The title of the OP suggests to me this should be a good thread in which to get to the heart of bitcoin. Please skip the rest of this comment and any subthread it produces if you disagree.
As a child of the 1970s in the US, I don’t put much store in any currencies. My conclusions, living through the high inflation, were to own stuff. Inflation after all is a statement about the exchange rate between stuff and money. The point of money is that you can trade it for stuff. It has seemed to me that I don’t need to be particularly long or short money, I need relatively small amounts of money for relatively short periods of time in order to facilitate trading one kind of stuff for another kind of stuff.
In fact, I generally have tried to go slightly short on money compared to stuff. I have usually carried mortgages (short position in money) larger than any cash balances I have carried. I haven’t analyzed my results from this carefully, but given the more-or-less steady 3%-ish inflation of US dollars, and the wierd US and California tax codes which combine to cut my cost of carrying a mortgage in half, this has probably been a little better than break even.
Of course, “owning” stuff is a matter of placing trust in governments. My shares in Berkshire Hathaway are only as good as a complex legal system backed up by courts, regulatory agencies, and a mix of officially jackbooted thugs to prevent other humans from walking off with the stuff which I think I own through my having signed various documents many years in the past to trade dollars (which I owned as tenuously as I own my BRK.B shares) for BRK.B shares.
So for my life, I am stuck, if I want to have wealth, relying on governments, in my case primarily US and to a lesser extent California and other US state governments. At least as I organize my wealth, the trust I place in order to use dollars is transient and insignificant compared to the trust I place in having wealth.
I can’t imagine there will ever be a cryptologic solution to owning stuff that renders trust in governments with their sanctioned jackbooted thugs irrelevant. Is this a defect of my imagination?
For someone like me, do bitcoins matter at all?
Are there big holes in my thinking of the purpose of money or currency that render bitcoins, compared to US dollars, an important thing to me and people like me?
This is sort of the reason BTC is so interesting. Throughout all of human history everything has ultimately relied on jackbooted thugs or the implication thereof to secure title. A reliable distributed ledger is fundamentally new. Sure, you can be threatened physically, but how do they actually link you to your holdings if you’re smart about it? And if your locality is threatening people who use it, you go somewhere where they aren’t and retrieve your encrypted wallet from cloud storage.
BTC’s biggest use case is capital flight IMO.
First of all, I think bitcoins are basically a kind of stuff and not a kind of dollars. My brother commented that the market reminds him of the market for certain rare items in certain MMOs. And that’s basically what this is, to my thinking. Stuff that exists online in limited supply, that people want. A more environmentally friendly way of satisfying our consumer impulses than cars and houses. (But also more fungible and so forth, and I think possible to convert into a kind of dollars in the sense of something optimized for price stability.)
However, there is a hole in the model that this particular kind of stuff also depends on the standard set of sanctioned jack-booted thugs who protect it and promise to give it back and so forth. Bitcoins really only exist as information codes (private keys, placed in files known as wallets). You can arrange it so that the only thing that gives someone the ability to transmit your bitcoins is knowledge of a passphrase (or rather, which passphrase out of millions possible was the one you used). Or if you choose, you can move the only copy of the numbers needed to use your bitcoins to a piece of paper, USB drive, etc.
This also isn’t the same thing as logging into a website where you basically have to take their word for it that they are storing only a salted hash of your password, where they could potentially shut you down or transfer out your funds due to a power outage or government intervention, etc. Rather, it’s something where you yourself do the encryption all client-side and publish your transactions when you want to. The choice to republish and share that transaction to the network is made independently by a bunch of different nodes, who are programmed to block you if you try anything mathematically fishy. You only have to publish anything when you sign a transaction, which itself only happens when you need to prove that money someone else sent to your public address (which otherwise would be just a random number) does in fact belong to you, so you can pass it along to another public address.
There are two aspects to owning stuff: One is knowing who has ownership rights to stuff, and the other is enforcing those ownership rights against people who don’t respect them. If you can trust people not to do the second, you still need the first.
If you can trust people not to do the second, you still need the first.
I can’t parse that, sorry. If you can trust people not to enforce ownership rights, you still need to establish ownership rights? I don’t understand the point.
The title of the OP suggests to me this should be a good thread in which to get to the heart of bitcoin. Please skip the rest of this comment and any subthread it produces if you disagree.
As a child of the 1970s in the US, I don’t put much store in any currencies. My conclusions, living through the high inflation, were to own stuff. Inflation after all is a statement about the exchange rate between stuff and money. The point of money is that you can trade it for stuff. It has seemed to me that I don’t need to be particularly long or short money, I need relatively small amounts of money for relatively short periods of time in order to facilitate trading one kind of stuff for another kind of stuff.
In fact, I generally have tried to go slightly short on money compared to stuff. I have usually carried mortgages (short position in money) larger than any cash balances I have carried. I haven’t analyzed my results from this carefully, but given the more-or-less steady 3%-ish inflation of US dollars, and the wierd US and California tax codes which combine to cut my cost of carrying a mortgage in half, this has probably been a little better than break even.
Of course, “owning” stuff is a matter of placing trust in governments. My shares in Berkshire Hathaway are only as good as a complex legal system backed up by courts, regulatory agencies, and a mix of officially jackbooted thugs to prevent other humans from walking off with the stuff which I think I own through my having signed various documents many years in the past to trade dollars (which I owned as tenuously as I own my BRK.B shares) for BRK.B shares.
So for my life, I am stuck, if I want to have wealth, relying on governments, in my case primarily US and to a lesser extent California and other US state governments. At least as I organize my wealth, the trust I place in order to use dollars is transient and insignificant compared to the trust I place in having wealth.
I can’t imagine there will ever be a cryptologic solution to owning stuff that renders trust in governments with their sanctioned jackbooted thugs irrelevant. Is this a defect of my imagination?
For someone like me, do bitcoins matter at all?
Are there big holes in my thinking of the purpose of money or currency that render bitcoins, compared to US dollars, an important thing to me and people like me?
This is sort of the reason BTC is so interesting. Throughout all of human history everything has ultimately relied on jackbooted thugs or the implication thereof to secure title. A reliable distributed ledger is fundamentally new. Sure, you can be threatened physically, but how do they actually link you to your holdings if you’re smart about it? And if your locality is threatening people who use it, you go somewhere where they aren’t and retrieve your encrypted wallet from cloud storage. BTC’s biggest use case is capital flight IMO.
First of all, I think bitcoins are basically a kind of stuff and not a kind of dollars. My brother commented that the market reminds him of the market for certain rare items in certain MMOs. And that’s basically what this is, to my thinking. Stuff that exists online in limited supply, that people want. A more environmentally friendly way of satisfying our consumer impulses than cars and houses. (But also more fungible and so forth, and I think possible to convert into a kind of dollars in the sense of something optimized for price stability.)
However, there is a hole in the model that this particular kind of stuff also depends on the standard set of sanctioned jack-booted thugs who protect it and promise to give it back and so forth. Bitcoins really only exist as information codes (private keys, placed in files known as wallets). You can arrange it so that the only thing that gives someone the ability to transmit your bitcoins is knowledge of a passphrase (or rather, which passphrase out of millions possible was the one you used). Or if you choose, you can move the only copy of the numbers needed to use your bitcoins to a piece of paper, USB drive, etc.
This also isn’t the same thing as logging into a website where you basically have to take their word for it that they are storing only a salted hash of your password, where they could potentially shut you down or transfer out your funds due to a power outage or government intervention, etc. Rather, it’s something where you yourself do the encryption all client-side and publish your transactions when you want to. The choice to republish and share that transaction to the network is made independently by a bunch of different nodes, who are programmed to block you if you try anything mathematically fishy. You only have to publish anything when you sign a transaction, which itself only happens when you need to prove that money someone else sent to your public address (which otherwise would be just a random number) does in fact belong to you, so you can pass it along to another public address.
There are two aspects to owning stuff: One is knowing who has ownership rights to stuff, and the other is enforcing those ownership rights against people who don’t respect them. If you can trust people not to do the second, you still need the first.
I can’t parse that, sorry. If you can trust people not to enforce ownership rights, you still need to establish ownership rights? I don’t understand the point.
Even if you don’t need to lock your bike, you need to have some way of selling your bike to someone else.