Monday, January 18, 2016

A Bitcoin postmortem

Two weeks into 2016, the Norwegian stock market is down 12% and the oil price has fallen below $30 a barrel. As Chris Martenson puts it, the deflation monster has arrived. And the one thing that could offer us some hope in the face of deflationary collapse, Bitcoin XT, has failed to gain enough support to impose bigger blocks on the blockchain. The Bitcoin network is already close to maxed out at the current blocksize, so it is not going to get much better than this. Now the best we can hope for is 2MB blocks if Bitcoin Classic is able to gain consensus, but that is far too little to offer any realistic alternative to the fiat banking system. This means Bitcoin is fated to die on the vine, and industrial civilization will sink with the financial system which is now at the end of its rope.

So, what went wrong? The one-megabyte blocksize limit was just a stopgap measure instituted by Satoshi to prevent spam transactions in Bitcoin's early days. It should have been removed or greatly increased by now, but that didn't happen because the limit is being exploited by people who either have a completely different vision of the purpose of Bitcoin than the peer-to-peer payment network it is meant to be or want to cripple the network for their own conflicting interests (Blockstream), all of whom are oblivious to the coming collapse. The Lighting Network under development by Blockstream is unappealing in many ways and would still fail to scale Bitcoin sufficiently without bigger blocks. Another partial solution is a possible soft fork known as segregated witness, but that only gives us an effective blocksize of 1.7 MB. Mike Hearn has written the most detailed and accurate account of what went wrong, concluding that the Bitcoin experiment has failed, and sadly I have to agree.

The Bitcoin exchange rate may go up in the short term and especially in the early stages of stock market collapse, but don't be fooled. Bitcoin will crash when it runs into major disruption thanks to the crippling blocksize limit, and if that doesn't kill it, the fallout from the ensuing forking attempts and escalated blocksize wars certainly will. There will be no useful alternative left standing as we enter the next global financial crisis, which may well put and end to our entire civilization. The more I learn about blocksize, the clearer it becomes that the blocksize war is a clash of two fundamentally irreconcilable ideologies. Either path will lead to the death of Bitcoin in the eyes of the opposing side. Each side has different definitions of centralization and success, so no amount of technical argument can resolve the controversy. The small-blockers are the new Luddites, and this time they are winning.

We had our one and only chance to bootstrap a decentralized digital currency for the world, an undisputed measure of value that everyone can use even when the banks shut down, and we failed. Now civilization will collapse due to low commodity prices and there will be no way to save it. Now there is no hope of any alternative payment system reaching sufficient adoption to keep the machine that is industrial civilization running after deflationary collapse has run its course.

Collapse is the sort of thing that sneaks up on us slowly and then suddenly. It looks like the slow part is almost over now.

10 comments:

FiddleBooger said...

time to buy lots of guns....

...and porn....

saladin89 said...

wohoooo let the APOCALYPSE begin, every man in his heart wants the world to end.

Eivind Berge said...

No one in his right mind would wish for collapse, which will be horrible for all of us. We should try to do something constructive about it. Bitcoin would be one approach to have greater resilience in the financial system, if it could scale.

√ėyvind Holmstad said...

Yes, Bitcoin could have become an important backup system! Not to have a backup system to the banking system, our civilization's lifeblood, is rather risky. It can be compared with running an airplane with just one engine, if this engine fails the plain crashes. Bitcoin could have become that second engine, giving us a more secure landing instead of crashing straight down.

Bitcoin could have given us the time span needed to implement Terje Bongard's "pocket democracy" when the banking system crashes. I'm sure governments would have been looking for alternatives when the banks are gone, and blessed bitcoin to keep industrial civilization ailing on.

Gail Tverberg's last essay "Why oil under $30 per barrel is a major problem" is so clear and easily understood that almost an infant could understand our predicament. Not to understand or accepting the predicament we are into needs a huge amount of cognitive dissonance, after Tverberg describing it the simplest way possible.

Berge has done a great effort in promoting Bitcoin and thus saving us all, at least for a while. If Bongard was given grants for MEDOSS in 2014 and Bitcoin XT had become a major success, I would have had much more peace of mind now, thinking my daughters might had a future.

Meanwhile TPTB are working hard to take our civilization down, like with reducing wages for non-elite workers.

Anonymous said...

Threats against Norwegian police officers.

The comedian posted a picture of some officers entering his flat, and promised a reward to those who could identify them. After that, the Norwegian comedian was arrested and put in solitary confinement awaiting further interrogation.

http://www.vg.no/nyheter/innenriks/krim/valen-maa-tilbringe-natten-paa-glattcelle/a/23610977/

Eivind Berge said...

Interpreting a request for identification as a threat is ridiculous and will probably not hold up in court, but that doesn't stop the cops from messing with him. Solitary confinement is standard operating procedure by the Norwegian police against anyone they want to scare for any reason. I hope Kristian Valen learns to hate cops and becomes an MRA. There is absolutely no threat of violence in the context of that Facebook post as far as I can see -- merely an expression of exasperation -- so the reaction from the police is shockingly over the top and well suited to turn that naive and innocent-sounding exasperation into hatred. Actually, his filming the cops indicates a glimmer of political awareness already, so that is encouraging, but he also seems a bit dysfunctional for causing that scene in the first place.

Anonymous said...

Sorry that this is a little off-topic but please bear with me. Here's an interesting development that just happened. I've heard about the feminist movement putting up posters on college campuses that infer that all men are rapists. Just the latest example of how feminism is nothing less than a hate movement. So I go on the website of the Southern Poverty Law Center which tracks hate groups and lo and behold I don't see any mention of feminism being a hate movement. Shocking, right? So I call up the S.P.L.C. to ask politely why feminism isn't listed among their numerous hate groups they track. For two days I've been getting the runaround from these idiots, getting patched through to this one's phone or that one's phone and amazingly nobody seems to be at their desks. It's like they all take lunch all day long and are never at their desks.

Finally after numerous phone calls trying to reach someone there I reach someone's voice mail that gives me the number for their communications director, one Kirsten Bokenkamp. Amazingly she picks up when I call her number. This is how the conversation went:

Me: "Hi, you're with the Southern Poverty Law Center, correct?"

Kirsten: "Yes, may I help you?"

Me: "Well I was wondering why a particular group that is clearly a hate movement is not listed on your website as a hate movement. Listen, anyone taking an objective, unbiased look at the feminist movement in this country has to conclude that it's a hate movement. They are now putting up posters on college campuses across the country inferring that all men are rapists. As a man I find that highly offensive as well as being wildly inaccurate."

Kirsten: [the clicking sound of the phone hanging up]

So I call back immediately and get her voice mail saying "Hi this is Kirsten Bokenkamp, I'm away from my desk right now..."

Several more calls in the next few minutes get the same lack of response. So I leave several messages saying how unprofessional and immature it is to hang up on someone when they are being polite and are simply giving you information that hurts your little feelings and conflicts with your agenda. And how cowardly it is. Still no response.

So you can rest assured that the Southern Poverty Law Center, whatever it started out as, is nowadays nothing but a very biased, immature shitstain of an organization that is nothing more than a stick with which to beat groups that they politically disagree with. Worse than worthless.

And their communications director Kirsten Bokenkamp is the most cowardly piece of shit imaginable.

Eivind Berge said...

That's ridiculous, but about what I would expect. Feminism is a protected ideology that can do no wrong in our culture. None of the established institutions will oppose them no matter what they do.

Blogger said...

Hello Everyone,

Below are the most recommended bitcoin exchange services (BTC for CASH):
Coinbase: $1 minimum trade
CoinMama

Earn free BITCOINS with the best Bitcoin faucet rotator:
BEST Faucet Rotator

Blogger said...

Did you know that you can create short links with AdFocus and get dollars from every visitor to your shortened links.