energy to "create something of value"--it is an artificial waste of energy barrier. Furthermore, there will be an energy cost to transactions even after no substantial number of bitcoins are mined, since just verifying transactions requires wasteful hashing. The solar energy part is totally irrelevant--if you happen to have a solar panel sitting around, you could just as easily use it for actual work (and offset coal burning) rather than computing hashes.
- javert 13y ago
  It's hard to downvote a thoughtful comment from a smart person, but you're just plain, flat out wrong. Bitcoin is a heuristic for Byzantine concensus that requires 50% + epsilon of mining hash power to subvert. This is not explicitly stated in the original paper, but the original paper comes very close. I don't know what else you would want. Regarding economics: All you need for a functioning currency is a supply of speculators who will bet on its future value and thus prop it up. That is only sustainable if the currency is the best at what it does for some meaningful niche (e.g. untrusted digital transactions). This is not part of any proir school of economics, but it's close to common sense, and is strongly supported by the success of bitcoin thus far.
  - betterunix 13y ago
    You are already giving an unclear definition when you use terms like "mining hash power." What rigorous definition can you give for that term? What sort of model of computation are we working with (or is the definition based on information theory?)? For comparison, consider the definition of security used in this recently published paper: http://eprint.iacr.org/2013/443 http://eprint.iacr.org/2013/443 The definition is long, but very clear. Probabilistic polynomial time Turing machines are used as a model of computation; the adversary is given more power by being allowed to be non-uniform (i.e. the adversary can be a different machine for different security parameters). The security properties are clearly defined in terms of this model of computation, and a construction is given and proved to meet the properties (under certain hardness assumptions). Note that there is no possible way that Bitcoin could meet the security definition given in that paper, because that definition requires the existence of a bank that issues the cash. This is true of previous work on digital cash as well, including the work that preceded Bitcoin. That is why it is necessary to develop a security definition that makes sense for systems like Bitcoin -- digital cash systems in which there is no bank. That is the complaint I have: no satisfactory definition has been given. "This is not part of any proir school of economics, but it's close to common sense, and is strongly supported by the success of bitcoin thus far." Economics often defies common sense, so I would be wary of using common sense as the basis for a currency.
6d0debc071 13y ago
If bitcoin circulation is, in practice, much lower than it's generally believed to be - “We isolated all the large (≥ 50,000 Bitcoins) transactions which were ever recorded in the system, and analyzed how these amounts were accumulated and then spent. We discovered that almost all these large transactions were the descendants of a single large transaction involving 90,000 Bitcoins which took place on November 8th 2010, and that the subgraph of these transactions contains many strange looking chains and fork-merge structures, in which a large balance is either transferred within a few hours through hundreds of temporary intermediate accounts, or split into many small amounts which are sent to different accounts only in order to be recombined shortly afterwards into essentially the same amount in a new account.” - Dorit Ron and Adi Shamir, Quantitative Analysis of the Full Bitcoin Transaction Graph. Then the perceived value and the actual value would be off significantly. So, while I might not phrase it in quite as strong terms as the person you're responding to does, I do find reason to be somewhat cautious about the whole enterprise.
- simondlr 13y ago
  Don't recall who said it, but powerful disruptive innovations are overhyped in the short term but under-hyped in the long term. That's how I feel about Bitcoin. Circulation might not be a lot, and signs probably show that is not a lot, but it is disruptive. You also have to consider that perceived value is always reckoned into the 'actual' price. It depends on what market theories you ascribe to, but it is generally accepted that current prices reflect the market's capability to guess (and judge) futuer value. So, perceived value is often difficult to 'divorce' from the actual value, especially in the case with something like Bitcoin, where it is seen as both an asset and currency. Another thing is the continuing trend of providing off-chain transactions (through companies such as Coinbase en Inputs.io).
- i_am_dead 13y ago
  Things have changed since 2010.
  - 6d0debc071 13y ago
    Study wasn't done in 2010. That's just when that transaction shell game showed up from the perspective of the study. Do you have an up to date statistical analysis of the bitcoin transaction record to share?

Widdershin 13y ago

Do you practice your negativity or does it just come naturally? What's wrong with this idea?

crygin 13y ago
Both nutrition and pecuniary economics are far more complex then Soylent and Bitcoin allow for -- additionally, the history of both of these fields is seeded with innumerable failures to couch each of their fundamentals in terms of simple concepts (for nutrition: protien/fats/carbs, vitamins, micronutrents, and so on -- for economics, Smith, Marx, Keynes, Laffer, et cetera). The idea that either, as a phenomenological consequence of human interaction, has a simple solution is technically possible but foolhardy. I don't deny that there may be a food that is easy to make but perfect for humans; or that there may be such a currency as well. But for any rational actor to believe it would require not only extraordinary evidence, but specific refutations of the previous failed attempts (rather, the theory would provide those refutations). Such a failure to both acknowledge and rebut historical failures in the same vein is strong evidence of crankism/crankitude/crankosity/I Can't Believe They're Not A Crank. Somewhat ironically, the foodstuff I might be most inclined to believe would satisfy this requirement is exactly what "soylent" should be -- complete raw human. Om nom nom.