<div dir="ltr"><div dir="ltr"><div class="gmail_default" style="font-size:small"><br></div></div><br><div class="gmail_quote"><div dir="ltr" class="gmail_attr">On Tue, Oct 3, 2023 at 8:19 PM Ray Dillinger <<a href="mailto:bear@sonic.net">bear@sonic.net</a>> wrote:<br></div><blockquote class="gmail_quote" style="margin:0px 0px 0px 0.8ex;border-left:1px solid rgb(204,204,204);padding-left:1ex"><u></u>
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<div>On 10/2/23 13:46, Phillip Hallam-Baker
wrote:<br>
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<div style="font-size:small">What we
were promised was decentralized finance. What was
delivered instead was a classic Ponzi fraud wrapped up in
psychobabble. Pseudo-currencies are to the world of
cryptography what astrology is to astronomy and esoteric
alchemy to chemistry.</div>
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<div style="font-size:small">There is
a rule in physics that if you claim to have invented a
perpetual motion machine, you are mistaken, something,
somewhere is adding energy into your system. The same
holds for proposals for better assassination markets: if a
system allows such, the system is going to be regulated
out of existence.</div>
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<p>I'm going to agree, but it's more nuanced than just being a Ponzi
scam. It was a mistake. We made buggy software, and Ponzi scams
are a symptom of the software bug.<br></p></div></blockquote><div><div class="gmail_default" style="font-size:small">The software was full of bugs, but that wasn't what kicked in the exponent.</div><div class="gmail_default" style="font-size:small"><br></div><div class="gmail_default" style="font-size:small">One part of the story is that the rise of $BTC was driven by the collapse of the Gold Age Ponzi scheme. Specifically, some of the crooks behind Gold Age used $BTC as their exit path. Ths crooks that did not get caught went on to run many of the best known pseudo-currency exchanges.</div><div class="gmail_default" style="font-size:small"><br></div></div><div class="gmail_default" style="font-size:small">Hal's original obsession was stopping inflation by fixing the amount of currency issued. But that makes no sense when there is no bound on the number of schemes being offered.</div><div class="gmail_default" style="font-size:small"><br></div><div class="gmail_default" style="font-size:small">And once people started to notice 'number go up', the Ponzi dynamic took hold of people rushing in hoping to sell their currency on to a greater fool</div><div class="gmail_default" style="font-size:small"><br></div><blockquote class="gmail_quote" style="margin:0px 0px 0px 0.8ex;border-left:1px solid rgb(204,204,204);padding-left:1ex"><div><p>
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<p>What we learned was that finance cannot be deregulated, because
it is finance. Money is power. Power is regulation. Nobody who
has money, wants to risk money or spend money if they do not have
regulation to ensure that their risks are honestly represented or
in case they do not get what they spent their money for.
Therefore, people who have money, or anything that can effectively
be used as money, demand regulation. Having money means that they
also have power, so they actually get regulation.</p></div></blockquote><div><div class="gmail_default" style="font-size:small">Empirically, the risk of having your money confiscated by government is many, many times lower than the risk of having it stolen from you if you put it in a pseudo-currency. The code has bugs, some of the hardware has deliberate backdoors, not your keys, not your crypto and its not your keys unless you personally audited the running code.</div></div><div> </div><blockquote class="gmail_quote" style="margin:0px 0px 0px 0.8ex;border-left:1px solid rgb(204,204,204);padding-left:1ex"><div>
<p>Cryptocurrency in its current "block chain" formulation aimed to
replace this regulation with simply making sure that the
transactions are a consistent record complying with impartial
computer code. It was a worthwhile experiment; regulation that is
more impartial is after all a resolution devoutly to be wished.
The problem is that real transactions require both the movement of
money, which the computer code is aware of, and the production of
value, which is not part of the universe that code can respond
to. And because a block chain can track only one side of the
transaction, the stage was set for big systematic failures on the
other side.</p></div></blockquote><div class="gmail_default" style="font-size:small">A while back, I met Chaum at a conference and we discussed the failure of anonymous cash. The key flaw in my view being that there was no 'slop' in the system. Slop being what allows gears to actually move. If you have to commit your entire scheme to cryptography in advance, there is no way to adapt to changing circumstances.</div><div class="gmail_default" style="font-size:small"><br></div><blockquote class="gmail_quote" style="margin:0px 0px 0px 0.8ex;border-left:1px solid rgb(204,204,204);padding-left:1ex"><div><p> <span class="gmail_default" style="font-size:small"></span>It was a worthwhile experiment. It was something of a success
because we did successfully fix the trusted-role bug that had been
the downfall of previous cryptocurrency protocols. So the state
of the art was advanced, and we discovered a new bug whose
existence we hadn't run into before. But it's still a serious
bug, and systems that still have this bug, ultimately won't work.
Solving both bugs simultaneously - how to have trust in a
world-aware regulatory system that somehow doesn't require a
central trusted role - will be, at best, tricky.</p></div></blockquote><div><div class="gmail_default" style="font-size:small">I don't think the trusted role bug was solved, it was merely deferred. The end game of the cryptocurrency world will be mining consortiums trying to stave off bankruptcy by unwinding the chain.</div></div><div class="gmail_default" style="font-size:small"><br></div><blockquote class="gmail_quote" style="margin:0px 0px 0px 0.8ex;border-left:1px solid rgb(204,204,204);padding-left:1ex"><div>
<p>We failed to recognize what the requirements for supporting
genuine wealth actually were, and made a mistake. The ponzi scams
are the user-facing problem that manifested, ultimately, as a
critical bug report. Thing is I don't think the CVE system
acknowledges bugs that are this subtle. <br>
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<p>If you want real cryptocurrency that tracks real wealth, we've
got to fix that bug. Money cannot exist independent of the
regulation of the society whose wealth it represents. People who
don't want regulation don't want to see it fixed. But script
kiddies don't want to see a patch on a bug that allows them to get
root on other people's servers, either.</p></div></blockquote><div><div class="gmail_default" style="font-size:small">What a lot of people found compelling was the notion they were making money out of nothing by just running their machine. But the very fact that 'wealth' was being created out of thin air should have been the warning sign. </div></div><div><div class="gmail_default" style="font-size:small"><br></div><br></div></div></div>