The Decentralized Alternative to Central Banking
Highlights
Chapter 1: Money
In the primitive small economy, the structure of production of fish consisted of individuals going to the shore and catching fish with their bare hands, with the entire process taking a few hours from start to finish. As the economy grows, more sophisticated tools and capital goods are utilized, and the production of these tools stretches the duration of the production process significantly while also increasing its productivity. In the modern world, fish are caught with highly sophisticated boats that take years to build and are operated for decades. These boats are able to sail to seas that smaller boats cannot reach and thus produce fish that would otherwise not be available. The boats can brave inclement weather and continue production in very difficult conditions where less capital‐intensive boats would be docked uselessly. As capital accumulation has made the process longer, it has become more productive per unit of labor, and it can produce superior products that were never possible for the primitive economy with basic tools and no capital accumulation. None of this would be possible without money playing the roles of medium of exchange to allow specialization; store of value to create future‐orientation and incentivize individuals to direct resources to investment instead of consumption; and unit of account to allow economic calculation of profits and losses.
Individual Sovereignty
In The Sovereign Individual, James Davidson and William Rees‐Mogg argue that the modern nation‐state, with its restrictive laws, high taxes, and totalitarian impulses, has grown to a level of burdensome repression of its citizens’ freedom comparable to that of the Church in the European Middle Ages, and just as ripe for disruption. With its heavy burden of taxation, personal control, and rituals, the costs of supporting the Church became unbearable for Europeans, and newer more productive political and economic forms of organization emerged to replace it
Individual Sovereignty
industrial society and the modern nation‐state that have become repressive, sclerotic, and burdensome while new technology eats away at its power and raison d’être. “Microprocessors will subvert and destroy the nation‐state” is the provocative thesis of the book. New forms of organization will emerge from information technology, destroying the capacity of the state to force citizens to pay more for its services than they wish. The digital revolution will destroy the power of the modern state over its citizens, reduce the significance of the nation‐state as an organizing unit, and give individuals unprecedented power and sovereignty over their own lives.
How to Kill Bitcoin: A Beginners’ Guide
Bitcoin’s diminishing supply growth rate is likely to continue to make it an attractive speculative bet for many, which would in itself cause it to grow further and acquire a larger monetary role. In my assessment, a global monetary return to gold might be the most significant threat to Bitcoin
How to Kill Bitcoin: A Beginners’ Guide
Another possibility for derailing Bitcoin would be through the invention of a new form of sound money that is superior to Bitcoin.
Altcoins
Being the first such invention, Bitcoin demonstrating its value as digital cash and hard money was enough to secure growing demand for it,
Altcoins
virtually all altcoins have a team in charge; they began the project, marketed it, designed the marketing material, and plugged press releases into the press as if they were news items, while also having the advantage of mining a large number of coins early before anybody had heard of the coins. These teams are publicly known individuals, and no matter how hard they might try, they cannot demonstrate credibly that they have no control over the direction of the currency
Altcoins
as long as there is a party with sovereign power over a digital currency, then that currency cannot be understood as a form of digital cash, but rather, a form of intermediated payment—and a very inefficient one at that.
Blockchain Technology
miners need to expend enormous processing power to commit transactions to the joint ledger, whereas nodes need very little power to keep a copy of the ledger with which to verify the accuracy of miners’ transactions. This is why nodes can be run on personal computers, whereas individual miners have the processing power of hundreds of personal computers. Should the operation of the ledger itself become too complex, nodes will need to be large servers instead of personal computers, destroying the possibility of decentralization.
Blockchain Technology
the Bitcoin network was born from the blockchain design two months after Nakamoto presented the technology. To this day, it has been operating uninterrupted and growing to more than $150 billion worth of bitcoins. The blockchain was the solution to the electronic cash problem. Because it worked, it grew quickly while Nakamoto worked anonymously and only communicated curtly via email for about two years. It did not need investment, venture capital, conferences, or advertisement.
Blockchain Technology
The DAO was the first and so far only sophisticated application of a smart contract on a blockchain, and the experience suggests wider implementation is still a long way off, if it ever were to occur. All other applications currently only exist in prototype. Perhaps in a hypothetical future where code literacy is far more common and code more predictable and reliable, such contracts might become more commonplace