Verification is more important, yes. But I expect that the total cost of hashing will be much, much higher than the total cost of tx processing (this is of course the case now - there's a $500M / yr market of mining hardware, but no similar market of network nodes). Hence, when talking about hashing, I consider the capacity cheap.
The reason for this is simple - mining is deliberately made artificially difficult. Tx processing is not.
Ah, but mining is not made artificially difficult in any absolute sense. It's whatever it needs to be to keep the target pace. The system operates fine, though its insecure with the difficulty at 1. The hardware investments are one time, they amortize, energy usage is what is actually interesting. I know I'm not saying anything you don't know, but I don't know why you expect a particular cost for hashing without first starting with an income (e.g. transaction fees) which would sustain it. The primary quantity is the amount of hashing power an attacker (who wishes to commit hashrate-based attacks) is expected to amass. (And in this respect, I do believe hardware capex is more significant than power costs. At least for SHA-256, hardware is extremely specialized, so obtaining a high burst rate is difficult. The opex costs of an attack greatly depend on the available % of network hashrate). From this we derive what the total cost of mining should be to keep the network secure from hashrate-based attacks (it is proportional to the attacker's hashrate). And from this, we derive how we should fund this cost using tx fees. We want to keep tx fees artificially high, so that the total cost of mining is high, so that the network is secure. |
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(an incentive for the user to give up on a beneficial tx to conserve a resource which is, in absolute terms, cheap).
I disagree here. Network capacity is not very cheap... It is cheap marginally to miners but thats because the trust cost of a transaction is largely an externality to miners. It's also cheap in a highly centralized network where there is only one or a few verifiers, but in a highly decentralized network much less so. Security does not come exclusively from miners, it comes _primarily_ from verification. Miners serve to provide ordering, an essential part of the system, but miners incentive are aligned by all the other parties verifying (otherwise, a rational thing for all miners to do would be to just agree to inflate the currency forever). Verification is more important, yes. But I expect that the total cost of hashing will be much, much higher than the total cost of tx processing (this is of course the case now - there's a $500M / yr market of mining hardware, but no similar market of network nodes). Hence, when talking about hashing, I consider the capacity cheap. The reason for this is simple - mining is deliberately made artificially difficult. Tx processing is not. |
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I believe a good proxy for this is the total number of coins transferred in the tx.
Probably not, due to all the non-bitcoin overlay things people are interested in. (E.g. the altcoins, colored coins, etc). That is indeed an issue. But for the current purpose I'm talking about Bitcoin as a currency, not a generic ledger. I disagree with the claim that its unrelated. Scarcity of block space is what enables a market for it; absent complete miner collusion, with unlimited block sizes there is a defection problem (the rational move for the miner is to take very low fee paying transactions instead of turning their nose up at them in order to drive the market price for fees above zero).
I don't think you understood my point. Yes, absent any limits you'll have tragedy of the commons. Limits on block size have an effect on this problem, but only in a distorted way, which creates perverse incentives (an incentive for the user to give up on a beneficial tx to conserve a resource which is, in absolute terms, cheap). This is because the cost of hashing has nothing to do with block sizes - a bigger size doesn't make it more expensive to hash to secure the network. |
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I believe that if people want a secure network, they will figure out a way of getting it.
I agree, for a sufficiently broad definition of "a way". I believe the way will be placing hardcoded block caps; and figuring it out is what we're doing right now. Speaking of caps: I'd like to stress the point that there are two separate costs in the Bitcoin network, each should be addressed in its own way: 1. The marginal cost of propagating, verifying and storing transactions. Caps on the block data size and amount of ECDSA signatures help with funding this. 2. The amortized cost of hashing blocks to secure the network. This has nothing to do with data size, and using data size caps to fund this is misguided and creates perverse incentives. Funding hashing is a pure bargaining game between miners and users; the miners can include a tx at no cost, but they are in a position to charge a fee for this because the user relies on them. Shapley value theory suggests the amount the user should pay is proportional to the value of the transaction for them. Knowing the value for the user is difficult; however, I believe a good proxy for this is the total number of coins transferred in the tx. Placing a cap on the total number of coins transferred in transactions in the block helps ensure that users pay fees proportional to the amount sent, which in turn is roughly proportional to the value of the tx to them. I'm not convinced about the viability of assurance contracts as a solution. It works well when either: 1. You have a small number of players, each with a large stake in the outcome and a large influence on the chances of success (as in traditional infrastructure projects) 2. Players get perks for their pledges, and have additional complex motivation (as in Kickstarter) Here, if there are players with a big stake, we have failed in creating a decentralized system. If there are a large number of small players, they don't get anything extra for pledging (and their chances of effecting the primary objective is low), and it doesn't seem like the kind of thing they'd do for personal satisfaction, so people will still prefer to hold off their pledges and wait for someone else to pledge. 30% -- Bitcoin sustained through charitable mining / donations
20% -- Creation of an inflationary Bitcoin2
15% -- It doesn't get solved, some other blockchain with better economics eventually replaces Bitcoin.
10% -- Things will work roughly as-is
5% -- Assurance contracts
I'd assign less weight to charity, more weight to a radical economic change (though I hope Bitcoin will itself morph into something new rather than being replaced). |
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I love that painting, anyone know who the artist is? I don't think this is a one off type of thing because the painting is actually very nice and professional. I could see that hanging on my wall, it would fit right in with all of my other stuff
The artist's name is Xania Dorfman. |
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Just to keep everyone updated, the crowdfunding campaign was not successful (it was mostly Israel-focused) and the producer is not giving up and is re-envisioning the project. From reddit: Hi all i'm Lahav the director and creator of this film. Funny it suddenly showed up here thanks! We intended to crowdfund the production an then release the film on the net for free. Our current status is reinventing the whole concept of the film to fit an international audience. As mentioned, our local crowd funding didn't make it and there is no way I can even set out on shoots and production without funding since I am young and poor... If some bitcoin millionaire wishes to fund this project his logo and name will be all over it so just saying... this trailer was only produced for crowd funding but there was not much support locally. I can say the new reinvented film will be in English and international. Hope this reaches the right person/s
Btw Btc address for anonymous support is in the youtube description. Oh wow, you have failed to raise 30k USD for a free documentary in the socialist Israel with a controlled media. Let me guess, not a single (government) news website has featured you guys? I don't know about government news websites, but they were featured in "Layla Calcali", arguably the most important economics TV show here. |
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Hey, how was this? Is there a set of transcripts of the speakers? Hope it all went well!
It was very cool! We had about 260 participants, which is a bit lower than our initial expectations but still very nice. We received overwhelmingly positive feedback about the agenda and organization. What exactly do you mean regarding the transcripts? Like, perhaps, a recap of events or some sort of video footage that one could view. A list of speakers and what they discussed and perhaps any tangible growth in the related market on the horizon in said community. The event just ended today so most journalists haven't published their reports yet. When they do I think much of it will be in Hebrew. We will release the video footage once we finish editing, which should take at least a few weeks. The list of speakers and what they intended to talk about is at http://bitcointlv.com/en/Agenda/All-Sessions, it should be similar to what they ended up talking about in practice. |
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Hey, how was this? Is there a set of transcripts of the speakers? Hope it all went well!
It was very cool! We had about 260 participants, which is a bit lower than our initial expectations but still very nice. We received overwhelmingly positive feedback about the agenda and organization. What exactly do you mean regarding the transcripts? |
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@Meni Rosenfeld, Is there anymore pics of stuff available for purchase or was this a one off thing showcased and then sold???
I think this was the only painting in display. |
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We are in the midst of the Inside Bitcoins Tel Aviv 2014 conference, and one interesting thing to report is that a Bitcoin-themed painting made by a local artist, which was placed on display in the conference, has been sold for 35 BTC (about 10,000 EUR) to Yoshi Goto from Bitmain. This is possibly the largest purchase of merchandise for Bitcoin in Israel so far.  |
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Still not too late to sign up.
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This post (like much of the discussions of alternative mining) seems to confuse the two roles of mining, issuing new coins and synchronizing transactions. Your calculation of costs relates to issuing coins, yet PoS is not a viable method for a fair issuing of coins, only for synchronization.
If we stick with synchronization - the idea of updating now for the far future has merit, but no currently existing method is solid enough to deserve being privileged as the default future method - and that's taking into account our ability to change it later.
Also, I don't see a problem with making a change when it's relevant. The miners may resist, but we're not asking them.
hi Meni, Perhaps you can elaborate why no POS current method is solid enough, even for synchronization. Is that because of the nothing-at-stake attack vector and similar issues? Thanks, Jonald It could be the case that some already proposed method happens to be ok. My main point is that none of them have enough theoretical basis or empirical evidence to justify any confidence in them. |
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This post (like much of the discussions of alternative mining) seems to confuse the two roles of mining, issuing new coins and synchronizing transactions. Your calculation of costs relates to issuing coins, yet PoS is not a viable method for a fair issuing of coins, only for synchronization.
If we stick with synchronization - the idea of updating now for the far future has merit, but no currently existing method is solid enough to deserve being privileged as the default future method - and that's taking into account our ability to change it later.
Also, I don't see a problem with making a change when it's relevant. The miners may resist, but we're not asking them.
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Maybe just take the next block ID and use the last number, if higher or lower than X the tie goes to one or the other. Same can be done for 3 and 4 way ties breaking up the numbers to 3 and 4 divisions.
That's similar to the mod suggestion. As you described it only works when on item needs to be chosen (A method that generates a permutation could be used for, say, choosing 2 items out of a tie of 4). Anyway, my main point is that I don't want to describe in our bylaws "We will take the block hash and do modular division and X Y Z...", I want to be able to write "We will use the standard blockchain tiebreaking protocol". Ahh, this is the first I have read of someone wanting to use the blockchain for tie breaking. A few methods for voting but not tie breaking. Perhaps you could come up with the standard  Interesting, seems to me a general problem, and a useful solution for it, so I'd be surprised if no one else considered it. |
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