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Implications of Bitcoin


(Ken Carroll) #2

What about introducing a concept called ‘Bumponomics’ - whereby people are rewarded based on their contributions to solving high value problems. This isn’t too far from what we have today - although I would argue that capitalism is a skewed variation of this. I think entrepreneurs were traditionally high value problem solvers - but in the current model entrepreneurs appear to be more like predators who are rewarded for exploiting/manipulation situations for their own short term gains. So maybe the answer is to somehow move towards a rewards system based on the problems solved. True entrepreneurs who solve high value problems probably have good reputations - so maybe this already in sync with a reputation based economy already.

Then we would have organisations built around problem solving. Ideally the organisations would only exist until the problem was solved then dissolve to reform around new problems. Again - maybe isn’t too far from what we have now, but in the current situation organisations are encouraged to persist and transform to new situations, and I believe this is a problem itself.

I’m still diving into blockchain based systems - but agree that the implications haven’t yet been appreciated by many, me included.

(Michael Hrenka) #3

It’s very far from what we have today in our current economic system. People are paid depending on their position in a payment hierarchy, which doesn’t need to have much to do with how good these people are at solving problems. Or they are paid depending on how good they are at crushing their competition with unfair methods. The idea to reward people based on their contributions to solving high value problems is rather revolutionary. It’s totally out of the line of contemporary thinking, although it should be common rational sense!

Yes, definitely. A reputation based system allows for a more accurate allocation of merit, though it’s still not a perfect system. This reputation based system is the better, the better we are able to use swarm intelligence.

This is very far away from what we have now. There is institutional inertia everywhere. Why? Because people want to keep their jobs after they have solved a problem, instead of being made obsolete for solving a really meaningful problem. Instead, people should look forward to making their own work obsolete by finally solving a problem, or automating their work. People should look forward to being liberated from their former work! There are not only no incentives for that in our current economic system, but instead people get severely punished, because they effectively lose their entire income when they are fired. This is a really big problem, which slows down the rate of true innovation, automation, and problem solving immensely. There are a few things which could help solve that huge problem:

  • Implementation of a universal basic income, so people won’t have the need to actually work to have their basic living expenses covered.
  • Introduction of a “liberation bonus” for people who make their own jobs obsolete (could be a bonus on the universal basic income, or a simple one time payment, for example)
  • Reputation incomes that help people to live on their previous contributions for society, at least for a while.

I think the core is really that you can have secure distributed databases without having them secured by a central controlling entity. This is truly revolutionary, and it certainly will take years and decades until this insight finally sinks in for a large fraction of the population! Those who understand the true implications of this change first, will be the ones who will be effective at shaping the world of tomorrow. The others will eventually fail when still applying their outdated ways of thinking.


If an employer actually fires a person who eliminated their own job, words cease to suffice to describe how stupid that employer is. An intelligent employer would recognize that this person is orders of magnitude more valuable than someone who just keeps doing the job without automating it away. In other words, an intelligent employer would immediately set this person working on eliminating more work. Perhaps even motivate him with a meaningful stake in the company.

(Michael Hrenka) #5

I see a few potential problems with this line of reasoning, even though it sounds quite reasonable in general:

  1. You seem to assume that the ability to automate one kind of job translates into a general ability to automate other kinds of jobs. This doesn’t necessarily need to be the case, even though the assumption sounds plausible. If the job required a lot of specialist training to learn in the first place, then a more or less large part of the specialist training is now automated and can’t be used to justify a high paying position anymore. New specialist training would need to be acquired to automate another job. It might be argued that the investment into that training is more than worth it, but on the other hand, why not ask people who already have the required training to automate their own job? Some of them might be willing and able to do that. So, who would really employ specialists who automated their own jobs?
  2. The argument depends on the employer possessing a high level of intelligence. This certainly cannot be expected to be present in all cases. Employers are not necessarily the brightest cookies in their own companies. I might be opening a can of worms by claiming that. Of course I don’t claim that employers are necessarily stupid. My general intuition tells me that companies work best when the CEO and managers have an IQ that is slightly above the average of all employees. Too great differences in IQ cause issues with effective communication.
  3. The argument only works if the act of automation is attributed to the skills of the worker, and not the enabling technologies which allowed that automation in the first place. It can be argued that with sufficiently advanced technology nearly anyone has the ability to automate his or her job.

If you could automate your job, would you actually do it? Or perhaps the idea of automating all parts of a job is flawed in the first place. What gets automated are most probably the rather boring and repetitive parts of a job. So, the result of partial automation would be to make your job more interesting and creating, but also more challenging. I’m not sure that everyone would be happy about that. I would be rather mad, if everything that wasn’t automated about my current job would be to explain to people how to do stuff. I don’t want to be a full-time teacher / support hotline employee.

  1. There’s a lower bar of training that’s needed to be able to automate a job than there is to be able to actually do it. Also, the value of that automation is well worth having the person learn the job to automate it. There’s a certain set of skills that’s needed for this that’s not needed at all in manually performing the same job. It’s this set of skills that’s more valuable. They’re harder to learn. Besides that, if the employer kicks the employee out, who’s going to adapt the automated worker when it inevitably needs some tuning?
  2. Yes, not every employer is bright enough to realize the value of an employee who can automate jobs. Conversely, not every employee bright enough to automate their job is also bright enough to dump such an employer and find a better one. Well, I suspect it won’t be long before we start seeing automation replace company management.
  3. Of course, as the tools get better, this becomes a reality. New companies will push out the old if they can’t adapt. New companies are flexible enough that they can even alter their structure if it gives them a competitive advantage.

My job involves mostly thinking and then writing/testing and/or talking when I finish thinking. I can imagine ways to make these more effective by utilizing automation. However, my work wouldn’t change much. I’ve already automated everything of my job that I know how. I still have more things on my plate than I have time to do :wink:

(Michael Hrenka) #7

Why should that be the case? I think the further we move towards the jobs that are harder to automate, the higher the skill level required to automate that job becomes. It’s always possible to automate jobs poorly, with a loss of quality and flexibility, and the quality of the good or service provided will suffer because of that. I think the goal should be to automate jobs so that the resulting goods and services become actually better, while also becoming cheaper. Doing that successfully sounds like a tall order to me.

Anyway, we seemed to have strayed quite far from the original topic. We have discussed about Bitcoin and alternative modes of economics and got hung up on automation. I still think that a better economic system would accelerate automation dramatically, while buffering the social fallout for those who actually lose their jobs due to automation. But changing the economic system, especially in a way that is socially responsible, it quite a huge challenge. Anyway, without deeply understanding the implications of Bitcoin, I don’t think that any contemporary effort to revolutionize the economy can be successful. The economy of the future is going to be decentralized, whether we want it or not, and whether it’s legal or not.

Or have I missed something?


No, I don’t think so. The technology, at the very least, will be adopted for everything. That appears to be the viewpoint of even those who doubt Bitcoin as a currency. The nitpicking is mostly on whether someone will keep the ability to make more currency or not and whether or not anonymity can be allowed etc.

Yes, the current way of things, where you lose your income and the ability to live a decent life when your job becomes automated feels very shortsighted. It’s a version of the tragedy of the commons. It’d be to everyone’s benefit that social unrest or outright rebellion is avoided by making sure people are taken care of. However, everyone, individually, is better off letting others finance that.

Personally, though, I think Bitcoin is a reasonably long term transitory phase currency. Mostly because I suspect the internet allows for tools that actually make barter fluid enough that we can actually move back to that. In other words, currencies might lose a lot of their use case due to improvements in direct barter. There might already be prototypes out there.

I remember seeing one project that was based on the idea that there’s a shared database where users register services they’re offering on the system. Then as the system is used, they add requests for services from other people and indicate which of their own services they’re willing to offer in exchange. When the system finds a full circle of requests where everyone would get what they wanted, it’ll notify them and ask if they accept. If everyone accepts, the deal is done. Unfortunately, I no longer remember what it was called. I forgot to bookmark it.

This kind of system would benefit a lot from a reputation component too, but it’s not absolutely essential, as people could restrict who they’re willing to accept services from.


I think this is the most probably development unless a workable voluntary taxation model is found. That’d be ideal. I mean, all kinds of organizations already receive loads of donations. Perhaps that could actually work to fund at least some branches of government too.

(João Luz) #10

If this passes Bitcoin is over in Europe.

(Michael Hrenka) #11

I don’t really see the advantages of barter. Barter makes economic transactions more complicated. You need to evaluate at least two goods and services rather than simply comparing one good or service to a relatively fixed measure of value, which is usually a currency. If barter was such a good idea, you would expect to see places dedicated to barter all over the place.

I have written about a voluntary taxation model. I still need to publish that article on the IEET and on my blog.

I don’t find a petition by only 3 MPs scary. The current EU regulation rather points to broad acceptance of or indifference towards cryptocurrencies. And even if too restrictive legislation was created, the only effect of that would be to push Bitcoins underground. You can’t stop cryptocurrencies with laws.


Money has it’s own complexities and problems. One of the more important ones being it’s habit of concetrating into the hands of a few. Many people actually have a much more ready supply of services they could provide than money. This system would allow trading to happen even between individuals with little to no money. It currently doesn’t happen because it’s too difficult to find people who happen to want your services and are offering services you want. However, a system like I described can remove this limitation, which is the only real problem for barter.

Money solves the same problem in a way that doesn’t require much coordination. However, the resulting system is something that no-one really understands. I’m sure you’re aware of the instability that follows from that. The coordination required for barter used to be impossible. That’s not the case anymore with computers and the internet.


great OP thx for sharing these ideas

these articles discuss the rumors about chinese regulation attempts on bitcoins and its consequences. they are in german though.

here an english article about that topic

(Michael Hrenka) #14

I’ve just read a pretty pessimistic article about blockchain technologies that basically claims that the technology is useless for most practical purposes.

And then the most upvoted comment is that blockchain technologies do have a very particular practical use: Undermining the control of governments.

Well, this has both good and bad sides. And both cannot be avoided, since the cat is already out of the bag: Nobody will uninvent blockchain technology!


Well, this thread’s from 2015, last year, bitcoin and cryptocurrencies became a hype and now it’s over again, since a few months.

(Michael Hrenka) #16

Bitcoin has experiences many hype cycles since its inception. Once bitcoin becomes more prominent in the media, many people join in, and the bitcoin exchange rates rise. Then other people see the rising rates and want to join in. Eventually, many people want to cash in their gains through rising exchange rates and sell bitcoins. Then the prices eventually start falling again, possibly leading to a crash of the bitcoin value. This patters is typical for volatile markets, but bitcoin is quite interesting in that it has relatively consistently followed an exponential trajectory overall, when one smooths out the “hype peaks” and “doom troughs”.

(Kaily Boil) #17

Bitcoin is not a new cryptocurrency, but one that can turn your world around. Just read more about it:

(Steffen Rattay) #18

I think Bitcoin and blockchain should not be viewed as a way to undermine governments, but (especially blockchain) as a way to create transparency for everyone. Transparent (but privacy preserving) votes would be a start, and would help restore trust between government and citizens. But this is also a wake-up call for banks, because people have lost faith in the integrity of banks (especially after the last crisis), and using blockchain can restore trust, because blockchains are intrinsically trust-less and publicly verifiable. Blockchains should be used to create a better automated and interconnected industry, where all processes are clearly specified and verifiable and can adapt to each other without human error or tampering/manipulation. (I didn’t read all of the discussions, so I don’t know whether this has been said before)

(Michael Hrenka) #19

Transparency could also be achieved by universal reading access to centralized ledgers. Transparency isn’t a unique feature of blockchains.

In theory yes, but dealing with a blockchain means that you trust the algorithms it is based on. Very few people are able to verify that the algorithms of blockchain software are really trustworthy.

That’s definitely a possibility, but human error cannot be prevented completely by blockchain technology. Humans have to interface with digital technologies and that process is inherently error prone. Even if in the chain human 1 -> computer 1 -> computer 2 -> human 2 the part “computer 1 -> computer 2” was completely error free, the first and last arrows provide ample possibilities for error and manipulation. And that’s only the processes in which computers are involved at all (though the ratio of such processes in continually increasing).

(Steffen Rattay) #20

Centralised ledgers can be manipulated by their owners, so even though they might not contain contradictory data, they might be censored or something, which is not verifiable by simply looking at it.

Although only few people can verify that, algorithms can be proven to be secure or to have some other property (i.e., treat citizens fairly or something like that). This task is, as you pointed out, up to the experts. It also means, (almost) everyone can look at the algorithms and try to improve them.

Well, that is true, the system is only as secure as it prevents tampering from users. Preventing dishonest behaviour is one of the biggest challenges when designing a blockchain, which is why blockchains are usually reduced to only contain statements that are verifiable inside the system.
Malicious/Dishonest participants are usually forced to play honest either via (financial) incentives, or (in the best case), all tampering is recognisable, and therefore eliminated. Because it is so hard to design a system that is completely verifiable, blockchains are yet to be successfully connected to information coming from outside the system, but once a good solution is found, I hope my previous post’s vision will be realised.
Edit: The key problem is to create trustworthy “oracles”, as they are called, that state information about the outside world.

(Rahul Kumar) #21

The price volatility of Bitcoin and other cryptocurrencies is one of the biggest barriers to widespread adoption that cryptocurrencies face today. Unlike fiat currencies, today’s cryptocurrencies do not have a central bank that implements monetary policy to keep purchasing power stable, meaning that changes in demand can induce massive fluctuations in price. If users cannot be sure that the purchasing power of their accounts will remain stable, they will never adopt a cryptocurrency as a medium of exchange over a price-stable alternative.

For example, imagine paying someone a salary of 1 BTC per month—if the price of BTC dropped, they might go hungry!

So the major flaw that Bitcoin has is actually its USP i.e it’s Non-Fiat currency. Which means that the quantity of Bitcoins remain fixed in the system while the value skyrockets with increasing demand.

This will soon diminish due to advent of other more practical cryptocurrencies like Ethereum and Basecoin. But Bitcoin has to be credited for their invention.

On a broader picture, YES cryptocurrencies are here to stay due to advancements in BLOCKCHAIN and Cryptography. It’s the INTERNET analogous of NETSCAPE era and we are lucky to witness the change !!