No, seriously.  How is one going to link the transaction to alphabay with the withdrawal from Polo ?

I don't know what happened to the owner of kickasstorrents.com, but I can think of two reasons, correct me if it is something else:

1) that guy was using his coinbase wallet to do directly transfers to or from shady activities.  
2) that guy was using bitcoin, and the transactions in bitcoin are of course linked and traceable.

(I would bet on 1) ).

But I repeat my question, so that you can clearly point out how silly I am:

1) I put my picture, ID and everything you want to know about me on Polo.

2) I buy 100 XMR on Polo with money from my bank account

3) I withdraw my 100 XMR from Polo.

4) I transfer my 100 XMR a few times between addresses of mine on the XMR block chain

5) I wait for a few months

6) I now buy crack on alphabay with 80 XMR from one of my addresses.

Tell me how one is going to use the ID information on Polo in relationship with this transaction.  Tell me how giving out my ID and picture on Polo is going to get linked to this transaction on alphabay and is going to inform law enforcement that *I* was the guy buying that stuff.

Or, to put it differently: tell me how giving out my ID to polo to buy XMR is going to put me at risk, while obtaining XMR over the counter from someone is NOT going to put me at risk (because you are talking about the risk of a centralized exchange and getting people in jail because of that, so the risk must come from the fact that I gave my picture to Polo to make your point).

Explain me in detail, so that my silliness is illustrated.

Tell me now exactly how that would happen.

Imagine that tomorrow, I buy, say, 100 XMR on Polo and withdraw them.  I now send my own 100 XMR to another of my addresses.  I do this, say, 3 times.

Imagine that 3 months from now, I use 80 of those to buy crack on Alpha bay. 

How is anyone going to link this transaction to the one I used to withdraw my XMR from Polo ?

I think you think too much in bitcoin.  In monero, these transactions are essentially unlinked.   So what has my Polo account information to do with this unlinked transaction on the monero block chain ?

Suppose that law enforcement knows about my withdrawal of my 100 XMR (because Polo knows it of course).  Suppose that they know that there has been an XMR transaction to alphabay of 80 XMR, but of course, law enforcement doesn't know what was bought with it, or to whom it was sent (if they knew, they had me already, and monero didn't have anything to do with it: for instance, I naively told Alphabay to send the stuff to my postal address, and law enforcement found out).

For you to accuse monero to "put people at danger", you have to explain how law enforcement can, from the knowledge they get from Polo (my withdrawal of 100 XMR)  infer that *I was the buyer*.

Now tell me exactly how that's going to happen.  How are they going to use the Polo information to track me to alphabay ?

If you are going to tell me that they saw that it was MY IP ADDRESS that did the transaction, then that's of course the same as "finding my postal address".  Monero/Polo/single exchange is not involved, they simply saw where the order was coming from. 

Tell me how "buying XMR on Polo" puts me at danger, which I wouldn't have if I didn't get my coins from Polo.

That is true if monero or zcash remain niche activities.  One could say that the culprit is then the unfortunate existence of bitcoin
This is like right now, where it becomes suspicious to withdraw cash.  There's nothing that can be done concerning anonymity if most people can opt to use a system which entirely exposes private matters.  The only thing we can hope is that sufficient users will use a privacy-protecting system, so that the use in itself of that system is not something that is suspicious as such.  But there's no reason to build a system that only allows you to opt in for that privacy protection.  It is much better to attract people to a system for different reasons, and to protect their privacy by default.


Actually no.  Right now, I haven't looked any more, but a month after launch, only about 6% of transactions were done with Z addresses.  Most were 'in the clear'.

Of course not.  Every mining pool, or individual miner, has a specific full node which it uses *to decide on what chain to build*.  THIS node is what I call a "mining node", the one the miner is using.  It are the rules on THAT NODE, which the miner has in hand and which he uses to decide on what chain to mine, that I'm talking about when I talk about a miner node of course.

Imagine Joe having a mining pool.  In other words, he has:
1) set up a full node
2) set up some software that will dispatch hashing tasks to his customer-ASIC mining hardware owners, which results he uses to make blocks that are VALID ACCORDING TO THE RULES ON HIS FULL NODE.
3) He needs to decide what block he will construct, and on what other block he will construct.  This, he will do as a function of what his full node tells him is the current state of the block chain.
If his full node has other rules (for instance higher block rewards) than non-mining nodes, then of course his own mined blocks will be accepted by his own node, but not by the non-mining nodes.

However, in as much as most other mining pool nodes use also his set of rules, they (that is to say, THEIR FULL NODES) will accept his block just as well AND WILL BUILD UPON IT, even though these blocks are rejected by the non-mining nodes.

Amongst themselves, the mining pools and their own nodes will make a block chain that is in agreement with THEIR rules, and there will NOT be any growing block chain around that is in agreement with the rules of the non-mining nodes, which will hence come to a grinding halt.

You are saying that miners don't have a node.  Of course they have to have a node, in order to DECIDE on what block to work, what blocks eventually to orphan and so on.  There is a DECISION to be made.  The node that makes that decision is the mining node.  It is not the owner of asics that does this: he just gets his task from the pool, and returns the results he obtains.  It is the "owner of the node and the task distribution software (the pool software)" that I call "the miner node.  He can at will, use the rules he wants to accept, or not, a block chain, and to BUILD A BLOCK OF TRANSACTIONS of his choice.

In order for this to work, one needs:

1) that the ASIC owners are in agreement with the mining pool rules (otherwise, they won't continue to work for that mining pool)
2) that most pools, representing most hashing rate, are in agreement amongst themselves on the rules
3) that the users of the coin are mostly in agreement with these rules

And that's all.

If there are now a lot of people that set up non-mining nodes that do not agree with these rules, and hence, reject about any block that comes from these miners, DOESN'T MATTER.

https://www.reddit.com/r/Bitcoin/comments/3f3meb/what_is_the_difference_between_mining_and/

Full non-mining nodes don't "orphan" anything.  Orphaning means that miners decide to build on a previous block and neglect the orphaned block.

You seem to miss the fact that non-mining full nodes don't contribute anything, when users and miner nodes agree.

Tell me again how your 100 000 amazon nodes who "orphan" a block will influence what so ever.

I can't do that because the MINER NODES don't agree.  So the test you propose illustrates my point: the MINER nodes decide on the protocol, because they MAKE THE BLOCK CHAIN.  If the large majority of miner nodes were to agree (which they don't in your proposal), there would not be the slightest problem for me to do so (like they do).
Whether the non-mining nodes agree or not, doesn't matter.

I will propose something else: YOU decide that your non-mining node will not accept blocks containing a transaction that I will send out.  So your "quality assessment" REFUSES that block.  If my transaction gets included in a block, what will your screaming node now do, apart from not accepting the rest of the block chain any more ?   Who is now annoyed by this node saying "NO! NOT VALID!" ?  Apart from yourself ?

Suppose now that you set up 100 000 such nodes on amazon.  You clearly have the large majority of non-mining nodes in your hands.  They ALL scream "non valid block".  So what ?

In fact, transaction fees are essential in the working of a block chain.  Whoever is mining/minting, has absolutely no incentive to make bigger blocks and to include transactions.  If ever there is "competition", a bigger block is always problematic compared to a smaller block, so there needs to be an incentive to make bigger blocks.

On the other hand, doing a transaction must cost something, or otherwise, there's no reason NOT to send out billions of transactions, which would explode the chain and the network.  There can be malicious (DoS) style attacks on the system, but also, as a way to find anonymity, it might be useful to do billions of transactions and mixings if it doesn't cost anything.

So transaction fees are necessary on both sides: on the miner/minter side to motivate to make bigger blocks (with the cost that comes with it) ; on the user side to limit the amount of transactions, because it costs resources in chain room and network activity.

With PoW, there's no problem with transaction fees.

My idea is that PoW is not a bad solution, but that ASIC centralisation has to be avoided.  I think that the easiest way to do so, is to have complex PoW schemes, that change regularly over time (forking).

Yes, you are right, if the only earnings are "inflationary earnings".  You then simply apply at the same time an "inflationary "tax" (a depreciation) of all coins, and an "inflationary interest".  This is in fact the "punishment for those that do not mine": their coins get depreciated because of the debasement by inflation, and they can just break even by minting according to their stake.

I made the mistake by considering a finite supply of coins, and an interest-bearing savings account.  *then* you get this divergence.  

I'm not sure, though, how it works out with transaction fees.  One can say the same, if people pay transaction fees, proportional to the amounts transmitted.  In this case, "non-moving" money will collect relatively more from the transaction pot than it re-distributes, and hence a non-moving amount of coins will get a higher interest rate, and hence WILL diverge.

Let us say that our rich guy with 50% of the coins, never moves his coins and hence, never pays transaction fees.  He gets 50% of the inflation, and also 50% of all transaction fees.  But he never pays a transaction fee, because his coins never move.  The remaining 50% gets also 50% of the inflation, capture also 50% of the transaction fees, but PAY ALL the transaction fees.  So in fact, there's a transmission of transaction fees from these 50% "poor" guys to the rich guy.  After a while, the rich guy has hence, say, 55% of the coins, and the poor guys, 45%.  And so on.

There is also another effect.  If you are a small coin holder, then you may not mind "minting".  If you are only using the crypto to buy stuff (which is the goal, isn't it !), then maybe the small inflationary loss you suffer doesn't matter.  It amounts to a few tens of dollars or so.  So you do not go through the hassle of setting up a running minting node.  If you are a rich guy, you won't let those important earnings (maybe we're talking about millions of dollars) get lost. 

So rich guys will be more careful in minting all the time than poor guys, and they can invest somewhat more in making sure their minting machinery works smoothly.  We're again having some economies of scale here.

I know everything you tell me, and I have read that several times, but my whole point is: if all non-mining nodes reject a block, SO WHAT ?   It is as if these non-mining nodes are simply not there, that's all.  Users can still send their transactions DIRECTLY to mining nodes, and mining nodes DON'T CARE what non-mining nodes may say.

Yes, 90% of all non-mining nodes may scream "invalid block !  invalid block !".  So what ?  If the miners decide to build the rest of the chain on that "invalid block" because they like it, what do these non-mining nodes have to say ?  The only thing they can observe is that from that point on, there's no valid (according to their rules) block chain any more.  But the users don't care, and the mining nodes don't care, if they agree.  The users still send their transactions to the mining nodes (directly, because the non-mining nodes may not transmit it eventually), and the mining nodes continue building the block chain that the non-mining nodes consider invalid.  Again, so what ?


Well, then I'm a mining node (I'm making a block) if a majority of my peer MINING NODES decides so, it will get accepted, even if 90% of non-mining nodes reject it.  My peers will build onto my block.  And the non mining nodes will scream that it is a non-valid chain, and we don't care.


Yes, and so what if they reject it ?  What happens ?  They don't put it on their own version of the block chain.  So what ?

Ah, I have a conceptual difficulty distinguishing between both, to be honest.  To me, a hard fork happens when the rules to make blocks become different.  So I don't really know what happened on the 5th (although I have to say that I hurried like crazy to get my new node version running by then, which I had forgotten to update, and was then surprised that the status response told me that it was still several days away...)

My "indeed" pointed to the problem, not to the "system is perfect" :-)

In fact, PoS would be a good system if there were NO REWARD (which is nothing else but an "interest bearing savings account").  But then it begs the question, because how do you do the coin emission then ?


But again, how do you do coin emission ?  Where do the coins go that are "taxed" from the non-minting stake holders ?  Are they simply destroyed ?  (deflationary currency) ?  That makes the emission problem even worse: you start with no coins, and you have to destroy some ?

We are thinking here about "who takes the burden of securing the chain".  But that's just one problem.  The real monetary problem is "how do you do coin emission" ?  I have to say that I find PoW very well thought off in this respect: it solves both issues: it destroys seigniorage (so that coin emission is not "making a privileged rich" and hence renders that coin emission credible and acceptable) and at the same time it secures the chain. 
The downside is the centralisation that happens when too much gain is made through economies of scale, like bitcoin illustrates.  Another downside is that the PoW becomes insanely wasteful if the emission scheme doesn't correspond well to the coin appreciation, so that there are too important block rewards which must be burned (like with bitcoin).

I don't see how PoS can help with coin emission without becoming an "interest bearing savings account" which leads to terrible divergence due to the compound interest formula.  PoS CAN work to secure the chain if it is combined with some PoW, but that's not the hard part.  The hard part is coin emission.

Eh, my node tells me that it is in half a day, at block 1220516.  I'm currently at block 1220135.

http://moneroblocks.info/warning

I would like to point to a few issues here:


In my opinion, there is absolutely no need for a GROWING mining cost for a PoW coin.   Ideally, the PoW cost is exactly equal to the *market value* of the coins being mined and the fees collected minus a small margin.  Let us concentrate on the coins being mined.  If the emission scheme is such that the number of coins emitted is not falling proportionally to the market appreciation of a single coin, then of course, the market value of the block reward increases, and HENCE the cost of PoW has to increase (as it has to be almost the reward value).  This has been the case with bitcoin: the market value of a block reward has increased over time, so the cost of mining had to increase too.  This is because the bitcoin emission scheme is TOO SLOW as compared to its market appreciation.  If the amount of coins mined dropped faster than the market appreciated a coin, then the mining cost would decrease, as it wouldn't be competitive to mine at higher cost than the block reward.

Suppose, for instance, that instead of a halving every 4 years, bitcoin had a halving every 4 months.  Then the amount of PoW waste right now would be way, way lower.  It isn't even said that there would have been ASICS.  It is simply so that the VALUE of a block reward is so high in bitcoin, that a lot of value has to be wasted in PoW.

On the other hand, if we would have a very slow emission scheme, where, say, the inflation rate would be 0.01% per year, then there too, there would be much less PoW cost: it would amount to the market cap divided by 10 000.  If it were bitcoin's market cap, it would result in a waste of about 1.5 million dollars a year at this point.   However, in as much as such a coin would appreciate a lot, even 0.01% of the market cap could mean a huge waste in the far future.

It is amazing how good the PoW scheme works in killing seigniorage when you see such a calculation !

All rewards are essentially gone in hardware and power.  Brilliant.

To add to the topic discussion:


talking about "danger", is it MUCH MORE dangerous to use bitcoin on dark markets than it is to use monero, because bitcoin is traceable as hell.   Referring to Spoetniks complaint about putting people at danger, if one crypto did that, it was bitcoin !

The fact that there is only one or a few exchanges that offer monero is hence a "danger" in the following sense only:

- people thinking that exchange IOU are the same as the crypto token, and hence can lose every IOU they have on an exchange when that exchange decides not to honour that IOU.

- people using an exchange to obtain exchange IOU, and think that it is the same as the crypto token, *paying others directly from their exchange account* (doing "withdrawals" to their trading partner's address directly).

- people thinking that exchange IOU are the same as the crypto token, and do "trading" to get rich, ripping their peers playing the same game.

- people buying and withdrawing monero and use it directly to do VERY SENSITIVE stuff.  The monero anonymity system is not 100% opaque (like zero knowledge proofs would be), and so there is limited traceability if the transactions succeed themselves quickly, which can help law enforcement somewhat in limiting the list of potential infractors.

For most "normal" use of crypto, where you put up some fiat to an exchange, and withdraw it immediately, monero is essentially private, in the sense that the next transaction you do cannot be linked strongly to the act of buying the coins from an exchange.  Which is the totally opposite behaviour of bitcoin.

Exchange IOU (the stuff you buy with fiat on an exchange) are NOT the crypto.

And how would they do that ?  They will *observe* corruption, but what can they do about it ?  They cannot add any block.  They cannot make any forked chain (if they do, then they become mining nodes, which we supposed they weren't).

What does a non-mining, full node actually do, apart from verifying FOR HIMSELF whether the block chain that is distributed elsewhere actually corresponds to his own standards and wishes, or not ?  Once you see that the block chain that you downloaded from peers, doesn't correspond to what you thought it had to be, you can only refuse to use it, but that's about it.

Of course, when I talk about miners, I'm talking about the FULL NODES that mine (whether they are individual miners, or pools).  I'm not talking about JUST the mining hardware. I'm talking about the node that takes the decision on what block chain to build the next block.

Let us do a gedanken experiment.  Again, in what follows, the what I call a miner is the mining node, that decides on what block to work, on top of what chain.  THOSE are the (only) nodes that matter, as I will show.  A non-mining node (as I have one at home) doesn't have the slightest bit of "consensus power".

A fundamental modification of the protocol is proposed (like you say, the 36 BTC per block reward).  

We consider this:

EDIT: oops, I messed up, which made this incomprehensible.  Options corrected.

1) most miners are against it, but most non mining full nodes want to apply it, and users don't want want it.

2) most miners are against it, but most non mining full nodes want to apply it, and users want it.

3) most miners are in favor of it, but most non mining full nodes don't want it, and users want it.

4) most miners are in favor of it, but most non mining full nodes don't want it, and users don't want it.


What happens ?

In case 1, miners will still continue to mine normal block awards.  Most non-mining full nodes, who updated their code, will reject the block chain miners produce.  As users want it this way, they will short-circuit the non-mining nodes, and send their transactions directly to the mining nodes.  --> non-mining nodes don't matter.  Market cap is normal.

In case 2: miners will still continue to mine normal block awards.  Most non-mining full nodes, who updated their code, will reject the block chain miners produce.  If users send their transactions to mining or non-mining nodes, it doesn't matter, in the end these transactions will get caught by miners, who will mine it with normal rewards.  If users are pissed off because they didn't want this, they can simply sell their coins, and the market cap plunges.  --> non-mining nodes don' t matter, market cap plunges.

In case 3: same as case 1, except that this time, miners now mine high-reward blocks.  Same conclusion: non-mining nodes don't matter, market cap is normal.

In case 4: same as case 2, except that this time, miners now mine high-reward blocks.  Same conclusion: non-mining nodes don't matter, market cap plunges.

In other words: miners determine the protocol ; users determine the market cap.  Non-mining nodes don't matter.  When users are in disagreement with the miners, they leave, and the market cap plunges.  When the users are in agreement with the miners, both work together and keep up the transactions and the market cap.  Whatever think non-mining nodes doesn't matter.



The point is that no-one gives a shit about what block chain a non-mining node decides to accept or not, apart the owner of that node.  What matters is the chain on which a mining node works, and whether that node receives user transactions (directly) or not.

A block chain is a relationship between those writing the chain (the mining nodes) and those using it (the users).  The non-mining nodes can help in the transmission of the data, but in as much as they don't agree, it is as if they were simply switched off.

When Satoshi considered full nodes, he considered them to be mining too.



https://en.bitcoin.it/wiki/Full_node


Ask yourself what happens if:

1) all non-mining full nodes are in disagreement with a block
2) 70% of all mining nodes are in agreement with that block.

Answer: the mining nodes decide, and whether the non-mining full nodes reject those blocks or not, doesn't matter.  You, as a user, can decide (because you run a full node, or because you contact a full node) that the currently used block chain is not in agreement with the bitcoin rules, but that doesn't matter, the miners decide and make the chain.  If full nodes reject that chain, this doesn't matter.  They will just stop updating their local version of the chain, but no "good" chain will appear out of nothing.

In other words, full non-mining nodes can be aware that the rules aren't followed (that they have changed, in other words, that bitcoin has forked, in other words) but apart from noticing that, they can't do anything about it.

Users can still send their transactions directly to the mining nodes, if the non-mining nodes don't agree.

Amen.

Again: if you are trading "monero" on exchanges, then you are not using the monero block chain and code, but exchange IOU which are just promised to be 1-1 parity with the monero tokens on the block chain in as far as you believe the exchange owner.

Of course those exchange IOU do not have the privacy properties of the monero tokens on the block chain: they are different entities, held by a centralized exchange.  Whatever information that is leaked about you concerning your buying these exchange IOU is simply totally independent of whatever information is propagated by using something different: the monero token on its block chain.

Whining about the lack of privacy of an exchange IOU and accusing the block chain token that has not much to do with that for that, is simply comparing apples and oranges.  This is like complaining that cash money isn't private, because bank account movements are known to the bank.

Yes, of course you take a risk if you buy exchange IOU and yes of course you give out ID information when you buy exchange IOU.  What this has to do with that other entity, namely a block chain token, is a mystery to me.

There is something to say for this, related to the thread subject.  The problem with Gift Cards is that you have to buy them and that, of course, when you use a gift card, it is traceable to where it was bought in principle.  That said, for "normal privacy" that's good enough: gift cards are then nothing else but something like paper cash money, only somewhat more clumsy.

If Joe buys a gift card, we can suppose that Joe's act of buying can be registered, and "attached" to the gift card.  If that gift card is later "cashed out" to buy something, then the buyer will make himself known to whoever he was buying stuff from with the gift card.  The link between the act of using the gift card, and the act of buying it, can be obtained if the seller of the gift card and the seller of the stuff that was bought with the gift card, cooperate.

Now, in as much as it is possible to buy gift cards that are not "traced" (for instance, if you buy them with cash in the supermarket), indeed, they become anonymous money you can use to pay people with.  But in as much as the act of buying gift cards is registered, this is not the case, and gift cards are then just as traceable as bitcoin bought on an exchange.

Do the same with monero, and the link between the act of using monero, and the act of obtaining it, is hidden.  But buying monero on an exchange to LAUNDER MONEY is not a good idea of course, because an exchange has a trace of the fiat money that you wanted to launder in the first place.  

To come back to this, I have a few points to make.  First of all, testing a privacy-related crypto on dark markets is a very good thing as a test bed.  After all, given the implicit risks of handling money in freedom markets, being tested there will reveal a lot of holes and security problems so that they can be patched.  It is one of the more severe tests a payment system can hope for.  If it works there, it works everywhere.

The "pump" that resulted was on one hand not good, in as much as it was speculative, and not driven by genuine usage demand.  On the other hand, monero's market cap was somewhat low to even be able to sustain real usage, so the fact that the market cap increased by itself was good (you could do a few million dollar deals without shaking too much the market cap, which is the minimum to be able to do anything else than buying pizza), but the speculative part is bad.  As with most crypto, bitcoin included.

Most new technology is first used by freedom seeking people with "borderline" freedom and privacy seeking activities.  Video was about porn, internet is about downloading "illegal" software, crypto is about paying "illegal" transactions.

I'm pretty happy that there is now at least a privacy centric alternative that is viable to bitcoin, which is, as I said, a privacy nightmare.  If I had ambitions to become a world dictator, I would have invented a money like bitcoin and impose it to everyone, where nothing can hide and your every transaction is visible and graved in stone for ever.