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Author Topic: Lead developer quits Bitcoin saying it has “failed”  (Read 1831 times)

MamaLiberty

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Lead developer quits Bitcoin saying it has “failed”
« on: January 18, 2016, 08:00:51 am »

What the heck happened to BitCoin?

Lead developer quits Bitcoin saying it has “failed   ”http://www.reuters.com/article/global-technology-bitcoin-idUSL8N1521DD
January 18, 2016
 Reuters   

"Bitcoin slid by 10 percent on Friday after one of its lead developers, Mike Hearn, said in a blogpost that he was ending his involvement with the cryptocurrency and selling all of his remaining holdings because it had 'failed.' Hearn, one of five senior developers who has spent more than five years working on the web-based currency, said he would no longer be taking part in development. 'Despite knowing that bitcoin could fail all along, the now inescapable conclusion that it has failed still saddens me greatly,' Hearn said in his post on blog-publishing platform Medium." (01/18/16)
http://www.reuters.com/article/global-technology-bitcoin-idUSL8N1521DD
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Bill St. Clair

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Re: Lead developer quits Bitcoin saying it has “failed”
« Reply #1 on: January 18, 2016, 08:03:27 am »

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Silver

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Re: Lead developer quits Bitcoin saying it has “failed”
« Reply #2 on: January 18, 2016, 01:51:27 pm »

I predicted that Bitcoin would probably fail, because it is not money and never will be.

I didn't predict this particular cause of failing, which is fascinating.  I want to read and think about this some more, but at first glance it appears that there is a combination of exploiting flaws in the blockchain protocol, plus perverse incentives created by the hard upper limit on the number of Bitcoin. 

Mike Hearn reports that just 2 miners control more then 50% of the blockchain hash power, and a handful control 95%.

There's very limited incentive for newcomers to try and break whatever cartel has been established, because there is a hard upper limit on the number of Bitcoin, and it isn't hard to imagine the cartel being able to smash any upstarts until all available coins have been mined.

This cannot happen with genuine commodity based money.  If a cartel tries to control production, it raises costs and prices, until upstarts decide it is worth the risk to try and open new sources.  No cartel can limit the amount of gold mined, or tobacco grown, or silver coins minted.  Owners of the new mines are free to underbid the cartel.  In Bitcoin, it is effectively impossible to dislodge the cartel.

Hearn bemoans the fact the Bitcoin "has failed because the community has failed. "  But greed and avarice have been with us since Eden.  This is a tacit admission that Bitcoin has fundamental flaws. 

The idea of blockchains and distributed accounting for transactions probably has lasting value.  If bitcoin fails, the lessons learned may allow a new, more robust and secure system to take its place.  One that doesn't require a world full of Boy Scouts to make it work.

Peace,

Silver

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DiabloLoco

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Re: Lead developer quits Bitcoin saying it has “failed”
« Reply #3 on: January 18, 2016, 01:53:47 pm »

All unbacked currencies ("crypto" or otherwise) are doomed to failure. ALL OF THEM! It's a mathematical certainty. I know that I'm sounding like a broken record here, but........If you can't hold it, you don't own it. Period. Now, if there were a feasible gold-based crypto-currency with complete accounting transparency and an ironclad option to "cash-out" in actual gold, I'd be the first to sign up!
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MamaLiberty

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Re: Lead developer quits Bitcoin saying it has “failed”
« Reply #4 on: January 18, 2016, 02:08:35 pm »

.If you can't hold it, you don't own it. Period. Now, if there were a feasible gold-based crypto-currency with complete accounting transparency and an ironclad option to "cash-out" in actual gold, I'd be the first to sign up!

I agree with the first idea... in the hand.

Seems to me that privacy and confidentiality is the opposite of complete accounting transparency. Can you have both?

What would constitute an "ironclad" option to cash out in actual gold? I think the first is the only practical answer... in your own hand is pretty ironclad. As long as you have the IRON to defend it from theft, of course. Cyber technology is wonderful for many things, but I can't see "money" as being one of them. :) Contracts, yes... money, don't think so.
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DiabloLoco

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Re: Lead developer quits Bitcoin saying it has “failed”
« Reply #5 on: January 18, 2016, 02:21:01 pm »

.If you can't hold it, you don't own it. Period. Now, if there were a feasible gold-based crypto-currency with complete accounting transparency and an ironclad option to "cash-out" in actual gold, I'd be the first to sign up!

I agree with the first idea... in the hand.

Seems to me that privacy and confidentiality is the opposite of complete accounting transparency. Can you have both?

What would constitute an "ironclad" option to cash out in actual gold? I think the first is the only practical answer... in your own hand is pretty ironclad. As long as you have the IRON to defend it from theft, of course. Cyber technology is wonderful for many things, but I can't see "money" as being one of them. :) Contracts, yes... money, don't think so.
There has to be a way to complete interstate and worldwide transactions. That cannot be feasibly done with "gold-in-hand". When I said "complete accounting transparency", I was referring to the "crypto-bank" proving beyond a shadow of a doubt that all assets are backed 100% by gold to any and all requests. Individual accounts are another matter entirely. Privacy would most certainly be an issue with any cyber-based currency, but there has to be a solution to that though. It's beyond me, for sure, but there's gotta be SOMEBODY that could solve that problem.
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MamaLiberty

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Re: Lead developer quits Bitcoin saying it has “failed”
« Reply #6 on: January 18, 2016, 03:01:33 pm »

but there has to be a solution to that though. It's beyond me, for sure, but there's gotta be SOMEBODY that could solve that problem.

I'm sure there are lots of possible solutions. But all of them will include some risk. That was my point. Even the gold in your hand is secure only as long as you can defend it. :)  I was reacting to the word "ironclad."  :)
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Rarick

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Re: Lead developer quits Bitcoin saying it has “failed”
« Reply #7 on: January 18, 2016, 03:56:39 pm »

How about splitting the difference?  What if there was a currency that could use something limited like gold, but had a bit of the ability to "print more" but not a whole lot really fast.  What if that basis of making more currency actually made it possible to grow the economy to back that currency?

Base a countries paper currency on the total of wattage it generated.  Allow people who generated power to redeem their excess power in currency?  Suddenly the electric companys become the banks and the electrical infrastructure gets very important you get the need for cheap and efficient ways of building powerplants, most wattage out for least wattage invested?

With the power suddenly being plentiful...
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MamaLiberty

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Re: Lead developer quits Bitcoin saying it has “failed”
« Reply #8 on: January 18, 2016, 04:34:52 pm »

Don't think it works that way, Rarick. Work, production of goods, and savings are what produce wealth and a healthy economy. "Money" is simply the exchange medium.  One big fallacy, far as I can see, is the idea that "the economy" is some universal thing and that actions or problems can/should/will affect all of it, everywhere. But like politics, it is all basically local and each small economy affects others - far and near - in a relative and usually random manner.  Economies, like the weather, can't really be controlled. At least not much, and not for long. Markets/economies do change and adapt to each barrier and challenge. The black market is a good example.

Just imagine if everyone was perfectly free to call anything they liked "money." Each exchange would rest not only on the trust of the money offered, but trust in the traders and level of desire for the goods. People would have to be self responsible, and work a little harder at it. The self checkout lanes in the WalMart probably wouldn't be too practical then, unless they could negotiate for the company. Any centralized control of "currency" is doomed to inflation and corruption. Inevitably - just as is any centralized, non-voluntary government. And I suspect you can't have one without the other.

I was reading about the impending chocolate "shortage," with doom and gloom speculation on astronomical prices... supposed to be coming in 2020 because demand is rising and not enough is being grown. The article totally neglected to explore the idea that more would be grown when the potential producers understood the potential shortage and saw an opportunity to benefit. Now, of course there are lots of bureaucratic barriers and pressure from the envirowhackos, but where there is a will, there is a way. Those who gauge the potentials and the risks wisely will prosper.

We've heard the same hysteria over everything from coffee to gasoline. We can still buy both of them, and the price (not counting the inflation) is lower than it was a  year ago.
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Re: Lead developer quits Bitcoin saying it has “failed”
« Reply #9 on: January 19, 2016, 12:49:43 am »

If you can't hold it in your hands and trade it in person, it won't function as money.
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Rarick

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Re: Lead developer quits Bitcoin saying it has “failed”
« Reply #10 on: January 19, 2016, 04:11:10 am »

A powerplant sitting on your property is not a good equivalent for holding it in your hand?  The current electronic funds system could serve as the means of verifying the current status of those "Watt Dollars" that are not in paper form.  The ability of individual citizens to build a nest egg in the form of a powerplant if they gathered the capitol would be a diversifying factor.  There would be many ways to do it too.

A variety of certifying organizations could compete for those new watts as well probably evolving out of the current public utilities.  The "Fairest" would probably hold the largest market share and set the standard.  You would have a selection of "bankers" from green power to the more traditional forms.
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MamaLiberty

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Re: Lead developer quits Bitcoin saying it has “failed”
« Reply #11 on: January 19, 2016, 06:06:40 am »

You and your voluntary partners could do just about anything they wanted, of course. Whether or not others would consider that "money" would be their choice, and their problem.  Freedom is messy... there are no guarantees and few absolutes. We'd just have to play it by ear. :)
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Silver

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Re: Lead developer quits Bitcoin saying it has “failed”
« Reply #12 on: January 19, 2016, 10:54:50 am »

The Theory of Money and Credit and the less technical What Has Government Done to Our Money? both do an outstanding job of explaining how money arises from trade in free markets.  Both are available for free download in a variety of formats at Mises.org.

Powerplants will never be money.  They are capital investments, factories for pumping electrons.  They are neither fungible nor divisible, and most people don't like them despite being utterly dependent on them, so they fail the "always and everywhere in demand" test.  As ML points out, trust and acceptance is required of money, and power plants range from extremely safe and reliable to death traps about to fall in upon themselves.

One of the most astonishing displays of economic ignorance I've ever seen was recently posted at Edge.org.  In response to the question "2016 : WHAT DO YOU CONSIDER THE MOST INTERESTING RECENT [SCIENTIFIC] NEWS? WHAT MAKES IT IMPORTANT?" some central planner dimwit proposed "Feces Standard Money."  In a world awash in economic ignorance, this one stands out.

This turd (pun intended) stands out in an otherwise mostly thoughtful and thought-provoking responses.  I particularly enjoyed the short piece by Freemon Dyson on the Dragonfly Array, a telescope made from commercial telephoto lenses that is 10 times better at detecting faint galaxies than the big ones costing literally 1,000 times as much.  Already this inexpensive instrument has discovered evidence that will cause some major reworking of the theory of how galaxies form and the universe ages.

Peace,

Silver
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Rarick

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Re: Lead developer quits Bitcoin saying it has “failed”
« Reply #13 on: January 20, 2016, 05:37:25 am »

The reasons people don't want the power plants under NIMBY clause, is because of the spectrum you outlined.  They fear getting a lowlife cur of one for a neighbor...

The market would somewhere take care of the bad operators, if it was opened up.  Even if it came down to neighbors eliminating an imminent danger with a shotgun....  The EPA currently replacing the shotgun and being problematic in itself...
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Most of the time news is about the same old violations of the first principles of consent and golden rule with a dash of force thrown in........ with just enough duct tape to be believable.

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Re: Lead developer quits Bitcoin saying it has “failed”
« Reply #14 on: January 21, 2016, 05:08:11 am »

Rarick, the thing you propose is actually being done by the government right now, well, the private bankers with their government partners.

They are using the labor and creative resources of a nation state as their backing.  Now before someone jumps in and says "well that's not tangible" I have a different question:  If your labor is not worth something "as money" then obviously the government has just been proven correct and they can tax you on every penny you make since obviously your life would have no value, your effort would have no value.  Now, if they can ascribe a value to your life or to an hour of mental or physical effort from you, this changes.  So which way do we go, because saying one cannot base currency on projected labor/productive output of a facility/plant/organization, is saying that time spent exerting one's mind or body has no value, which would play into the government's tax story that "all wages are income."  Do you want to lend validity to their story while also devaluing your own?  (I.E. that your life actually has VALUE.)

I've said it time and again.  The reason you can't keep what's yours is because you are constantly taxed on the very things you need to live.  You are taxed on your house, on your food, on your transportation.  We're not talking "luxury" smog taxes on a Lamborghini you only drive three times a month.  We're talking a couple of hundred bucks on that 6 year old, extremely efficient Toyota Corolla you drive to work and back.  Until that screwy concept is eliminated, and virtue and some form of meritocracy PROMOTED in society, everything else is forever doomed to failure due to the vampirism or cannibalism (choose your analogy, both are valid) inherent in the current system.  Changing the substance which acts as money will not change the fact that the parasites will fleece you dry, whether you have to add zeros to a number representing your wealth, or you have to overload the wheelbarrow in which you carry your gold money.  People are trying to overhaul money, without realizing that we're still using an archaic barbarian "government" system.  That will need overhauling long before money can be overhauled.

Just an observation.
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