[Cryptography] threat models, was Krugman blockchain currency skepticism

[William Allen Simpson]

On 8/5/18 11:59 AM, Patrick Chkoreff wrote:
> John Levine wrote on 08/05/2018 11:01 AM:
> 
>> If you're OK with a centralized system with tethered assets, why don't
>> you use Paypal?  Internal transactions are fast and free, value is
>> firmly tethered and exchangable into banks all over the world.  Before
>> arguing that they're not trustworthy, please compare the number of
>> people who trust Paypal to do their transactions (on the order of 200
>> million) with those who use any sort of cryptocurrency.  Why are they
>> all wrong?
> 
> I never said they were all wrong.  Paypal is a perfectly fine
> alternative as long as they don't cut you off.  Then you can use Bitcoin
> instead.  Recall that my original point was to answer Krugman's question
> "what problem does it [bitcoin] solve?"
> 
Krugman also wrote:
   "Don’t just try to shout down the skeptics with a mixture of
   technobabble and libertarian derp."

How does blockchain currency prevent anybody from being "cut off"?

Obviously, you can be cut off by governments.  Several nations
have already taken this step.


>> That worked OK in the 1700s but there's probably reasons we've moved
>> beyond it.  But again, what's your threat model?
> 
> The threat model is that a payment processor cuts off your service
> because somebody doesn't like you.
> 
But you can be cut off by payment processors of any kind.

The fewer who will take it, the less it's a valuable asset.  You can
accumulate all the blockchain bits you want, but it's rather worthless
after nobody will take it.


>>    If so, who runs it, and why do you trust them?
> 
> I will trust some issuers and payment platforms more than others.  Other
> people will make a different assessment.  That's what makes a market.
> 
A trust market?  How is that valued?

There's been a bunch of derp about "reputation" floated in this
thread.  Reputation doesn't exist as a market.

Heck, I'll go farther: reputation isn't a barrier of any kind.

Bad actors simply change their names.  Do you trust Academi nee Xi
nee Blackwater?

Worse, even with all the controls in the world, exchanges can go
bankrupt.  At which point they also change their names....

Reputation is entirely based upon non-repudiation (to inject a
little cryptology into the discussion), and liability (provably
having sufficient real assets to cover their outstanding balance).

Blockchain currency doesn't have either of those properties.


> I am less concerned about accepting an issue which I trust less if I can
> trade it for an issue which I trust more.  It may well be that the
> person on the other side of the trade has exactly the opposite position
> of trust with respect to the two issues -- or at least has a more
> pressing need for the one I have versus the one he has.
> 
And as soon as there is no possible exchange, your asset is valued as
nothing.


> [...] Real assets are so 18th Century anyway.
> 
Currently, there's a fellow named Manafort who is discovering how
pertinent mapping of real assets is to liability.

Note there was some other libertarian derp mentioned earlier:
"[...] taxing needs to be driven out of the market for good."

Manafort is also learning that just because you've concealed your
currency and tried to conceal your transactions, that doesn't mean
they are not subject to taxes.