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Is anyone here actually BTC positive? (lemmy.ca)
submitted 1 year ago by to c/bitcoin@lemmy.ml
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I have been using crypto since 2017, made plenty of dumb trades which caused me to lose out a lot. Currently my portfolio is about 80% BTC and while the new USA admin seems they may do more damage than good to the crypto space I'm still positive about Bitcoin.

This sub seems like a meme or anti-btc sub mostly. Anybody here who isn't that way?

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[–] -1 points 1 year ago (12 children)

Ethereum's long-term security model is Proof of Stake.

At best, it's economic rent with holders getting free money from workers. At worst, it's a game of musical chairs that only people who don't use the money can win. Profits from securing the network ought to automatically adjust towards zero.

PoS is why Ethereum bailed out everyone with money in the DAO. PoW is why Bitcoin didn't bail out anyone with money in MtGox. The cost of auditing smart contracts ought to be internalized to the people using them, not an external cost for all users.

Upgrading Bitcoin is a great idea. Ethereum's flexibility has been proven useful by the huge variety of projects that run on it. So we should support BIP 300 and get some of that. But I would not consider Ethereum's security model to be an upgrade.

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  • [–] 1 point 1 year ago (9 children)

    The DAO happened six years before Ethereum switched to Proof of Stake. Forking was probably the wrong call but the users voted with their feet and Ethereum Classic is still there if anybody wants to use it. Payments do decrease as a larger percentage of all Ethereum is dedicated to staking. Proof of Stake is not economic rent, the stakers only receive payment while they continue to perform their duties faithfully, if they fail or cheat they are instead penalized and lose their status.

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  • [–] 1 point 1 year ago (8 children)

    The DAO happened six years before Ethereum switched to Proof of Stake.

    I know, I was an ETH user myself until then. The reason they did the bailout was because they were afraid the hacker would risk PoS.

    Proof of Stake is not economic rent

    Do you agree that stakers are making a profit - a higher return than the cost of bringing the factor into production?

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  • [–] 1 point 1 year ago (7 children)

    They clearly do expect to make a profit, otherwise they wouldn't stake. But rent is only one part of profit and in this case, where the activity does require some amount of effort, skill, and risk, and is subject to competition both from other stakers and from other chains, categorizing it as rent is an error.

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  • [–] 1 point 1 year ago (6 children)

    Economic rent is when the owner of a factor of production is paid more than the costs of bringing it into production. It doesn't imply literally zero skill/effort/risk.

    I'm suggesting that it's better to set those profits on fire than it is to give them away below cost, just for owning something.

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  • [–] 1 point 1 year ago (5 children)

    That's a greatly oversimplified definition that would capture essentially all productive activity. If I paint someone's house and charge them more than the cost of paint, am I earning economic rent? As the owner of my tools and my own labor, the answer according to that definition would be yes.

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  • [–] 1 point 1 year ago (4 children)

    In your hypothetical, you're paying the cost of bringing the painted house into production with your labor, not getting paid just for owning something.

    A closer comparison would be landlords who claim "being a landlord is a job" because they pay themselves to paint the house (or other property management).

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  • [–] 1 point 1 year ago (3 children)

    Being a landlord can be a kind of hybrid, it depends. If you just own land and collect rent while doing nothing to provide value to anybody then yes, all you're going is gatekeeping access to something that you didn't make which is basically the textbook definition of economic rent and it's parasitic. Using your labor and capital to build or maintain an improvement (like a house) and then leasing that out isn't economic rent, it actually is a real job just like any other, but only for the portion of the income that is due to the improvement; the lion's share of the income is almost always due to land ownership so it's still parasitism but with a garnish of legitimate work.

    I don't think reading only the first sentence of the Wikipedia/Mirian-Webster definition in isolation is very helpful, you really have to dig deeper if you want to have a good sense of what economists are really trying to communicate with the concept of economic rent.

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  • [–] 1 point 1 year ago (2 children)

    With all due respect, I have read quite a bit and was trying to inform you. We seem to agree on how landlords are parasitic, but not on how being a staker is essentially the same thing.

    Yes, it takes some know-how, and they have to set it up, but at the end of the day, that cost is significantly less than the income the rent seeker receives. There is no mechanism to reduce their profits, especially not approaching zero.

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  • [–] 1 point 1 year ago (1 child)

    I can appreciate that your intentions here are good but I remain convinced that you've got the economic aspect of this quite wrong. If the rewards of staking were zero the network would be at risk because nobody would be willing to do the necessary work of securing it. This is in stark contrast to land, which would be just as capable of productive use even without a rich person to own it. Validator slots are freely available to anybody who is prepared to do the required work and dedicate the required capital, and they are subject to unrestricted competition from other stakers and other networks, their profits do not come from any privilege given by law or unnatural strategic advantage. The full cost of staking is surprisingly difficult to determine, it's potentially much more than just the cost of hardware and electricity given the risk involved, not just from slashing but also from holding a volatile asset, in addition to the sacrificed opportunity cost of the staked capital. The rewards of staking would fall to less than half of what they are today if the percentage of Ethereum staked were to get anywhere close to 100%, and if the price of Ethereum were to fall in the future they could well already be effectively less than zero.

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  • [–] 1 point 1 year ago (1 child)

    At best, it’s economic rent with holders getting free money from workers.

    The workers are the ones securing the network. Anybody can participate, providing they have as little as 0.01 ETH to put up as collateral.

    At worst, it’s a game of musical chairs that only people who don’t use the money can win. Profits from securing the network ought to automatically adjust towards zero.

    Ethereum base fees are in fact sent to a burn address and removed from circulation. Validators get priority tips only.

    PoS is why Ethereum bailed out everyone with money in the DAO.

    PoS is unrelated to the DAO hack. PoS is a consensus mechanism change from PoW. Instead of solving increasingly more difficult and energy-intensive puzzles to determine who gets to process the next block, in Ethereum it's randomly chosen amongst the validators.

    • Firstly, the DAO fork was not a rollback or bailout. It was a unique situation where the hackers had to wait 28 days for withdrawals, so a smart contract change was executed.

    • There was strong consensus across developers, users, miners and community alike - it was hardly a centralized decision.

    • Those who disagreed simply moved to Ethereum Classic. It's a win-win situation for all.

    • Ethereum was still a very, very new project then. You know which other project did a rollback when it was less than 2 years old? Value overflow incident - Bitcoin Wiki

    • EIP-999 being rejected is the final deathblow to this hypothesis. There was a chance to rollback 500,000 ETH to an entity managed by one of its co-founders, and the community overwhelmingly rejected it. Rollbacks do not happen on Ethereum.

    Upgrading Bitcoin is a great idea

    An idea that virtually NOBODY in the bitcoin community agrees with. The entire value prop of Bitcoin is that it's ossified and simple.

    But I would not consider Ethereum’s security model to be an upgrade

    Ethereum's model is sustainable 10, 20, 50 years from now. In order for Bitcoin's security to be sustainable, the price of BTC must rise. Each Bitcoin halving reduces the block reward for miners ... so unless the price just goes up forever as Bitcoin literally burns the planet, the result is a decrease in the overall hashrate of the network, allowing for an easier attack.

    This is demonstrably true: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4727999

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  • [–] 1 point 1 year ago* (last edited 1 year ago)

    At best, it’s economic rent with holders getting free money from workers.

    The workers are the ones securing the network. Anybody can participate, providing they have as little as 0.01 ETH to put up as collateral.

    The workers - people with jobs - are not securing the Ethereum network. The rich can more easily afford the opportunity cost and transaction costs of staking, and thus get a higher percentage return than the poor with mostly cash reserves. It recreates the feedback cycle we're seeing with the dollar.

    https://en.wikipedia.org/wiki/Economic_rent

    At worst, it’s a game of musical chairs that only people who don’t use the money can win. Profits from securing the network ought to automatically adjust towards zero.

    Ethereum base fees are in fact sent to a burn address and removed from circulation. Validators get priority tips only.

    I'm talking about net profits, not base fees. You would need something like difficulty adjustment.

    PoS is why Ethereum bailed out everyone with money in the DAO.

    PoS is unrelated to the DAO hack.

    No, it was related. I was an ETH user myself until then. The reason they did the bailout was because they were afraid the hacker would risk PoS.

    And there wasn't a strong consensus. They explicitly said "the code is the contract" and pointed towards the code itself when asked about design intent before the hack. Those of us who disagreed with the bailout just left.

    You know which other project did a rollback when it was less than 2 years old? Value overflow incident - Bitcoin Wiki

    This was a bug in Bitcoin, not a bug in a user-created smart contact. Ethereum was working perfectly at the time of the hack.

    There was a chance to rollback 500,000 ETH to an entity managed by one of its co-founders, and the community overwhelmingly rejected it. Rollbacks do not happen on Ethereum.

    Not doing it every time proves that these co-founders were not as influential as Vitalik Buterin (who had invested in the DAO). The DAO hacker's money was rolled back with a hard fork.

    The entire value prop of Bitcoin is that it's ossified and simple.

    That would make altcoins worthwhile, wouldn't it! The value proposition of Bitcoin has not changed since it was the most complicated cryptocurrency.

    Each Bitcoin halving reduces the block reward for miners ... so unless the price just goes up forever as Bitcoin literally burns the planet, the result is a decrease in the overall hashrate of the network, allowing for an easier attack.

    This is addressed in the Bitcoin whitepaper. A block's transaction fees alone are already worth more than the total block reward used to be.

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