this post was submitted on 22 Sep 2023
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#1. Ethereum is not designed to have a fixed supply like Bitcoin is.
#2. Bitcoin, Ethereum, or any other similar cryptocurrency can always modify the rules of its own protocol. When you do this, a "fork" is created, but if you are the only one on the fork then for all practical purposes it does not exist and you can't do anything with it. This actually happens all the time in Bitcoin when two miners discover the "next block" at the same time and is resolved automatically when the next block after that is found and things settle. A random group of programmers can't just change the code and make the whole network accept it. In order to make a successful fork, you must have widespread consensus. The difference is that the participants in the protocol (miners, stakers, and nodes) are the ones making that decision, not some elected or unelected politicians. This means the change has to benefit a broad base of users. Both Bitcoin and Ethereum have had many non-contentious upgrades (forks) which altered network protocol. A lead developer for Bitcoin or Ethereum could make a new version of the software, but if it is not adopted by the majority of the network it doesn't matter and goes nowhere. There have also been some contentious forks such as Eth Classic, Bitcoin Cash, etc none of which resulted in new coins being minted on the "main chain". The majority of users stuck on the main chain, and anybody who held BTC for example during the Bitcoin Cash fork still has that BTC, even Bitcoin cash was unable to turn on the money printer. From Bitcoin's perspective, Bitcoin Cash or any other chain that isn't the main chain is not Bitcoin, it may as well be Dogecoin. It's another network running a different protocol minting different coins. You can't spend Bitcoin Cash or Dogecoin on the Bitcoin network. Anybody who tries to fork bitcoin or ethereum faces the same problem as anybody who tries to mint their own fiat money: unless they can convince other people to accept it, it's a useless endeavor. And people using the existing chain have every incentive to reject your fork.
#3. It was not "programmers" who did the fork which created Eth Classic. It was fairly broad consensus among all network participants, mainly people who mined Ethereum and provided the network's security. Some of them didn't agree with it and kept using the old code, which became Ethereum classic. It was rather contentious, but in the long run, the "main" chain of Ethereum has become inarguably the dominant one. Nobody was harmed by the split of Eth into Eth and Eth classic I fail to see what the problem is you're pointing to.
Which is why Bitcoin in hyper-deflationary, which is a insane economic policy for any serious fiat currency. That policy can be changed in code by programmers just like lawmakers can change economic policy for national fiats. Bitcoin might be taken slightly more seriously as currency rather than a speculative asset if they removed the fixed supply. But that would hurt the existing wealthy stakeholders. Are you starting to see how this is still political?
The difference is that the law makers are in principle — though usually not in practice — supposed to represent the interests of everyone. There are no such lofty ideals on the chain. Whatever group controls the most wealth controls the chain. Its like our government in 2008 but with no pretense of serving everyone.
Ethereum programmers implemented a rollback on the chain in the code early on because many wealthy people close to the project lost money through an attack and needed to be bailed out… like the government did for Wall Street in 2008. The fact that its possible for the programmers to rollback the chain completely undermines the concept that crypto is decentralized in a way that meaningfully solves the problems it claims to. Wealthy players will exert their influence on crypto just like wealthy players did on the US dollar in 2008.
The fact that Ethereum Classic still exists demonstrates that there was not a consensus with the rollback — there was discontent with the rollback — just like people were discontent with the bailouts in 2008.
Most modern economists would agree with you. There is no correct answer here, it's mainly a matter of perspective and what you value. I would say it's mildly deflationary, the supply is fixed, it's not like 10% of the supply is burned every year or anything. We used to have the gold standard, that was essentially based on a fixed supply, the world didn't collapse, it was fine. We moved away from it for good reasons although if you asked the other countries who participated in that system about how the US went about making that transition it was of course quite contentious at the time. They trusted their national currencies to be pegged to the dollar which was pegged to gold until one day the US just said "Hey jk not anymore good luck". I'm not going to get into the weeds arguing inflationary/deflationary economics with you I was mainly just trying to correct what seems to be your misunderstanding about how Bitcoin and Eth actually work when it comes to forks etc.
I'm not making the argument that economic systems are divorced from politics or don't have political or social implications. They obviously do.
Sorry but you're just wrong about the rollback and how that works. The only reason the rollback worked is because the majority of the ethereum network nodes and miners agreed it was needed. Releasing code in an of itself does nothing, you need network consensus for it to work. If legislators write a law, that changes the fiscal policy immediately. If the Eth programmers write a protocol change into the code nothing happens until there is widespread enough consensus for the network to upgrade to that new code and fork. They have to convince the entire network to download and run that new code. This would be equivalent to having to get the entire country to vote on a new fiscal policy every time congress or the federal reserve proposed changes to it. It is wildly more democratic.
A. Pretty much how our existing economy works. B. Nodes and miners control the chain (or in Eth's case nodes, validators, and the people who stake their coins to those validators which is literally everyone who has Eth can do). They can directly vote on proposed rule changes unlike in a representative democracy where they elect people who can change those rules and in most cases the only recourse if they make bad rules is to elect somebody different next time. In Bitcoin or Ethereum you need widespread consensus among those who use the network to effect protocol changes. There have been many proposals to change Bitcoin's core protocol over the years, most of them did not succeed as they required widespread consensus which is hard to get and takes significant time. So it produces a very stable protocol (and fiscal policy) which tends to be backwards compatible.
This is like saying tulip mania was mildly deflationary. At a certain point without changing the rules of the blockchain there will never be another Bitcoin made. That is somehow supposed to represent an ever growing economy forever?… And not be hyper-deflationary? Remember… they were still making more tulips.
As long as Bitcoin remains this deflationary it will be a terrible store of value and a terrible facilitator of trade. In other words a terrible currency. And the people in charge of bitcoin — that is the people who own stakes in the network — will never want to end that because they make too much money with it being deflationary. It would be funny if some people didn’t loose a ton of money in the process.
If its not divorced from politics then what’s to stop the same or similar political situation that happened in 2008 from happening again?
Remember the thing I disagreed with was…
If the rules can be changed by someone then what’s to stop whoever that someone is from turning on the money printers on for the wealthy under the right political circumstances?
I understand how it works. I used to mine Ethereum and I’ve run both a Bitcoin and Ethereum nodes. I’ve been following Bitcoin since I saw it on slashdot in 2009.
Of course they “agreed” to give themselves a bailout. That’s no more valid of an argument than saying the US agreed to the bailouts in 2008. Other’s disagreed that’s why we still have the fork.
Randomly forking is terrible for a currency. I don’t want to wake up tomorrow and find out that my money is worth half as much because some rich assholes didn’t like some transactions. And because they own enough nodes/ASICs/GPUs/stake and are friends with the programmers on the project they can just fork me over.
Most representative democracies have direct ballot initiatives and they’re based on 1 person 1 vote. We should work to have more of that because a broad base of people generally have interests different than those with access to wealth.
In the case of crypto none that I know of base their “democracy” on a system of 1 person 1 vote but instead on how much ownership you have on the network in terms of nodes/Mines(GPU, ASICs, etc.)/stake. This is not democracy, this is a system of political power based on ownership. In other words the same system of influence at the root of the 2008 bailouts.
Yes, the people who own stakes in the blockchain are going to make very conservative decisions that protect their own wealth. The US congress chose to turn the money printer on in 2008 because that was the best way to protect their wealth and the wealth of their donors. Again… its same system of influence based on wealth and ownership that lead to the 2008 bailouts.