Quote from: r0ach on May 25, 2014, 11:42:37 PM

Quote from: Peter R on May 25, 2014, 08:16:54 PM

Quote from: r0ach on May 25, 2014, 10:00:14 AM

Why do I think altcoins are valid? Because the financial industry wants to hedge security, and one, single block chain does not give them that. What if Gavin or some other guy issued an update that imploded the BTC network? They're just supposed to accept 100% loss? No, they're not going to do that.

This argument is part of the Alt-coin Narrative Cycle. It is only considered valid by people who don't fully understand how bitcoin works. As people learn more about bitcoin, they will learn that it is not possible to "implode" bitcoin by an "update." Even a network split event due to a poorly-excuted forking change wouldn't result in anywhere near a 100% loss. It would be annoying, some double spends would occur, speculators would no doubt dump coins, but things would return to normal.

How is it possible to "implode" bitcoin if the value of bitcoin is stored in the blockchain ledger?

Is this a joke? I don't think you really understand how cryptocurrency works, the entire thing is a confidence game. Since you can't hold it in your hand, that's what it's backed by. Walk around in the altcoin world for a while and you'll see that when coins encounter major security issues like forking, double spends, whatever, most do implode and don't recover. Bitcoin won't be exempt from that in the future.

Perhaps it is you who doesn't understand how money works.

Money is a confidence game. Like you said, "you can't hold it in your hand so that's what it's backed by." Money is an abstract idea invented by humans to solve the double-coincidence of wants problem that a pure barter economy faces. Money represents spots on a ledger that people trade in and out of for real goods and services. The more legitimate the ledger, and the easier it is to trade in and out of that ledger (the payment system), the more useful this form of money becomes.

You understand that the value of a cryptocurrency is related to confidence, but it seems you assume this confidence comes from the technology employed by the payment system. But this is not true. The confidence comes from the legitimacy of the ledger. A new payment system can be built around a legitimate ledger, but a legitimate ledger cannot easily, if it's possible at all, be built around a new payment system.

The reason most alt-coins die is because the ledger wasn't legitimate in the first place. It has very little to do with the technology of the payment system or else every bitcoin-clone would be equally valuable.

You mentioned that a simple "update" could "implode" bitcoin such that 100% of its value was lost. Can you explain how such an event would occur? If the ledger of value is still intact, and if people can still prove ownership of their spots on that ledger with their private keys, and if transactions can still be registered on that ledger, what event could be so bad that suddenly everyone would agree that 7 billion dollars (or $7 trillion in the future) of purchasing power went up in smoke?

Here's a thought experiment: at some point in the distant future, imagine that the Bitcoin Network gets relentlessly 51% attacked for days on end. Imagine also that there is a new experimental technology that we know for a fact will defeat the attacks. What would the economic majority do? Would they abandon all their purchasing power, financial records and accounting systems? Or would they simply employ this new technology to record transactions on the existing bitcoin ledger and go on with their lives?

The answer is pretty obvious if you think about it.

The Blockchain will be preserved.