(moderator note: this is a discussion of Bitcoin itself not the Foundation specifically)The announcement of the Bitcoin Foundation has shaken this community; its thread received 50 plus pages and over 13K views in about 72 hours.
The Bitcoin community recognizes there is no official leadership. That's a major strength because a leader could abuse power, or be incompetent, but also become a target for enemies, or a magnet for corruption.
While TBF can't lead by force (e.g. proprietary rights to software) it could gain leadership attributes by popular agreement and influence, which means it could inherit other leadership attributes, both good and bad.
Since Bitcoin may come to play a powerful role in society this presents cause for concern, which given the track record for mixing humans, money, power and corruption, wouldn't seem to bode well.
People on both sides of the issue highlighted valid pros and cons, but one thing that is true is you can't stop such foundations from forming. The fact Bitcoin doesn't grant anyone power means opportunity exists for anyone to pursue power for good or ill. It was partly in recognition of this that I came upon the solution to this dilemma. Bitcoin relies on the free market for self-regulation and that's where the answer lies.
You won't believe how well this works out, and also the implications. I'll give a TL;DR version, then extended view.
TL;DR
The biggest complaint/possible danger opposition to TBF express is it could become corrupted and control a very powerful market, if and when Bitcoin becomes powerful, which we all expect could happen. But that's just it. Their power would pertain to
Bitcoin. Even their name pertains to it, which is one of the complaints. How much power would they have, however, if there were other cryptocurrencies just as prominent in the market? The power would be diminished, of course. There would be just as many people with different coins than whatever people believed about Bitcoin specifically. Same cryptocurrency, but entirely different coins, and system.
In response to critics supporters of TBF have said start your own foundation to compete; to which we, the opposition, reply we can't compete with the top talent already concentrated at TBF. But that answer is partly right. It's not to start another foundation; it's to compete. But we don't do it, we let another cryptocurrency do it. The free market will do the rest. If people think Bitcoin is becoming tainted with power/corruption they can vote with their feet and opt to use alternative currencies. The exchange rate of such alternative currencies should rise/fall as an indicator of approval/disapproval of what was happening with Bitcoin. Make sense?
So the solution is simply to promote at least one other cryptocurrency in the market (ideally there might be 2 for better distribution), and do it before Bitcoin gets a stronger foothold. The timing of TBF announcement is fantastic, because it leaves room in Bitcoin's life for competition to check it. And the foundation should absolutely use the name the Bitcoin Foundation, because if they don't someone else could. They can even become as corrupt as they wish, as the market will reflect that with exchange rates, heightening awareness of the corruption. The free market system checks itself remarkably well!
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Extended View
Almost as if the free market anticipated this issue alt-coins have already started.
After Bitcoin the one with the most traction is
Litecoin. Checking this forum's alt-coin section, or rates at exchanges like btc-e.com or vircurex.com confirms that. For that reason I'm now advocating establishing Litecoin in the market alongside Bitcoin, which was created to be the "silver to Bitcoin's gold". It should be trivial for merchants, exchanges, and eWallets to add it because everything is just bits and bytes!
And the benefits to doing this are just getting started:
One of the fears voiced about TBF is it could make targeting Bitcoin users easier by the government. Gavin Andresen, being both a board member and lead Bitcoin developer, and having made Bitcoin presentation at the CIA, is fodder for conspiracy theorists whether or not any concern is warranted.
Having Litecoin in the market counters that. Litecoin, being silver, can just sit back and watch daring big brother Bitcoin go out into the world, then learn and benefit from the mistakes. Since everything is open-source any advancements for Bitcoin automatically apply to Litecoin. The same is true of legal victories for Bitcoin since they are both cryptocurrencies.
So what has happened is this "foundation" development hasn't hurt Bitcoin at all, rather it has
strengthened cryptocurrencies overall.
The base has also been expanded in two key ways:
-Growth of market
-Growth of opportunity
There is already a fledgling Litecoin community forming, including its own forum and LTC businesses like
Litecoin Dice which mirror Bitcoin successes. That's growth of market.
With higher LTC market prominence comes increased opportunities including speculation/arbitrage of exchange rates between currencies, which brings up an interesting idea...
An Unexpected Development
As I pondered the implications of all this I realized this also
solves the 51% attack.
Most everyone is aware of the dreaded 51% attack vulnerability cryptocurrencies share. Until network hash rates are believed beyond challenge such attack possibility lingers. Unfortunately, sufficiently high hash rates only begin once the currency is successful enough to be a threat.
However, I believe this no longer an issue. The problem posed by a 51% attack is not one of network damage, it's one of
confidence damage. If people remain fearful of an attack they understandably become hesitant to use the currency. But the issue of confidence comes into play another way. Nothing backs cryptocurrencies, famously. They gain or lose value and acceptance based on how they are perceived. As I've illustrated it's easy for alternative cryptocurrencies to challenge each other, and no one knows what the market will come up with next. Since it's just as easy for merchants and everyone else to accept one form or another of these all electronic currencies and switch between them, any one could rise or fall at any time.
What I think this means is cryptocurrencies should be used transactionally, rather than as primary stores of value. I see a cryptocurrency version of
xe.com showing all alt-coins values relative to gold (or USD to start). Exchange rates would be updated and available to merchants in real time. They could quote product prices in one, two, three or more currencies. They might prompt users with CC (as in currency choice, meaning they accept gold, fiat, crypto etc.) or CCC (crypto-currency choice) pricing signs.
Average consumers would store the majority of their wealth in which ever form of money they deemed most stable (likely gold) and keep about 2% or so of their wealth in other (crypto) currencies. Traditionally, actual physical exchange and storage of money has made it impractical and costly to trade in and out of currencies frequently, but the Internet and cryptocurrencies reduce or remove such barriers.
If over 95% of your wealth is usually in gold, for example, are you ever really concerned about a 51% attack, or the possibility of new and better cryptocurrencies? Not really. You only hold a given cryptocurrency for short periods of time, probably based on exchanged rates, and perhaps even managed by a professional.
Again, we find cryptocurrencies are strengthened overall.
Conclusion
So while the community had fractured over TBF I believe we're all on the same side again
I think everyone (TBF opponents in particular) should begin adopting, promoting and using Litecoin to diversify cryptocurrencies in the market. People should have cryptocurrency portfolios, I think with BTC and LTC starting things off. Exchanges, eWallets, and merchants should add support for multiple cryptocurrencies so people can switch between them easily. Vircurex.com and Btc-e.com currently reflect this well.
The exchange rate for Litecoins I estimate should be around $3, which is about 4 times less than Bitcoin's current rate, because there will be about 4 times as many Litecoins than Bitcoins in total. I personally will be working hard to help the community move in this direction. It also means broader wealth distribution as there are already about the same number of LTC as BTC in existence.
