Don't Trust Anyone Alone

Technologists often rave about new mechanisms just because they are possible – remember for example how 3G video telephony was going to "revolutionize mobile communication"? Mobile operators lost a staggering amount of millions on ads believing in that techie dream only to find out nobody wanted 3G video telephony (I know, I worked for 3 at the moment).

Observers of any progress are often confined to their own point of view.

To "get" Bitcoin you need to understand not only technology (knowledge on processes) and the Internet, but also human behavior and macroeconomics (largely the same thing though, those two last concepts). IMHO, this is why so many otherwise noted commenters only partially add something of value to Bitcoin debates, all the while often also adding info that's plain wrong (because they've confused a pattern in the Bitcoin world with something similar in the "real world").

As an example; this weekend I stumbled onto an hour-long talk (link below) at Google from Paul Vigna and Michael Casey (renowned journalists/writers both of them) which contains a lot of correct info. But, the talk also sways away from reality when they talk about things they think they understand, when in reality they just don't – because they've confused characteristics in the current economy (fiscal policy, 1.0 – 2.0 – 3.0 startup culture, government setting the rules, fiat/FRB etc) with features in the Bitcoin world which on the surface looks like those old processes. Bitcoin often turns things on it's head.

Linking to an example here where Michael Casey talks about fees vs. rewards in the Bitcoin network (regarding concerns on how the miners upholding the network will be compensated in the future). He uses wordings like "value proposition", compares to Visa/Mastercard and asks "what are miners gonna need to process information" and says he has "a sense these problems can be solved" (adding also that the 21 million limit "may be a problem").

It's obvious he has not really understood Bitcoin yet (i.e the human behavior guiding the mining). What miners "need" is not a problem to be solved. No particular miner "needs" anything from the perspective of Bitcoin and its users more than what is already there (the block reward). It's actually pretty simple: just as workers/companies of the gigantic ice industry gave up protecting their profits when refrigerators came along (after a lengthy fight mind you) there is no need to protect the workers/companies mining Bitcoin. Electricity replaced the "mining", transporting and storing of ice, just as it is now poised to replace the production, transporting and storing of paper bills. As long as there is value in it's mechanism (value-transferring) there will be miners providing the hardware needed to uphold the security. Simple as that.

Michael Casey wants us to "fix" Bitcoin so that it fits into his paradigm (the banking era's paradigm).

But, now that we have this tool (decentralized permissionless programmable money) there is no "need" for anyone to try to come up with a way for this mechanism to be adapted to "fit" with the current system and the current financial institutions' wishes (to protect their profits). Bitcoin does not care.

IF the current Bitcoin network would be made to serve the old paradigm (banking) there are already many copies of the network vying for a chance to take over Bitcoin's role as the value-transferring mechanism. This fact alone will keep a majority of miners aligned with Satoshi's original vision (if you interpret that vision as I do; as it's stated in Satoshi's white paper). As journalists working mostly within the "old" economic sector covering mostly established companies this fact is difficult for Casey and Vigna to see (again, IMHO). And I was only using the linked cut-out above as an example. This talk is filled with these subtle erroneous assumptions, as are many talks from "noted" commenters from the "old" paradigm.

In this way these sorts of talks are really misleading, as true info is mixed with false, making the latter appear true (and it's difficult to separate the two if you're not more knowledgeable than the speakers in question). And very few, if anyone, can really grasp Bitcoin, but you can try (also, don't forget to google the term "the unknown unknown").

Bitcoin is an idea more than a technology, and it's not "a start-up" where we "need to fix things" so the established institutions "like it". On the contrary. If banks "liked" Bitcoin, Bitcoin would not exist.

What's the lesson here then? Well, you should not trust any one authority (not this blog either), but form your own opinion using many different sources - and develop a sense for discovering your own assumptions - and a habit questioning them.

Also; compare this reasoning with the blockchain - another place where we do not trust any one authority for our own personal benefit.

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