The folks with Bitcoin Cash are arguing that the initial promise of Bitcoin was not simply that it would be a store of value, but that it would be a medium of exchange, and that people would use it in ordinary transactions. That aspect of Bitcoin [Core - BTC] seems to be breaking down.I appreciate the way Tom presented this. Ammous' answer was... well, I've typed it out in full below. If you don't want to read it all, you can click the above link and listen to it. Anyway, here is his entire answer, with my emphasis on some fun parts. See if you can find the misleading stuff:
You get two different responses. One is, 'Well, we're coming up with some innovations that may help foster that again...' (OP insert: a reference to Lightning Network) and the other one is, 'Ah we never really needed the medium of exchange function anyway, it's best to think of Bitcoin as being digital gold, and it's fine for it to be expensive to transact in.
I think at the very least the Bitcoin Cash people can say that their concerns are concerns that are rooted in the original vision of Bitcoin, and that that vision is being changed in ways that aren't radical enough. In other words if you really want to challenge the Federal Reserve, you've got to challenge it not just by introducing another store of value, you've got to introduce another medium of exchange.
That's absolutely wrong, because first of all, the Bitcoin Cash people fundamentally confuse the idea of the method of payment or the payment of system with the function of medium of exchange. So the point of what makes a medium of exchange is the fact that people will exchange it with one another, and once something is desirable as a store of value, people will want to be paid in it, people will want to use it as a medium of exchange, and then it will get used as that.There is a lot of misleading stuff in Ammous' long-winded answer. I started typing out his whole answer because I knew Ammous was all wrong. But of course, that's not the case. To be honest, there are some kernels of truth in there. Here are some of the things I didn't like:
Now the payment mechanisms in which it is delivered is a separate issue, okay. So the platform in which the payments are made is something completely different from that. In other words, the dollar is a medium of exchange. Paypal is a payment system... and this confusion.... the Bitcoin Cash people seem to think that Paypal is the medium of exchange and we need to built Bitcoin into a bigger Paypal that is a medium of exchange. But that's not true, and that's not important.
Also, Bitcoin is not a religion, it is not a cult, Satoshi Nakamoto is not God, and he is not a prophet that has given us holy scriptures that we must preserve. This is a technology that has evolved over time. And I don't like to get into all of these ideas of what Satoshi wrote, and what he really meant. Satoshi is just a human being like you and me. If he had something to say about what's happening with Bitcoin, he's perfectly capable of making his own opinions felt, and telling people what he wants. But he introduced this technology and it's going to grow. And I'm sure you understand the concept of spontaneous order, that you know things that involve human action, they are not the product of human design. So yeah he produced the initial design, but what Bitcoin has grown into is not something that he necessarily foresaw. Not something that he had to foresee. It's the product of people using it in the market and people understanding what it's good for and people using it to its advantages.
Jokingly I like to use the example of Viagra. Initially, the original vision of the people who made Viagra was that it was going to treat baldness or heart disease or something like that - it turned out to be much better for other uses. And you don't see people going around angrily demanding that Viagra be used for treating baldness. Maybe it does work for other things.
In any case, I don't even believe that this is really true of Satoshi's vision, and the Bitcoin Cash people can be really annoying in the way they spread this silly idea. But more importantly is, forgetting about all of the religious scriptures and looking into it. The important question is, if you want to disrupt the Federal Reserve, what do you want? This is exactly what Bitcoin matters for, in my opinion. Which is that, you know, we don't need a new Paypal. If we do invent a new Paypal, we shave off 50% or 90% of Paypal fees, that doesn't really make a big difference. That doesn't really excite me. That's something that some startup could do one day, and you know great for them, they'll make a few billion dollars and it'll be a great thing. But who cares...
What matters is, what we need is, a new form of central bank. We want to replace central banks. We want to be done and rid of central banks that are able to control money. So for me, regardless of what Satoshi wanted, what really matters is that now we have this technology that can allow us to have the monetary policy of really hard money, and monetary policy that nobody can change. This is for me why Bitcoin matters. So just to begin with the entire notion that we're going to hard fork Bitcoin to increase the capacity is a complete non starter for me because hard forking Bitcoin makes it trivial to then go into hard forks that will change the money supply. This is why it's a complete non starter. Even if I agreed that I would like for Bitcoin to have the properties that the Bitcoin Cash people want, the fact that they need a hard fork to do it is why it will never happen, and why it's a completely stupid idea. Sorry for saying that, but it's an extremely stupid idea.
You know the only thing valuable about this is, nobody can mess with the money supply. If you're going to go and change that just so that you can double the transaction throughput, or quadruple the transaction throughput, or even multiply it by 100, that is one of the dumbest engineering trade offs that anybody could ever do. Because even if you multiplied Bitcoin's on-chain capacity by 100 it would still not be enough to make all of the transactions in a small town of America, let alone the rest of the world, ok. Bitcoin currently does what, half a million transactions a day? That is the capacity. So multiply that by 10 or 20 or 100 and increase the block size by 100 and what do you get? You still have a system that can't handle as much transactions as a small little town in the US. If you want a payment network that handles all the payments of everybody in the world, it's completely unimaginable that anybody would want that on the first layer of Bitcoin. Anybody who says that anybody who thinks that must not understand how Bitcoin actually works. Because the way that Bitcoin works, the way that Bitcoin transactions are confirmed is that every single member of the network has a record of every single other member's entire your own computer for you to know every single person, what they are doing what they are selling and buying. And that's just absurd. It's impossible. It's impossible for you to follow this.
Plus it won't even be workable because you have to wait at least 10 minutes for one confirmation in order to be sure that the transaction is not invalid. So if you wanted to use this as a way to pay for your lunch, you'd have to wait at least 10 minutes in order to get one confirmation. It's not safe to spend any transaction that doesn't have at least one confirmation, although I would recommend waiting for several confirmations at least if there's a big payment involved. So the notino that everybody in the world is going to be using the Bitcoin blockchain itself to pay for all of their payments, is something that only people who are completely ignorant of how Bitcoin works from an engineering perspective could say. It's absolutely absurd. And frankly I'm really... quite disappointed that we're wasting this episode discussing this idiotic idea rather than getting into some interesting economic discussions. This is really the problem with it. And you know, it will never work on this level where we have 7 billion people running their own on-chain transactions and waiting 10 minutes for every single thing that they spend.
Secondly, it doesn't have to, because what do we need it for? We don't have a big problem with Paypal or Visa or Mastercard. Sure, you know, it would be great if we could reduce fraud on Visa and fees on credit cards and fees on Paypal and all of those things. But let's face it, that's not the biggest problem in the world. That's not the reason we get wars and inflationary governments, and that's not the problem that's allowing all these governments in the world to expropriate the wealth of their people and do all these horrible things with people's wealth. The problem we have is inflationary monetary policy.
Bitcoin can solve that. By, and this is the point that I try to communicate with my book.. even at its current level with only half a million transactions per day which is about the maximum that Bitcoin has done thus far, even at this level Bitcoin is able to process enough transactions to have a settlement layer for a global settlement system for... thousands of banks. Currently maybe about 1000 banks. So you could have 1000 central banks that are completely free market, that are completely independent of government control, none of whom can change the money supply, and all they can do is clear payments for clients. In a free market, a free competitive market for banks, in which, you know, if any of these banks does something you don't like, you're free to go and move on to another one. So if you do this, if you think of Bitcoin in this sense, that's when Bitcoin is really powerful.
Who cares about Paypal or Visa. We are here to compete with the Federal Reserve, with the IMF, with the Bank of International Settlement, and with the European Union. And frankly, perhaps I wasn't exactly correct to say that you'd have to be stupid to believe those ideas. You could also be motivated by... in fact, if I were a central banker, perhaps the most effective line of attack against Bitcoin to prevent it from playing that role which competes against central banks, that could take away monetary policy from the hands of central banks... the most effective way to do this would be to increase the capacity or increase the block size of Bitcoin to continue to hard fork it to make people stop thinking the policy is immutable, you know, introduce a change in the block size, and then move from the block size to, let's say, well we need to increase the money supply because we get Keynesians arguing for things like that.
So that's what Bitcoin can disrupt. Because it could replace that one central bank, with all that ability to create money and inflate the money supply and determine who gets to have money, you could replace that with an open free market network of thousands of banks, none of whom can affect the money supply... and all of whom are subject to free market competition.
Class 2 (9/11): Readings • ’Conflict reigns over the history and origins of money ’ Science News • ‘ A Brief History of M. oney’ IEEE Spectrum Bitcoin investor Trace Mayer believes you should hold your own Bitcoin. Trace Mayer Among Mayer’s first blockchain investments, Armory sought to empower people to hold their own bitcoins securely. Defining Bitcoin and cryptocurrencies in mainstream phrases has by no means been simple. In spite of everything, how can it ever be? Cryptocurrencies are revolutionary, they have been by no means meant to be confined to the standard definition of ideas. The instance of how tough it has been to outline cryptocurrencies in authorized phrases […] PayPal Passthru Service - BitCoin Point of Sale & Tools PayPal Passthru is an additional service giving your buyers the option of paying for their order with PayPal or altcoins. With PayPal Passthru the funds go directly to your account, they do not go through our account at all and we don't collect any fees for this service. In a blog post published last Thursday, Craig Wright said while forks of bitcoin would be allowed under the open-source MIT license under which bitcoin was released, copying the database would not.blog post published last Thursday, Craig Wright said while forks of bitcoin would be allowed under the open-source MIT license under which bitcoin was
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