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<nettime> ***SPAM*** Re: de Jong, Lovink, and Riemens: 10 Bitcoin Myths
morlockelloi on Mon, 30 Nov 2015 19:46:47 +0100 (CET)

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<nettime> ***SPAM*** Re: de Jong, Lovink, and Riemens: 10 Bitcoin Myths

Compared to the trust in traditional currencies, the trust in Bitcoin is in the fanaticism end of the scale, due to the simple math - how much does it cost to subvert a currency:

Traditional currencies, operated by the state-size actors, lose value when the state's economy and the state itself collapse. Why this happens is a different topic, but there almost always major losers, who invest a lot to prevent this from happening. There can also be major winners (ie. invading army) who invest a lot to make this happen. What is are the baseline amounts involved in these investments? Most likely not less than several hundreds of $MM.

Bitcoin mining is currently reduced to less than 10 operators. There is relatively small number of people involved, and none of these seem to have a standing army or a navy. How much would it cost to coerce/subvert 51% of these and do anything with Bitcoin (split hash trees into oblivion, etc. etc.)? At worse few $MM, if really expensive first-class thugs are hired. This is completely different situation from the early days of Bitcoin, when there were thousands of miners, and the cost of obtaining control over 51% of those was much closer to the cost of subverting state-run currency.

On 11/30/15, 11:06, nettime's_forgotten_password wrote:

4. "Bitcoin is not a fiat currency."

In practice, acceptance of Bitcoin payments takes place before the
(irrevocable) recording of the transaction in the distributed database.
That is, without formal confirmation of its validity. Apparently, the
parties involved in payments in bitcoins_believe_  in their eventual
recording. The payee therefore trusts the_eventual_  availability of
received funds.

This looks distinctly similar to the way traditional instruments of
payments, such as coins, banknotes and bank transfers, operate. The
users trust, based on  experience and social convention, the correct
operation of the system such that received funds are available for
further spending. This 'systemic trust' in traditional, fiat, currency
is underpinned by a mix of technical features such as hard to copy bank
notes, fraud detection software in financial institutions and government
imposed and enforced regulations.

Conclusion: Where in practice the 'systemic trust' in Bitcoin is no
different from that of traditional currencies, Bitcoin operates _de
facto_ as a fiat currency.

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