Bitcoin discussion and news

[Monkeygrinder's Organ]

This is similar to the stuff about nation states a couple of days ago. There are valid ecological reasons why cutting consumption massively might be a good idea, if not an absolute necessity. The consequences of that are massive though and incredibly broad. Stuff like 'look here's someone doing something clever with Blockchain and some trees' not only doesn't address them all, it fails to do it to the degree that it's essentially irrelevant.

 

[BigTom]

Consumerism is a sideshow that is certainly worth paying attention to, but the real impact of deflation is on investment, not consumption. Investment in all types of economic activity — labour, machinery, education, infrastructure, You name it. Why bother when you can sit on the money instead and just wait for it to be worth more? It’s that lack of infrastructure etc investment that really hurts you. Once that stops, there is deterioration in the fabric of everything.

To bring this side of things down to the microeconomic level, if I run a business and prices are falling then I face the real prospect that in the time it takes me to buy the supplies for my business, turn them into a product and sell them, that the sales price will have fallen enough that I lose money on every item I make. It'd need to be a consideration in every business plan in a way that inflation simply isn't. Hyper inflation screws things in a different way but normal low levels of inflation are easily managed.

 

[littlebabyjesus]

Consumerism is a sideshow that is certainly worth paying attention to, but the real impact of deflation is on investment, not consumption. Investment in all types of economic activity — labour, machinery, education, infrastructure, You name it. Why bother when you can sit on the money instead and just wait for it to be worth more? It’s that lack of infrastructure etc investment that really hurts you. Once that stops, there is deterioration in the fabric of everything.

Yep, which is why even r/w capitalist governments will embark on big public spending programmes when deflation looms.

 

[Ahlan]

Consumerism is a sideshow that is certainly worth paying attention to, but the real impact of deflation is on investment, not consumption. Investment in all types of economic activity — labour, machinery, education, infrastructure, You name it. Why bother when you can sit on the money instead and just wait for it to be worth more? It’s that lack of infrastructure etc investment that really hurts you. Once that stops, there is deterioration in the fabric of everything.

Damn, I knew there'd be a catch .
I guess we'd be in the realms of planned economies if the level of investment was aligned to the demand of only the very necessary of items, which would beg the question - why would we need a crypto currency.

Cheers

 

[q_w_e_r_t_y]

I have no problem with what consenting geeks get up to in their spare time but this has nothing to say about what would replace a collapsing nation state.

We will have bankless nations.

A Bankless Nation 🏴 (Part I) on Bankless

Bitcoin and Ethereum are Digital Nations; a new paradigm for how humans organize and coordinate

newsletter.banklesshq.com

"These systems are holistic compositions of different interconnected components, woven together by a system of incentives, rational agents, and inputs/outputs. The emergent product of this composition is far greater than the sum of each individual part. Finding a precise name for the emergent product of these systems has been difficult. In fact, the only name that truly encompasses the entire body of these systems are the names themselves: Bitcoin and Ethereum."

"..., a nation is an organizational schema that humans use to organize and orient themselves to the world around them. Nations are systems that humans use as scaffolding for their daily activities; they create the structure for the constituent components that compose them. Not only have many nations come and gone with the passage of time, but many different types of nations have emerged, matured, aged, and then eventually died, as new nations are born in their place."

"Nations are tools that humans leverage to access stability in their lives. They offer organizational structures that people depend on for coordination, trust, and protection. The Nation achieves its sustenance by charging taxes, which the people are largely happy to pay so long as they perceive the cost to be an overall benefit. The Nation protects and organizes the people, the people pay the taxes for the upkeep of the nation. "

"Nations, or organizational schemes, are protocols. Protocols dictate the rules of the system, in order to establish standards that everyone can rely on. Protocols, and the standardization they create, are crucial for efficiency. If everyone can assume that everyone else is operating within the same standards, the heavy-lifting of coordinating is already taken care of. "

"The nation-state offered a stronger way to scale trust and organization across people, with fewer costs than organized religion. Nation-states brought an attempt at formalized ‘protocolization’ and the instantiation of ‘credible-neutrality’ in the underlying system. The ‘Constitution’ of a Nation is an ‘if-this-then-that’ codebase for how the nation-state system should operate. While it did not completely remove subjectivity from its interpretation, it made significant progress in reducing it. "

"Bitcoin and Ethereum are Digital Nations. They are the next iteration of a Nation system. Importantly, they live on the Internet; the tanks, infantry, fighter jets, and nuclear bombs that instantiate the power of physical nations have no impact on the livelihood of these Digital Nations. Because they live on the Internet, they have the ability to reach the entire world population and require none of the costs of a centralized government or military to do so. "

We are replacing the collapsing nation state.

 

[pbsmooth]

What a load of gibberish.

 

[q_w_e_r_t_y]

Which part?

There is a whole eco-system out there, that I strongly suspect you have no clue of.
Its very nascient, but its there and its happening.

People think crypto is about making fiat money, its not about that at all - its about destroying fiat money and with it, the nation state form.

 

[littlebabyjesus]

Finding a precise use for the emergent product of these systems has been difficult. In fact, the only name that truly encompasses the entire body of these systems is Bullshit.

cfy

This is an incoherent alt-right wet dream. So in among the bullshit (nations aren't computer programs - the analogy does not work - and the DNA metaphor is also atrocious), he says this:

Ethereum and Bitcoin treat all people equally. Each person is treated exclusively by objective standards; what money and assets they hold according to the blockchain.

You are what you own. You are your wealth. This is a charter for the rich to dominate the poor, nothing else. Even if it could work, which it can't, it would enable and reproduce appalling systems of exploitation.

The unintended irony of this last bit is staggering.

Bitcoin and Ethereum say to the Nation-State: “No, you cannot print money for free. No, you cannot ban or control goods or services you deem illicit.”

Setting aside the highly questionable notion that states somehow 'print money for free' (they don't - it's all tracked and accounted for), where do they think all that 'value' has come from for bitcoin, raising its price from pennies to thousands of pounds when all it has done is sit there on the block doing nothing?

This shit is deeply anti-human.

 

[magneze]

How is it supposed to do that?

 

[q_w_e_r_t_y]

Oh your human supremacy is showing. "Anti-human", huh? The removal of privilege so often looks like oppression.

Where did the value come from? It came primarily from long dead creatures and the sun.
Its value lies in the energy that has been used to create it.

Where did Biden just get the 6Tr that he is about to spend?
Did he go to Fort Knox and sell some of the gold? Course he didnt, he just signed a bit of paper.

Not everything on the Blockchain is money, there are many other assets that can be assessed, particularly past behaviour, which is likely to become ever more important. For example, a far quantity of tokens that have a dollar value are distributed based on things like contract deployment, protocol governance participation, protocol interaction.

 

[littlebabyjesus]

Where did the value come from? It came primarily from long dead creatures and the sun.
Its value lies in the energy that has been used to create it.

This is your single biggest mistake. The energy used to solve the pointless algorithm does not get translated into value.

 

[Saul Goodman]

Where did the value come from? It came primarily from long dead creatures and the sun.
Its value lies in the energy that has been used to create it.

If I place three peanuts on a table in a room, then heat the room to 300 degrees for 3 years using electric heaters, resulting in 250 grand electric bill, how much is each peanut worth?

 

[fishfinger]

If I place three peanuts on a table in a room, then heat the room to 300 degrees for 3 years using electric heaters, resulting in 250 grand electric bill, how much is each peanut worth?

Millions!

 

[beesonthewhatnow]

We will have bankless nations.

A Bankless Nation 🏴 (Part I) on Bankless

Bitcoin and Ethereum are Digital Nations; a new paradigm for how humans organize and coordinate

newsletter.banklesshq.com

"These systems are holistic compositions of different interconnected components, woven together by a system of incentives, rational agents, and inputs/outputs. The emergent product of this composition is far greater than the sum of each individual part. Finding a precise name for the emergent product of these systems has been difficult. In fact, the only name that truly encompasses the entire body of these systems are the names themselves: Bitcoin and Ethereum."

"..., a nation is an organizational schema that humans use to organize and orient themselves to the world around them. Nations are systems that humans use as scaffolding for their daily activities; they create the structure for the constituent components that compose them. Not only have many nations come and gone with the passage of time, but many different types of nations have emerged, matured, aged, and then eventually died, as new nations are born in their place."

"Nations are tools that humans leverage to access stability in their lives. They offer organizational structures that people depend on for coordination, trust, and protection. The Nation achieves its sustenance by charging taxes, which the people are largely happy to pay so long as they perceive the cost to be an overall benefit. The Nation protects and organizes the people, the people pay the taxes for the upkeep of the nation. "

"Nations, or organizational schemes, are protocols. Protocols dictate the rules of the system, in order to establish standards that everyone can rely on. Protocols, and the standardization they create, are crucial for efficiency. If everyone can assume that everyone else is operating within the same standards, the heavy-lifting of coordinating is already taken care of. "

"The nation-state offered a stronger way to scale trust and organization across people, with fewer costs than organized religion. Nation-states brought an attempt at formalized ‘protocolization’ and the instantiation of ‘credible-neutrality’ in the underlying system. The ‘Constitution’ of a Nation is an ‘if-this-then-that’ codebase for how the nation-state system should operate. While it did not completely remove subjectivity from its interpretation, it made significant progress in reducing it. "

"Bitcoin and Ethereum are Digital Nations. They are the next iteration of a Nation system. Importantly, they live on the Internet; the tanks, infantry, fighter jets, and nuclear bombs that instantiate the power of physical nations have no impact on the livelihood of these Digital Nations. Because they live on the Internet, they have the ability to reach the entire world population and require none of the costs of a centralized government or military to do so. "

We are replacing the collapsing nation state.

What utter fucking horseshit.

 

[q_w_e_r_t_y]

This is your single biggest mistake. The energy used to solve the pointless algorithm does not get translated into value.

Read Podilinsky, he was dismissed by Marx because Marx was a human supremacist.
All value is energy.

 

[q_w_e_r_t_y]

I mean you believe in the labour theory of value, right...but what is labour if not energy?

The problem with the LToV is that it only values human energy.

 

[littlebabyjesus]

I mean you believe in the labour theory of value, right...but what is labour if not energy?

The problem with the LToV is that it only values human energy.

I don't see what this has to do with anything. Just a bit of simple phenomenology is needed here. Look at what is actually done and what is actually produced. As BigTom pointed out earlier, bitcoin is set up to maximise inefficiency. The only purpose of the mining is to provide a mechanism to unlock the blocks. The work being done produces solutions to a puzzle that has no use. Meanwhile the price of a bitcoin is produced by speculation. The mining has exploded as a result of that speculation, but causally it is that way around. Measuring the use value of bitcoin is quite tricky, but whatever measure you use, the answer produced is 'tiny'.

Marxist categories may not be a perfect fit here, but the insistence that you need to look at what is actually happening is a good discipline to weed out the bullshit.

 

[kabbes]

It’s also anti-human because it ignores what creates the subjective experience of being human, which includes the power relations embedded into the systems that the human is formed within. In short, people don’t behave as a society because there are laws banning certain behaviours. They behave as a society because they have internalised sets of normative judgements about the way to behave under a dizzyingly complex continuum of circumstances. You can’t replace that with a blockchain, the combinatorics are mind-boggling. Society exists because of its collective interacting institutions. The idea that can all be thrown away and replaced with an algorithm is, again, just alt-right, property rights-obsessed fetishism.

 

[BigTom]

a system of incentives, rational agents, and inputs/outputs.

"homo economicus"
one of the worst, most derided ideas to emerge from people trying to treat economics as as science, and thinking you can use maths to explain behaviour.
At least people in the field realised what a load of nonsense it is and went on to create game theory to try to build a framework for understanding why people don't behave in what academics consider a rational manner.

 

[littlebabyjesus]

Where did Biden just get the 6Tr that he is about to spend?
Did he go to Fort Knox and sell some of the gold? Course he didnt, he just signed a bit of paper.

Just to come back to this bit as it's been annoying me. I can come across as an apologist for capitalism sometimes, probably, but a mistake is a mistake, and this mistake is repeated all over the place wrt bitcoin. It's just not true that they create money by 'just signing a bit of paper'. They create money by creating an obligation, by creating a debt that is recorded. That's how you create money.

If you're going to criticise a system and propose an alternative to it, you need to understand it first. Why do you think Marx spent decades studying capitalism?

What you seem to be proposing is some kind of mad version of Thatcherite monetarism. Even Thatcher had to quickly abandon that idea because it was fundamentally wrong. That's how bad your ideas are, though - they're as bad as Thatcher's worst mistakes.

 

[Monkeygrinder's Organ]

Bombing because some dickhead posted a couple of memes is definitely a healthy sign isn't it.

 

[Saul Goodman]

No currency so volatile can ever be considered a currency. A currency has to be a safe store of value in order for it to work. Bitcoin isn't that and never will be. It's not even a commodity. It tries to act like one but it's not. It's actually just a huge steaming pile of carbon heavy digital shite. The people singing its praises should try to remove greed from the equation, just long enough to realise how deluded they are.

 

[Storm Fox]

How do you borrow and lend in bitcoin? Until this can happen then I can't see how it will be anything other than a fad.
If you can borrow and lend, who regulates it? If it's not regulated, then surely it becomes the playground of loansharks and defaulters.

 

[NoXion]

Getting paid in literal peanuts looks be more stable than bitcoin.

 

[BigTom]

How do you borrow and lend in bitcoin? Until this can happen then I can't see how it will be anything other than a fad.
If you can borrow and lend, who regulates it? If it's not regulated, then surely it becomes the playground of loansharks and defaulters.

Crypto is not really regulated at the moment, and there are quite strict laws in the UK about lending money - you can do it to friends/family but not to strangers, I don't know if you are allowed to charge interest.
So I would expect any commercial lending to be illegal and unregulated, or just between friends with the same issues as lending anything to friends brings.
That said it's possible that organisations set up to make commercial loans are allowed to do so in any form and not just restricted to £ and could do it in a regulated environment - I really don't know enough about the details of the rules but I'd guess it's not allowed.

 

[q_w_e_r_t_y]

How do you borrow and lend in bitcoin? Until this can happen then I can't see how it will be anything other than a fad.
If you can borrow and lend, who regulates it? If it's not regulated, then surely it becomes the playground of loansharks and defaulters.

Well, at the moment, you can borrow and lend in bitcoin either on centralised services (like Blockfi or Celcius), or using a bridged btc token like wBTC or RenBTC on Ethereum (check out Aave and Compound), soon you will be able to directly borrow and lend on the bitcoin chain through L2 scaling (check out RSK)

There is a whole industry called "Decentralised finance" or "defi" operating in the crypto space. No-one regulates it, its permissionless, governed through smart contracts and decentralised autonomous organisations (DAOs), although there are firms like Open Zepplin which audit the smart contracts to ensure that the code is well formed and does what it says.

Mostly the loans are fully collateralised....so you put up 1btc and are able to borrow against it, either in a stablecoin (like DAI, pegged to the dollar) or in another crypto. Increasingly rather than selling your bitcoin, bitcoiners are borrowing against it, obviously there is risk involved - if the price of btc falls you can be liquidated and lose either all or a proportion of your collateral, but you pays your money and you takes your chances. If you are very risk averse however, there are also non-liquidatable loans available (check out Ruler Protocol or Alchemix), where the lender takes on all the risk of default.

Under collateralised lending is also starting to come (check out arc-x),

There is approximately $57bn locked in defi at the moment, down from a peak of approx $85bn last month.

 

[Storm Fox]

Well, at the moment, you can borrow and lend in bitcoin either on centralised services (like Blockfi or Celcius), or using a bridged btc token like wBTC or RenBTC on Ethereum (check out Aave and Compound), soon you will be able to directly borrow and lend on the bitcoin chain through L2 scaling (check out RSK)

There is a whole industry called "Decentralised finance" or "defi" operating in the crypto space. No-one regulates it, its permissionless, governed through smart contracts and decentralised autonomous organisations (DAOs), although there are firms like Open Zepplin which audit the smart contracts to ensure that the code is well formed and does what it says.

Mostly the loans are fully collateralised....so you put up 1btc and are able to borrow against it, either in a stablecoin (like DAI, pegged to the dollar) or in another crypto. Increasingly rather than selling your bitcoin, bitcoiners are borrowing against it, obviously there is risk involved - if the price of btc falls you can be liquidated and lose either all or a proportion of your collateral, but you pays your money and you takes your chances. If you are very risk averse however, there are also non-liquidatable loans available (check out Ruler Protocol or Alchemix), where the lender takes on all the risk of default.

Under collateralised lending is also starting to come (check out arc-x),

There is approximately $57bn locked in defi at the moment, down from a peak of approx $85bn last month.

Thanks for the info, I'm clearly getting old cos I see words and sentences but none of that makes sense.

<Shake fist at cloud>

 

[q_w_e_r_t_y]

Thanks for the info, I'm clearly getting old cos I see words and sentences but none of that makes sense.

<Shake fist at cloud>

Let me try again with links.

Blockfi and Celcius are like banks, you give them your bitcoin and they give you fiat money (euros, dollars, sterling) to your bank account. They are risky because you no longer have the private key to your bitcoin, so they could run off with it, and all you would have left is the fiat you borrowed. You can also deposit with them and they will pay you interest - currently about 8.5% on dollars and up to 5% on bitcoin. These are known as "Cefi" (centralised finance), compared with Tradfi (traditional fiat finance) and Defi (decentralised finance)

Compound and Aave are much safer, as they are native defi protocols. Here instead of trusting someone else will return your btc when you pay back the loan, you lock it in a smart contract and that smart contract gives you the loan, when you pay back the loan, the smart contract automatically gives you back your collateral. But these run on Ethereum, so first you need to wrap your bitcoin into a token that can operate on the Ethereum chain.

RSK is working on bringing smart contracts directly to the bitcoin chain, so that there is no need to use another chain, but the smart contracts, like lending, can all work directly using the security of the bitcoin chain, so you will be able to borrow against your bitcoin without ever needing to move it off chain (like compound/aave) or giving it to someone else (like Blockfi/celcius)

All of the above require that you deposit more bitcoin than you borrow in fiat. So if you default on the loan, you get to keep what you borrowed....and they get to keep the bitcoin. Compound and Aave both insist that the value of the btc is worth x% more than the value of the loan - so if the price of bitcoin falls, they will take some of your bitcoin and sell it to pay back a chunk of your loan, however there are defi projects where you cannot get liquidated, like Ruler Protocol, and can always redeem your btc at the end of the contract, regardless of price.

ArcX is now trying to introduced credit scoring, based on past on-chain behaviour, through a "defi passport", where if someone's history suggests that they have behaved well - borrowed money, not defaulted and has repaid loans when they were near default.

 

[Colin Hunt]

Let me try again with links.

Blockfi and Celcius are like banks, you give them your bitcoin and they give you fiat money (euros, dollars, sterling) to your bank account. They are risky because you no longer have the private key to your bitcoin, so they could run off with it, and all you would have left is the fiat you borrowed. You can also deposit with them and they will pay you interest - currently about 8.5% on dollars and up to 5% on bitcoin. These are known as "Cefi" (centralised finance), compared with Tradfi (traditional fiat finance) and Defi (decentralised finance)

Compound and Aave are much safer, as they are native defi protocols. Here instead of trusting someone else will return your btc when you pay back the loan, you lock it in a smart contract and that smart contract gives you the loan, when you pay back the loan, the smart contract automatically gives you back your collateral. But these run on Ethereum, so first you need to wrap your bitcoin into a token that can operate on the Ethereum chain.

RSK is working on bringing smart contracts directly to the bitcoin chain, so that there is no need to use another chain, but the smart contracts, like lending, can all work directly using the security of the bitcoin chain, so you will be able to borrow against your bitcoin without ever needing to move it off chain (like compound/aave) or giving it to someone else (like Blockfi/celcius)

All of the above require that you deposit more bitcoin than you borrow in fiat. So if you default on the loan, you get to keep what you borrowed....and they get to keep the bitcoin. Compound and Aave both insist that the value of the btc is worth x% more than the value of the loan - so if the price of bitcoin falls, they will take some of your bitcoin and sell it to pay back a chunk of your loan, however there are defi projects where you cannot get liquidated, like Ruler Protocol, and can always redeem your btc at the end of the contract, regardless of price.

ArcX is now trying to introduced credit scoring, based on past on-chain behaviour, through a "defi passport", where if someone's history suggests that they have behaved well - borrowed money, not defaulted and has repaid loans when they were near default.

They're all much closer to pawn shops than banks. You're pledging your cryptocurrency as a security to borrow something (usually cash but sometimes another cryptocurrency). If you can't afford to repay the loan, you'll lose the pledged security. Lending money and paying interest don't come close to making something a bank.

Regarding smart contracts, this is one of the few areas where I could see them making some headway. However, you'd be a fool to pledge your cryptocurrency assets as security under a self-executing contract. What happens if you miss a payment? Or if there's a glitch that affects the oracle? Or if there's a change in the law governing the type of transaction that you're engaged in? Or any of the many things that can and do go wrong in retail lending situations every day?

As a final point, I have no idea where you got the idea that decentralised finance is somehow unregulated. It's completely untrue and you'd only have to read the terms and conditions on the defi providers' websites to know that it's completely untrue.

 

[q_w_e_r_t_y]

They're all much closer to pawn shops than banks. You're pledging your cryptocurrency as a security to borrow something (usually cash but sometimes another cryptocurrency). If you can't afford to repay the loan, you'll lose the pledged security. Lending money and paying interest don't come close to making something a bank.

Regarding smart contracts, this is one of the few areas where I could see them making some headway. However, you'd be a fool to pledge your cryptocurrency assets as security under a self-executing contract. What happens if you miss a payment? Or if there's a glitch that affects the oracle? Or if there's a change in the law governing the type of transaction that you're engaged in? Or any of the many things that can and do go wrong in retail lending situations every day?

As a final point, I have no idea where you got the idea that decentralised finance is somehow unregulated. It's completely untrue and you'd only have to read the terms and conditions on the defi providers' websites to know that it's completely untrue.

I suppose you could consider it a pawn shop mode; the reason I am describing it as a bank is that its custodial, in that you dont own your btc in cefi, you are giving it to someone else, in defi, you retain primary ownership (unless liquidated) but lose usage#

Typically in crypto loans, you simply repay at the end of the term rather than fixed payments (although of course you can choose to redeem in chunks or only partially redeem it). The oracle problem, is a known issue with oracles that rely on continuous price feeds to monitor liquidations, however there are alternative oracle types that dont rely on feeds, but simply get a price at the time that someone wants it, and typically uses a time weighted average price from multiple markets. which protects you from that, but yes, the reliance of a lot of lending platforms on Chainlink(which relies on a continuous price feed) is an issue which is much discussed.

I'm not sure which "change to the law" you are referring to. The real "law" in blockchain is the smart contract, you cant change a smart contract once it is deployed. There can be changes to governance certainly, and smart contracts can be governance dependent, (eg rely on the governance to set the interest rate), but again, you pays your money, you takes you risks. If you are referring to analogue law tho how is that going to impact on a smart contract?

Decentralised finance is not regulated by analogue law in any meaningful sense. Yes, countries can have regulations saying "you must not offer crypto loans", and certainly defi protocols often have "terms and conditions" on their website, (typically saying you agree you are 18+, you do not live in a state subject to economic sanctions and that you do not use it for illegal purposes), but if a 12 year old in North Korea used it to take out a loan to buy crack cocaine on the dark web, firstly who is going to know that they are 12, that they are in NK or what purposes they are using the loan for, and secondly even if "they" (who - protcol? government? financial conduct authority) did find that out, what are they going to do?

How do you put code in prison? How do you impose a fine on the blockchain? How do you shut down a decentralised, distributed global network?