> I am presently incapable of seeing how any token other than Bitcoin will be the one that wins.<p>In some sense, Bitcoin has already "won" in that it currently has a non-zero value. Anyone who says "Bitcoin can't possibly exist or hold value" already is known to be wrong, simply by Bitcoin's existence.<p>In the same way, I don't understand people like OP who say "No other cryptocurrency but Bitcoin can have value" because many of them already have a value and have "won" by some measures- Why do people keep trying to argue that dogecoin/litecoin/etc/etc don't have value, when people trade them for other currencies every day on open markets?<p>Near as I can tell, there will be (and already are) multiple "winners" in the cryptocurrency competition, filling different niches, just like there are multiple species on planet earth filling different niches.
The common adage seems to be "storage is cheap", meaning "multi-TB blockchains won't be a problem because you can buy that much storage for a few hundred dollars".<p>But I think the stupidly-large size of the blockchain is a major hurdle, given the concurrent trend of miniaturization. Embedded devices like one might find in the much-vaunted "internet of things" (eyeball roll) can't really afford to be toting six SSDs just for storing 3 or 4 different blockchains, or even one big one.<p>There comes a point when it's just no longer practical to store the entire blockchain, but truncating the chain (or only storing some kind of "working set") isn't feasible either.<p>Not to mention the gargantuan download that's required for that initial setup to get up to date with the latest network transactions.<p>I think it's a great idea in theory but ultimately pretty annoying in practice.
I kinda get the author's point here - to run a proof of work based system you need an incentive to actually do the work. Bitcoin has such incentives, and so it will succeed for any tool that people try to run on it.
If you try to create a new system, you have to convince people to do the work in the first place.<p>So it makes much more sense to use bitcoin as your distributed consensus system, for whatever application you choose to place on top of it.<p>I'm not sure I agree with the premise, though - which is that people actually think that - I reckon that Sam Altman's comments might just be a way of saying 'Bitcoin is in the news a lot, I think it's a waste of my time, but I don't want to write it off just yet.' It's good, it makes him sound profound, everyone's kinda happy.<p>The question is: What non-currency applications would actually benefit hugely from being decentralised in such a way?
TL/DR: the Blockchain only wins if Bitcoin wins, because miners need an incentive to mine.<p>"...the Bitcoin Blockchain cannot win without Bitcoin as a currency winning too, but if the Bitcoin price languishes, the incentive mechanism backstopping the Blockchain will be weak and therefore unreliable, ..."
This argument hinges on the assumption that miners need the incentive of new coins mined from the blockchain for them to continue mining. However, there are several other incentives that people can have. There are several actors inside and outside the US who like to have a currency without government control for various ideological reasons and do not need an economic incentive to continue validating the blockchain.
> <i>"The moment one becomes centralized, whether due to a flaw in the protocol or the concentration of mining power, it is no better (and probably worse in fact) than fiat money, e-gold, or any other monetary scheme which is vulnerable to capture by a minority, and therefore vulnerable to abusive seigniorage and capital controls."</i><p>Hasn't this already happened? I believe I heard something about a '51%' attack some time ago, which (I think) would mean that attacker could re-write history (I'd appreciate any corrections or clarifications).<p>Edit: Here's one story <a href="http://arstechnica.com/security/2014/06/bitcoin-security-guarantee-shattered-by-anonymous-miner-with-51-network-power/" rel="nofollow">http://arstechnica.com/security/2014/06/bitcoin-security-gua...</a> (not quite about rewriting history but double-spending becomes possible).
In order for bitcoin to "win" it needs to get massively more valuable. Valuable enough to move the equivalent of trillions of dollars per year and users need to be able to make million dollar purchases without drastically changing it's price. Otherwise it will never be truly useful as a currency and as interest is lost and prices go down parties concerned with verifying the blockchain will become sparse and the whole system collapses, magical blockchain and all.<p>Bitcoin has far from "won" in the sense of a currency and if another crypto-currency surpasses it's current popularity the faith in any crypto-currency being stable enough to move trillions of dollars each year is irreparably harmed.<p>People raising a few thousand dollars here and there in other crypto currencies is fun but it's not only paltry and not generally useful but can easily be attributed to entertainment more than economics. Once the novelty wears off, where will crypto currency stand. That's the most important question we need to ask ourselves. All these alt-coins aren't evidence of a thriving eco-system, they're evidence of the very reason why a cryptography based currency is inherently valueless.<p>The blockchain cannot last without bitcoin becoming massively more valuable. Many people already see bitcoin as being too valuable and alternatives too easy to create. What needs to be done to scale crypto-currency to the level of an actual currency? Government backing?
While in theory Bitcoin can be adapted to "2.0 features" and beyond, in practice it's impossible.<p>Bitcoin code, protocol and marshaling formats are a mess. Bitcoin blockchain and transaction data structures make too many hardcoded assumptions about underlying application - payments with a single token.<p>Bitcoin scripting language was designed for transaction validation only, which makes implementing a smart contracts with it a hack and requires external Oracles.<p>TL;DR: Bitcoin is a good PoC which gained a network effect.
I don't necessarily agree with the conclusion at the end. Supposing that sidechains can be mined simultaneously with the bitcoin at no additional cost, and that there is a fixed bitcoin <-> sidecoin conversion (<i>not</i> market based) built in to the protocol, bitcoin would never completely lose its value, because it could be converted to sidecoin at the same rate it would be before. The market price would be fixed to some small price differential below the price of the amount of sidecoin it could be converted to.<p>The thing about bitcoin is there are a lot of things done "wrong" with it, that are impossible to retrofit into it. However, the network effect means that it's also impossible to switch to another altcoin without completely devaluing bitcoin, which would mean that the altcoin would be devalued because it could happen to the altcoin as well. I agree with that part. However, something that's pinned to the value of bitcoin like what I've read of the sidechain proposal would be a way to do that.
Interesting post in that this is the first time I've seen someone from the bitcoin speculator group challenge the thesis of those in the VC/startup group.<p>Both groups are clearly 'talking their book', but this reads like little more than cheerleading/threatening aimed at himself and fellow speculators. For example:<p><pre><code> If Cryptocurrency 2.0 ever replaces Bitcoin and all Bitcoins
become worthless, confidence in the category of
cryptocurrencies in general will be, I believe,
irreparably damaged. If Cryptocurrency 2.0 just replaced
Bitcoin, there's nothing stopping Cryptocurrency 3.0 from
replacing Cryptocurrency 2.0 and sending the value of its
tokens to zero. Ad infinitum.</code></pre>
I'm pretty sure what people mean by "Blockchain not Bitcoin" is "Bitcoin 2.0" and not "Bitcoin 1.0" i.e. people think that the killer apps will be complex programs running on the blockchain that enable things like smart contracts etc much like search & social apps were more of killer apps than email which is the analog of bitcoin the currency. The point this article goes into detail to explain is likely not lost on people as smart as Sam Altman or Fred Wilson who say this.
One of the central assumptions in the argument is that the miners need an economic incentive, a (spendable) reward for mining.<p>How then to explain why people contribute to Wikipedia? Or volunteer at the local seniors centre? Or donate compute time to SETI@home (and other BOINC projects)? Or add map data to OpenStreetMap? Or test open source software? Yes, some of those people get paid, but many do not.<p>The incentive need not be economic.
I think its the decentralized nature that is the big win. However for bitcoin to really "win" is when people would actually prefer payments in bitcoin than any other medium. Which is not the case so far, except for illegal market places.