Nakamoto Institute

> they have intense hatred for anyone with a different opinion, even the very people who developed bitcoin.

Hal Finney, the very first recipient of a Bitcoin transaction claimed, quote:

"Bitcoin itself cannot scale to have every single financial transaction in the world be broadcast to everyone and included in the block chain. There needs to be a secondary level of payment systems which is lighter weight and more efficient." [1]

And Satoshi Nakamoto stated:

"Piling every proof-of-work quorum system in the world into one dataset doesn't scale." [...] "Bitcoin users might get increasingly tyrannical about limiting the size of the chain so it's easy for lots of users and small devices." [2]

Did you have anyone else in mind? Perhaps Mike Hearn and Gavin Andresen? It's a matter of historical record that these two believe gigablocks will assuredly cause Bitcoin P2P nodes to become confined to datacenters. Their gigablocker quotes follow:

Gavin Andresen: "there will be big companies spending lots of engineering dollars on their own highly optimized versions of bitcoin. I bet there will be alternative, secure-and-trusted, very-high-speed network connections between major bitcoin transaction processors. Maybe it will just be bitcoin transactions flying across the existing Visa/MasterCard/etc networks" [3]

Mike Hearn: "probably 2 or 3 racks of machines" [4]

Gavin Andresen: "No, it's completely distributed at the moment. That will begin to change as we scale up. I don't want to…

I don't think bitcoin has much utility as a means to transfer value, over the existing solutions.

It might be a superior means to store value. The theory is that is as the amount of dollars (or any fiat currency) constantly increases, anyone holding large quantities of dollars will want to exchange them for something with a more fixed supply. Usually this is stocks. Oil futures, property, and gold are also used as stores of value. (In countries with weak currencies, people also hoard dollars as a comparatively stronger source of value).

So the purely monetarist argument says if there are only 21m bitcoins, and an ever-growing amount of dollars, one would expect that the dollar price of bitcoin will only be stable at 0 or infinity. E.g., either the network crashes and bitcoin becomes worthless, or the dollar collapses and bitcoin reigns supreme.

http://nakamotoinstitute.org/mempool/im-hoarding-bitcoins-and-no-you-cant-have-any/ - see here for more on this theory as regards bitcoin.

The counter to this argument is that a. despite seeming logical, money supply inflation doesn't always seem to occur in reality. E.g., quantitive easing hasn't noticeably increased consumer prices.

b. Bitcoin is volatile, which means it isn't actually a safe store of value. One persuasive argument I heard (from goldbugs) is that bitcoin, having a fixed supply, has no mechanism to stabilise the price, and so booms and busts become self-reinforcing. With gold, on the other hand, the amount mined…

First and foremost I think it will stick around. It's too useful a tool and it would be very hard to kill. It's money for enemies, no one controls it, everyone can use it.

China might currently be the only country in a position to attack Bitcoin as a protocol (not from a legal angle) but I think it's not in their best interest to do so. They are a rising empire, eventually they will have far less problems with capital flight than others that are declining, so it might make sense for them to let it go on, potentially causing a speculative attack on USD [1]. China's dominance in mining is shrinking, so at some point that won't be a problem anymore imo.

If (which is a big if) a "speculative attack"-type scenario happens the hyperinflation and resulting turmoil will leave a shock and I hope [2] we could actually see new hard currencies emerge. Some of them might be BTC backed as it is a harder money even than gold (at the expense of being younger, not as lindy). If that happens in the form of federations as I mentioned or well-known centralized solutions: who knows? I'll work towards a future with many different, but freely interchangable, uncensorable, private and fully backed BTC-based "currencies". I still like gold in case we nuke ourselves into the stone age, but I try to be an optimist.

Even if Bitcoin doesn't become a predominant store of value (because it gets widely banned, unlikely at this point imo) I think it will at least establish itself as a means of breaking…

Bitcoin can't even handle the currency transaction needs of a large shopping mall. The bitcoin blockchain is limited to about 7 transactions a second.

That's the main chain only; Lightning Network and side chains have no such limitations. There are over 36,000 lightning channels that can clear bitcoin transactions without using the main blockchain.

In a shopping mall scenario, most people would already have open channels with their favorite stores, similar to how store credit cards work today.

A cryptocurrency of some sort may eventually become a threat to the US dollar but bitcoin is clearly not it.

If it's going to happen, bitcoin will most certainly be it. The dollar is starting to lose its place as the world's reserve currency; Russia, China, Iran and other countries are cutting side deals to use currencies other than the dollar when they can [1].

Sure, smart people will continue to buy their morning coffee with dollars but they won't be saving for a rainy day in dollars.

The Fed has already printed trillions and trillions of dollars, with no end in sight; it's just a matter of time before we have either negative interest rates or noticeable inflation or both. Regardless, it's losing its buying power daily.

That's why a company like MicroStrategy borrowed $550 million at 0.75% to buy more bitcoin—and that's after a $425 million purchase a couple of months ago. Mass Mutual—an insurance company—just bought $100 million in bitcoin [2].

These and other companies…

>Nodes can handle far more than 7 transactions per second of throughput, even if you 4X the data size of that to account for propagation to multiple peers. 10 KB/s is nothing. Keeping nodes so light so that you can validate with a Raspberry Pi with a dialup connection, at the cost of preventing 100X more people from using Bitcoin, is a terrible tradeoff.

That wasn’t the tradeoff. The tradeoff was that increasing transaction throughput would also increase the risk to loss of decentralization and thus effectively the systemic catastrophic failure of Bitcoin. Without decentralization it’s just technological trash.

The most vocal big blockers were business guys prone to the same kind of risk-blind short-term thinking that led to the Global Financial Crisis less than a decade before - improve some easily measured metric now at the expense of introducing greater medium to long term total failure risk into the system.

Part of the problem is, systemic risk is difficult to measure and quantify, whereas other metrics like ROI or TPS are easy to measure and quantify. And thus we get more of what we measure, and less of what we don’t (systemic resilience, safety factor, redundancy, etc.). Everyone has a very strong bias for optimizing measurable metrics while being blind to the unmeasurable but important, and that’s what was happening here.

Thankfully the Bitcoin engineering community understood this and resisted making this tradeoff.

>There is no technological bottleneck…

Since post-Snowden, the Cypherpunk Movement somehow became active again, but many are not aware of the history of Cypherpunk.

I recommend everyone who is interested in cryptography, privacy and Cypherpunk to read A Cypherpunk’s Manifesto (https://www.activism.net/cypherpunk/manifesto.html), and The Crypto Anarchist Manifesto (https://activism.net/cypherpunk/crypto-anarchy.html) for the starter, both are very short and concise.

After reading the Manifesto, everyone should read Tim May’s Cyphernomicon, the most important document - the only comprehensive and the only documentation of the entire Cypherpunk movement.

https://nakamotoinstitute.org/static/docs/cyphernomicon.txt

Yes, it’s ten thousand lines of plaintext in a list format, and obviously not easy to read. It may be difficult to start, but it is surely an amazing collecting of ideas. You should download it to your disk, open your favorite text editor, and choose a nice color scheme, to read the entire document, line-by-line, as if you are reading some source code. In my opinion, this is the most comfortable way to read. You may need two weeks to a month to finish the reading, use the bookmark feature of your text editor to mark your progress. Another useful note is that, Tim May’s documentation is heavily leaning towards Anarcho-Capitalism, but as he said, the house of Cypherpunk has many room.