Re: Try to answer the difficult questions...

Quote from: inca on March 16, 2015, 04:17:46 PM

Quote from: Wandererfromthenorth on March 16, 2015, 03:12:41 PM

Suppose we have a technology at our disposal where we can move fiat currencies or anything else of value (that is not supposed to be double spent) using a distributed ledger system (allowing cheap, instant, global trust-less transfers) that is not dependent on the price of a native cryptotoken (that in this case you would not need) and using this distributed ledger system for smart contracts. In this case, should bitcoin be valuable?

What do you think? Yes? No?
Why?

VC money in the crypto space is more interested in the blockchain that in bitcoin, as any statement from these entities clearly shows. They all agree that "the blockchain is the main innovation".

So far the criticisms to the "it's about the blockchain, not bitcoin, stupid" way of thinking (http://www.miscmagazine.com/its-the-block-chain-stupid/) consists in saying that the blockchain is dependent on bitcoin (the miners need an incentive to keep the network running, the price of the token needs to be sufficiently high because security etc).
Therefore no bitcoin = no blockchain (https://twitter.com/nvk/status/522115773918359552)

But what if we had a system that works with decent security that doesn't rely on that cryptotoken? Wouldn't that make all cryptocurrencies themselves pretty much useless (unless they have a specific purpose that is not just a necessary security mechanism)?

Then sure, you might simply consider bitcoin to be valuable because it can be a store of value/new currency/replacement of fiat. But the world might not find these use cases to be useful, compromising bitcoin's high valuation scenarios.

How do you secure this mythical distributed blockchain allowing frictionless transfer of any assets?

This is a very important point. You cannot secure any thing on a block chain of which the market cap is much lower than the things you want to secure. Indeed, the cost of the proof of work (or the proof of stake for that matter) is of the order of the market cap (or lower). To attack the chain, you need, in the worst case, about to invest the whole market cap (you then redo all of the proof of work). Now, for the currency itself, that would of course be ridiculous: spending more than the total market cap of all coins, to be able to attribute yourself some. But if there are things in that chain that are worth much more than the market cap, then that might very well be worth the difficulty.

If the market cap of bitcoin is now estimated at, say, $ 4 billion, then that comes down to saying that with about $ 4 billion, you redo all the proof of work (if the mined coins were mined at the price they were worth). That means that someone able to plonk down, say, $6 billion, can redo the entire bitcoin block chain. Of course, that wouldn't be worth it. But if that chain contains a contract worth $50 billion, then that changes things: if it is worth to you $50 billion to change that contract, then plonking down $6 billion is a good deal.

So the bitcoin block chain is not more secure than about its market cap.