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    I feel like this is actually a very good summary of the problems in the system, despite the “rant” tag.

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      Even as someone who is hopeful about the future of cryptocurrencies, I wouldn’t argue any of the points on this list. They’re all very real problems bitcoin has.

      The very last paragraph goes too far, though.

      The more scalable the network becomes, the more centralized it becomes, until ultimately a “scalable” cryptocurrency would be doing things exactly the same way as a credit card processor.

      There’s no doubt that centralization and third-party trust provide easy scalability. But this paragraph asserts that centralization is the only way to achieve scalability, which seems like an overconfident claim.

      There has been lots of innovation since bitcoin came out, and much of it has been aimed towards solving scalability issues without proof-of-work schemes. Who knows what the future holds?

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        A lot of things could be argued and I’ve seen them argued.

        Really the core issue is proof of work. It requires physical resources to vote.

        This is where proof of stake is trying to change the dynamic and hopefully fix the issue. But now people vote with virtual resources, not physical ones, hopefully “resisting” centralization a bit more.

        Regardless, everything eventually “centralizes”…We need to decide as a whole to what exactly !

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          Has anyone actually made proof of stake systems work at scale? Not criticizing, I actually don’t know. I’ve been hearing “proof of stake will fix this” for years and seen few examples of it actually doing so, but I also haven’t been following the cryptocurrency scene lately. Do you have references I could read up on?

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            Ethereum 2.0 will be the first large scale test.

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      Bitcoin makes a lot more sense when you see it as performance art.

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        Amusingly enough (along with some hijinx, like that 1BTC in memorial to Len) Dan Kaminsky put up the same argument .. in 2011.


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          Technology is not – and never was – value-neutral, and it is high time we all realized it. Maybe the technology of bitcoin is broken, because the values of the bitcoin community are broken? Full disclosure: my dream of the future is one of abundance and no money, not of blockchain-induced scarcity powering darknet murder-marts.

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            Full disclosure: my dream of the future is one of abundance and no money

            Leaving aside darknet murder marts, which I think we all agree are a bad thing, how would you propose to deal with scarcity in the absence of money (or a scarce replacement, like cryptocurrency)?

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              Isn’t the whole goal to get to a post-scarcity society?

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                No snark, but there will always be scarcity; we have finite amounts of minerals on the earth, finite amounts of energy we can reasonably use, finite amounts of farmable land, etc. etc.

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                  Type 2 or 3 societies are essentially post-scarcity; fission would get us a lot of the way there.

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                    How would that be post-scarcity? All that achieving a Type 2 society would do would be to move the scarcity bar upwards.

                    Look at modern society as an example. We are unimaginably rich compared to past civilisations, and we have access to energy sources that would be literally incomprehensible to people only a few centuries in the past.

                    And yet, these are still scarce. There is a finite amount of energy on tap. The new, fantastical, medicines and medical machines are limited in number. Our industrial capacity, while so many orders of magnitude greater than in days of old, is still quite limited compared with our aspirations.

                    I honestly can’t see any sensible, moral, solution to scarcity other than money, prices, and markets.

                    And I don’t see that general rule changing with a Type 2 society, any more than it did with the industrial age.

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              darknet murder-marts

              Bitcoin’s intent is to enable trustless transfers. And there is no honour among thieves.

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              While the statements seem valid to me, it party seems to assume goals which might not align with the original goals.

              First the pseudonymous. It’s true that this allows for eavesdropping, but the original paper speaks about similarity to information in a stock exchange, which to me sounds correct. It also mentions that “linking is unavoidable”.

              The corruption, mining, power part is similar. I would consider that to be more of a social problem we see elsewhere as well, that Bitcoin neither created, nor pretended to end, which makes it a statement that applies to many technologies and developments in general.

              On PoW, etc. Again true. An observation though. In the early days there always was an argument of the PoW algorithm being replaceable. Over time this kind of changed to new cryptocurrencies being “Bitcoin with different algorithms/settings”.

              So no disagreements, but I do think that some points make assumptions goals of Bitcoin, that might not actually be goals, at least not according to the original paper.

              I think the space and transaction cost parts are by far the biggest problems when looking at the technology itself.

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                First the pseudonymous. It’s true that this allows for eavesdropping, but the original paper speaks about similarity to information in a stock exchange, which to me sounds correct.

                I think it’s much worse than looking at the order history and order book of an exchange. You could send me some coins, and I could look at your address to see how many coins you have (although not perfect - maybe you try your best to retain some privacy and never reuse addresses and keep your inputs small).

                It also mentions that “linking is unavoidable”.

                There’s Monero and Zcash. All people can see is that someone sent some amount of XMR/ZEC to someone.

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                Bitcoin was always meant to be private, it’s just that the project stopped evolving since ~2016 (that’s the last time miners voted on a BIP afaik) and now we’re at this sad state where we have to pay 10$ to send one transaction.

                There’s no point responding about the negatives of proof of work schemes - that has been discussed countless times now. Hopefully we’ll have some alternative with a decent user base actually work this year (looking at you, eth 2.0).

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                  the negatives of proof of work schemes

                  I think proof-of-wastingenergy is pretty bad too, but if it is used it should at least be like Monero’s RandomX which tries to discourage people from creating dedicated mining hardware.

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                    BTC was never meant to be private… what are you talking about? The whole point is a public ledger that can be audited. Despite its other issues, this is one area it excels in. Everyone know who has what at any given time. Thats the point.

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                    It was a Ponzi scheme since the beginning, so duh. https://youtu.be/5m_OiTARec8

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                      Bitcoin does not in any way stretch nor bend to fit the definition of a ponzi scheme.

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                        It’s easy to say that when there’s no single definition for Ponzi schemes. Considering the following list of red flags for Ponzi schemes:

                        • High investment returns with little or no risk. This is assured by the deflationary design of Bitcoin.
                        • Overly consistent returns. Bitcoin prices fit an exponential model on most windows, although there is an obvious dent from the recession which started in 2018.
                        • Unregistered investments. One of Bitcoin’s foundational values.
                        • Unlicensed sellers. Another foundational value.
                        • Secretive or complex strategies. Blockchains which can host DAOs can make their games arbitrarily complex.
                        • Issues with paperwork. It’s all exactly as legible as the blockchain itself.
                        • Difficulty receiving payments. One of the chronic complaints of cryptocurrency exchange customers.

                        At the same time, the actual deployments of blockchains are usually not guarded by a single corporation as in a traditional Ponzi scheme, but instead are built by consensus and a constant influx of new deployers, as in a pyramid scheme. And it is easy to imagine that blockchains like Ethereum are not Ponzi schemes themselves, but rather a platform for deploying arbitrary Ponzi schemes.

                        There is an attempt to generalize all of this under the terminology of Nakamoto schemes. A Ponzi scheme would then be a specific type of limited, single-operator, centralized, manually-executed Nakamoto scheme.

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                          Bitcoin wasn’t designed as an investment vehicle nor advertised by Nakamoto (nor Finney, et al.) as one; the goal of Bitcoin was to be a trustless peer-to-peer cash system. Whatever happens with the coins and their value is a problem with society, not with the technology and it’s developers. I don’t think it fair to sully Nakamoto’s impressive achievement with cryptography by using his moniker in this way. The way people with vested interests use and abuse Bitcoin is different to whichever stupid altcoin scam is popping up this week. (Keep in mind, Nakamoto’s coins are and have been unspent since January 2009…)

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                            Investment vehicles are not limited to instruments designed for the purpose. Precious metals and real estate are two important examples; gold was not designed to do anything at all, and housing is meant for people and not for banks. Rather, the vehicle comes to exist for its designated and designed purpose, and then capitalists destroy the system by wringing value from it. The classic example in USA law is onion futures, which were banned by the Onion Futures Act following a rotten scheme by two capitalists; they destroyed a market meant to ensure that grocers would be able to provide onions to people at reasonable prices while paying onion farmers for their labor and fruits.

                            It does not help us at all to highmindedly pay lip service to smart contracts and capability security theory if we do not also recognize when these tools are being abused by rent-seekers and wealth extractors.

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                      Why is accurate to describe Lightning network as “debt brokering”? Debt is a social construct, enforced by courts or similar.

                      The whole point of Lightning is that it only relies on the the ability to get the revocation transaction or other closing transaction on the chain. Where is the debt?

                      The only way I can make the term make sense, is if you can call anything that “eventually” happens “debt”. But if we’re talking about money, “debt” already has a meaning, so I think it is really confusing.

                      If you think that the preconditions of Lightning (e.g. assuming miners don’t collude) isn’t fair, why not just point that out?

                      If Lightning is “debt brokering”, what about other Payment Channel Networks? What about SWIFT? Where does it stop? What is the value in this characterization?

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                        Can one sovereign be in debt to another, in your definition of debt?

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                          I am not so familiar with that word, but the dictionary says “a supreme ruler, especially a monarch”. I’d say it depends whether they have agreed to a system which is doing the bookkeeping (or a system of courts). It seems like there are International Debt Statistics which includes 128 countries, of which many are monarchies. So yes, these sovereigns would be indebted. I guess it contradicts the very definition of sovereign, but given that so many “sovereigns” are indebted, I’d say that the problem is with the concept of “sovereign”, not with “debt”.

                          If any citizen is a “sovereign”, and there are courts to enforce the debts, I would also say that you can be indebted. You can even have an informal debt where nothing is recorded physically, but you simply remember how much your friend owes you. (the debt is enforced by morals)

                          The difference to Lightning is that in Lightning, you do not need to trust an individual per se, you can enforce the “payment” yourself. This is what makes it something else than debt, to me. Since you don’t need a court or morals, I wouldn’t call it debt. You trust that you can post the closing transaction on the blockchain. Nothing is truly trustless, but just because it isn’t trustless doesn’t mean it is based on debt.

                          If “debt” is the correct term in the context of Lightning, can somebody enlighten me and post an example of where debt has been used when you can enforce it yourself? To me, it seems that it is connected with either courts or morals.

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                            Secured debt.

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                        I agree with the replies: Bitcoin is an interesting prototype rushed into production, and its advocates have pushed that instead of throwing the prototype away to learn from it on the next systems.

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                          Bitcoin relies on being decentralized whereas the mining process is so resource intensive that most people can’t compute it, this makes it centralised with many centers.