Topic: Someone will solve our problem. We won't like it. (Read 2335 times)

Hear hear! and at $5000 a BTC I think the value you sink into a protocol just to carry and store your wealth starts to be questioned, i.e., why wouldn't I use another, similar protocol at these high valuations? Also someone else can come along when BTC is approaching $1 Trillion market cap, and easily afford $100 Million to upstart and market a better coin with the infrastructure in place.

I'm hedging more and more with Litecoin as the BTC valuation increase. Plus you gotta know it's coming to more exchanges soon.

The bitcoin infrastructure is actually not that small.  KNCMiner quickly sold-out 1,000 Neptune miners for $16,000 each.  Thats $16,000,000 just from one product run from one company.  Multiple this by all the other mining companies and all the various iterations of mining products, and the total USD invested into just the bitcoin mining infrastructure is most certainly measured in hundreds of millions of dollars.  There's about a quarter million bitcoin nodes (at let's say $500 per node hardware cost = $125,000,000), and numerous services design to mesh with this infrastructure and the bitcoin protocol.    

This functional network of expensive hardware and well thought-out software will not just be "tossed aside" or repurposed.  

It's not as uphill as you think.  In small illiquid markets all it takes is one real or perceived negative.  Every next generation of new users represents a bigger user base then the last.  Once they are comfortable and familiar with it there is no learning curve and 1st to market advantage isn't that great.

It's not as uphill as you think.  In small illiquid markets all it takes is one real or perceived negative.  Every next generation of new users represents a bigger user base then the last.  Once they are comfortable and familiar with it there is no learning curve and 1st to market advantage isn't that great.

Altavista  and Netscape are bad examples, there is no network effect there. If someone builds a better browser than Firefox (chrome, whatever) ,  there is no reason they couldnt grab marketshare, even today.  But try to get people to sign up to yet another social network where none of their friends are on, while Facebook and twitter have them all; thats a different story. So the Myspace comparison is much more apt. And I agree, its far from certain bitcoin will be the winner in the end. The market is still young. Something better might come along, but it will have an uphill fight against the current market leader. Simply because it is the market leader.

But to play devil's advocate neither FB or Twitter where first to the market.  We look back now and it sounds silly.  But remember Netscape?  Altavista?  They had 70%+ market share at their peaks.  MySpace beat FB out there but FB did "it" better. 

Sooner or later someone is going to issue a cryptocurrency with a promise that you can use it to buy a certain amount of a particular thing from the issuer.  And other things being as equal as possible,  and most folks being unconcerned with privacy, I think people are going to appreciate that more, and be more confident about it, than they appreciate and are confident in abstractions like privacy and decentralization.

Crypto currency market is a "winner takes all" market. The reason one will become or remain dominant is that the value of the system correlates directly with the number of users. Sure, I can make a Puppetcoin, but if no one accepts it (and no one mines it), its worthless.

Just think of facebook or twitter. Any half competent web developer could design something quite similar to facebook or twitter in a few weeks. Possibly even something e little better. But facebook is worth >$100B and that facebook copy, little more than nothing. Why? Because the true value of facebook is the fact its used by a billion users. Its a network. Thats the barrier to entry, just ask Google+. Likewise, bitcoin is not only a currency, its a network of users, and it derives most of its usefulness and ultimately value from the size of the network. And the bigger it is, the easier it is to grow it further. Quite the opposite of any new challenger.

PS bitcoin is still small enough, and crypto currency still new enough I think its entirely plausible in the end its not actually bitcoin that wins. Something better might come along. Time will tell, but there will be a single winner.

To me a cryptocurrency is a trading medium with a complete and public record of transactions that is cryptographically secured against retroactive alteration or tampering.  The complete and public record must allow people to check it with trustable software (ie, they can see the source code) to test the validity of transactions and to make sure that they are seeing the same version of the record that other users are seeing. In the case of Bitcoin these validity conditions include money supply limitations, coinbase transactions, transaction outputs no greater than inputs, etc.  In the case of some other cryptocurrency the validity conditions could be different.

For example if someone wanted to issue a cryptocurrency carrying a promise that you could use one unit of that currency to buy a gram of gold from her on demand, then the validity conditions you'd be checking , aside from the conventional restrictions on individual transactions, would include that no one else besides her is issuing new coins, and that a monthly audit by some third party assayer continues to find enough gold in her vault to sell on demand to all holders.  It wouldn't be decentralized, nor completely trustless the way Bitcoin is, but it would be a cryptocurrency.  If the transaction record were updated in a decentralized way as Bitcoin's blockchain is, then people could go on trading with it even if the issuer takes her server offline completely.  She'd only have to connect to the network once in a while to announce sales of gold (destruction of the currency) or creation of new units of currency (with evidence of acquisition of corresponding gold for the vault).

First, yeah, you can 'issue' a cryptocurrency.  It would be centralized, but with transaction log published in real time and automatically auditable by any client.  You get a couple of the major advantages of bitcoin without all that messy anarchic decentralization stuff that "reasonable consumers" don't care about anyway.  You can make promises about the money supply and people can use software to ensure that those promises remain unbroken.  You can transfer it across the globe in minutes, etc. 

And it's just not true that anything an altcoin can do can be done better by Bitcoin.  Peercoin does proof-of-stake mining (keeping transaction fees low enough that it can be used in vending machine sales etc), and Bitcoin doesn't.  Nextcoin promises to do that even better, btw.   Anoncoin does Tor integration and Bitcoin doesn't.  Several coins resist centralization by being ASIC resistant and Bitcoin doesn't.  Bitcoin transaction fees are already too high for vending-machine sized sales and several altcoins are able to fit into that niche.  Technically speaking there are already valid reasons to choose different cryptocurrencies for different applications rather than choosing Bitcoin for all applications.  Bitcoin currently has a bigger network, and that is to its advantage in many, but not all, applications. 

Cryptocurrencies have a massive advantage over paper currencies in terms of counterfeit detection, auditability, liquidity and speed/reliability in transmission.  But they're not really more resistant to theft (as wallet-stealing programs demonstrate), nor inherently resistant to being extorted from someone against their will (or cryptolocker wouldn't work).  Anyway the nub of the problem is whether any cryptocurrency, in the long run, has a massive advantage over other cryptocurrencies.   The question of why someone prefers one paper currency over another is not posed as an analogy to the question of why someone prefers a crypto over a paper currency.   The interesting question is why to prefer one cryptocurrency over another cryptocurrency.

I don't see any evidence yet that this is a "natural monopoly" wherein network effects will automatically cause a single mover to become dominant.  That's an interesting idea, and may be true, but I don't see evidence for it yet.

Sooner or later someone is going to issue a cryptocurrency with a promise that you can use it to buy a certain amount of a particular thing from the issuer.  And other things being as equal as possible,  and most folks being unconcerned with privacy, I think people are going to appreciate that more, and be more confident about it, than they appreciate and are confident in abstractions like privacy and decentralization.

What would I need to get my paper $4 bills taken seriously?  And is it something that any of these cryptocurrencies have?

Satoshi's invention combines a printing press capable of producing tokens that can be easily verified real and can't be forged, an international courier service that can take these tokens anywhere in just a few minutes, and 'brakes' on the printing press that guarantee that no more than a given number of tokens will ever be produced from that printing press. 

And now anyone can set up one of these printing presses, each with its own international courier service and its own supply of unforgeable, easily-verified tokens.

I've been trying to identify a reason why one of them should become (or remain) dominant in the long run, and I don't think there is one.  Some will die off as their developers give up or their innovations lead to security failures or whatever, and some will become more popular because of good technical innovations, responsive devs, good interface design, or good support.... but I just can't identify a reason why any of them should ever achieve lasting dominance.  They are competitors in a market with little or no barrier to entry, and many of them are more or less suited to particular commercial niches, so there are incentives to choose one over another that vary from one task to another. 

In the physical world, on paper, anybody can set up a printing press (or a laser printer) and print his own money.  But most of the time nobody cares.  If I show somebody my freshly-designed $4 bill with Guy Fawkes on the front, they'll look at me funny and treat it as a joke.  Or a crime, although some folks can't tell the difference. I can promise I'll never print more than a few million of them, and they'll wonder why the hell that's relevant.  I can demonstrate that nobody else can make them exactly the same, and show how you can tell mine from any attempted copies -- and by this time they'll be getting mad at me for standing around talking uselessly so much and kick me out.  If I happened to drop any of those $4 bills, they go in the trash once I'm gone.

What would I need to get my paper $4 bills taken seriously?  And is it something that any of these cryptocurrencies have?

This is our unacknowleged problem.  Altcoins didn't cause it; they just exposed it.

Sooner or later someone is going to issue a cryptocurrency with a promise that you can use it to buy a certain amount of a particular thing from the issuer.  And other things being as equal as possible,  and most folks being unconcerned with privacy, I think people are going to appreciate that more, and be more confident about it, than they appreciate and are confident in abstractions like privacy and decentralization.

What would I need to get my paper $4 bills taken seriously?  And is it something that any of these cryptocurrencies have?
This is our unacknowleged problem.  Altcoins didn't cause it; they just exposed it.

I've been trying to identify a reason why one of them should become (or remain) dominant in the long run, and I don't think there is one.