"Bitcoin mining isn’t just about security—it ensures the fair distribution of coins, preventing centralization, inflation, and control by a single authority. Proof of work formalizes this in a way no other system can."
https://video.nostr.build/f8b6a468108360b0fab807c38c72195f3e79f554895f022091c180837648e283.mp4
Mining is the coordination mechanism that provides settlement assurance. A provable real world cost that signals which blocks should propagate through the network & that subsequently creates a growing barrier to changing the transaction history.
It's a lot more than a way to distribute coins.
What would happen to Bitcoin if someone could provide settlement assurance more cheaply?
You can't. The assurances are a function of the real world cost. Without that it all goes back to just being a game of politics (like the dollar, & any gold or commodity "backed" token, & ETH & any other shitcoin).
The settlement assurances are Bitcoin's multi millenia technological leap.
What would happen to Bitcoin if someone COULD provide settlement assurance more cheaply?
Well, that's kinda like saying what would happen to air travel if we could all teleport. I guess air travel might not be needed, but it's kind of a ridiculous question.
If settlement assurances could be guaranteed in some other way then maybe that new system would do to bitcoin what bitcoin will do to gold & what gold did to glass beads. But maybe not, because bitcoin's energy use makes it a buyer of last resort & a way to bootstrap & laod balance energy infrastructure. It is energy money.
The energy cost required to make a change to the ledger is the only real form of insurance against transactions being reversed. If it doesn't cost more than a billion dollars to reverse a transaction, then the network can't really secure a billion dollar transaction. This is why exchanges & others often wait for 6+ blocks to be sure that the transaction is secure. How else do you eliminate the need to trust people?
Trust but verify
If you make a trust-less currency you still have to solve the exact same trust issue for the other side of the transaction
If you can figure out the trust issue to be able to ship oil and computers around the world you can figure out the trust issue to ship gold around the world
That's what multi-sig contracts are for. I can provably lock money into an address in such a way that the money cannot be moved until you & I both agree to finalize the transaction. It's escrow with no 3rd party. That plus a web of trust network, & other smart contract forms of insurance, & the discipline of constant dealings all have the combined capacity to basically secure all forms of trade. The thing we really need is a way to do 2 party escrow via the lightning network or L2 ecash. It can be done via the base chain & on Liquid, but we really need full retail layer support.
"money"
You're begging the question - assuming the thing for which you are supposedly presenting an argument
Bitcoin is used as a means of exchange all the time. You are trying to avoid having to pay attention to & face the implications of what is being said.
"Bitcoin is used as a means of exchange all the time"
What is the meaning of the term "Bitcoin" in that sentence?
Does your sentence have the same basic meaning as "SWIFT is used as a means of exchange all the time" ?
The scarce units on the consensus network that ensures only 21mil will ever exist. The bitcoin units are bearer assets. The cryptographic keys allow exclusive access to said units.
SWIFT has no limit on units, offers no provable validation of said units, & offers no sovereignty (it's completely permissioned by a central authority).
"scarce units"
so scarce not a one has ever been seen
Do ".com" addresses have value? Do IPv4 addresses have value? These are real & useful things with provable limits on their supply which make them both scarce & valuable. Bitcoin is both far more scarce & far more useful, with basically zero meaningful substitutes.
Bitcoin far more useful?
For what?
Bitcoin's usefulness depends on it having value for some other reason.
The "other uses" of gold were only needed to spread the commodity & bootstrap the recognition of its monetary properties. In reality consumptive demand driven by nonmonetary purposes makes it a worse money. It cannot purely reflect the supply & demand in other parts of the economy if it also has to respond to industrial uses for the metal itself.
Bitcoin's value has already been bootstrapped via the understanding that it was specifically designed to be a better money.
The design of Bitcoin is in some ways truly excellent.
It's just the supply of ledger entries has far outstripped the supply of actual Bitcoins.
It's the same problem as the US Dollar.
That doesn't make any sense, you want to unpack that a little bit?
You are worshipping Nothing because it's a lot less work to care for than Something
I am not worshipping anything beyond the basic principles of sound money & the laws of economics & the rest of existence which all make up the body of God. But it is nice to see something as well aligned with reality as Bitcoin happens to be.
"aligned with reality" but firmly outside of it
So you think technology & language & math are outside of reality?!
People and books and machines and chalkboards are part of reality.
Technology and language and math are not, except as descriptions.
If math is part of reality, where can I find three?
Not three objects or the numeral three, but three itself?
Do they keep it in a vault underneath the Champs-Elysee?
What does money do? Is it not a tool used to describe economic reality? Is it not a language of trade that is supposed to aggregate all the changes in supply & demand in any area down to a single price?
It is a receipt for work done & a key to future consumption in proportion to the value created.
Money does NOTHING.
It sits there.
We are the ones who DO.
It is a tool. As a tool what does it facilitate?
Which of these do you mean?
Tool
noun
1) A device, such as a saw, shovel, or drill, used to perform or facilitate manual or mechanical work.
2) A machine, such as a lathe, used to cut and shape machine parts or other objects.
3) The cutting part of such a machine.
4) Something regarded as necessary to the carrying out of one's occupation or profession.
"Words are the tools of our trade."
5) Something used in the performance of an operation; an instrument.
6) (Vulgar Slang) The penis.
7) A person used to carry out the designs of another; a dupe.
8) A bookbinder's hand stamp.
9) A design impressed on a book cover by such a stamp.
10) (Computers) A utility program.
Stop deflecting & playing semantic games.
Do you think money has no purpose? Why do we use it?
You are using language in a loose, metaphorical way while insisting that accurate language is a "semantic game".
Bitcoin does not exist. There are no Bitcoins. That is literally and indisputably true.
What does exist is human beings and computer equipment.
So to speak in a strictly factual way, you should not even claim that Bitcoin is money. You should say that INSTEAD of paying me money it is better (for me, somehow) if you mark in your computer equipment that I am owed a credit. That's a statement that corresponds to entities that actually exist and relations between them. Saying "Bitcoin is money" is a relationship of concepts, one of which does not refer to any physically existing thing at all.
See:
"Concepts are not and cannot be formed in a vacuum; they are formed in a context; the process of conceptualization consists of observing the differences and similarities of the existents within the field of one’s awareness (and organizing them into concepts accordingly). From a child’s grasp of the simplest concept integrating a group of perceptually given concretes, to a scientist’s grasp of the most complex abstractions integrating long conceptual chains—all conceptualization is a contextual process; the context is the entire field of a mind’s awareness or knowledge at any level of its cognitive development.
This does not mean that conceptualization is a subjective process or that the content of concepts depends on an individual’s subjective (i.e., arbitrary) choice. The only issue open to an individual’s choice in this matter is how much knowledge he will seek to acquire and, consequently, what conceptual complexity he will be able to reach. But so long as and to the extent that his mind deals with concepts (as distinguished from memorized sounds and floating abstractions), the content of his concepts is determined and dictated by the cognitive content of his mind, i.e., by his grasp of the facts of reality."
Ayn Rand, Introduction to Objectivist Epistemology, p.55
So NOSTR doesn't exist? Software doesn't exist? The English language doesn't exist? How are we having this conversation?
Do books exist? Do the words written in books contain valuable information? There are computers, there is information stored on those computers, the information being more dynamic & updatable than books does not make it any less real than a book.
If I "go for a run", running does not suddenly exist, except when we are speaking in a loose and metaphorical way. I exist, and I run.
Similarly, if your computer executes a piece of software then perhaps we can point to a pattern in the memory of the computer and say "that is the software and it exists right there physically as electrons". But usually when we talk about software what we are really talking about is the computer doing a certain thing. The computer exists but its doing does not, just like I exist but my running does not.
If you want to say that Bitcoin is a pattern of electrons in the same way that words on a page are a pattern of ink, that's totally fine. In that sense I must admit Bitcoin exists. But if you define Bitcoin in this way it is not scarce. I can spin up way more than 21 million copies of the entire Blockchain, or the Bitcoin source code, or a given cryptographic signature. The thing the computer does when it runs the Bitcoin code does not exist.
It is a doing, and not a being.
You are just trying to define things out of existence so that you don't have to give up your shiny rock ideology.
Trade & economic coordination are the most valuable sources of wealth & value creation in all of human history & because these are actions & not a physical things you are trying to suggest they don't exist.
Let's say there's a vault full of gold & a "gold standard" token that perfectly repesented the amount held in the vault with no way for anyone to engage in any sort of debasement. The tokens trade easier & with far less cost than moving gold (which is why the gold standard started in the first place). And somehow, without anyone knowing aliens steal all the gold, but the tokens remain impossible to debase & work the same as if the gold was there. When does the system fail?
"Trade & economic coordination are the most valuable sources of wealth & value creation in all of human history & because these are actions & not a physical things you are trying to suggest that they don't exist."
Are you trying to suggest that they do?
There's some entity called "trade" out there spitting out gold coins or wheat or convertible automobiles?
I suppose there is, but only in a very loose and metaphorical sense.
However these claims about trade can be translated into claims about actual entities without any loss of meaning.
We do this automatically.
"Humans who trade & coordinate economically have produced more wealth & economic value than by any other action"
Do you agree that this statement fairly reflects the content of your original without supposing that there is an entity called "trade" out in the world?
Trade is an action that produces an increase in value (which is always subjective). People really do perform actions, so "trade doesn't exist" would be an incorrect statement. But it is not a particular item you can point to.
I don't think the path you are trying to walk makes any sense. An atom of gold exists even if I need some special tool to see or hold it. The tools we need to store & process information are not an indication that the saved information itself does not exist.
Is Bitcoin (in the sense of "I have 5 Bitcoin") an entity or an action?
If I said "Sherlock Holmes does not exist" would you give me all this argument or would you understand and agree immediately?
This is the sense in which Bitcoin does not exist.
Yes, there are words on a page. There are books and films about Sherlock Holmes. There are even electrons in computer memory with a pattern that corresponds in some way to the name or character or concept of "Sherlock Holmes". But obviously he does not exist.
It is the same with Bitcoins.
It seems you are implicitly admitting that "Bitcoin" (the currency, not the Blockchain or source code or whatever) is an action and NOT an entity.
Are you willing to agree to that?
No. I think language & computers & software are real things of immense value & that to suggest otherwise is really kind of silly. A written or recorded word is not an action. A saved pattern of 1s & 0s is not an action. Saying words & interacting with computers are actions, but the things themselves, the results of those actions, still exist.
OK so are you saying that Bitcoin (the currency unit) is an entity?
It's a recorded entry in a distributed ledger, a UTXO. And the power to destroy & create new entries is controlled by a private key, or keys. So long as one copy of the ledger remains then the unit(s) accessed by your key(s) exist.
So... yes? You're claiming Bitcoin currency units are entities?
[Bitcoin the currency] unit is a recorded entry in a distributed ledger
I don't want you to tell me what is the record of the Bitcoin, I want you to tell me what is the actual Bitcoin.
They are different.
The record is not scarce - I can spin up 21 trillion copies of the entire blockchain.
I want you to tell me what characteristics make a good money & how fiat would fail without a way to inflate the supply.
Money is a thing you give to someone as payment.
It has to be a thing (and not an idea) otherwise you can't give it to someone (except metaphorically).
To make something better at being a thing you give to someone as payment, it can be more durable (so you don't have to give it right away), more uniform (so there's no debate about whether this unit of the thing is more or less valuable than something else) and more divisible (so if I get some number of units of the thing I don't have to spend them all at once).
"How fiat would fail without a way to inflate the money supply?"
You're confusing two different things. There is no 'money supply' of fiat. Fiat is currency. Fiat, like Bitcoin, is an attempt to settle accounts WITHOUT money. I can imagine multiple failure modes, but the most obvious is that a group of people starts using real money and other people decide they'd like to participate with the first group and receive real money rather than tokens.
OK - your turn. What is Bitcoin [the scarce valuable currency unit]? It can't be a computer record or computer code or cryptographic signature because any of those can be copied infinitely without losing the original (because they are patterns rather than actual entities and a pattern can be copied).
Well, you can transfer full exclusive control of the digital units on the bitcoin network.
Trying to separate "money" & "currency" is nonsense.
Currency is debt. Money extinguishes debt.
What are the digital units on the bitcoin network?
Do they exist in any real sense at all?
Or are they just as fictional as Sherlock Holmes?
I still think the distiction is retarded. Debt is debt. But maybe we can agree that with a money, work has to be done upfront to produce it... Like the costs associated with mining bitcoin or gold.
No I don't agree to that at all.
If I'm lying on the river bank catching fish and a gold nugget happens to wash into my pocket it's no more or less money than an equivalent gold nugget mined from an asteroid.
Bitcoiners often default to a labor theory of value or energy theory of value, both of which are absurd. Value is subjective (meaning it relates to the subject, not that I just make up whatever I want). I value an additional unit of a good equivalent to the highest-valued new use to which I can put that good.
It's not a labor theory of value at all. There is no specific amount of work that has to be done. You could run mining software on your phone for 5 minutes and find a block which rewards you with bitcoin. It just generally requires more effort than that to acquire scarce things. If gold was just freely available it would not be money.
Yes, scarcity is a requirement for something to have economic value.
That does not mean that work has to be done or that the scarce thing derives its value from the work done to obtain it. Those are fallacies.
I agree that making up records of new Bitcoin units is expensive. So is digging a hole and filling it back up. If I could prove that I had dug a hole of a certain size and filled it back up, would that receipt be a candidate to use as a money unit?
If the only way to reverse the transaction history is to do more work than was done to record the history in the first place then the setrlement assurances provided are a function of the cost of the work done.
settlement of what?
it's easy to build a better mousetrap when the mice are all in your head
Money is valuable because it can facilitate trade. It has nothing to do with how tagible it is. Gold's tangibility has nothing to do with it's value as money. All other metals would be money too if tangibility had anything to do with it. Tangibility actually makes it worse at being money in a digital economy.
But the reality is that none of this bullshit matters. Bitcoin is going to keep working & keep being money whether you understand or agree or not.
Again
If there's a vault full of gold & a "gold standard" token that perfectly repesented the amount held in the vault with no way for anyone to engage in any sort of debasement. The gold standard started because tokens trade easier & with far less cost than moving gold.
If the gold is suddenly gone, but the tokens remain impossible to debase, & they work just the same as if the gold was there. When does the system fail ?
- The point of the illustration is to show that the entire reason that physical gold is part of the equation at all is simply to limit the supply of tokens to the supply of some good with a high stock to flow ratio.
Gold has actually caused destructive periods of inflation too. It is not any sort of "intrinsic value" that prevents inflation. It is simply the physical constraints on finding or acquiring more, which makes it better at transferring value across time.
reset your context and GFY
All tools are forms of technology. Language is a technology. Math is a technology. Software is a technology. Software allows more accurate & repeatable interactions with existence than any other tool we have ever created. Automating a sound monetary system is an innovation on par with the invention of the printing press or the discovery of zero or any other foundational shift in human history. You don't have to agree, reality doesn't care. Bitcoin doesn't care.
Existence exists.
It is not a law.
The Dao that can be told is not the eternal Dao.
Ceci n'est pas une pipe.
Do you get it?
Your image of reality is not reality.
Reality is reality.
"Your image of reality is not reality"
Yes, the map is not the territory, but some maps are right, & some are wrong, & some are useful & some are not.
Maps can still help us better operate in & appreciate existence. I don't trust my mental map over what reality is telling me, it seems kinda like you & Peter Schiff prefer your ideological mental maps over what the real world has to say on this issue.
I'll homestead the territory and you homestead the map and we'll see whose perception matches the real world in the long run.
"consumptive demand driven by nonmonetary purposes makes it a worse money"
There's a story in a book I read. I apologize, but I don't recall whether it was Villheljmur Steffanson or Weston A. Price and internet searching isn't helping at the moment, but I'm pretty sure it was one of those.
There was a mining prospector in Alaska during the early days of European exploration of that area. Given the bleak landscape (and the short experience of most Europeans in such conditions), imported food assumed some importance. In particular, the most durable imported food - canned tuna - emerged as a form of money. This mining prospector traded some gold he had panned for a can of tuna. He was dismayed when he tried to eat it and discovered it completely rotten and inedible. When the prospector complained to the proprietor who had sold the tuna, he just laughed. "That's trading tuna, that's not eating tuna".
Your theory seems to be that trading tuna is somehow better than eating tuna.
No I am saying the world is better off when tuna is just tuna & money is just money. The fact that the tuna in your story had value independent of its ability to be used as food illustrates how important it is to have something that serves the role of money extremely well, & it shows what sort of things happen when we don't.
"trading tuna" is just money and is not food
and yet it is clearly a worse thing to have than eating tuna
that's the point of the story
I think what the story shows is thst when there isn't good money available, people will use any halfway viable thing in its place. And it's also basically a demonstration Gresham's law -- given the same face value, the out of date tuna will trade & the good tuna will be saved.
But tuna just isn't a good form of money.
A good form of money is something that doesn't expire, is more scarce, is more divisible, is more portable, is verifiable, & is censorship proof. Bitcoin is better at all of the above than any other money to ever exist. What would the bootstrapping of a new monetary system look like?
"when there isn't good money available, people will use any halfway viable thing in its place"
Congrats, you've explained why Bitcoin (and rotten tuna) can have a nonzero market price
What are the features of a good money? If you can define money properly then it becomes obvious why bitcoin is the best money to ever exist.
Please give me your list of the basic features required for a thing to be a good money and explain why each feature is needed.
"If you can define money properly then it becomes obvious why bitcoin is the best money to ever exist."
Go on then, define money properly.
Also, if you could give some proof that the second part of your claim is correct, and that Bitcoins do indeed exist, that would be most welcome.
I asked YOU to identify the key characteristics of money. If you are so certain that you are right, you should be able to that.
Your acknowledgement that money has characteristics at all is an admission that I am correct.
"A characteristic is an aspect of an existent. It is not a disembodied, Platonic universal. Just as a concept cannot mean existents apart from their identity, so it cannot mean identities apart from that which exists. Existence is Identity."
Leonard Peikoff, Introduction to Objectivist Epistemology p.106
Money is a thing that one person gives to someone else as payment.
Why does it have to be a thing?
Because if it is not a thing, I cannot give it to someone else.
Rather than give you money, I can teach you to play the electric bass guitar. You might accept that service as payment, but my "lesson" is not money except in a very loose metaphorical sense. You are unlikely to be able to buy groceries by transferring to the clerk the first electric bass guitar lesson which you already received from me.
Bitcoin is not money because Bitcoin is not a thing. Perhaps like my electric bass guitar lesson it is tremendously valuable. Perhaps it is worthless. But it cannot be money any more than trade can be potatoes.
Is a stored jpeg a thing? Can you send it to others?
If you could be certain that said jpeg could only be controlled by one person at a time & could not be copied, could it be used for trade?
It varies over time. We're nearing the end of the distribution phase. Once the last few satoshis are distributed, Bitcoin mining will serve two primary functions: securing transaction order and earning rewards solely through transaction fees.
"fair distribution of coins"
Has anyone got any actual coins?
Or just ledger entries for coins?
Who is supposed to give me the actual coins for my ledger entry?
If you run a node then you are the bank updating & auditing the whole system for yourself. It's a ledger & the rules cannot be changed on your instance without your voluntary participation. If anyone attempts to make a change that is incompatible with the many thousands of nodes then they simply exclude themselves from the network.
If you mine (participate in the number guessing lottery that the network uses for coordination) & are successful then the rules unlock some portion of the remaining tokens yet to be moved (of the total 21mil) just for you. You are also rewarded with some transaction fees from those who made transactions in the block (page of the ledger) you assembled when you won the mining lottery.
Has anyone got any actual coins?
Or just ledger entries for coins?
Who is supposed to give me the actual coins for my ledger entry?
What difference does it make? Do you actually think that the physical nature of gold is what gives it value? Gold's value, despite partial demonetization, is still far higher today than it would be if it only had industrial uses. Do you think the digital units in your bank account don't have value? What do you use to buy things?
The only real problems with the digital units in your bank account is that someone can create them for free & third parties tend to control your access. If you could make them provably scarce & grant every individual soverign acess to what is rightfully theirs, then no other money would be needed.
The reason the shittier money beat gold is because the economic benefits of expanding our trade network globally & reducing transaction costs outweighed the drawbacks of the supply being less limited.
With bitcoin we get a further improvement in reach & an improvement over even gold in terms of scarcity.
"Do you actually think that the physical nature of gold is what gives it value?"
Yes, absolutely. The physical nature of gold is 100% responsible for humanity selecting it (and not some other commodity) as money.
The only reason fiat "beat" gold is Gresham's law.
Bad "money" [when artificially valued at par by threat of force] drives out [of circulation and into hoards] the good.
"Do you think the digital units in your bank account don't have value?"
Correct, and every day that gold hits a new all-time high other people are realizing it too.
I think the only rational thing to do with fiat or pure credit instruments is to spend or invest the purchasing power in something else as quickly as possible. This includes the pure credit instrument called Bitcoin.
Bitcoin is not a credit instrument. Energy was invested in the unlocking of even the first of the available units. Now each additional unit requires the expendature of a significant amount if energy to unlock. Generally a pretty significant investment in tools/hardware is required too (much like gold mining).
The properties needed for something to be an ideal money do not include physicality. In fact pysicality increases transaction costs to such a degree that fiat tokens will always replace physical gold & the trust in said tokens will always eventually be violated.
Gresham's law is not some eternal absolute. It actually primarily applies to sound money vs cheap money with the same face value. People may always prefer to give away trash instead of good money, but producers are not always willing to accept it. Thier's law is the flip side of the coin. The growth of Bitcoin adoption & gradual increase in the transactional use of Bitcoin demonstrates this.
"I dug a hole, GDP must go up"
"I wasted electricity, this ledger entry must be valuable"
More begging the question (assuming the thing you are supposedly arguing for).
If Bitcoins were valuable, the energy cost would be a constraint on their supply. If Bitcoins were not valuable, the energy cost would be just a further element of waste.
You might insist (rightly) that Bitcoins enjoy a market value above zero. So does the US dollar. So did Enron. So did FTX.
So at what point & by what metric will you admit that the growing value of bitcoin as a result of volubtary adoption is real & that it has nothing to do with company stocks or fiat money?
I feel about Bitcoin and the US Dollar the way you feel about the US Dollar.
What would make you admit the US Dollar is in some way valuable or excellent?
If the US dollar stopped being printed, stopped falling in value, & the system ceased to be centrally controlled & could be audited by everyone at any time then I would have no problem with dollars. But the printing & inflation & centralization are basically the entire reason for its existence. It was literally designed to have a central bank & to be a tool to enslave people.
"What difference does it make?"
Ceci n'est pas une pipe
