Comment by catbird | Hacker News Reader

Comment by catbird | Hacker News Reader

I don't understand the transit example presented in this article. I feel like I am missing something fundamental about the utility of any of these distributed services backed by their own type of coin.

For the transit example you have some people who want to request rides, and some people who want to provide rides. OK. Someone develops an application to process these requests, in some kind of bidding system...

How are the rider and driver matched up? I assume there needs to be some publicly accessible list of all open queries. Is that list what would be stored on the TransitCoin blockchain, and would that imply that all records of requested and completed rides are public, such that someone who knows your TransitCoin address can read all your previous trips, which are stored in this immutable chain until the end of time?

Would the TransitCoins be 'mined' by people running a 'node' that does the ride matching? Then in order to pay for a ride you send a TransitCoin to the driver? The driver would then have to sell his earned TransitCoins on an exchange for USD (or GroceryCoins) at the end of the day?

In the end I don't see why a new currency needs to be included in every proposed use of a blockchain, if the people who want to participate as a consumer and as a service provider are the ones running the nodes of the blockchain.

This - all things that can by done by SomethingSpecificCoin can be equally well done on smart contract platform ala Ethereum.

There is no reason (except for rewarding founders and early investors) someone who want to provide taxi rides own specialized mining equipment for maintaining blockchain of a proprietary coin.

I rode a taxi few months ago, and I don't remember having to change my currency for a TaxiCoin which would be the only token the taxi driver accepts. In fact, it is illegal for him not to accept the national currency.

It can be equally well done with a Postgres database.

You can't sell postgres table inserts.

Yes you can. Google made a business out of it.

Show me where Google is selling each row update operation for $13k a pop.

And leave all the INSERTs and SELECTs to a trusted third party like Uber?

Works pretty well. If you want to minimize trust you can add signing, encryption and hash-chaining to your central database, but I doubt people actually care much about any of that.

The average person defines trust very differently than the average hacker, Hacker News reader, crypto-anarchist, or Ethereum developer.

For the latter group, trust means that mathematically nothing can go wrong. Everything is cryptographically proven, and short of being able to factor large primes, there is no logical way for the protocol to result in an incorrect answer, and no central authority that can abuse its authority.

For the average person, trust means nothing has gone wrong. When you first encounter a stranger, you open up a little bit, trust him with small secrets or small tasks, and see what happens. If she doesn't abuse that trust, you entrust her with progressively more vulnerability. Once someone or something has a long-time record of being in a place where they could have abused your trust but did not, they're considered "trustworthy".

For many people, Uber is still a trusted third party. Ditto Facebook and Google. For most of the media, they're not, because Facebook and Google together fucked over most of the media in a pretty large way. But half of America - and much of the rest of the globe - doesn't trust the media anyway, because the media's story is unrepresentative of their own lived experience. The average person determines who to trust on their own, irrespective of what the math says. For them, the fact that Ethereum has been hacked even though mathematically it can't be hacked is a big strike against it - unless they have another reason to trust it, like having made a whole lot of money speculating in it.

I mean, you are still running some client code you have to trust. People who want to take taxi rides aren't going to build their own client to interface with the taxi blockchain. What is the difference if the database is distributed instead of centralized?

it is illegal for him not to accept the national currency

According to the United States Department of the Treasury’s site[1], there is no federal law requiring that businesses accept currency or coins as payment for goods or services.

[1]https://www.treasury.gov/resource-center/faqs/Currency/Pages...

Yes but not accepting currency[0] or coins is different from not accepting USD. In the United States a creditor may choose to only accept certain forms of USD (ie. no $100 bills at some stores) but they still must accept USD in some form.

[0] It is obvious from your link that the Treasury intends "currency" to be interpreted as paper money, see this:

There is, however, no Federal statute mandating that a private business, a person or an organization must accept currency or coins as for payment for goods and/or services. Private businesses are free to develop their own policies on whether or not to accept cash unless there is a State law which says otherwise.

I'd be interested in your reference. I think it's obvious that businesses aren't required to accept credit cards, checks, ACH transfers, whatever else. If they also aren't required to accept bills or coins, it would seem as though they don't need to accept payment in USD in any form.

This creates a problem for them, but why do you think they must accept USD in some form?

The policy is stated on every bill: “this note is legal tender for all debts, public and private"

You can put your question in a search engine and find many references. Businesses in the US must accept dollars, but can choose what form they come in.

post-service payment is a debt, taxi payment is usually post-service, and as your own link says “This statute means that all United States money as identified above are a valid and legal offer of payment for debts when tendered to a creditor”.

The import of this is that such an offer (even if rejected) has a substantial impact on the creditors legal ability to pursue a debt.

I agree that limiting one's accepted methods of payment is problematic for a business, but it's not illegal for a business to not accept bills and coins.

It's not illegal for a business not to accept bills and coins, true; but there are potential adverse consequences on ability to collect debts and otherwise available nonpayment penalties (interest, etc.) if you reject a legal tender offer for valid debt.

Lots of businesses (e.g., typical retail) deal primary with payment in advance of providing goods and services and don't mainly deal with debt, so this isn't a concern. Legal tender is (as the text on paper US currency lays out fairly explicitly) an issue that comes into play with settlement of debt.

> In fact, it is illegal for him not to accept the national currency.

What country are you referencing? It can't be the US.

https://www.federalreserve.gov/faqs/currency_12772.htm

Is it legal for a business in the United States to refuse cash as a form of payment?

Section 31 U.S.C. 5103, entitled "Legal tender," states: "United States coins and currency [including Federal reserve notes and circulating notes of Federal reserve banks and national banks] are legal tender for all debts, public charges, taxes, and dues."

This statute means that all United States money as identified above is a valid and legal offer of payment for debts when tendered to a creditor. There is, however, no Federal statute mandating that a private business, a person, or an organization must accept currency or coins as payment for goods or services. Private businesses are free to develop their own policies on whether to accept cash unless there is a state law which says otherwise.

It's tricky, but this is generally interpreted to mean that while a business can choose not to accept cash/USD up-front for payment, they must accept USD to extinguish any debts (i.e., payment after the fact). This is because a non-standard form of payment must be agreed upon prior to the sale/service at issue.

That's exactly what it says. USD must be accepted for debts only.

You hit the nail on the head, the challenge with Blockchain and Bitcoin is that it did two things, which together were supposed to tackle the original problem, peer to peer monetary exchange without a trusted intermediary.

So for that the blockchain provides the trust mechanism which is useful. However, the blockchain is just the channel, it needed a medium of exchange, you couldn't very well use USD because then you are back in the banking system.

Here, BitCoin is introduced.

However, the problem with BitCoin is that it initially has no value. So if I bought a nice coffee mug for $10, and I wanted to give it to you for BitCoin, well your BitCoin is currently worth nothing, so we can't have an exchange.

This is where the scarcity argument for BitCoin comes in, which is supposed to inflate the value of the currency, because it is limited. You can also see by the amount of BitCoin initially envisioned the scale of how large the peer to peer exchange network was supposed to be.

We are used to paying $1 for coffee, but are you used to paying 0.0000000001 BitCoin for a coffee?

Now absent speculation, the price of BitCoin would be reasonable, and determined by the effort of the miners, since they are exchanging their fiat currency for computers and energy, and that creates a stable layer for the price.

It would also stand to reason that until all of the Bitcoin are mined the price would continue to increase, because the amount of energy used to mine them increased, while the supply was limited.

If instead an equal output of energy produced and equal output of BitCoin, then BitCoin would have a stable price, that would track energy prices globally, and then the coin would have value because it would still take work to produce it, or you can simply purchase one if you don't want to waste the time mining it yourself.

And you can pay a premium for that already mined coin because it's more convenient.

It's also important to note that the system was already incentivized for miners because they are the ones processing transactions and they collect a fee. So if mining produced a 1:1 BitCoin exchange for fiat currency based on energy usage they would still make a profit from transaction fees like VISA, or for selling the BitCoin for a slight profit because some people wouldn't want to setup a miner themselves, or wait for their coins to be minted.

Speculation occurred because of the limited supply and the increasing difficulty of mining, absent those two things, the value of BitCoin once established would actually be very stable and could in essence become a medium of exchange.

> Now absent speculation, the price of BitCoin would be reasonable, and determined by the effort of the miners, since they are exchanging their fiat currency for computers and energy, and that creates a stable layer for the price.

You've got it backwards. The effort by the miners is determined by the price of Bitcoin, not viceversa.

Also, I think requiring what you suggest is a fallacy, since I, as a user of some tech, don't care about how hard it is to maintain that tech, I only care for its utility to me. If that utility is lower than the cost, I won't pay for it, even though the creator might have poured more effort.

That would imply that Miners need an incentive in order to mine bitcoin, which would make sense. However, don't forget that there are also transaction fees that they get. So technically when mining is finished they will be making a return on their investment from transaction fees alone.

I'm simply saying that the value of Bitcoin has outpaced what is it's potential intrinsic value through the above mentioned exchange of value.

If you removed the limit on the number of bitcoins and rearranged mining so that difficulty would increase more in parallel with the increase in performance of computers, then you would end up with a stable currency that would have the potential to achieve the original vision of the white paper.

The proof of work is destructive and it does not imbue some sort of magical value to bitcoin. The value of bitcoin should not come from the energy wasted in mining it but in its utility of moving value in a trustless medium. It's like saying a hammer is more valuable the more glass panes it shattered.

Mining is wasteful but the main thesis of BTC is that waste is less than the current monetary system maintenance waste. I think it might just be right but can't tell right now. If some sort of working secure alternative to POW comes up we should seize it, seeing as it would reduce the cost of transaction ans would make a currency more appealing and useful (the less a transaction costs, the more the currency can be used for smaller payments).

> If you removed the limit on the number of bitcoins and rearranged mining so that difficulty would increase more in parallel with the increase in performance of computers

But the mining difficulty _does_ increase in parallel with the computing performance. That is the beauty of it.

People can say all they want about cryptocurrency and greed and politics, but I think Satoshi was a fucking genius. I think he was a true visionary and I was stunned the clarity with witch he could see problems arising and the fixes and incentives for the actors in the system.

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