Maybe you mean that bitcoin doesn’t have value outside of its ostensive monetary value. Bitcoin has that too. It can back up data to thousands of locations and be censorship resistant and have a verifiable timestamp.
for you it seems that must equate the end of the world where it doesn't matter anyway.
If Bitcoin is forced to go split-brain temporarily, the network could coordinate to rejoin after the fact. Or, it could stay split in two.
Regardless, infighting over which network was “the real Bitcoin” would ensue. See Bitcoin Cash and friends.
Ultimately, one chain will come to dominate the other, and the ones who fight hardest for it to be their chain will probably find they're on the wrong one. That's because people on the right chain will not need to fight about it. They'll just be running their software as they've been doing till now, and it will pick the correct chain for them. The ones screaming "you need to download a new client" will proceed in destroying their own reputations.
That may be attempted, but then no technology company is going to start a business in the locations where this happens. The nations which attempt this will probably do more damage to their economies by enacting it than any damage that Bitcoin could possibly do. It will only take a couple of nations to declare themselves open for bitcoin business, to have economic success, for the rest of the world to realize that fighting against Bitcoin is a losing game.
Debasement of the USD will probably happen, but who knows when. My guess is it that it won't be a sudden event but will happen gradually over a few decades. You might measure USD to lose half of its value over a decade, but if you attempt to do the same for bitcoin, you might find that it has barely changed because "inflation" in bitcoin is negligible - ~7/8 of the total bitcoin supply has already been released, and the amount of "inflation" is decreasing over time.
Fed is printing $4T this week!
Welcome to the new normal.
https://twitter.com/apompliano/status/1238463895095869440?s=...
It's not that simple. Transactions can, and will be, replayed on both chains. There would however be many opportunities for attacks such as double spends for a short window of time.
> The two forks could exist for a long time after the split simultaneously,
That's not realistic. As soon as there is some communications between the chains, the system will reconcile. It's sort of the whole reason why this proof-of-work thing exists. Without the need to reconcile chain splits it would be sufficient with some sort of voting of proof-of-stake scheme.
My point was that a merchant who accepts a payment for some good or service, and later finds out that they were partitioned from the network after they have already released the goods, may find that they don't have any money on the other (main) chain because it was already spent. The merchant has no recourse to get back their money.
> That's not realistic. As soon as there is some communications between the chains, the system will reconcile. It's sort of the whole reason why this proof-of-work thing exists. Without the need to reconcile chain splits it would be sufficient with some sort of voting of proof-of-stake scheme.
This is what I was alluding to in the last paragraph. The majority of participants who do nothing will simply continue to operate on the main chain, but those who were partitioned (which may include miners) may resist operating on the main chain by forking their software. If enough people are affected by a partition, they would have the incentive to follow the partitioned chain and promote the forked software because their money doesn't exist on the main chain. They would probably operate both chains in attempt to spend the money they received whilst the partition occurred, but eventually the dominant main chain would account for most of their economic activity and the partitioned chain will become obscure, like Bitcoin Cash.
Right, the double spend attack. It's feasible under certain circumstances, such as a chain split. That doesn't mean the system breaks down completely, but that it has to be mitigated. In the event of a multi hour long network partition, some participants are likely to take action.
> they would have the incentive to follow the partitioned chain and promote the forked software because their money doesn't exist on the main chain
My point was that their money do exist on both chains as long as transactions are replayed. That may be more or less hard depending on the nature of the split (say, a whole country falls on the Internet completely). Economic participants do have an incentive to replay transactions (for example by following the satellite feed, or a number of other ways).
It is enough that one participant does this to at least give everyone else the possibility to mitigate themselves. Not a good situation to be in, of course, but still. It doesn't require nodes to follow both chains, and certainly not promote minority chains. There is simply no economic incentive to do that should transactions be guaranteed on both chains.
If you think that is possible then you must not have paid attention to how blockchains work. By definition there is only one chain and it is always the longest chain in the network. The shorter chain will always be discarded and all the data within it is lost. Now we have a problem. Can't everyone just create their own chain with garbage data and then win by being the biggest spammer? (also known as 51% attack). This is why proof of work is necessary. It is basically a cryptographic lottery that ensures that there will only be one winner every 10 minutes. Since there will never be more than 1 winner there will also never be more than one longest chain. If you decide to disconnect from the network and solve the POW offline your chain will always be much shorter than the main chain. Only if you possess 51% of the miners can you do this offline attack and control which chain becomes the new one. It is possible to rewrite past transactions as well. Just start mining 3 blocks ago and remove transactions or add new ones. However, this becomes harder and harder the older the transaction is. Finding e.g. 10 blocks takes such a huge amount of mining resources that it is infeasible if don't control at least a super majority.
We must not go silently into that dark night.
>Bitcoin let’s you store $1T USD of dollars in your head, transport it anywhere in the world, and there’s not a single thing anyone else can do about it.
It's amazing how easy gray matter cryptography can be broken using a cheap $5 wrench.
So true too. At the end of the day, digital security must be reinforced with physical security and good opsec.
Also, left out of this discussion is the fact that gold is actually tangible, divorced from some weird semantic backflips. You can build useful things with it.
Also: gold can easily be confiscated and it has been before - https://en.m.wikipedia.org/wiki/Executive_Order_6102.
How much gold do you think you can travel with? Think the TSA would allow even $100k of gold to be carried on your person?
Given golds limited supply, why has the price been relatively stable in dollars (which are unlimited)? Because the gold market can easily be manipulated because central banks and Govs hold most of the supply and they can, and do, suppress with targeted market supply flooding.
No, we don't, which is exactly why gold is considered superior.
Holders of gold maintain custody at risk of physical confiscation.
Holders of Bitcoin maintain custody (of the password that allows spending said Bitcoin) and are cannot he compelled one way or another. The bitcoin moves when they say so.
There's four things in play in this discussion, and they each fit those ideas differently. Paper dollars in the hand, digital dollars in a wallet, gold in the hand, and bitcoin. This discussion would be over if better definitions of 'ownership' were used.
A vanishingly small percent of gold's value is attributable to its industrial use. Of all the gold ever mined in history, only something like 1% has been used in an industrial or construction context.
Maybe if you extend "useful things" to jewelry you might have a point. But almost assuredly jewelry is made out of gold because gold is expensive and valuable. Not the other way around.
If everyone on Earth tomorrow forgot about gold's historical role as a store of value, it might be worth $50 an ounce at most.
https://medium.com/coinmonks/bitcoin-has-no-intrinsic-value-...
Care to elaborate on what my misconception was? I never said that bitcoin is not an interesting concept on its own. Just that is ain't got what most people think or need when they talk about gold or money. Especially not in time of economic distress.
Can you use bitcoin without the internet? Can you use bitcoin without someone else mining and being allowed to connect to these entities?
The answer to both is, simply, "no".
All cryptocurrencies (not just Bitcoin) are incredibly reliant on the availability of unrestricted communications between all participating parties, including miners. Where those communications break down, the cryptocurrency is likely to become unreliable or entirely unusable.
(As such, Bitcoin is an incredibly poor choice if you're planning for some sort of apocalyptic scenario -- it's likely to be one of the first things to stop working.)
Bitcoin is more of bet that Keynesian monetary policy fails. It doesn’t hedge for Armageddon.
Planning for a collapse of world order involves small coins, farmland, prepping pantries, home schooling, and firearms.
Hey, I’m all for individual sovereignty!
Full nodes have financial incentives to run and they do so today at a scale that rivals the internet. It’s not a favor to Bitcoin, it’s a business. They would only stop if the financial incentive ceased to exist. I can’t think of a reason node operators would cease to care about their own financial well-being. That’s baked into our species.
Note that your reservations apply equally (and potentially more so) to fiat. USD is a virtual currency. Cash is on the way out. You will not be able to spend your USD offline. USD is based on a network of centralized banks. You cannot spend your fiat without a computer asking permission from these centralized systems.
The world stops if the internet stops. That’s not a Bitcoin problem. Bitcoin actually improves on the state of things by replacing encumbant authorities and centralized computing systems with math and a decentralized network.
I’ll add this. It’s not the current state of the world, but there is a very real chance Bitcoin can be made available off-internet via a satellite network. This would prevent state-level censorship like what we see when authoritarian regimes cut the internet.
https://github.com/Blockstream/satellite/blob/master/README....
I mean by that definition anything past barter economies are virtual, so sure if that's your definition then your statement stands. It's completely incorrect by any meaningful definition of virtual though.
Yes, I can, as long as I have it as physical currency, and regularly do. Admittedly, this relies on confidence of all participants that eventually systems (banking, etc.) which are as you describe will work or be replaced/retooled without he online dependency (and there is plenty of historical precedent of systems working with fiat without digital backup which could be reverted to in extreme need), but there is no real-time dependency on online systems for use of physical currency, and as long as systems are up and working it's easy for fiat users to adjust their risk profile regarding potential future system failures by moving funds into or out of physical currency.
Today, central banks acts as a final settlement later upon which the rest of the financial system is built (banks, credit, etc). This makes it impossible for the financial system to “shut off”.
In a Bitcoin world, the main ledger would act as a final settlement layer, and local lightning networks act as the layers on top providing payments, loans, and credit. All transactions would be batched and only get settled so often (once an hour, globally, for example).
This gives you similar local-affinity that today’s financial system offers without relying on governments to award permission to engage in commerce.
And far more trust in anonymous, unaccountable actors, largely foreign from the perspective of any given trusting party.
Those centralized actors have, in the case of major states, have well established trust and accountability systems that maintain that trust. Bitcoin not only doesn't have that, it is fundamentally premised on preventing it.
There is a certain ideological phyle to which this is appealing, but I'm not convinced that generally it hard an advantage over centralized institutions in establishing user confidence.
You then need to have confidence that humans will always act in their own self-interest, and that you are not important enough that a sufficiently large portion of participants would act against their own interest in attempt to try and scam you.
Acting against your own interest means deliberately losing money by trying to coerce a large number of economic participants to act against their own self-interest in order to benefit you.
Keeping the "main ledger" functional requires miners to have reliable communications with each other; I believe Lightning nodes need an up-to-date view of the ledger as well.
> All transactions would be batched and only get settled so often (once an hour, globally, for example).
There is no mechanism in Bitcoin which would provide this functionality. It's not clear that it'd even be possible without a major rework of the protocol.
You will not be able to get a hair cut unless you are an outstanding citizen and have your governments blessing.
I wish this were a joke.
Maybe, especially in some places, but even if that is the direction of digital financial transformation, the US is decades behind on most levels of that transformation and has cultural issues that that even if it was caught up on other aspects would make retirement of physical currency harder than it might be in other places.
I will be surprised if central banks don’t use the ushering in of the next monetary system as an excuse to go full-stop 100% digital.
I get the sense you think this is a far off and unlikely event. I think it’s much more likely and impending than that.
You are underestimating degree of our reliance on banking. Stores, restaurants and repair shops don't have enormous vaults with cash — they store money in bank accounts. If banks make cash transactions infeasible, businesses will suck it up. If your local coffee shop stops accepting cash, you will have to find another one, possibly located in different district (or even different country...). Many countries enforce mandatory use of bank accounts for business — companies are literally not allowed to operate in pure cash. When banks conspire to make cash undesirable (via high cash collector fees, shunning low-denomination bills etc.), local entrepreneurs begin go "cashless", a trend already seen in many places.
Never mind that, — even if your local legislators force shops to accept bills, who cares about them? Brick and mortar stores are deteriorating all around the world. A lot of things already can't be bought offline, unless you take an international flight each time you want to purchase. When your local electrical parts shop closes down, will you open your own? Or just order parts online and pay with VISA like everyone already does?
In not-so-distant future you will be able to spend your cash on bread and not much else. Until the backer becomes unable to spend his.
That's going to be pretty hard to do when all bitcoins have a combined "worth" of 92B.
Bitcoin has no intrinsic value in that it only exists due to artificial demand, e.g. if someone invented a better digital currency, Bitcoin's demand would evaporate and all BTC's would be worthless. It's nothing like Gold which is one of the most useful precious metals with usages beyond a storage of value.
As of now the $1T can also disappear and nobody will even notice.
Bus factor and too many single points of failure. How many lost wallets are out there with a few hundred or thousands of coins from before Bitcoin hit $100?
Lots of Bitcoin has been lost. Good key hygiene should not be taken lightly. What is unfortunate for those losers is fortunate for Bitcoin. As the supply of lost Bitcoin increases the overall scarcity of the asset increases.
With bitcoin the single point of failure is always your key. That's why every random walk down the timeline leads to 100% of keys lost over the full course of time.
As for backups, the Bitcoin ledger is likely the most durable dataset that has ever existed. Backups are made daily at every layer across the world and there is no central point of failure in the network.
Shutting down the Bitcoin network would take a world war, and even then the network would survive through backups and the will of network participants to bring it back.
Which means that it’s just a gamble of some insiders.
Speculation is by definition gambling. Investing is also speculation. You have a thesis, and you make returns if that plays out. You lose capital when you are wrong.
Also, I'm not sure what you mean by "insiders" - most of the world can purchase Bitcoin, the software is OSS, the network inspectable, and the evolving thesis and narrative is fully available online.
Bitcoin is the people's money.
>Abstract. A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution.
The 'transportability' of the asset is really a secondary feature when talking of 'stores of wealth'.
Gold is obviously terribly difficult to move around, but that's fine, it's stored in large vaults and we make agreements as to 'who owns it'. Just as BTC implies a kind of 'contract' so does Gold ownership, they just take different forms.
The value of Gold and BTC will be a function of their perception as a credible long-term source of value. BTC will not achieve the status of Gold for a very long time, and it's unlikely it ever will. I wouldn't write it off entirely, but it's basically not a relevant instrument at this time.
As a currency BTC is probably dead for a variety of reasons, but it could come back in those terms, in which case, we'll view it differently.
But the world is not going to value BTC materially differently due to how it's 'transported'. We can trade Gold in mostly the same way.
"Bitcoin let’s you store $1T USD of dollars in your head, transport it anywhere in the world, and there’s not a single thing anyone else can do about it"
Yes, there is 'something' we can do about it, and that's to collectively not care a single bit about the magic number in said BTC holder's 'head'.
How much of that 1T dollars would you keep after you try to pump it into bitcoin and then try to pump it out?
Nothing you said addressed this.
I'm also sure trying to cash that out is going to be as easy as taking money out of an ATM
Unless you "cash out" in USDT (tether) or something similarly fake
$500M transferred for less than $400 on 7/29/19 - https://twitter.com/whale_alert/status/1155808847908544512?s...
There are many of these, and they are increasing.
Cashing out large sums is done over the counter, not through regular on/off ramps (as in your ATM example). Bitcoin is legal in the US, so I'm not sure how suspicion plays into it.
The rich play by different rules than you and I.
Also, it's $250M now due to the 50% drop in the last half hour, so in a way, they paid $250M for that transfer.
Gold can be held, yes. It also is expensive to verify, transport, and protect. This has proved problematic for holders of the past. A paper system had to be built on top of Gold, which severely diluted the value proposition as gold was confiscated and stockpiled centrally. Practically speaking, very few individuals hold gold and the utility of doing so is limited when you consider how liquidity in the gold market functions.
Bitcoin is a different beast. You hold the cryptographic keys (like a password) which let you move Bitcoin to someone else’s address (under their password). You don’t trust anyone: Bitcoin is verified by math, not humans. It is tangible in the same way that owning google.com is tangible (and unarguably valuable). Bits and bytes exist on a global network and only you can move them.
When compared to Gold, Bitcoin is interesting because it is highly transportable, easily divisible, and censorship resistant. Consider this: Bitcoin let’s you store $1T USD of dollars in your head, transport it anywhere in the world, and there’s not a single thing anyone else can do about it.