I was
also banned from the Go Github. My antagonists here will probably idiotically mistake that as some validation of their stance. Click the link for some explanation.
Btw, Medium is also presumably
nuking very important information about potential false flags corruption.
Even in a long-term equilibrium state different communities may end up converging on different definitions of the ideal money: some favoring immutability while others prefer reversible transactions for example or preferring different trade-offs across security, transaction fees and inflation rate. Where there is consistent demand for a particular definition of money, communities can form Schelling Points and give that kind of money value.
This is especially likely given that humans often do not behave like purely rational economic agents. They despise shipping fees and a-la-carte pricing and they are (relatively) insensitive to inflation and risk. They covet both stability and growth, both security and flexibility. Community loyalty could cause users to value a niche currency even if they understand it to be inefficient, as arguably Dogecoin demonstrates already. Ultimately money is the servant of actual human demand and not economic theory, and so we may see a panoply of currencies thrive even if they dont necessarily make sense the economic equivalent of Wile E. Coyote never looking down.
What do you think of this idea of "ideal money may not be an absolute truth"?
edit: I just saw he has abandoned the forum.
Note in a prior blog of his, he pointed out why the real Bitcoin is more valuable in the long-run than the extra features of the Core altcoin:
The existence of Hypecoin implies the existence of Hypecoin-but-with-Bitcoins-network, which means Hypecoin and Bitcoin dont compete by featureset (because features can be freely co-opted) but instead compete strictly on network.[/size]
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The reason the Bitcoin network is so valuable is that Bitcoin has the most wealth, the broadest userbase and the longest history of successful operation. Since money is a network effect good, these advantages are self-reinforcing: a larger network means more liquidity, which attracts more use cases, which strengthens the network.
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The fastest way is slowly
Trust in new financial instruments is slow to build. For those of us considering adopting crypto already it can be hard to understand how slowly this trust will build for most of the world.
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The only way to learn the risks and failure cases of a crypto-economic system is put wealth into it and observe whether anything goes wrong. One of the central reasons that Bitcoins featureset is compelling even though it is very limited is because it is battle tested and reliable. Bitcoin has been operating for almost a decade with billions of dollars of value flowing through it and the system continues to operate as intended. The simplicity of Bitcoin and its reliability are different aspects of the same quality.
Conversely, the flexibility and featureset of the some of the newer cryptocurrencies is inseperable with their more complex security exposure. You can see this in practice with the Ethereum DOA hack or Parity bug, both of which involved losses in the hundreds of millions of USD and founding members of the Ethereum team. The very qualities that make it easier for Ethereum to do more interesting things also make it harder to be certain exactly what things any given smart contract will do. Trust for every smart contract will need to be bootstrapped individually. Even if the killer app were invented tomorrow it would take a long time to gain any confidence that it was working as intended.
Some argue that the sturm und drang over trying to launch SegWit signal a failure of Bitcoin governance and a counterargument to the reasoning above that Bitcoin could in practice actually adopt the features of a competitor. Personally I see the fact that Bitcoin is challenging to change as a feature, not a bug. Decentralization is the reason for the blockchains very existence and a decentralized monetary system should reflect the conservative preferences of the market about adopting new technologies.
Its not as easy as it looks
The challenges of building a crypto-economy are non-linear. There is considerably more incentive to spam, attack and exploit the market leader than the competitors. Weaknesses in other systems are left unexploited not because they dont exist but because the targets they protect are not sufficiently valuable to justify the effort. Congestion is lower not because of advantages in scaling but because there is less competition for limited network resources.
Many of the sharpest criticisms against Bitcoin (high fees, for example) are inevitable consequences of a thriving network. Many of the strongest claims of altcoins (strong privacy guarantees, for example) remain essentially untested until they accrue enough significance to be worth trying to defeat. To properly assess the value of a cryptocurrency we must account for the advantages and disadvantages of being / being sheltered by the market leader.
So Im in agreement with all the points he made in the above blog, so lets consider the second blog he wrote:Today Id like to continue my contrarian impulses by talking about why I dont think it makes sense to invest in an ICO or startup based on a decentralized application. Decentralized applications (dApps) may very well change the world but they are very unlikely to make their creators rich. To understand why, its helpful to take a step back and understand the basic mechanism that allows entrepreneurs to accrue wealth in the first place: the firm.
Where does shareholder value come from?
Profit is not an automatic side-effect of building a compelling product or having a large customer base. The cotton gin, for example, revolutionized the economy of 19th century America but it never made Eli Whitney rich. It is entirely possible to build a widely used and valuable technology without ever accumulating wealth. Thats because a firms profit isnt based on how useful the technology it builds is, but is instead based on how easy or hard it is for competing firms to enter the marketplace. The easier it is for a new entrant to solve the same problems you are solving, the harder it will be to charge a premium for your products or services.
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As demand for the services provided by the dApp increases, so does demand for token theoretically providing outsized returns to investors and early adopters who hold token. A nice situation if you can arrange it! But just as with the monopoly firm above, its vulnerable to competition. If there are interesting profits for the original holders of token to capture, those profits will attract competition.
In fact its even worse for dApps because in order to be decentralized they have to be open source essentially giving away their core IP for free. That means its incredibly easy for a potential competitor to download the dApp codebase, fork it into a new dApp′ with a new token′. Just as above the new dApp′ can underprice the original system, reducing the profit margin and stealing the consumer and supplier bases, since they have no loyalty to the original system beyond the service it provided.
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If your value generation takes place on-chain, it is decentralized. If it is decentralized, you will not be able to use it to extract economic rent.
He is actually arguing above against utility tokens because he makes it clear they have insufficient network effects and allegiance. I also had written before against the viability of utility tokens both from the standpoint of having no network effects and because utility tokens arent a cogent exemption from securities regulation.
But hes not arguing in the second quoted blog above against altcoins which have sufficient network effects. He instead made that argument for Bitcoin maximalism (and thus implicitly against altcoins) in the first quoted blog above. But then in the third blog which you have cited, he has backed off a bit on his claim that its impossible for an altcoin to establish a network effect.
Here are my thoughts on his third blog:Ideal money may not be an objective truth
Money is at its most basic a coordination tool that enables communities to cooperate economically, so its value is entirely dependent on the community of users that it serves.
Ive been making this argument for the past few years. Bitcoin as onchain transacted Ideal Money is ultimately for the community of $billionaires and $trillionaires as an international reserve currency which all other nation-state and highly fungible currencies float against. We will all be kicked off of the real Bitcoin eventually because the transaction fees will rise to $50,000 eventually (of course Bitcoin will be worth north of $250,000 then also though so it depends how many BTC youre hodling). Security, proven reliability, and immutability are the most important features of the real Bitcoin which becomes the new world reserve currency. It will be the most fungible and liquid asset on the planet by 2032.
But the real Bitcoin will not be a transaction token for the masses. For transactions, we have many competing technologies in play. For example, the Lightning Networks on the Core altcoin is one of the possible altcoins being developed to meet such need.
Lightning Networks will have certain unique attributes:- denominated in BTC
- Mt. Box fractional reserves (users will sometimes lose everything such as was the case for Mt. Gox)
- inability to transact to every other users on the blockchain
- inability to seamlessly integrate spending with others actions (e.g. posting a blog post a la Steem) recorded on a blockchain
So there will be other altcoins that attempt to compete with Lightning Networks that improve on some of those unique weakness but they will not be denominated in BTC.
Lightning Networks cant really remake the Web 3.0. Its more targeted only on spending without onchain integration required for decentralizing all the centralized databases on the Internet. So I do think some altcoin is going to end up being a major player and eventually in the long-term be more important than Bitcoin as the fungible monetary system fades and the knowledge age Internet system rises. LN is roughly Banking 2.0. Another altcoin could potentially be Internet 2.0.
But most of you will be incapable of analyzing which altcoin that is. You will invariably fall prey to hyped scammy ICOs along the way. And Im not going to be around here trying to help analyze for the members here. Ive been shown the door.
As usual, I have some surprises up my sleeve
I remain of the opinion that such opportunities to extract rent from decentralized applications will be rare and when they exist relatively modest, but I am excited to learn of counterexamples whenever I find them!
Its not necessary to extract rent from apps, although I think this will also be possible. Rather its only necessary to establish a token which has network efforts because of the unique decentralized ledger technology and market features. Others wont be able to successfully copy that technology because they wont have the first-mover advantage networks effects that are already established (as is the case for Bitcoin). Steem was open source from the start, yet it established network effects inertia that is hard to overcome. The problem for Steem is they screwed up the technology and the model, which leaves the door wide open still for a competitor.---------------------------- Original Message ----------------------------
Subject: You forgot Bitcoin, as it also broke up above downtrend after July 12
From: "Shelby Moore"
Date: Wed, August 8, 2018 9:42 am
To: Martin Armstrong <
armstrongeconomics@gmail.com>
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https://www.armstrongeconomics.com/future-forecasts/ecm/ecm-the-cycle-inversion/You forgot Bitcoin. Bitcoin has also broken above the downtrend line same
as for the US dollar and Canadian dollar.
This is yet another confirmation for you that Bitcoin is becoming a world
reserve currency.
Continue to ignore this Martin at your peril.