I never bothered to get involved in Bitcoin. When it started getting popular it was too late for me to ever afford mining equipment and even the electricity alone would have cost more than what the mined coins were worth.
The BTC market also was incredibly volitile. This was maybe 2009 when I first started hearing about it, and it just seemed like bullshit. I couldn’t figure out anywhere to spend them, and the fluctuations relative to the US dollar made it seem like it was just as much bullshit as CDOs and Toxic Assets. There was no garuntee it would keep even 1/10th of it’s “value” whatever that means, because at the time it wasn’t even a valid medium of exchange.
Later I saw the stories “some blowhard bought five Bitcoins a year ago for $12 USD, forgot about them for 10 months and now they’re worth $60,000 USD”. That kind of bullshit. So that just compounded it for me, because that kind of growth only comes from insane hyperinflation of the value by a userbase who has no idea what the stuff is worth anyway. It could just as easily be worth absolutely nothing overnight so why would it even make sense to buy into BTC now that it’s astoundingly expensive?
I remember during the noughties seeing all the “free credit” stuff, and thinking “why the hell is this happening. They’re offering insane amounts of credit to people who have no income and no prospects. This can only end badly.” And then the Great Recession hit. I have no idea why anyone thought such stupidly easy credit was a good idea. I don’t trust credit at all. If I want to buy something, I want to OWN it. And BTC seemed like a shitty, volitile investment with nothing backing it besides the optimism of nerds. I’m a nerd, I know a lot of nerds, and I know that irrational optimism is the order of the day. So I just said “fuck that shit, it’ll collapse in five years or so, and I’ll be fine because I’m putting my money in annuities and bonds and scarce goods that are physically impossible to replicate without a particle accelerator.”
Why has Bitcoin failed?
It has failed because the community has failed. What was meant to be a new, decentralised form of money that lacked “systemically important institutions” and “too big to fail” has become something even worse: a system completely controlled by just a handful of people. Worse still, the network is on the brink of technical collapse. The mechanisms that should have prevented this outcome have broken down, and as a result there’s no longer much reason to think Bitcoin can actually be better than the existing financial system.
This reminds me of Alan Greenspan’s meltdown. “I don’t get it! I assumed that a bunch of libertarian nerds and a house of cards built on game theory would be all the structure we needed. I guess I was wrong.”
Fascinating. Especially the part about China’s firewall.
I too, was late to the Bitcoin party. I have no liabilities tied up in it, so that makes me happy, but I really wanted to be part of the experiment, and that kinda makes me sad.
Bitcoin gives us yet another example of a common phenomenon.
The fallout of failed glibertarian “rational” market project gives us an object lesson in why all these regulations that they tried to disrupt were put in place to begin with.
So a system(s) parameters would support understanding and trusting, safe ways for people to assess, plan and pilot scalable production and distribution projects, evaluate same and defend illegitimate attempts to damage the functions or democratic legitimacy of the projects.
The block chain is a wonderful idea in principle. The way it’s added to is a ridiculously wasteful way either to generate Bitcoins or update the ledger. Can bandwidth keep up with the glut added by new users? Maybe, maybe not. Predictions by both sides of the argument are fine, but they depend on predicting growth, which is unreliable. One side wants to limit the block size so it doesn’t choke the system. The other wants to let the community vote on accommodating new users at a trade-off against bandwidth requirements. If I were suspicious, I might wonder if they’re getting kickbacks from the Chinese miners profits. Anyway, the problem with this is that there’s no way in the current system to prevent new users from adding transactions to the queue, so the blocks will get choked. Which is better, a guaranteed choke of the artificial block size, or a possible choke of the bandwidth for updating larger blocks?
I honestly don’t know if the technology is viable in the mid to long term. But I know the current Core will piss off so many users and investors in the short term that the user-base will shrink quickly as the rats jump ship. Wanting that outcome is the only logical explanation for why the Core devs refuse to raise the block size and try to kill off anyone using the forks, while smothering dissent and discussion within the community. They’re not stupid. They can’t fail to see where that will head. They must want the community to shrink to fit the existing block size.
This is stupid on two fronts.
They can’t DDoS every fork and competitor that gets fed up but still wants to use the network. Heck, they were only able to massively inconvenience the few forks to so far appear. Yes, their illegal harassment, of their own user-base for gawds’ sake, has temporarily intimidated a few companies and power users into shutting down their fork nodes. But killing a third of enemy forces while other enemies spring up faster is a losing strategy. The Core fundamentalists will succumb to attrition. It is they and their dictatorial censorship of any discussion within this open source community that will split it up and spook investors.
And in the end no one will trust them. Fewer companies and users do every day. They’ve blown their credibility by forcing open discussion to take back-channels.
The three Core developers opposing raising the block at any and all cost couldn’t do a better job of ruining the Bitcoin system if that was their intention. If they hadn’t put years of work into the project, I’d think they were trying to bring it down from within. As it is, their foolishness will be as effective as any Trojan horse.
Part of the challenge of bitcoin is that if we offer one or more economically burdened community members a bitcoin they might ask, “What is a bitcoin?”
If I understand correctly what I’ve read recently, there’s a much more logical explanation. When block size is near capacity, only so many transactions can be processed and the rest have to wait. Since there’s a limited supply of capacity, they can charge a fee to prioritize transactions (presumably so that people won’t spam out the system with frivolous transactions).
Smaller blocks means fewer transactions can be processed per block so they can charge higher fees. And if you don’t pay them then your transactions will sit in limbo until they run out of prioritized fee-paying transactions to process, which could be forever when they hit capacity, so you’ll need to pay them whatever they’re asking, which will increase with more demand.
Large enough blocks with plenty of capacity to process all the transactions would leave no need for priority transaction fees and they would lose all of those easy profits.
If it is as described mostly controlled by a small cartel now, then there’s no real need to compete by offering lower fees or faster service. They just need to prevent competition.
Fascinating article. Seems like a good tl;dr summary here would be: bitcoin is the rebellious teen that grew up to become just like its square parents.
I personally believe we will see a fork accepted by the mining community at some point this year. And that will come with a new set of core developers and some governance about how decisions are made among that core developer team. But it could well take a massive collapse in the price of Bitcoin, breakdowns in the Bitcoin network, or worse to get there.
