I was just thinking about the “This Is Good For Bitcoin” meme.
Then I wondered what wouldn’t be good for Bitcoin, even in the long run, and would thus change my conviction in it. I am writing “conviction” instead of “selling” on purpose here. Events that would make you sell are also possible answers but not the only answers: maybe there is something that would make fiat still less desirable than Bitcoin but would still not be good for Bitcoin.
I didn’t come up with any good answer, but I feel like there must be at least one. Do you have one?
1458 sats \ 3 replies \ @pillar 15 Jul
A highly centralized ownership situation that leads to forks that rot Bitcoin from the inside.
Theoretically, with a homos economicus mindset, Bitcoin never changes its ruleset into something that hurts decentralization since we already have a highly decentralized owner base that would defend themselves.
In practical terms, a lot of the people that "have" Bitcoin use centralized custodians such as exchanges and ETFs. In fork situations, their custodians have the ultimate power to decide. Plus, the profile of someone who leaves their stack with a custodian is probably not the one that will do a lot of research into Bitcoin internals and have strong opinions on what's the right thing to do in a fork.
So, how's this an issue? You might be thinking to yourself that you can always run whatever version you want of a node, so you don't mind people forking nor big players supporting it.
I also thought that way, but an OG from the blocksized wars opened my eyes to one issue: if someone has a lot of Bitcoin, they have a lot of ammo to shoot during a fork situation.
Imagine this:
  • Large custodians, corporations and other institutions in the western block hold 10% of Bitcoin's supply.
  • The USG promotes a fork, let's call it GovCoin. It's somehow way worse that Bitcoin in terms of Bitcoin ethos: centralized, not free, not private. Whatever distopian 1984 nightmare you want to think of.
  • Whenever the fork happens, people are going to be able to trade GovCoin and Bitcoin. The exchange rate across both determines the popularity and adoption of each. It's a bit of a financial war or a chicken game. If everyone holds tight their Bitcoin and dumps their GovCoin, GovCoin-Bitcoin goes to shit and the fork becomes a joke. This has already happened in the past with Bitcoin Cash and the like. You might still think that you could use Bitcoin if it goes to shit, but if Bitcoin takes a massive, long term value hit, it loses the NgU feature that drives most adoption and the game theory around it can crumble.
  • To successfully push GovCoin, the USG simultaneously:
    • Orders everyone to hand in their Bitcoin and use GovCoin, including the big players. Blackrock, Fidelity, JP Morgan, ... These guys are not going to oppose the USG. lf anything, they would probably have a stake in this whole operation.
    • Stores the confiscated Bitcoin, preventing those holdings from being used in the exchange rate financial war.
You can continue imagining.
So, I guess, what would make me lose my conviction is watching almost everyone in Bitcoin using large, state capturable custodians.
Or just more generally, people being submissive cowards.
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10 sats \ 0 replies \ @Fabs 16 Jul
Or just more generally, people being submissive cowards.
B-but Pillar, aren't that most of the "holders"?!
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Wouldn't they just sell their GovCoin and buy more Bitcoin?
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100 sats \ 0 replies \ @oomahq 15 Jul
In a situation like that only sovereign bitcoin holders would be able to do that. The millions of ETF holders would have their choice made for them, and likely to do the opposite.
This is actually in the terms and conditions of all the ETFs, in case of a fork they all reserved the right to decide which chain "is bitcoin" on behalf of their customers.
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My original hang-up was the possibility of some new bitcoin+, that was basically identical to bitcoin except for having one clear advantage.
To me, the clearest shortcoming of bitcoin is that there's no tangible specie that people can use in emergencies that knock out network access. If something rolled out that could do everything bitcoin can do, with no additional downsides, but also functioned in those situations, that would shake my conviction.
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77 sats \ 4 replies \ @joda 15 Jul
Almost all money is already digital anyway. Any large-scale network outage means people can't use their banks and credit cards anyway.
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I'm aware. This is actually a fairly technical and very long-run concern, but not much of an immediately important one.
Hoppe has laid out the theoretical argument for why there will ultimately be only one money. In short, whatever thing has the best monetary properties will drive all the other monies out of the market.
If bitcoin is unable to perform certain important monetary roles, then something else is likely to ultimately displace it.
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34 sats \ 2 replies \ @joda 15 Jul
I don't know. That sounds a bit like the "intrinsic value" theory. All money makes compromises. Gold may be the best money in an outage situation, but it's got major issues preventing it from being used for commerce otherwise.
People are always just using and trading whatever they want and need. A prepper may think ammo is the ultimate money. People in Argentina navigate multiple currencies simultaneously. I'm not convinced there will be "only one money" in the situation of a worldwide emergency network-outage.
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Even gold standard was imperfect
Exchange rates were fixed in a gold standard Fixed can be convenient and problematic
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Notice that I'm only answering that this would change my level of conviction, not that it would completely negate it.
In a world of purely imperfect monies, each with unique pros and cons, I think bitcoin wins. In a world where something emerges that is at least as functional as bitcoin in all ways and more functional in another, bitcoin will eventually lose.
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I still haven't read Micah Warren's book on Bitcoin's game theory, which I understand he found problematic and sold his stack as a result. Once I have, I may be better able to answer this question.
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He is a professor of mathematics at university of Oregon. I can’t think of a single academic who has anything favorable to say about bitcoin.
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I know and it's something to take into consideration. But still, math is math. However, in Bitcoin it intersects with things that are less objective and less provable. Regardless, I'd like to read it, because I'm interested in game theory and even if his conclusions are incorrect, learning more on this subject can't hurt, whether I apply it to Bitcoin or other things.
For a lighter introduction there are some videos on Youtube featuring him. From what I remember, some have found them underwhelming.
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23 sats \ 8 replies \ @k00b 16 Jul
I hadn't heard of that book. Thank for mentioning it!
Discusses how adoption by institutions would fundamentally change the security model.
hmmm
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23 sats \ 7 replies \ @Fabs 16 Jul
Sounds like some hefty reading, but some pretty dope one, too.
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Yes, and math-heavy.
The titles of the last 3 chapters - Centralization, Capture and Collapse - sound rather ominous.
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23 sats \ 5 replies \ @Fabs 16 Jul
Okay, thanks, I'm passing. 😅
Incredible how he has been able to a) learn and understand all of the above, and b) has been able to write a book about it.
Seriously impressive.
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It's really a shame that the book hasn't gotten more attention, because it does seem like he has given it a lot of thought. It's understandable though - it's too much for most. But I guess it has too be that way and can't be made more concise.
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Well, it's a highly specific and complex part of Bitcoin, what can you expect?
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It is, but it's also crucial. If this specific and complex part has a fault, none of the other parts matter in the grand scheme of things.
Hack. If a coordinated global effort from governments to ban bitcoin was successful. If bitcoiners stopped caring about freedom and sound money, adoption, layer 2 development and only cared about getting rich in fiat terms. If a fork that inflates supply wins out. If the fee and block subsidy prove to be insufficient in the future to secure the network and a consensus is not reached to solve the issue.
I am sure I could come up with a few more. I am not suggesting these are likely by any means but they are some things that would at least cause me to reassess my thesis.
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196 sats \ 2 replies \ @joda 15 Jul
Mining centralization is still top of mind for me. It's real, it's happening, and it is not accounted for in the code or game theory. In the past, some miners have simply chosen out of conscience to refrain from growing too large.
The argument that "they won't get too big because that will ruin faith in the system and devalue the currency they get paid in" is weak.
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23 sats \ 0 replies \ @Fabs 16 Jul
The argument that "they won't get too big because that will ruin faith in the system and devalue the currency they get paid in" is weak.
But it's true.
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239 sats \ 1 reply \ @k00b 21 Jul
Bitcoin is already more political than it should be (and I don't mean concerned with national politics). We give duplicitous talking heads too much power and without taxes they extract rent in sneaky ways - pay for play and organizations that increasingly bias toward surveilling and stealing IP and credit, enriching their friends and investments.
Seeing it from the inside has already changed my conviction in bitcoin's social layer. The protocol can cope with some degree of corruption, but I'm concerned about what happens if such power grabs escalate and remain unchecked.
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I was skimming an old AMA from 2022
He supported bigger blocks!
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The worst thing would be CBDCs being launched in a major world currency before Bitcoin can monetises as a medium of exchange.
The political powers could then impose a ban on Bitcoin and shut down any transaction in CBDC money who they find or suspect of dealing in Bitcoin or have anything to do with bitcoin.
Bitcoin as a store of value would then be blocked. Even if we later try to build the system needed for Bitcoin to become a general medium of exchange, it could be prevented from taking off.
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100 sats \ 6 replies \ @fm 15 Jul
I guess if… Satoshi nakamoto was really central intelligence And NSA would have facilitated the sha 256 as in a collab.. And it turned out to really be a psy-op to finance the black budget.. Then i would sell… Or not..
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And NSA would have facilitated the sha 256 as in a collab..
You mean if a backdoor in sha256 was found?
Then i would sell…
I think we could hard fork in this case and start anew 🤔 But it's going to be hard to not let mining get captured immediately by the first one who builds an ASIC for the new hashing algorithm.
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100 sats \ 2 replies \ @fm 15 Jul
Remember that crypto AG scandal?
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21 sats \ 1 reply \ @ek OP 15 Jul
No, I don't! Interesting
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0 sats \ 0 replies \ @fm 15 Jul
You should take a look into it.. It was up for decades.. I wonder what the actual ops are like today
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I think people underestimate the ability of Bitcoin core developers. They can read, understand and test the SHA256 code as well as any NSA employee.
If there was a back door it would've been found. This is one fear I don't lose sleep over
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50 sats \ 0 replies \ @fm 15 Jul
You mean if a backdoor in sha256 was found?
I was referring the fact sha 256 was developed by the NSA. That alone is kind of alarming.. But yes, NSA loves backdoors.. That would definitely mean the death of bitcoin
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i would lose some conviction if the number of people who had confidence in the success of humanity started dwindling rapidly. thankfully, we are accelerating in the right direction, i think. as i think, so i feel, so i act.
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If the major banks/government went back on a gold standard and began to live within their means.
That would change my outlook on the purchasing power of bitcoin but it would still have censorship resistance.
The other would be centralization of mining over a sustained time and those powers successfully censoring transactions.
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If the price plunged below the power law trajectory that might shake my conviction. Otherwise I’m chill and don’t worry about it.
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There are already aspects of the ecosystem that are not good for Bitcoin. In my view, the monopoly, or the technology moat, that Bitmain has achieved is bad for Bitcoin. They have 90% market share of the ASICs that run Bitcoin mining ops. And they operate Antpool, the single largest mining pool. They have shown deep conflicts of interest, literally crippling the ASICs they sell to everyone else except their own operations, which they fought hard not to patch, but were ultimately forced to patch after Braiins revealad their ASICBoost deception. They also directly operate or indirectly have major influence over BTC.com another huge mining pool and ViaBTC is also largely associated with Bitmain.
Every aspect of Bitcoin was designed to be decentralized for it's long term survival and success. History has shown over and over again, that centralization inevitably leads to corruption and debasement.
Block is working on 2 or 3 nm ASICs and announced their intention to open source their designs and plans. This is a positive step. There are other semiconductor manufacturers trying to dethrone Bitmain overwhelming position and try to grab share: NVIDIA, Samsung, Intel, Bitfury, MicroBT, and others. The ones that open source their designs for the benefit of the ecosystem have the right mindset.
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The fundamentals are laws. I can't change my conviction in bitcoin fundamentals the same way I can't change my conviction on the laws of thermodynamics. Then it comes the implementation, which is as fragile as the community behind it. So if the community ever dwindles, my conviction will as much (again, on this specific implementation of the fundamentals, which is now bitcoin).
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Theoretically, the loss of decentralization! If Bitcoin ever becomes too centralized due to mining concentration or control by a few large entities, it will move away from the core principle of decentralization. And a loss of decentralization will take with it trust in Bitcoin as a bastion of an independently sovereign democratic payment system.
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I would say it taking the digital gold narrative and becoming gold standard 2.0
Unfortunately I see many things leading that way, but there is so much good work that is making it more of a payments avenue. Circular economies inspire me, spot etfs do the exact opposite.
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38 sats \ 0 replies \ @bzzzt 15 Jul
responsible / minimized monetary policy and bipartisan protection of physical cash / the right to private commerce at least in my country. that would be the starting point.
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25 sats \ 0 replies \ @leaf 15 Jul
Bitcoin could be used by elites only with plebs having no access.
If they managed to permanently censor a transaction or reverse a particular controversial transaction - large theft or something.
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Absolutely nothing. Even if there is only one node left with a copy of the blockchain ledger, it's a seed to start over in case of a black swan like aliens landing and killing most of us etc. There will always be resitsance movement that fight.
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Satoshi is a 3 letter agency, SHA 256 broken and is exploited Our 99.99999999% up time crashes The fed comes to my door…. Um nope lost them already in a boating accident.
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Noone should change conviction for Bitcoin!
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110 sats \ 1 reply \ @beorange 16 Jul
The fungibility issue needs to be completely solved. Half-baked solutions and quick band-aids won't cut it. The rest is going great.
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This. Every UTXO is in fact an NFT. I believe the base layer design space has been pretty well-explored, so I suspect anonymity must be found on other layers, barring something bold like an OP_ZKP (which I'd fully support) Very bullish on ecash -- near perfect privacy and perhaps more importantly, ramping adoption to the less technically inclined.
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Life issues always bring doubt into your life.
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Increase supply or lack of finite
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This is the one for me.
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I don't have any answer but I would like to stick to a classic one. I wouldn't touch my stack for selling until I need it badly for a purpose much stronger than Bitcoin.
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I don't have a concrete answers since I know there isn't one authority that "shut off the internet" and it seems we are passed a 51% attack. I don't know how it can fail. Seems like it has already succeeded. If somehow the limited supply or security of Bitcoin is compromised, I will let go of it. Just don't see that happening. It's always what you don't know though that gets you. 🤷‍♂️
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Think of all the qualities of money and see if you can come up with any that is lacking in Bitcoin.
✓ Digital scarcity ✓ Timechain ✓ Decentralized ✓ Global ✓ Energy ✓ Self-custody ✓ Censorship-resistant ✓ Store of value ✓ Medium of exchange ✓ Unit of account ✓ and many more use cases.
We are yet to see the full potential of Bitcoin at work. First, let there be Hyperbicoinization!
Whatever that will make me change my conviction in Bitcoin has to be better than bitcoin in every aspect the market considers VALUABLE.
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If someone on HN told me it uses a lot of energy
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How 1 btc to idr
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