- I highly recommend re-reading Robert Sams’ post from earlier this year, The Marginal Cost of Cryptocurrency. Through many exchanges I have incorporated several of his thoughts into my own writings and think he is one of the top thought leaders in this space. He was on the Economic panel last week in Amsterdam too.
- I came across a new blog that deals with block reward incentives and network costs and one particular post in particular stuck out: Megawatts Of Mining. All of Dave’s posts there and on Bitcoin Talk are thought provoking.
- I will probably get some hate mail from some friends, but I thought Ben Dyson’s post, Bitcoin’s 3 Fatal Design Flaws made a couple of good points. I’m not swayed by point 3 but his first 2 are pretty accurate. Bitcoin was supposed to be an electronic peer-to-peer payment platform, in fact, according to Mike Hearn, Satoshi originally was working on building a P2P marketplace. Based on some cryptic notes at the Amsterdam conference last week, Hearn purportedly said, “when Satoshi launched bitcoin he was working on a p2p marketplace and you would be able to rate buyers and sellers and the weight would be according to how much mining they had done.”
Irrespective of what Satoshi’s plan was, in practice, what has happened is the token has turned it into a speculative asset, a store of value with little velocity. And we see that in actual blockchain behavior. So, Dyson’s first two points are worth thinking over once again.
Update: Mike Hearn sent me a note and mentioned that the marketplace was never finished and Satoshi deleted the code.
- Lastly, two notes about exchanges. Caleb Chen had a good post on the HKCEx scam and the WSJ noted today that a couple exchanges (Mt. Gox and BitInstant) are under investigation for ties to illicit trade (through Silk Road). Again, if Bitcoin is considered a developing economy, historically the successful ways to grow an economy is to take the existing capital stock and make it more productive. The sale of drugs does not create engines of growth. And scams are not helping the average person trust the safety and security of the ecosystem. The solutions to these involve creating real on-chain utility beyond gimmicky entertainment apps. There are also a lot of good wallets either being developed or in production now, I’ll likely post a round-up of those at some point this year. I do not think paper wallets are the solution as you need to be a genius to use them and it defeats the purpose of having or using an electronic asset.
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(Author of the Amsterdam notes from eigenjoy.com here)
Sorry that the notes from the panel were cryptic. I was trying to capture the ideas of the panel in real time and so some of the specifics and clarity were lost.
Mike was saying that Satoshi had several ideas that he wanted to put in bitcoin that were never really finished. One of them was a p2p marketplace that had some form of distributed reputation system. Mikes impression was that 1. reputation as a function of mining contribution probably wasn’t the right dynamic and 2. Satoshi had more ideas than we has able to actually bring to realization.
It was a fantastic panel & conference. I hope they post the videos soon so we’re able to re-watch each of the sessions.