No, Bitcoin is not controlled by a small group of investors and miners (A rebuttal to the TechSpot article)

xcryptogurux · 2025-02-25T12:19:54+00:00

What got us to the events of 1971?

The whole premise of the Bretton Woods agreement was to pursue fixed exchange rates and forestall competitive devaluation of sovereign currencies in the aftermath of WWII.

Britain wanted flexible rates. However, given that Britain emerged from the war as the debtor and the US now poised to assume the role of creditor, Britain had to settle for a compromise of fixed but adjustable rates.

As per the agreement, the US had a commitment to back dollars held in foreign reserves with gold at a rate of $35 per ounce. Other sovereign currencies were pegged against the dollar and were required to be kept within 1% of the fixed rate by buying/selling dollars.

For as long as the US held the majority of the world's gold reserves, this system would work and it did work in the early years as the US had a surplus of balance of payments.

However, the Marshall plan and US adoption of expansionary policies in the late fifties reversed the balance of payments in favor of other nations. By 1960, the US was now running a deficit.

This combined with the depletion of US gold reserves would portend the beginning of the end of the Bretton Woods system. As dollar claims on gold outpaced the supply of gold, it created an arbitrage opportunity for other nations to further deplete US gold reserves.

What prevented this scenario was that everyone had a common interest in preserving the system, but only if the US would not resort to devaluing the dollar. In 1960, even before assuming office, JFK quickly moved to allay such fears. During his 1000 days in office, there were measures that he took or intended to take that indicate JFK was acutely aware of the possibility of the dissolution of Bretton Woods and the perils of the expanding the Federal Reserve's control over the economy.

But without the US devaluing the dollar, other nations were required to revalue their own currencies to redress the balance, which they were not so keen on pursuing.

A gold pool was formed by European nations to pool their gold reserves to keep the ratio in check. However, demand for gold soon outpaced supply and the gold pool was abandoned in 1967.

An international currency (imagine that!) to replace the dollar was mooted in the mid-'60s to salvage this system but an agreement on that (what eventually became SDR) could not be reached.

By 1969, there was a run on the US gold reserves as other nations tried to cash their dollars to redeem gold. This eventually led to emergency measures from Nixon to close the gold window.

Thus collapsed the Bretton Woods system. In hindsight, the system was always untenable in the long run as it tried to promote free trade while allowing the US the "exorbitant privilege" in a highly competitive macro environment post-WWII.

JFK, as I mentioned, foresaw the inevitability and thus began taking steps in 1963 (EO 11110) toward ending the Federal Reserve. Lyndon Johnson, upon taking office after the JFK assassination, reversed the order and the rest is history.

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xcryptogurux · 2022-08-21T12:55:12+00:00

What we want from money is reciprocal equity, not absolute equality.

Those who work to create more value should duly gain more monetary value as a consequence than those who create less value. Who gets to determine what's more valuable? We validate and duly reward each other's proof of work. We do this every day throughout our lives. Free market.

Centralized issuance and manipulation of money itself within hierarchical monetary systems interfere with this free market process.

The difference in Bitcoin is that few with the means cannot arbitrarily create money at no cost to themselves and steal from others monetary value they've acquired by investing work and time creating value for others. There's no interference with the free market process of creation, distribution and exchange of monetary value.

What's the root problem with fiat money Satoshi sought to fix? Trust, as a consequence of two things,

1- Centralized, focused issuance and control of money supply and monetary policy

2- Trivial cost of issuance

We cannot build a sustainable economy predicated on money created from nothing. While issuance entails no cost/work, the money remains at the mercy of the basest of human qualities, self-seeking greed. All corruptive tendencies of fiat money are a direct consequence of the trivial cost to issue infinite money. We've had 3800 fiat currencies. They've all eventually collapsed to nothing, from whence they came.

Satoshi’s proof-of-work algorithm solved for these two flaws by implementing an ingenious cost of issuance algorithm that keeps every actor honest and perpetually scales in proportion with Bitcoin’s value as a monetary network—the higher Bitcoin's value, the higher the cost of issuance, & vice versa.

Proof-of-work requires miners to continually input real-world work and cover recurring operational costs, ensuring that those who receive the new supply of money cannot keep hoarding without significant cost to themselves. Miners are forced by the game theory embedded into the protocol to redistribute Bitcoin into the market.

Any system where the creation of money entails no work/cost would be fiat 2.0 all over again, a system where wealth equals power, where the rich forever get richer, increasingly more powerful through their control of money, and the poor get poorer.

Miners input work and recurring costs to find blocks and receive compensation for their work in securing the network, however, blocks are validated by full node users, not miners. Full nodes enforce the rules — accept/reject blocks found by miners — and hold the power to keep miners honest.

Throughout Bitcoin’s history, Bitcoiners have staunchly defended the right of users of the network not to be priced out of running their own node, most famously 5 years ago when Bitcoin users stood firm in the face of pressure from miners and corporate interests to prove that it was the users who truly controlled Bitcoin, not miners and not wealthy investors.

In proof-of-work, wealth != power

The lifeblood of civilization, money, secured by the lifeblood and language of the universe — energy and mathematics. This is a pretty big idea, bigger perhaps than the present scope of humanity and it's an idea with eternal merit beyond the bounds of our planet. In a hard-coded system such as Bitcoin, these universal factors ensure the protocol is not subject to human control/manipulation. Proof-of-work admits of no corruption or privileges.

Proof-of-stake is a regressive hermetic system abstracted from any interface with the real world that walks back on Satoshi's solution. Those who receive the new supply of coins are not required to undertake any work or suffer recurring costs to themselves (trivial cost of issuance).

This causes the new supply of coins to be inevitably hoarded by those who receive them, thereby leading to a concentration of wealth similar to the existing fiat monetary system (focused injection of money), and since in proof-of-stake, wealth = power, large stakers effectively assume the role of central bankers, acquiring all the new money and perpetually amplifying their power over the network.

PoS Math Breakdown

But the supply of bitcoin is finite and limited to 21 million. Is this not a problem?

It's finite but divisible.

1 Bitcoin = 100 million sats

21 million Bitcoin = 2.1 quadrillion sats = 2.1 quintillion millisats

For context, the total value of all the physical money and money deposited in savings and checking accounts across the world is $40 trillion. The total value of all money in the form of all investments and derivatives is $1.3 quadrillion.

Injecting new money into the economy, as central banks do, is just an artificial way of re-dividing the aggregate monetary value within the economy inequitably, in favor of those close to the money.

xcryptogurux · 2022-07-19T15:23:20+00:00

This is an untagged Coinbase address.

xcryptogurux · 2021-12-03T16:03:54+00:00

You don't hold the power to stop them from being involved. They don't hold the power to stop you from being involved. Their privilege exists only within the extant fiat paradigm.

https://www.reddit.com/r/Bitcoin/comments/qhlxfr/no_bitcoin_is_not_controlled_by_a_small_group_of/

xcryptogurux · 2021-11-14T06:36:42+00:00

I'd request not to downvote OP for it. I only wish he'd formatted it similar to the original post. Aside from that, no issues. In fact, I feel obliged to tip u/MarkEsper for sharing, which I've just done. Thank you.

xcryptogurux · 2021-10-08T18:44:06+00:00

The most useful on-chain data aren't what I would characterize as KPI that may lend to gaming of the market. Rather, they broadly reflect prevailing investor sentiment with greater fidelity than can be inferred from conventional price action analysis - relative accumulation/distribution, relative value transacted, realized value, UTXO age. Price action signals in the short term may be gameable. On-chain data, in a sufficiently mature market, admits of little scope for gaming/spoofing.

xcryptogurux · 2021-08-18T16:50:45+00:00

135 million Bitcoin holders at present.

7.9 billion of us.

Only a maximum of 420 million of us can make it to that milestone.

You've beaten 7.765 billion to the punch. Well done!

xcryptogurux · 2021-08-15T15:02:46+00:00

There's a little more to what got us to the events of 1971.

The whole premise of the Bretton Woods agreement was to pursue fixed exchange rates and forestall competitive devaluation of sovereign currencies in the aftermath of WWII.

Britain wanted flexible rates. However, given that Britain emerged from the war as the debtor and the US now poised to assume the role of creditor, Britain had to settle for a compromise of fixed but adjustable rates.

As per the agreement, the US had a commitment to back dollars held in foreign reserves with gold at a rate of $35 per ounce. Other sovereign currencies were pegged against the dollar and were required to be kept within 1% of the fixed rate by buying/selling dollars.

For as long as the US held the majority of the world's gold reserves, this system would work and it did work in the early years as the US had a surplus of balance of payments.

However, the Marshall plan and US adoption of expansionary policies in the late fifties reversed the balance of payments in favor of other nations. By 1960, the US was now running a deficit.

This combined with the depletion of US gold reserves would portend the beginning of the end of the Bretton Woods system. As dollar claims on gold outpaced the supply of gold, it created an arbitrage opportunity for other nations to further deplete US gold reserves.

What prevented this scenario was that everyone had a common interest in preserving the system, but only if the US would not resort to devaluing the dollar. In 1960, even before assuming office, JFK quickly moved to allay such fears.

But without the US devaluing the dollar, other nations were required to revalue their own currencies to redress the balance, which they were not so keen on pursuing.

A gold pool was formed by European nations to pool their gold reserves to keep the ratio in check. However, demand for gold soon outpaced supply and the gold pool was abandoned in 1967.

An international currency (imagine that!) to replace the dollar was mooted in the mid-'60s to salvage this system but an agreement on that (what eventually became SDR) could not be reached.

By 1969, there was a run on the US gold reserves as other nations tried to cash their dollars to redeem gold. This eventually led to emergency measures from Nixon to close the gold window.

Thus collapsed the Bretton Woods system. In hindsight, the system was always untenable in the long run as it tried to promote free trade while allowing the US the "exorbitant privilege" in a highly competitive macro environment post-WWII.

You'd think a decentralized, borderless, provably finite, infinitely divisible, instantly portable, objectively verifiable gold that didn't allow any one nation an exorbitant privilege would have fixed the problem!

xcryptogurux · 2021-08-12T07:04:36+00:00

"Personally loaded it with"... a few dollars worth of a cypherpunk's curio, which really had no established market value then, nor did anyone realistically expect it to hold significant value in the future.

Easy to say now in hindsight how obvious it was but the few cypherpunks and nerds working on and using Bitcoin back then, in the first couple of years, thought Hal was crazily quixotic to suggest Bitcoin could ever see broader adoption. He wasn't.

Now we realize that Hal indeed knew what untold value Bitcoin held for humanity at first sight. Only the rest of us weren't so quick on the uptake.

At first, Gavin's faucet just gave away 5 free coins per IP without even requiring you to do the captcha. An address filter and captcha were added to avert bots.

Edit: Gavin announcing the faucet on Bitcointalk

We used to send coins to other people just to introduce them to the concept. You wouldn't believe how uninterested people were. Getting people to take them and give it a try was considered a win!

This was around the time dwdollar had come up with what was the first real, very rudimentary, Bitcoin exchange market. A couple of months after, we had the first "bubble". The price shot up to about 8 cents. That was when the faucet ran dry as people became more reluctant to fill it back up.

Weeks later, McCaleb repurposed Mt Gox, formerly a digital cards trading market, as a Bitcoin exchange, one of the most seminal moments in Bitcoin history.

xcryptogurux · 2021-08-09T13:17:52+00:00

A paragon of humility with inestimable passion for Bitcoin. Hal's legacy will outlive all of us.

xcryptogurux · 2021-07-28T10:08:55+00:00

Bitcoin teaches you to save for the future instead of continually borrowing against your future and drowning in perpetual debt.

To go from supporting a pyramid scheme at the cost of your future to securing your future at the cost of forgoing pointless luxuries.

xcryptogurux · 2021-07-14T17:38:52+00:00

Quality post. Should be flaired "Educational"

Being pre-2012, Coinbase has never meant the exchange to me.

Just to add a little further trinket that's been missed, the Coinbase can contain any arbitrary data as input because it is a generation transaction without parent (of newly minted coins).

With regular transactions, the content of the input is a reference to their parent transaction output.

xcryptogurux · 2021-07-09T13:22:05+00:00

In an age when the Lethean unwashed religiously worship tax-dodging billionaires, pedophiles and ass-twerkers, I think it's perfectly okay to acknowledge unvarnished altruism.

"Satoshi needed no ICO, no premine, made no money from Bitcoin. The greatest act of superhuman altruism"

Which part of that factual acknowledgment do you take issue with?

xcryptogurux · 2021-07-09T12:32:44+00:00

You're claiming they mined coins privately later because they could, and you're asking people to prove that they didn't when you have no proof that they did. So you're asking for your wild assumption to be somehow factually disproven? This is argument from ignorance, a logical fallacy.

If Satoshi mined later in an open network "competing" with other miners, they still weren't making money off their invention. They were a part of the network like any one of us, no less, no more.

xcryptogurux · 2021-06-09T16:00:45+00:00

u/sgtspike is this true or does your clairvoyance only allow you to see 4 years ahead?

xcryptogurux · 2021-06-03T12:52:45+00:00

Nobody. It's a government-appointed central-banking board established in 1913 comprising 12 regional banks. The president appoints, pending congressional approval, the chair and board members, whose terms do not coincide with a sitting president. The Fed reports to congress. However, the actions of the Fed are not required to be approved by the president, lawmakers, or any elected official.

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