Topic: Blockchain = Powerful Tool for Keynesian Monetary Policy - page 7. (Read 11460 times)

No shit

Illegal where? Which country's treasury? I think you're falling into the old "Bitcoin only exists within one country, and thus falls under one set of laws" fallacy.

I see some merit in what cunicula has to say. However, I don't think any central bank could abruptly gain 51% (and thus, obviously, 100%) of hashing power - it would cause an instantaneous backlash, and there would be an immediate hard blockchain fork with the bank's servers being blockaded (caveat - what if the bank connects over TOR?).  However, in the far future of bitcoin, when many people depend on the blockchain for the salaries and groceries, then a central bank that managed to gain 51% surreptitiously could quite easily begin to levy a tax. They'd have to walk a fine line between rejecting untaxed blocks mined by others, and not arousing too much suspicion. And it would be easier as bitcoin became more accepted as a mainstream currency.

I have to say, the development of ASICs has me plenty worried. Hypothesize if you will a scenario where bitcoin mining is restricted to licensed entities only. Well, everyone can still have their GPUs for gaming, and even FPGAs have legitimate uses. But ASICs that only know how to SHA256(SHA256()) could have only one plausible, and therefore illegal, use. No-one could easily compete on mining, and since building ASICs requires big factories and investment, it would be easy enough to shut down unlicensed manufacturers. Think, the Treasury would be replaced by an ASIC factory.  I would be *very* happy to see the devs change the mining protocol to be ASIC unfriendly, if such a thing is possible; even better would be to make it FPGA and GPU unfriendly, and bring back CPU mining only -- only then will mining be truly fully distributed.

Of course, if this scenario came to pass, you'd still have other miners mining away, probably on an underground black-market blockchain - like I said before: "the blackchain":

Why would you pay the central bank's exorbitant transaction fees when there are other miners willing to process your transactions for less? I suppose the bank could attempt to use its 51+% hash power to orphan blocks mined by miners not playing by the bank's rules, but couldn't the rest of us simply retaliate? If the bank doesn't play by OUR rules, their blocks aren't recognized. They might have a lot of hashing power, but so what?  They opted not to use that power to gain 51% control of Bitcoin; they instead chose 100% control of Fedcoin (which seems like a strange choice). If that scenario occurs, I think I'll stick with Bitcoin.

Is this a threat?

Haha!

Also this: http://gavintech.blogspot.com.ar/2012/05/neutralizing-51-attack.html
Basically, it says that a crude proof-of-stake can quickly and easily be bolted upon the protocol if and when the attack comes.

x^(a + b) = x^a * x^b, you know! You can't do anything about it.

Stop trolling. Delete all your messages before it's too late.

cunicula has presented a very interesting scenario and no one tried to prove it impossible except by trolling or personal attacks. I'll try to show that it's not so easy as cunicula claims it to be.

You see, the described scenario makes 51% attack very profitable (because the central bank profits off of it). This means that a third party will be very much motivated to claim this power to themselves, so the central bank will be constantly pressured to increase its hash power to compete with the third party, ideally to the point of next-to-zero returns from monetary policy. What do you think about that?

It's interesting to see that there are always people on the Internet who love to try to disparage a topic among enthusiasts. Some call them trolls.

I think mr. krugman brings up a very valid theoretical weakness in bitcoin. However, I do wonder about his intentions. Why would someone invest hundreds of hours and thousands of posts only to try to prove to others that their work will fail?

I enjoy the story of innovators being told that their ideas are flawed and will not succeed; yet it is those who invest their blood, sweat and tears, like Satoshi and the numerous bitcoin developers and merchants, who can achieve, not the naysayers.

The amazing thing about bitcoin is that is has already succeeded. It has survived four years and plenty of Ponzi schemes, hacked exchanges, and bad press. Maybe bitcoin will now replace the Twinkie as one of the two things to survive a nuclear war?

But all hyperbole aside, I don't think bitcoin is bankrupting visa anytime soon. As mr Anderson has pointed out before, it is more efficient to worry about the short term problems before worrying about how bitcoin will survive when it has uprooted the pillars of the global economy and obsoleted the central bank.

caligula continues to caligulate on this thread?

You don't understand monetary policy. Changes in the interest rate are announced publicly. The aim is to erode the purchasing power of the unit of the account in order to encourage people to get it out of their hands like a hot potato. The market can't do shit about this (except abandon the currency). Maybe they would like to do that. Fine. That is what the central bank wants. But they have nothing widely accepted to turn to. This is what gives the central bank power.

I am confused (as to why you would attempt to disagree with me given your limited intelligence and knowledge base).

The K value I calculated is the annual capital expense (otherwise why would I include the interest rate and depreciation rate in the calculation?).

You are wrong, because you assume anyone would use a currency with a 51% weakness already in progress, and because your formula doesn't account for the initial investment in hardware required to achieve that 51%. You are only accounting for operating expense with that $212 million.

The whole "in secret" thing, I can vouch for it.  In my country of origin, there existed (some still exist) quite a few characters who had connections with the money printers (this was before they dollarized the economy).  They got rich as FUCK.  As it is to be expected from a group of official counterfeiters and their scumbag friends.

Their M.O. was, essentially, like this: the counterfeiters would tell their friends "we're about to devalue the currency by counterfeiting more money and changing the peg to the dollar", which prompted their friends to buy large amounts of dollars at the then-official price, after which they would print a shitton of bonds (which they of course eventually defaulted upon).  Which would cause the currency to be worth even less nothing (try to imagine that grammar horror in terms of currency) than it was before.  Then they would repurchase all the money they had sold, and then some, using the bought dollars.  Kickbacks, of course, were the norm.

Insider forex trading for the lose.  Many people lost their homes, cars, businesses, some even their lives, to poverty.  But that was all "okay" because these scumbags made hundreds of millions, hand over fist, until a new president (who was ejected from power in a coup) dollarized the economy.  Now they're trying to bring back galloping devaluation (a national currency they will devalue at will, of course) using bullshit "sovereignity" arguments.

Expect the same to happen with the Fed (except this time the insiders are literally inside the Fed).  I've seen it happen, The Bernank is doing the exact same moves, there is no way in hell this isn't going to happen in the U.S., because it's -- quite simply put, and incontestably so, according to the history of every single statist currency that went bust -- the natural, and malevolent, destiny of paper currencies.  What mathematically cannot continue, will not continue.

Thank FSM we have Bitcoin to hedge against that inevitable upcoming disaster.

Not sure you correctly understand the 51% hashing power weakness.

But that aside the real issue with Bitcoin is the open-source nature in contrast to the closed-source nature of current monetary policy. The result of closed-source is greater information asymmetry amongst market participants leading to inefficiencies in the market.

If central banks attempted to conduct monetary policy through an open-source instrument, like a blockchain, then market participants would adapt so swiftly and severely via algorithms and high frequency trading that it would render the manipulations powerless because there would be no uncertainty in the market place as a result of the open source blockchain.

Statist monetary policy must be conducted in secret or it will not be successful at allowing the rent seekers to take advantage of market inefficiencies as a result of their access to power centers. Look at how vigorously the Federal Reserve attempted to defend Bloomberg when it came to disclosing bailout funds.

Thanks

Cunticula:

"He doesn't believe in Godvernment and Mommy isn't around to beat him up, so I'm going to whine until he goes away".

:-)

(Note: I haven't read his comment -- ignore list -- but based on my experience, I'll wing it and suppose that's a good transliteration of what he said.)

Again, I am confounded by libertarian reasoning. Such sagacity! My interlocuter has bested me. I am at a loss for words.

Oh, cunticula answered!

Hmmm, given that I can't read his reply, what's an appropriate reply...

Cunti culi, cunti cula
cunti culi, cunti culaaaa
lie lie lie lie lie, cunti culi cunti cula

:-)