Thanks for posting. I'm happy I got to read your post at this hour, since I'm suffering a bit of insomnia in a different time zone than I'm used to. This may be a basic question, but can any currency ever really have an enforceable commitment? As you point out, core developers can make unforeseen changes in the future?
Secondly, why can't commitment and trustworthiness simply be tossed into the mix when currencies compete? Lack of commitment is a disadvantage, but why does it completely preclude free market competition?
can any currency ever really have an enforceable commitment?
Not sure. Bitcoin used clever design and cryptography to solve many things we didn't think possible before, so full commitment could be possible.
why can't commitment and trustworthiness simply be tossed into the mix when currencies compete?
I think that's one of the points of the paper. Can issuers simply compete on reputation?
One thing that economists like to talk about is "commitment technology". i.e. Is there some way for issuers to verifiably prove that they can commit to their promises. The paper's result is that without such a commitment technology, competition is not enough to keep the market efficient.
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How does a competing currency credibly demonstrate trustworthiness?
Reminds me of the used car or lemon problem
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Yes, that's the crux. Anyone can say they are trustworthy but how do you prove it?
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Hasn't Bitcoin already solved this problem then? I mean... 1) run a node 2) don't update it (generally speaking) 3) profit??? And by that I mean not change the monetary policy or inflation rate of the underlying asset (Bitcoin)?
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This is where we run into a Ship of Theseus type conundrum, which is the same as the hard fork problem.
If Bitcoin Core updates the monetary policy, but half the node-runners don't update, which network continues to be Bitcoin?
So you're right that the decentralization of Bitcoin (balance of powers between nodes and devs) kinda solves it, but it also kinda doesn't because of the possibility of hard forks.
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Anyone who wants to hard-fork and 'inflate' their Bitcoin by changing the monetary policy (for example by printing themselves a million Bitcoin) can go ahead right away and do so.
I won't be changing my node however. And there, in my opinion, is the solution. Plebs running nodes
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What if you're the only person who doesn't update your node, though? And everyone else does? I think that's the conundrum for Bitcoin with regard to fixed monetary policy.
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Updating a node... to increase the issuance rate devalues one's own holding, hard work, and savings. Nodes are the world's HOA of Bitcoin.
And HOAs if you have any experience with them are down-right militant. That's why it's important that people run nodes and Bitcoin generally speaking doesn't change (and it won't). Bitcoin needs time and education.
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