Baby formula is targeted towards a different species than the source of milk, perhaps?

The assumption is that, as the bitcoin economy grows, both the value of bitcoins and the absolute number of transactions will rise.  Right now, many transactions are free because there is little to scarcity of room for new transactions on the next block.  When there are 10K transactions moving across the bitcoin network per minute (or whatever) there will be time delays.  If you are someone who has a need to get your transaction in a block soon, you're going to end up paying a transaction fee to jump the line of free & nearly free transactions.  Miners would, logically, favor fee paying transactions and include as many of them as they can fit into their current block in order to collect those transaction fees.  The current blocksize limit is 1 megabyte, and we know that isn't going to be large enough, but it protects the lower end participants in the full network in the meantime.  Eventually, maintainning a full client on the bitcoin network is going to be like drinking from a firehose, and even with only 10K fee paying transactions in a single block at 0.005 BTC each the transaction fees would be 50 BTC on top of the blcok reward itself.

The bitcoin white paper is really just a technical primer, and does not cover some of the more subtle details of the network.  Most of this info I've gleaned from resources & forum members over the past couple years, many of whom are the actual developers.  I don't recall from whom I received this particular piece of data.

An additional little tibit, with regard to the brute force defensive security of the blockchain, is "checkpointing".  Basicly, this is a hardcoded list of hash values for particular blocks that are included with the official (and likely the others) client, which is added to with each minor release.  The list cannot be altered except at the source code, and when a fresh client is "bootstrapping" it will check this list as it encounters each of those blocks from the network, in addition to not considering itself up-to-date unless both the peers it's connected to AND the last of the checkpoints on it's list has been encountered.  What this does is it prohibits a malicious set of peers from colluding to feed a new client a completely false blockchain (for what gain to the attackers,  I don't know) without the fresh client knowing something was wrong, for even if an attacker were capable of finding a single hash for a fake block (perhaps granting the attacker an arbitrary amount of bitcoins, in the view of the client being attacked, even if temporarily) the odds of being able to do such a thing for all of the blocks on the checkpoint list (and still not get made on the interconnecting weave of transaction connections and other security measures regarding actual transaction data integrity) goes up exponentially.  No attack vector has even been demonstrated in this fashion, but the sheer level of difficulty that this checkpoint list adds to the issue all but promises that it never will.  And authors of alternative clients can use completely differnet checkpoint lists, further complicating the issue as the complexity of the blockchain grows.  For that matter, a developer could completely randomize the checkpoint list for each minor release, so the attacker would 1) have to know both the exact checkpoint list included in that release and 2) be able to fake substitutable blocks on the fly while 3) preventing the client under attack from makng even one connection to an honest node with a complete copy of the real blockchain.

Legality in the context of the Bitcoin system is differnet than legality in greater society.  Whether or not it was legal, from the perspectives of the bitcoin network design, if it's possible it will happen.  But don't jump to the conclusion that this will ever be a risk within the lifetimes of our grandchildren.  This is sometihng for furute generations to solve.

Easy!  Easy!  I was not aware this was already under consideration.  You're doing a fine job, Gavin; not everyone here is out to get you.

Well, on that note, it would be wise if the development team were to consider the adoption of a second address schema using a different public/private algo.  This way, in the event that a flaw in the current one is discovered, there will be an option to move funds to before the blackhats have the chance to exploit any flaws.

Nor would breaking bitcoin's blockchain security give you access to anyone's vault that you, personally, didn't already own in the recent past. 

And my understanding of why there are two consecutive uses of SHA256 was more about establishing 'hooks' for a future use of a more advanced hashing algo alongside the current one, permitting the network to upgrade over an extended period of time without the potential of exposing the system to an unknown attack vector or requiring a rapid upgrade cycle.

No way.  These days $5 would get you a wrench about four inches long and two ounces.  At least a $30 wrench is required to defeat a one time pad.

Now you are misstating my own position.  I have never claimed that hard money is any solution to the business cycle.  I have stated, and stand by the statement, that history of hard money and modern FRB confirms what we should have already known; that a flexible monetary base can and will be manipulated in every manner possible, and this amplifies the business cycle rather than dampens it.

The business cycle is the cumulative effects of many a natural aspects of a diverse marketplace, free or otherwise, and cannot practically be "solved" in any acceptable fashion.  A gold standard will not change this, Bitcoin will not change this, and nothing that you can offer will change this.


Wow, how does that worldview not make your head expode?


Perhaps I would be, but I'm too old to wait for all the data.

There will be no "post-mining" era, nor is there any planned cessation of mining.  Fix your misconceptions about bitcoin, and if you continue to have complaints, restate them and we can have a conversation.

I disagree.  If they are both effects, then they are both effects of the business cycle, which I know that you don't believe in.  Any amount of a commodity currency is a correct amount, so long as it cannot change faster than the knowledge of that change can distribute across the market.  An inflexible commodity money adjusts value in the marketplace just fine, if left alone to regulate itself.  The real problem is that it's often not in the interests of the soverign powers to permit self-regulation.


Then our disagreement here is one of semantics, not substance.  I would agree with the general idea the free market has historically chosen precious metals as money, but I also agree that was far from universal.


Nor can I disagree with the above statements.

In addition to the present impracticality of brute forcing key collisions, Bitcoin's internal design is modular and is thus capable of swapping in an alternative crypto algo and later deprecating the existing one without a hiccup.  In fact, the current method of block hashing (just as an example) requires the use of SHA256 (secure hasing algorithum 256 bit) twice to produce a validatable block hash.  One of these two algos are likely to be replaced with another similar algo yet to be created, without removing the second use of SHA256.  This results in strengthing of the blockchain brute force security without the risk of accidentally exposing it temporarily during the transition to another algo.  Very likely, the second instance of SHA256 will not be replaced until yet another, better, algo is developed or SHA256 is shown to have a flaw.

In a similar manner, wallet.dat keys are created using elliptic curve public/private cryptography; but once a better algo is developed in the future, both the present form of creating addresses and the new form of creating addresses could coexist for a time, permitting users to migrate over time.  Eventually, once the present (older) algo is no longer considered safe enough for the common hardware available, the old transactions long unspent on the blockchain using the old algo would likely only be "lost" coins, and thus be salvage by natural law.  I.E. ten years after the new algo came online there are still hundreds of old transactions on the blockchain decades old, those who can brute force those private keys first get to move them to a new algo address of their own.  In the long run, even bitcoins are never lost.

EDIT:  This modularity was an orginal design consideration.  Present bitcoin address all begin with a [ 1 ] for this reason, (testnet coin addresses all begin with a letter, IIRC) and thus future address algos can identify the algo used to produce them by the leading character.  Yes, this too was on purpose.  Satoshi was a far thinking genius.

Which, in your view, is the cause and which is the effect?


I can agree with that statement.


It's a prohibition on states issuing unbacked currencies, but not a prohibition on the actual coining of gold or silver by those same states.  Granted, the Constitution doesn't explicitly prohibt the federal level from FRL; but the implicit idea was that the federal government couldn't do such things when the individual states would still be producing gold & silver coin.  (They apparently didn't understand Gresham's LAw. which is understandable since it didn't yet exist)  There is some eividence that, after the collapse of the Second Bank of the US, SCOTUS was willing to interpret likewise should it had come to that in the early 1900's.  For this reason, the public/private hybrid central bank created by the Federal Reserve Act was neccessary under the idea that a private bank was not prohibited from creating debt instruments or loaning the federal government those same instruments, while still being shackled by the federal government as a matter of regulations.  It was, and remains, a legal workaround; but the practical results are very much like a true central bank owned by the government itself.


Yes, they were well aware, which has much to do why they stated it that way.  The Contenintal Congress had issued paper script and debased it so fast that the phrase, "Not worth a Contentintal" was in common use for another 100 years.  The clause above is the justifications for the Federal Mint, but I have met no one educated on the matter who would claim that the phrase "To coin Money" could have been interpreted as to mean anything other than actual coins, regardless of what metal that was used.


Interesting logic.  Do I really need to point out the errors here?


You make the claim that gold was not used in a free market during a economic boom in the absence of fractional reserve banking (I think you really mean credit expansion, which is different) so I pointed out that it ceratinly was, just not by whom you consider to be part of the market.


Ah, and there it is again.  Then you were arguing the inefficiency of gold using a false premise which should have been easy enough for you to correct with a little google-fu.  The 'market' chose gold, not only before the advent of "fiduciary media" (it would help to precisely define that term), it was chosen as  money among the greater part of known civilization prior to the event of writing.  The fact that other cultures used other commodites much later, or that gold was not the only such free market money in common use, doesn't change the fact that gold is and was money.  The common citizen of the Roman republic was as likely to use black iron nails in place of denarius (where we get the common Imperial unit for nails, the "penny" or "pence" while the written unit is a lower case "d" for denarius) or salt as change away from the coast (where we get the term "not worth his salt"); but he still regarded the value of such things relative to their trade value in the silver coin of the realm, the denarius.

Yet gold was in use as money for at least 6000 years, while silver only has a known history to about 4000 years.  Silver corrodes, after all.

Oh, sorry.  I must have overlooked the later explaination. 

Your understanding of Gresham's Law is incomplete.  While it's true that the law is often stated, "bad money drives good money out of circulation" the test is often assumed in our modern world, "whenever the relative exchange rate is fixed as a matter of law".  In a true free market, both currencies will float against each other and will be used for their own merits by different groups.

That "make trade easier" part is what economists use the term "frictionless" to refer to a currency, or more accurately "friction" is the total cost (monetary and otherwise) of a transaction in that currency.  No currency is truly frictionless, but Bitcoin is close.  Gold is not close, and you are correct in the sense that warehouse receipts were more convient to trade in, but they represented a defined amount of gold on depost.  Fractional reserve lending was fraud before 1913 in the US.  You cannot rationally make the argument that FRL resulted in economic growth when such an activity was a crime that should have been suppressed as far as possible during those eras.  The manipulation problem certainly has been the problem, and an unavoidable one.  Deflation resulting from a rigid monetary base was not.


Great book, too.  I highly recommend it.


Yes, those empires did exist, and as far as one might consider an empire to be 'successful' they certain were, for a time.  If the laws of economics were not slow in action, even you wouldn't be advocating what you do.

"No State shall make any Thing but gold and silver Coin a Tender in Payment of Debts."

Article 1, Section 10, united States' Constitution

Really?  Is that what you're going with?


His reasons for doing what he did were not relevant to the  point.  You claimed that they were "replaced", I said that they were defaulted upon.  The treasury sticks were deliberately burned to erase all evidence that a debt ever existed.  Are you actually incapable of seeing your own error?


In the long run, we are all dead.  It's the near run that often matters in economics.


Whether or not you agree that gold was "useful" for the masses or not is also irrelevant.  I highlighted your error, and you dismiss it as not useful.  Priceless.


Where did you argue "efficiency" before I jumped in?  If you did, I missed it.  Of course, that would be easy since I tire of reading your BS.  I already am again.  I was not, and am not, arguing the relative "efficiency" of gold.


Priceless.

The brits did try it at least once, and the results were about as effective.


Of course not, neither has anything else.  While the chosen medium of exchange can become a burden upon the economy, it's not particularly helpful even under the best condtions.  The reason is that money, be it gold or silver or paper notes, is only an abstraction of wealth and not wealth itself.  Money is the corpse of wealth, as was so well stated in the book Cryptocromincon.  The wealth of a people is the products & services that they offer, the means of exchange simply facilitates trade & specialzation of labor.  Money is also the "most liquid good" which, historicly; has been gold, silver & copper.  Paper worked better, so long as it was not debased, because such cash transactions had less "friction" than metal transactions.  Bitcoin has less friction still, but paper currencies require trust in the issuing body.  Since eventually all governments default, all fiat currencies fail.  I'm not sure that bitcoin can fail, but if so it won't be because the people have lost faith in some government agency.

Again, that's not true.  I could provide a number of cases wherein FRB was not present within a gold standard & the economy at large boomed; if I were inclined to the trouble, but I'm not because I've already had enough conversations with yourself in the past to know that your worldview is as deep as dogma.


Another falsehood.  Most central banks in our modern era are truly government owned, even if the Federal Reserve of the US is not.  And that is just a legal fiction anyway, necessary only because the constitution prohibits governments from issuing "debt instruments" i.e. FRN's lacking backing.


Tally sticks weren't replaced, they were defaulted upon.  When the king of England stole the gold in the valuts of the goldsmiths, the government agents would carve the "King's debt" into both sides of a stick and then break it in half.  The agent kept the long end, and the goldsmith got to keep the short end as a recept of the theft, which supported the illutsion that it was a loan.  Eventually the king declared the debts to be "ursury" and therefore void, and teh theft was complete.  That is exactly where we get the term "left holding the short end of the stick".  And you would be wise to refrain from challenging me on my knowledge of any history, for that is one subject for which I will soundly beat you down with.


That's a possible cause, but only one among many.  As with anything else, the causes of the decline of the Roman Empire are many and nuanced.  Still, this is not an argument, it's a conjecture with an 'appeal to authority' falacy thrown in for good measure.  And I, for one, don't consider Wikipedia an authority on much, even though it's a wonderful resource.


Perhaps if you didn't start your arguments with such crap, I'd be more inclined to consider further.


Not a red herring, very relevant.  The trade between soverigns was a free market.  Moreso than any of the markets within any particular borders, if for no other reason than there was no greater power to enforce trade regulations.  As I have already noted, international trade has been a free market, as a matter of reality, up until around 1880 or later.  Even then, Admarlaity law treaties really didn't have a significant effect on international trade for decades more.


http://en.wikipedia.org/wiki/Letter_of_credit

There, I did it too.  A letter of credit isn't Fractional reserve banking, and it's not a deposit note.   It's basicly a corporate check drawn on an international bank, or more accurately, it's the credit score that the bank is providing to the receiving company and the check.

There is a whole lot of misinformation right here in this one paragraph, so let me break it down a little at a time...


Fiat only in the sense that the standard units were fixed by a matter of edict, not that they were not related to a fixed exchange rate or predominately credit/debt based mediums of exchange.  So while the statement is literally true, it is misleading in our modern context of what a fiat currency is or how it functions.


And in both cases they each became empires only by abandoning many of their early principles in favor of military and economic domination of other cultures.  It is just as ligetimate to say that the debasement of each of those nations' currencies were one consequence of expansionism, not a cause, regardless of whether or not said empires are actually desireable.


This is actually false, and provablely so.  While the common man traded in silver and rarely (if ever) saw a gold coin, national soveriegns most certainly did trade in gold well in advance of fractional reserve lending's rise to common acceptance.


Likewise provablely false.  International trade was (arguablely) a "free trade zone" clear upt to at least 1880, and the defacto international currency of such trade was gold, even if the majority of such trades were conducted as "letters of credit".

Considerin that this was just the first paragraph in this post, I see no value in continuing to read your long winded post.

I'm part-Native, and it never really worked that way.  It's not rational to consider ALL of the early American wilderness to be "owned" by the tribes that hunted it or lived nearby.  Even if it were, there were a number of different tribes that could have competing claims to ownership of thousands of arces of unmolested wilderness, and they resolved their competing claims in exactly the same manner.  The Eastern/coastal tribes were (generally speaking) no more nomadic than the white Europeans, and built wooden clan sized homes & farmed.  There is little evidence that the early colonists did not respect an "indian" claim to ownership of an obviously cultivated area.  Those tribes did not believe that a natural & undeveloped area could be "owned", so in a sense they defaulted naturally to the ancap theory of ownership in the sense that it was the labor involed in clearing the forest & constructing the highway that made that real estate "ownable" to begin with.  The concept of 'homesteading' a wild area that has no obvious (living) prior claim to ownership is based upon a similar theory, and led to conflict with the western (nomadic) tribes; who generally believed that property is owned collectively & that a tribe could possess an extended & exclusive territory well beyond the region immediately near any improved areas.  So even by their own concept of ownership (which is obviously different than our own today, and different than those of the Western tribes) the Eastern tribes had no practical complaint concerning this highway or any other until they were denied safe passage upon those roads.  But that was a completely different issue.

Everytime that a fork of the code that permits this has been attempted, it has failed.  Every time. 

Feel free to try it yourself, though.  Really, we won't mind.