For people who have not been following along, the Bitcoin block size debate has been very intense and pulled out a lot of interesting psychology from the Bitcoin community.
Most of the core devs of Bitcoin are strongly opposed to increasing the blocksize to 8mb. 2 people in particular, Mike Hearn and Gavin Andresen, have been making very strong political pushes to get the majority of Bitcoin users to favor their block size limit increase proposals, and it appears that they have largely been successful.
Everyone has an opinion on the block size debate, and it has become clear that politics are very important to Bitcoin. Bitcoin is a complicated and delicate protocol, and having a qualified opinion on something like the blocksize debate likely requires around a year of studying the academic properties of Bitcoin. Most people don't realize this, and hold their own opinion in high esteem. In many ways, this would be similar to non-cryptographers engaging in debates about key scheduling in AES - it takes a lot of education before you are really qualified to make an opinion.
Unlike AES however, with Bitcoin most people believe that they have a qualified opinion, and actively engage in debate, religiously clinging to certain ideas without properly grasping their full implications.
Perhaps even more interesting is all of the drama and chaos on /r/bitcoin. Right now there are posts with 93% upvotes requesting that the moderators be replaced. The comment threads have lots of brigading, trolling, loudmouthing, and occasional spurts of academic discussion.
There are many accusations of the moderators censoring discussion that opposes their viewpoint on the subject. The moderators have been very active in deleting posts. Certainly many of the deletions were of garbage comments, but there also seems to be abuse-of-power happening.
Certainly there are many people trying to be as disruptive as possible, and deleting their comments only results in more assertions of censorship.
One big controvertial decision by the moderator team was to censor all posts relating to Bitcoin-XT, a client that runs code which will hard-fork Bitcoin after reaching 75% miner-usage. The two biggest proponents of the block size increase are responsible for XT, and censoring posts about XT seems synonymous to censoring topics about the block size. 'Off-topic' really doesn't seem like an appropriate label.
The behavior of proponents of both sides of the debate has been abysmal. Something in Bitcoin is broken, and it's not just related to the block size limit. The decision making process, and 'social consensus' process as a whole, needs improvement.
> Most of the core devs of Bitcoin are strongly opposed to increasing the blocksize to 8mb
2/5 of the core devs support increasing the blocksize, and of the remaining 3, at least 2 have vested interests in companies/technologies outside of core bitcoin that could stand to benefit from smaller blocksize, eg Blockstream.
You got that backwards, one of the two, Mike, suggested to that they should spend some time working on payment channel and improvements like lightning and since they though it was a good idea they did.
Blockstream has to benefit from blocks as large as possible without losing decentralisation and security properties, like everyone else.
"Dr. Hoenikker used to say that any scientist who couldn't explain to an eight-year-old what he was doing was a charlatan." - Kurt Vonnegut, Cat's Cradle
The argument that "I understand this and you don't, so you don't get a vote" seems like a lazy way to suppress democratic process. A better alternative is, "This might seem complicated, but really it's not; here's a simple but complete explanation to help you make an informed decision."
When all you have to do is explain to a child (or indeed a layman adult) you can use things like analogies that aren't perfectly accurate, and you only need go a little way beyond the person's existing knowledge - it's a waste of time to deliver more information than they can absorb in the time you've got to explain.
If you're a high energy experimental physicist you can say you work on a particle accelerator. That's a machine that makes particles hit into each other really fast, a bit like a super-high-speed game of conkers! When the particles hit together and break apart for a really short time you can see the parts that make them up, and you can learn things about them!
You've now explained what you're doing to an 8 year old! But if you ask the 8 year old whether they think it's a good idea to use Fox-Wolfram moments to partition phase space and suppress the continuum background, like B-factories do, or whether you'll have difficulty determining the centre-of-mass frame due to missing energy? Probably the 8 year old won't have an informed opinion either way.
Right, it's completely ridiculous that I had to study for months to understand the transport properties of a nabotube with magnetic contacts, after having studied for years to obtain the base knowledge to start that project. The prof should have been able to explain that to me when I was 8 years old. Obviously he doesn't understand his stuff and neither do I.
Or could it maybe, just maybe, be that it is entirely reasonable that it takes years to have sufficient background understanding before an expert can convey the knowledge you need to study for another few months to actually understand something and also have an expert opinion on it?
Do you see anything redeeming about the quote? It seems problematic if something like this can be so political but be impervious to the logical debate an 8yo can engage in, no?
You imply that a logical debate is somehow 'better' than a political debate. That's a category mistake: those two are incomparable. They necessarily coexist, because they are about different things.
Politics is about ethics. In this case: the ethical consequences of certain technical choices (under which I include a consideration like 'I will make less money'). (Expert) knowledge of the technical choice itself is mostly irrelevant for those parts of the debate. We can discuss the military merits of e.g. nuclear weapons until kingdom come, but if I'm opposed to them on humanitarian grounds, no amount of technical merits will convince me.
As for the quote, it depends on context. In a context where expert knowledge is necessary to make useful contributions to the debate, there is nothing redeeming in the quote. It merely encourages people to be disrupt it. In the more general context where you ask a researcher to be able to explain his work: of course he should be able to dumb it down. But not for the purposes of subsequently engaging in fruitful discussion with him.
Politics is about ethics? Yes, well, do you think an eight year old can look words up in the dictionary? Yes, of course you do. Well I argue that's all it takes, essentially, beyond that an eight year old needs some time, to answer some questions of their own, to be lectured at about the implications. But, an 8yo is perfectly capable of making the right choice, given context/access to information.
And, I'll additionally argue that technical merits can convince someone opposed on humanitarian grounds, the two are not incomparable, we do these sorts of comparisons just fine in the real world.
You are attempting to modularise the argument in a way I find unpalatable is all, our differences are likely surface deep.
In theory, I agree. In practice, it took me months of people explaining crypto & blockchain to me before I could claim I even partially understood how bitcoin transactions worked.
> having a qualified opinion on something like the blocksize debate likely requires around a year of studying the academic properties of Bitcoin.
I do not like statements like that -- it basically says unless you know as much as me (and if you knew as much as me you'd agree with me), you can not have an opinion. It is pretty exclusionary. Most people can get up to speed fairly fast than that if they have access to good information on both pros and cons.
I have absolutely no horse in this race (I'm here for the schadenfreude), but to be honest, when it comes to deeply technical decisions, I think this is entirely fair.
I wouldn't expect Linus to listen to my opinions about the Linux task scheduler.
Why should the Bitcoin community listen to some random guy's unsupported opinions about block size? This isn't about politics or being nice and listening to everyone. This is about making a massively technical choice and it better be made based on solid technical reasoning, not on a desire to be happy and inclusive.
The difference is that the opinion has political and economic outcomes, and not everyone involved has a year to devote to learning about Bitcoin, so it essentially amounts to "just trust us, we won't enrich ourselves by fucking you". Which has been said by people involved in banks and currencies for centuries. If you want to say something like that, better follow it up with links to a list of the academic papers that one would need to get up to speed, otherwise I have no way of verifying that the problem is more difficult than my current understanding says it is.
Furthermore, a year is a really silly measurement of time for how long learning something will take. If you have some background knowledge in the field, then most individual blind spots can be cleared up in a month or two of full time study. It took me about 2 months from not knowing how Bitcoin worked to implementing my own cryptocurrency with a novel PoW approach. This stuff isn't that hard.
If you want to say something like that, better follow it up with links to a list of the academic papers that one would need to get up to speed, otherwise I have no way of verifying that the problem is more difficult than my current understanding says it is.
Totally agreed. Just because you're an expert, that doesn't absolve you from having to make your case.
But the same is true of anyone else, and that necessarily excludes non-experts who will not be able to make their case effectively.
> The difference is that the opinion has political and economic outcomes.
That is the crux of why this is a huge deal, and Linus changing the Linux scheduling algorithm is not a huge deal. People are afraid that Bitcoin is going to break, or meet an obstacle that prevents them from making massive ROI on their speculation, and they have a lot of stake in the game in protecting Bitcoin.
> It took me about 2 months from not knowing how Bitcoin worked to implementing my own cryptocurrency with a novel PoW approach.
"It took me about 2 months from not knowing how cryptographic hashing worked to implementing my own hash with a novel sponge function."
The hard part is not making a cryptocurrency that works when people use it normally. The hard part is making a cryptocurrency that works when people around the world can profit tens of millions of dollars by breaking the cryptocurrency (either abusing the mining, spending coins that don't belong to them, DoS'ing competing miners, etc.)
I don't know which cryptocurrency you made (I tried to look it up via your HN profile, but didn't find anything), but if you get it peer reviewed I imagine that experts will quickly be able to find a reason or two for why it is either broken or uninteresting.
Anyone can make a cryptosystem that they themselves cannot break. Bitcoin is among the most complex and cutting edge cryptosystem we have today. Even in the past few months, several important and severe flaws in Bitcoin have been discovered and fixed.
Decisions as seemly small as updating the blocksize limit are enormously nuanced. It changes the entire game theory behind the mining, affects how people will be running validation nodes, and requires a strong understanding of how blocks propagate around the world, and what a nice 'average' block looks like vs. a block that was made maliciously.
> better follow it up with links to a list of the academic papers that one would need to get up to speed
This is a very difficult thing to do, especially because Bitcoin is so new. Much of the important discussion that has happened resides only in mailing lists, blog posts, irc logs, github issues, and forum posts.
It will also help if you read the full #bitcoin-wizards log, dating back to around 2013 I believe. There you will find lots of highly technical discussion with links to more discussion and research papers. It's probably got the highest signal to noise ratio of any public discussion.
Bitcoin is a technical solution to what had previously been a political problem. It is not surprising that people in the bitcoin community are more aware than people at large that technical decisions have political ramifications.
Even the normal political problems that governments concern themselves with typically have technical aspects as well as their social values aspects, and while democracy can hopefully allow us to take many different peoples ideas of what constitutes the good life into account, we don't expect them all to have a complete understanding of the technical aspects of each decision.
It's quite possible that random guys might have relevant things to say about the values that inform the block size discussion even if they don't understand the details of the technical discussion.
> I wouldn't expect Linus to listen to my opinions about the Linux task scheduler.
Why not? As an end-user your opinion is very important, you're the one that has to live with the detached decisions that Linus makes regarding the scheduler.
Task scheduling is deeply complicated. Optimising for one set of cases hurts others, so it's an exercise in hard tradeoffs. It also has deep knock.on effects in other parts of the system.
I do not have the expertise to make proper judgements regarding choices in that space. The breadth of knowledge and experience required greatly outstrips my own.
Moreover its a space where subjective experience is the worst possible measure. So my gut feeling as a user is utterly useless in making appropriate technical choices in the space.
Do you think you are entitled to an opinion on the design of the brakes of your car? Or on the structure of the foundations of your house? Because you are the one who has to drive the car/live on the house. Unless you have technical expertise in that particular field, your opinion on technical matters has zero value.
So he might expect Linus to listen to his opinions on the end user experience, but maybe not to his opinions on how it should be implemented technically? Would that be fair.
I'm pretty sure giving people the time of day is an admirable trait and can teach you many things regardless of their expertise. It's after the fact that you disregard the cruft.
It's like the Republican debates for me, I can't seem to find any common ground with these candidates but then I find a few nuggets that I do like (such as Jeb Bush's funding of crisis birth centers and increasing the adoption rates in Florida through better funding and education for adoption centers. Even if I'm pro choice I think those are good ideas). Of course, the Republican debates are two to three hours long so it's very thankful they're not very often and you need to find the balance so that you're not just wasting your time.
I think it's fair to say that there is no black and white answer to this issue and you really have to go on a case by case basis to maximise your use of the information contained in the people around you.
There is no law against publishing software that would introduce a blockchain hard fork if run. Yes, XT infuriates those who hope to make money based on the appreciation of their pre-fork bitcoins. Publishing XT introduces economic uncertainty in the short term, and long-term undermines confidence that we can rely on the mathematical promises of bitcoin at all. If XT is successful, why wouldn't Hearn (or Coinbase, or another person with interests divergent from large bitcoin holders) publish XT 2.0 removing the coin max? Or introduce any number of other inflationary changes?
If it can be done, eventually it will be done. It's inevitable that people will eventually propose all manner of changes to bitcoin, some good, some stupid. Real bitcoin (or original bitcoin) could still continue to run as its own fork, in the background, waiting for the market to decide on a winner. Just as it is inevitable that developers will propose a small infinity of bitcoin-derived altcoins, trying to capture the windfall of a self-published bootstrapped currency. But very few altcoins will become successful networks in the long term, a smaller and smaller percentage of new coins as time goes on.
Either Hearn and Andresen are correct, in which case their success will speak for itself -- even if they totally screw over the large bitcoin bag-holders in the process. Or, XT will become an insecure, centralized network and will die off on its own. No need for politics, in this case mathematically dictated incentive structures will decide who wins.
>Yes, XT infuriates those who hope to make money based on the appreciation of their pre-fork bitcoins.
Could someone explain how the XT fork might affect the future value of currently-existing Bitcoins?
I expected it to have a neutral effect, since one fork will eventually die out (and since the fork does not try to change the rate at which Bitcoin are created). Even if both forks persists somehow, every holder of a current Bitcoin will essentially have 2 Bitcoin -- one spendable on one fork, another spendable on the other.
OK, but then if you have one BTC now, you will have one of each kind of BTC later, so that scenario does not explain why "XT infuriates those who hope to make money based on the appreciation of their pre-fork bitcoins".
It is correct that bitcoins mined before the fork will be spendable on both chains. That being said, it is also possible (and in my opinion probable) that the combined value of both currencies (BTC and BXT) will be less than the current value of BTC for a variety of reasons (Metcalfe's law, loss of confidence, etc.). That being said, I think it's more likely that one of the forks will win (e.g. the core devs will merge Bitcoin XT to Bitcoin Core if the fork happens).
> No need for politics, in this case mathematically dictated incentive structures will decide who wins.
Whenever I see a statement like this I smile because that's what politics is[1]. If many people decide to do something based on their interests (rather than, say, being forced to leave their homes because of an erupting volcano) -- that's politics. Thing is, people who say they hate politics usually don't know what it is, and the result is that they just do politics badly. You can't not have politics in any social structure -- it is an inherent process in any kind of social interaction. Whenever one person tries to convince someone to do something, or to reach any sort of an agreement -- that's politics by definition. Whether the incentive are mathematical (though they never really are when it comes to humans) or not doesn't matter. Politics is the process by which a decision -- any decision -- is eventually taken by a group.
I agree that politics operate in bitcoin. I disagree that politics will decide which network branch remains in use, at least not conventional politics of influencing people through polemic, logrolling, or subsidy. Politics in the sense of any attempt at influencing people aside from the literal design of your favored protocol implementation. You may be correct to say that incentive structures designed in software protocol is in fact politics itself, a new and effective form of politics. In that case I would agree with you. Perhaps my original comment would be more interesting if I had thought of bitcoin protocol proposals as a form of politics!
>If XT is successful, why wouldn't Hearn (or Coinbase, or another person with interests divergent from large bitcoin holders) publish XT 2.0 removing the coin max? Or introduce any number of other inflationary changes?
This was bound to happen sooner or later. Good that is "only" about something relatively minor like this, so that the community can practice handling it. Maybe later there will be a conflict where serious money is on the line and it would be bad if that was the first one.
I mean this change will affect miner revenue, but transactions fees are still completely insignificant compared to block rewards.
I thought that if the split does happen all existing coins will be spendable on both sides of the split. Does that not count as 'serious money' on the line?!
That is just like a stock spinoff, it doesn't favour one group of users over another. And the actual forking of the chain (so far only the software has been forked) is some time in the future so everyone will have time to prepare.
For an example of something that would favour one group of users over another, we can take a change of block reward decay schedule. If it decays faster, old users are favoured. If it decays slower, new users and miners are favoured.
An increase in blocksize later on, when fees are majority of mining revenue would favour users over miners.
Security is my concern, even simple changes open big bugs. Bitcoin is not a blog engine where you are just exposing your content, it is one of the most delicate protocols found on Internet and most transactions are irreversible (indeed all transactions are irreversible but sometimes you can recover your money).
Forking code sounds great but we are talking here about money and assets, I would prefer agreement even when distributed systems are exciting.
Yes, but Bitcoin really is just an experiment. If something in it is fundamentally not going to work, (including the consensus development concept), then isn't it best to blow up and fail now when there's only $4 billion at stake, instead coddling it until it stagnates and dies, or until there are trillions of dollars at risk?
"...bitcoin is an experiment. It's getting to be a scarier and scarier experiment as it gets larger and larger, because if it fails there will be a lot of people who will lose the money they've invested..." Gavin Andresen, Bitcoin Developer, 2014 - http://www.econtalk.org/archives/2014/05/gavin_andresen.html
There is great debate and concern about Bitcoin trying to change its core software. Network tests have found the credit card processor can process many more transaction per second than Bitcoin can. Some influential leaders want to make changes that will make the protocol more competitive with VISA/MASTERCARD. They want to change increase amount of transaction processed in each block (the block in blockchain technology). The important issue is not about changing Blockchain size it is about changing the hard coded rules that are the foundations for trust in Blockchain based systems. What is there to stop future forks that change other rules that users relied upon in their choice to participate in this financial system. Lets say some economic interests in the future lobby the influential core developers and miners to change the amount of coins mined in the future to let say 100 million. If the users rely on the software to enforce it rules any important changes to the rules that are significant can effect the end users in unpredictable ways. The users of Bitcoin have no say. Once again a small group is making choices and if they are wrong they can destroy the entire system. A system that relies on influential few promoting there own economic interest is no better than a public company issuing out more shares when they see the need or the government printing more currency. Those who want to take Bitcoin into direct competition with VISA/MasterCard should simply create a new coin designed to do this. There is so much more to the potential of the protocol than just a cheaper way to spend money. The principal of hard coded rules they can not be changed and are enforced by the software is one of the true revolutionary idea’s of Bitcoin. There is more at stake than creating competition for banks. Its about staying true to a financial system rules that users chose to participate in.
Bitcoin originally did not have this 1MB limit. It was only added when there were concerns about spam transactions or blocks that could clog the network.
Why do you think it was OK to make a change to add a limit but not make a change on the size of the limit?
With so much money at stake (and potentially large concentrations of it) why isn't there much of a governance model for Bitcoin?
I see many articles touting the so called democratic governance model of Bitcoin and if that is indeed the model then what other "popular delusions and madness of crowds" will my money be subject to in the future?
Are they also doing anything about the centralization of mining pools? AFAIK, the main problem is that right now it's possible for miners to prove that they were mining "for the pool" and not for themselves. If this proof was impossible, each miner would be a selfish miner and any collaboration would be impossible.
An independent miner with an average affordable rig might find somewhere on the order of one block per year on average. This means that due to variability, a good proportion of miners would not find any blocks at all within the lifetime of their hardware, and give up forever.
If low-income-variability pooled mining becomes impossible, then my guess is that mining will be centralised to people who run purpose-built datacentres full of miners, not the casual users.
> If low-income-variability pooled mining becomes impossible, then my guess is that mining will be centralised to people who run purpose-built datacentres full of miners, not the casual users.
AFAIK, that's already happened. The difference is only that mining pools owned by independent entities wouldn't be able to collaborate. So you'd be more likely to have e.g. 5-10 big pools, as opposed to 2.
Mmm, no. If the four largest mining pools go for it, but the various exchanges and online wallets do not, then you get a very dangerous fork where you now have two separate currencies, and have the possibility of double spends. The nodes that are not updated to allow these larger block will keep on going along with their chain, just rejecting the other chain as invalid; and the ones that do accept the larger blocks will probably see their chain as longer and so only accept that one. That fork means that until all of the online wallets, exchanges, and anyone accepting Bitcoin directly realize that there are now two different currencies, all kinds of fun can be had with double spending.
Something complicated will happen for an indeterminate but probably fairly short period of time, and then one fork will emerge as a winner.
Nobody wants to buy unspendable BTC, so it's in almost everyone's interest to find consensus, even if it's tragedy-of-the-commons consensus, very quickly.
In the GW debate we have folks saying things like "I'm not a climate scientist but I know global warming is a lie". That's pretty similar to this case where there's this belief that the opinions of non-technical folks should be held in the same esteem as those of technical folks.
I think this comes down to the same basic cultural trend: a desire for everyone's opinions to be of equal value regardless of individual merit, a deep distrust of science/engineering/etc, an assumption that by reading a couple of echo chamber blog posts anyone can become an expert on anything, and a rejection of any and all authority.
I don't see the connection to the global warming debate. Clearly no-one listens to the so called "gods" in the global warning debate even though the consequences become clearer and clearer every year.
The global warming debate is long settled by pretty much everyone doing research in that area. If that is an example to your case, you didn't make it very well.
There was a study about butterflies migration and everyone just took it as fact that it was due to climate change. When another study came out proving that it was wrong (with more science), the original study was never withdrawn and is still used to this day as an example of climate change.
It's not even a debate that CO2 is causing warming. It's that CO2 isn't causing it at anything near a catastrophic rate.
It's used by the likes of Al Gore to make billions from things like carbon credits and the politicians to attack their political opponents. It's not the first time the scientific community was used as pawns in someone else's game.
So much of the data is either: changed, doctored, or even hidden (climate gate brought out many issues with some of the leading climate scientists and showed that much of the data isn't actually being peer reviewed. I thought this would bring about a discussion about real science...but it was covered up and scoffed at by the scientific community because it made them look bad.
We are spending so much money on global climate change, while ignoring many other pollutants that might actually save some of the environmental disasters that we have created(which cost much less to fix).
You don't have to be a climate scientist to see bullshit science. I was part of the academic world for many years and it's unbelievable how much politics plays into the research that is published. It's why I left it forever.
This post will probably be modded down. Mostly because when something against the narrative is posted here on HN, it's not even discussed. The person who posted it is bullied into submission or silenced because you not only can't see something you disagree with, you can't bear to have someone else see it either.
I see it as the tactics of the intellectually inferior. Those insecure people that can't have ideas discussed freely and without prejudice because it goes against their core beliefs.
Even the name 'climate skeptic' is a pejorative used to make the other person look like they are an idiot that knows nothing about the climate or science. This has no place in science. Science should not be about personal and ad hominem attacks.
That's the funny thing: I'm demanding more science and the climate change zealots are basically saying that the science is 'settled'. The science is never 'settled'. When it is, it's called religion.
I'm sick and tired of politics ruling over science and you should be too.
It's somewhat ironic that one of the big selling points of Bitcoin was decentralization. The thing that they failed to realize is the team also needs to be decentralized. For something like this to take off it needs to be a specification for a federated network with zero single points of failure, and not an actual codebase with a dedicated team.
> specification for a federated network with zero single points of failure
The problem is that some people want to change the specification (bigger blocks) and some want to keep the current specification. The block size is part of the specification or that it's only an implementation detail?
For me, it's not clear what a "specification for a federated networks" means
* One interpretation is that the specification is written in assembler and is the current official Bitcoin client, and any other client has to be 100% bug compatible with it. Nobody can change it ever.
* Another interpretation is that anyone can add a new version inside a general framework, and somehow the people decide which version to use. You need some kind of number identifier for each version, or to make it user friendly you can use a nickname. If the network is too general, you can include Bitcoin and Litecoin (and all the Altcoins) in it. The network is just Internet.
Both alternatives have "zero single points of failure". The problem is that people want something in between.
I imagine it would be closer to the 2nd of the two.
When I've thought about it, I come to the conclusion that the base specification needs to be so simple (with clear path for extensibility) that no one will disagree, and everyone can see that it's critical for an electronic currency to exist. Namely the ability to own it, and to exchange it.
Another thing is, I believe that in order for something like a global electronic currency to become universally accepted, without support from / cooperation with governments, there can be no center of power, and unfortunately structurally I can't imagine something like that could happen with a blockchain-based currency.
Don't get me wrong. I see the beauty / elegance of the blockchain, but I can't get my mind wrapped around the idea that everyone (or even a significant percentage of people) around the world will accept the idea that their currency is at the mercy of decisions being made by some relatively small group of people who basically answer to no one except in the sense that they'll always attempt to do popular things in order to prevent people from leaving their currency for another.
What do you mean? The only thing that matter is what application the users employ. The people who convince the most people to use their protocol/implementation "win" (or they have the strongest fork or whatever). I don't see where centralization enters into the equation?
Funny, a successful decentralized monetary system has existed for quite some time, being the oldest monetary system in existence and probably the one that will still be relevant in 1000 years from now ... Gold ;-)
In my mind the only useful trait of Bitcoin has been its decentralized nature. Take that away and I'd rather deal with USD, EUR and my local banking system, thank you very much.
That old problem has of course been addressed, e.g. by using things like gold certificates: https://en.wikipedia.org/wiki/Gold_certificate Which add their own set of problems, but at least you get a clear signal when they get repudiated.
Many crashes in the 1800s were about Banks issuing too many certificates for the amount of Gold that was actually stored in their vaults.
Gold Certificates are no different than credit cards or fractional reserve banking. The bank makes a promise without proving anything, and people are expected to trust the banks for things to work out.
And when the poop hits the fan, people look into the vaults and realize they've been fooled. Maybe the gold really was there, but has been loaned out to another bank (and the banks have gold certificates to another bank). And maybe _THAT_ other bank has been lying this whole time. Its your standard economic issues, too big to fail and all that.
I don't see how a gold standard would change any of this. Should the banks have issues, they will legally prevent bank runs by making it impossible to withdraw money.
Whether or not a bank is tied to the gold standard, this will occur.
> When, not if. I think this may be better than how fiat money "works", but obviously opinions vary.
No sarcastic "quotes" needed. We both know that both Gold Standard and Fiat Money works. The question is if anyone has actually studied the 1800s economy and honestly can tell me that it was better than the 1970s+ economy.
Bank runs a plenty, private persons losing their entire savings as banks folded. Etc. etc...
Bank runs a plenty, private persons losing their entire savings as banks folded.
The fixes for those have only a limited bearing on a gold standard, which, BTW, I have no interest in debating, don't know much about them.
It was institutions like the FDIC with its limited backstop of bank accounts, and during the recent crisis a backstop for non-interest bearing business transaction accounts (e.g. those used for payroll, accounts payable, etc.) that fixed those problems well enough. As far as I can see a gold standard would only be an issue if it would prevent the government from doing that, which is certainly possible, but would not be a direct or inevitable thing.
The capacity cliff: https://medium.com/@octskyward/the-capacity-cliff-586d1bf771...
Crash landing: https://medium.com/@octskyward/crash-landing-f5cc19908e32
On consensus and forks: https://medium.com/@octskyward/on-consensus-and-forks-c6a050...
They were quite useful for someone not familiar with the topic.