Altcoin investment has always come across to me as pure financial speculation
Yeah, same with me. In dealing with altcoin people, saying that all altcoins are unadulterated shit (which I do regardless) is not popular. Here at least it is ok to confess that. Monero is not an altcoin in that sense. It is what Bitcoin was promised to be (but is not, and likely cannot be) - private cash, and nothing more. I will never buy bitcoins with the gains from my XMR; Bitcoin is legacy to me, as well as silver, gold, and bank accounts. (I will answer to the main points by Z.B. later, they seem strong, the debate is just getting interesting!  ) OK, so I'm genuinely curious to understand in what ways you think Monero as money is superior to Bitcoin as money. To me the six properties of money are: - Portable - Easily transported - Check, Bitcoin is perfectly portable and easy to conceal (pw in head) (much better than gold)
- Scarce - Fixed supply - Check, Bitcoin is perfectly scarce (much better than gold)
- Divisible - Can be split into any useful amount without losing value - Check, Bitcoin is as divisible as needed (easier to do than gold)
- Uniform - Each unit is valued the same - Check, Bitcoin is perfectly uniform (same/better than gold)
- Durable - Will not degrade over time - Check, Bitcoin private keys are perfectly durable (better than gold)
- Accepted - Widely used and valued by the population - Not yet, Bitcoin misses here for now (gold is better)
Bitcoin has always been interesting to me because it beats gold handily in 1) Portability, 2) Scarcity and to a lesser extent 3) Divisibility and 4) Uniformity. Bitcoin still loses in Acceptability but that is to be expected for 6 year old currency vs a 5000 year old one. This one follows the other 5. In what manner is Monero better along these dimensions? |
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That dynamic requires that one can (and is willing to!) short the small chain. You can not sell what you do not have and can not borrow.
My sense is that most of the investors in the more promising altcoins like Monero are Bitcoin investors as well, who, like rpietila also are strongly weighted toward Bitcoin but have just a bit in an alt or two. I don't see how the top altcoins can have anywhere near their current market caps without simply being side investments by bitcoiners who are hedging against that possibility at the rates revealed in their market cap ratios to Bitcoin. "At the rates" is the key aspect. Why suddenly change your portfolio without a fundamental reason? However, even if this isn't the case, what you're saying can only really hold true if most altcoin investors are single-coin investors. Because if they invest in, say, 50% Litecoin and 50% Dogecoin, why should they allow their portfolio to go to 90% LTC and 10% Doge, for example, as people rush into Litecoin for no fundamental reason? Their portfolio weighting already suggests they are happy with their bets, so why would they allow them to be changed? They should be selling LTC and buying Doge to maintain their weighting as they wanted it. Therefore the 10% "rogues" also empower their own altcoin competitors. And in the end, even if you don't short or sell the altcoin at all, its holders are of course much weaker hands than typical BTC holders, so there should be a lot more selling on the way up. If it's a mined coin, also, the inflation rate tamps the price back down as mined coins flow into the system, just like Bitcoin in 2014. (Monero most especially because of its fast inflation rate.) Maybe an unstated premise is that a temporary situations of an altcoin having a high "market cap" compared to Bitcoin would cause everyone to flood into that coin. I don't see that at all. Again, BTC holders tend to be Smaug-like strong hands, not price chasers. Plus, where are you going to get this sudden burst of an entire 10% of BTC holders changing their minds? If it's too slow, remember, it fails to sweep the thin markets. And even if it were somehow coordinated to deliberately spike the market cap on the thin exchanges, most of these people are going to lose horribly to slippage. Overall I just don't see it. 10% is basically 10%. People don't switch their trust affiliations fast enough, and track records don't develop fast enough. I only see this as possibly being able to have some short-term psychological impact at the margins, in a hypothetical situation where the altcoin was already right about to take over anyway. But if that situation ever looked plausible, it's spin-off time ♪  This is just what I've seen, but it has always come across to me that BTC investors invest in Bitcoin because they think there is a chance for Bitcoin to disrupt our existing banking system and build something better in it's place. There is speculation here, but it is speculation on useful creation and innovation happening, which is more properly described as investment. Altcoin investment has always come across to me as pure financial speculation, simply hoping that Altcoin x will rise in price faster than Bitcoin for a given time period. I never get the sense that Altcoin investors want to disrupt the corrupt banking world and replace it with something better, just that it is a way to make a fast buck. If this view is correct, then there is nothing long term to drive Altcoin's value up, they will just follow Bitcoin's coat tails sometime. And the better investment is to put your money where the real creation is happening, which is Bitcoin. The price action of the last Bitcoin bubble seems to support this view. First Bitcoin shot up to $1000, and only after Bitcoin stalled did the Altcoins take over and shoot up a similar amount. They were simply following Bitcoin and offered people who missed out on Bitcoin's quick rise a 2nd chance to participate in a run up. Then as Bitcoin has slowly deflated back down, Altcoins did the same, only to a much larger extent. I'm sure Altcoin's will pop again on Bitcoin's next pop, but it is not a sustainable pop, just a speculative fever for people who missed the BTC boat. |
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as Bitcoin has alot of enemies, why do you think we aren't seeing a regular stream of these types of blocks?
I'm not trying to be conspiratorial here, just factual, but there is no real gain in doing it at 1 MB. 1 MB was chosen to be a size that is fairly immune to spamming attacks. Opinions differ I guess about whether 20 MB is similarly immune. Doesn't make sense that the protocol allows non standard TX's to be accepted in block form by nodes yet at the same time they won't relay or accept them if simply propagated. The transactions were always valid. To make them invalid would require a hard fork. We try to avoid hard forks for obvious solutions. So the compromise was to change bitcoind nodes to only consider certain types of transactions as "standard" and not re-transmit transactions that did not qualify as "standard", these have since been called "non-standard". Along with this change many miners decided to not include these "non-standard" transactions either (but some still do). This did not require a fork because the base protocol, which is defined by what constitutes a valid block, did not change. As a consequence, non-standard transactions can still be included in a block because they are valid transactions from a block verification standpoint. However to discourage them, most P2P nodes and most miners ignore them. So how come they appear in the unconfirmed transaction list on blockchain.info? Because someone sent them to blockchain.info directly, or they were relayed by a node that ignores the "non-standard" agreement (not rule). blockchain.info's website is also setup to be a view of the network, they include visibility into strange and other transactions. So it would make sense they would also display information on non-standard transactions that most node's won't re-transmit. Again they are valid transactions, it's just an informal agreement to ignore/limit them. A formal agreement requires a hard fork. So any code changes made to the Bitcoin Core client do not require forks which is to be distinguished from changes to the protocol which defines what is acceptable as a block and requires a fork? I'd define it as Bitcoin is the blockchain data structure and the set of rules that govern what constitutes a valid block. If you want to change the rules that govern what is a valid block (transactions and block structure) then that is a fork. Anything else is not a fork. The reasoning is simple, these are the rules that govern if a specific chain is valid and thus govern consensus. Nodes however can operate however they want, as long as they agree on the rules that define a valid block. If some nodes decide on a different set of rules, then they will be forced onto their own chain and lose consensus with the main chain. Take Gavin's IBLT proposal as an example. This is a major change to bitcoind that changes how nodes communicate blocks to each other. This is not a fork simply because it does not change anything at all about what defines a valid or invalid block. Just the communication of blocks. Take LukeJr's insertion of Ubuntu nodes that block SatoshiDice type services into the Ubuntu default client. This was not a fork because he simply made the nodes decide not to relay transactions to/from specific addresses, but these nodes still followed the same rules on what is a valid block, and so they would accept these transactions after they were confirmed in a block. (To do otherwise would be a fork and they would be kicked onto their own tiny chain). and your definition of a hard vs soft fork? They are both forks in the sense above. The difference is in whether or not all nodes need to change to accept blocks under the new rules or if the change is backward compatible and old nodes can still function without changing themselves. This is a good description http://bitcoin.stackexchange.com/questions/30817/what-is-a-soft-forkObviously a soft fork is easier to roll out. A hard fork required everyone to agree to the change and the exact block to change. |
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as Bitcoin has alot of enemies, why do you think we aren't seeing a regular stream of these types of blocks?
I'm not trying to be conspiratorial here, just factual, but there is no real gain in doing it at 1 MB. 1 MB was chosen to be a size that is fairly immune to spamming attacks. Opinions differ I guess about whether 20 MB is similarly immune. Doesn't make sense that the protocol allows non standard TX's to be accepted in block form by nodes yet at the same time they won't relay or accept them if simply propagated. The transactions were always valid. To make them invalid would require a hard fork. We try to avoid hard forks for obvious solutions. So the compromise was to change bitcoind nodes to only consider certain types of transactions as "standard" and not re-transmit transactions that did not qualify as "standard", these have since been called "non-standard". Along with this change many miners decided to not include these "non-standard" transactions either (but some still do). This did not require a fork because the base protocol, which is defined by what constitutes a valid block, did not change. As a consequence, non-standard transactions can still be included in a block because they are valid transactions from a block verification standpoint. However to discourage them, most P2P nodes and most miners ignore them. So how come they appear in the unconfirmed transaction list on blockchain.info? Because someone sent them to blockchain.info directly, or they were relayed by a node that ignores the "non-standard" agreement (not rule). blockchain.info's website is also setup to be a view of the network, they include visibility into strange and other transactions. So it would make sense they would also display information on non-standard transactions that most node's won't re-transmit. Again they are valid transactions, it's just an informal agreement to ignore/limit them. A formal agreement requires a hard fork. So any code changes made to the Bitcoin Core client do not require forks which is to be distinguished from changes to the protocol which defines what is acceptable as a block and requires a fork? I'd define it as Bitcoin is the blockchain data structure and the set of rules that govern what constitutes a valid block. If you want to change the rules that govern what is a valid block (transactions and block structure) then that is a fork. Anything else is not a fork. The reasoning is simple, these are the rules that govern if a specific chain is valid and thus govern consensus. Nodes however can operate however they want, as long as they agree on the rules that define a valid block. If some nodes decide on a different set of rules, then they will be forced onto their own chain and lose consensus with the main chain. Take Gavin's IBLT proposal as an example. This is a major change to bitcoind that changes how nodes communicate blocks to each other. This is not a fork simply because it does not change anything at all about what defines a valid or invalid block. Just the communication of blocks. Take LukeJr's insertion of Ubuntu nodes that block SatoshiDice type services into the Ubuntu default client. This was not a fork because he simply made the nodes decide not to relay transactions to/from specific addresses, but these nodes still followed the same rules on what is a valid block, and so they would accept these transactions after they were confirmed in a block. (To do otherwise would be a fork and they would be kicked onto their own tiny chain). |
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as Bitcoin has alot of enemies, why do you think we aren't seeing a regular stream of these types of blocks?
I'm not trying to be conspiratorial here, just factual, but there is no real gain in doing it at 1 MB. 1 MB was chosen to be a size that is fairly immune to spamming attacks. Opinions differ I guess about whether 20 MB is similarly immune. Doesn't make sense that the protocol allows non standard TX's to be accepted in block form by nodes yet at the same time they won't relay or accept them if simply propagated. The transactions were always valid. To make them invalid would require a hard fork. We try to avoid hard forks for obvious solutions. So the compromise was to change bitcoind nodes to only consider certain types of transactions as "standard" and not re-transmit transactions that did not qualify as "standard", these have since been called "non-standard". Along with this change many miners decided to not include these "non-standard" transactions either (but some still do). This did not require a fork because the base protocol, which is defined by what constitutes a valid block, did not change. As a consequence, non-standard transactions can still be included in a block because they are valid transactions from a block verification standpoint. However to discourage them, most P2P nodes and most miners ignore them. So how come they appear in the unconfirmed transaction list on blockchain.info? Because someone sent them to blockchain.info directly, or they were relayed by a node that ignores the "non-standard" agreement (not rule). blockchain.info's website is also setup to be a view of the network, they include visibility into strange and other transactions. So it would make sense they would also display information on non-standard transactions that most node's won't re-transmit. Again they are valid transactions, it's just an informal agreement to ignore/limit them. A formal agreement requires a hard fork. |
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as Bitcoin has alot of enemies, why do you think we aren't seeing a regular stream of these types of blocks?
I'm not trying to be conspiratorial here, just factual, but there is no real gain in doing it at 1 MB. 1 MB was chosen to be a size that is fairly immune to spamming attacks. Opinions differ I guess about whether 20 MB is similarly immune. Doesn't make sense that the protocol allows non standard TX's to be accepted in block form by nodes yet at the same time they won't relay or accept them if simply propagated. The transactions were always valid. To make them invalid would require a hard fork. We try to avoid hard forks for obvious solutions. So the compromise was to change bitcoind nodes to only consider certain types of transactions as "standard" and not re-transmit transactions that did not qualify as "standard", these have since been called "non-standard". Along with this change many miners decided to not include these "non-standard" transactions either (but some still do). This did not require a fork because the base protocol, which is defined by what constitutes a valid block, did not change. As a consequence, non-standard transactions can still be included in a block because they are valid transactions from a block verification standpoint. However to discourage them, most P2P nodes and most miners ignore them. |
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as Bitcoin has alot of enemies, why do you think we aren't seeing a regular stream of these types of blocks?
The attacks yield zero profit, and in actuality cost money. Only a government agency (or something similar) not driven by profit and highly motivated to stop bitcoin would bother with these types of blockchain/UTXO bloat attacks. |
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I was assuming the unconfirmed TX set to stay relatively the same size if the cap was lifted.
First off, you can't take a 1BTC address and create 10000 zero balance outputs with 0.0001BTC fees. They are invalid and wouldn't be accepted by the rest of network.
Second, even if the attacking miner constructs non zero output TX's, he can't just spring this block onto the network filled with those TX's if the network nodes haven't heard about them beforehand. They will reject the bloated block since they don't recognize any of the content.
There's a difference between non-standard transactions and invalid transactions. Non-standard transactions are a subset of valid transactions. Examples of non-standard transactions are TXs with outputs less than the dust limit or TXs with insufficient fees; such transactions may still be valid, however. Clients do not relay nonstandard transactions but will accept a solved block that contains them (provided each TX in the block is still valid). Example of blocks full of nonstandard (and pointless) transactions are Block #309657 and Block #309740. They each contain thousands of 1 satoshi dust outputs that will pollute the UTXO set for a long time! BLOCK #309740: 10,486 DUST OUTPUTS
ADDRESS SENT FROM TX HASH N_OUTPUTS
===================================================================================================================
1Enjoy1C4bYBr3tN4sMKxvvJDqG8NkdR4Z b2b6112e73cbe0937a1b60c9abfc4c2ca6e26b2612c90ec598b1cd28787a553e 749
1Enjoy1C4bYBr3tN4sMKxvvJDqG8NkdR4Z 5e5d17901378b8835861d8cc0df2b5f9bf3c86759c3821f96470cd852344d799 749
1Enjoy1C4bYBr3tN4sMKxvvJDqG8NkdR4Z b2bf7525618ed5402024d5bff6f477a2093965d3f11ececbc2b6a9b5bbe1f5d5 749
1Enjoy1C4bYBr3tN4sMKxvvJDqG8NkdR4Z 3df8f4a7e06486bb3b0700935a16fc6d4fad397dcb6c88b9c4b6a7453301aa54 749
1Enjoy1C4bYBr3tN4sMKxvvJDqG8NkdR4Z ae05ddfc8aa206b213c71ec0e96723dcd4ff03a71ca76b469d225d1c60d9e262 749
1Enjoy1C4bYBr3tN4sMKxvvJDqG8NkdR4Z f75b455b4df94bcdcd54985b4aeea9948d2a1dca0f63c65b85ad2d941050c5cf 749
1Enjoy1C4bYBr3tN4sMKxvvJDqG8NkdR4Z ee61b911610f66f539832699fbbf4ab3955c8bd5ad0cfa570ff500dedcde5bf8 749
1Enjoy1C4bYBr3tN4sMKxvvJDqG8NkdR4Z a22186cbcf82cac66da17183209f20f76088934c931bec131fe71ad2f250e8f8 749
1Enjoy1C4bYBr3tN4sMKxvvJDqG8NkdR4Z 0469286403543b7d794fe52661135a80142c47ac541793c703fd637a4e9dc0bf 749
1Enjoy1C4bYBr3tN4sMKxvvJDqG8NkdR4Z a71dc9abd8bae377b661b0c288222acf2ab62fc7bf96b0bab2dd5354fbc91643 749
1Enjoy1C4bYBr3tN4sMKxvvJDqG8NkdR4Z f437d94c1cfe818c44f4505f3e6506839113ec747d815a867e953a4164276047 749
1Enjoy1C4bYBr3tN4sMKxvvJDqG8NkdR4Z eb95d902eb841ce23c9c1466e010cbb05d43d1c248376440f9dd56ee1bc8b3e5 749
1Enjoy1C4bYBr3tN4sMKxvvJDqG8NkdR4Z b62416ceb3453d6dcba95213e4e222915438a4b70eba37e09099110b20be0d52 749
1Enjoy1C4bYBr3tN4sMKxvvJDqG8NkdR4Z f3aba1c064e9c9a1d49db3bce42c07c184a0b329366994000fa49f0bc8f3ba16 749
BLOCK #309657: 7,490 DUST OUTPUTS
ADDRESS SENT FROM TX HASH N_OUTPUTS
===================================================================================================================
1Enjoy1C4bYBr3tN4sMKxvvJDqG8NkdR4Z 2e7fdb43e2a0fe17cfe2d283a2da4d375204700aef4bf2c31056125f4383b121 749
1Enjoy1C4bYBr3tN4sMKxvvJDqG8NkdR4Z 3d1105d7c2cd36705b2163fa2d0f74973377467aefea72156a30444f330acf71 749
1Enjoy1C4bYBr3tN4sMKxvvJDqG8NkdR4Z 5c4e56943f3128629ebecb41f5916bd7bc1dceaccc37f29e59c385464f2bf558 749
1Enjoy1C4bYBr3tN4sMKxvvJDqG8NkdR4Z 536adfb745ffaa8c1fb698414475f5ca7d82846eadd912cfe0a76045d78c3198 749
1Enjoy1C4bYBr3tN4sMKxvvJDqG8NkdR4Z 45c7544374e88de47d9be2e3e100f4aa10aafd9469c4dba8d55a870f83c312ab 749
1Enjoy1C4bYBr3tN4sMKxvvJDqG8NkdR4Z e7ae2378a44a940a8c872a63e43fa67c5a023df4df3f9ca8011611422fc2861c 749
1Enjoy1C4bYBr3tN4sMKxvvJDqG8NkdR4Z d864e3cc07dc79f221bd91210b274e136159ccbb5c9eafad906d9d08c5558ce5 749
1Enjoy1C4bYBr3tN4sMKxvvJDqG8NkdR4Z 3dedbc086d5cfc81bd3614a1b3fab1bb4d73d8982d9552e811f84f0118a1fc12 749
1Enjoy1C4bYBr3tN4sMKxvvJDqG8NkdR4Z 7337d7ac353a9283c65a1ab99d28f97997784a0fb26d0dc0b59f2fa2556c4460 749
1Enjoy1C4bYBr3tN4sMKxvvJDqG8NkdR4Z 634a7fdcba3fe91da07f44e6b9bee1c659cbfca27076bd8b61984d062c071651 749
A miner can fill a block full of nonsense transactions very easily. Good point on the inclusion of non-standard but valid transactions. What I outlined just included standard & valid transactions. What you outlined is how much further an attacker could push this, here 1BTC could turn into 100M satoshi dush outputs.... On the UTXO topic, the distribution of balances here http://bitcoinrichlist.com/charts/bitcoin-distribution-by-address?atblock=350000shows that 96.97% of addresses contain less than 0.001 BTC. Now these are address totals, any analysis of UTXO outputs would show that more than 96.97% of UTXO outputs contain less than 0.001BTC. I think this shows that the UTXO is already vastly populated by dust nonsense that simply sits around. If UTXO size becomes an issue any intelligent implementation could easily swap these out to a lower tier of storage. Most of this dust will never be spent simply because you'd have to pay more in fees than the output is worth, spending them is literally burning money. |
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Let me ask again.
Does anyone know the average number of unconfirmed TX's that exist in mempool at any given time, the average size in MB (i know <1) and what % of them get cleared into a block every 10 minutes or so?
https://blockchain.info/en/unconfirmed-transactions2MB, not much. thus, it appears an attacker would have to construct and broadcast all his own fake or withheld tx's to try and perform this bloated block attack which, imo, is way too expensive and risky even though he would be paying himself his own tx fees. Well to be fair, the reason why we don't see this attack is because with the 1MB limit it is not possible to pull off. If BTCGuild started to do this, they could only take 3% of the blocks to 1MB, which is immaterial. I think it would technically be very easy for a pool/miner to add a huge number of transactions into a block. For every address they have with 1BTC, they could create 10,000 transactions with 0.0001 fee each (which they receive back in the coinbase transaction) by simply creating a chain of transactions in rapid succession. With 100BTC, they cloud create 1M transactions at zero cost because they would only include the transactions in their own block and recover the fees. In the real world though, a pool could only do this a few times before miners would abandon them en mass, destroying the pool's business in the process. So it seems unlikely At large solo miner with maybe 0.1% or 0.3% of the hash rate could start to inject very large 1GB blocks every 200 or 400 blocks or so, but in that case I could very easily see the rest of the pools agreeing to ignore those massive blocks. And even if they didn't coordinate to ignore them, the large blocks would propagate so slowly they might not be included anyway. (The attack requires transmitting a full block since Gavin's IBLT wouldn't help here). Another way to address the issue of one or two rouge pools making large blocks, is to set a floating blocksize cap that resets with each difficulty adjustment and is based on an average of the last x number of blocks plus some overhead. Now to implement the attack an attacker would need to create false transactions that everyone mines on to bring up the average, but this would become too expensive since the fees would be lost to other miners. I was assuming the unconfirmed TX set to stay relatively the same size if the cap was lifted. First off, you can't take a 1BTC address and create 10000 zero balance outputs with 0.0001BTC fees. They are invalid and wouldn't be accepted by the rest of network. You start with 1BTC and send 0.9999BTC to a new address with a 0.0001BTC fee -> then 0.9998BTC -> 0.9997BTC and so on until you have created a chain of 10,000 transactions, each paying a 0.0001BTC fee. This is a chain of valid transactions. Since these fees are recovered by yourself, you don't mind paying them and can do this over and over and over again. For every 100BTC that you control you can create 1M transactions in every block you mine with this attack. Second, even if the attacking miner constructs non zero output TX's, he can't just spring this block onto the network filled with those TX's if the network nodes haven't heard about them beforehand. They will reject the bloated block since they don't recognize any of the content.
Blocks can include any transaction, even ones that network nodes haven't heard about. Today nodes receive transactions a minimum of 2 times today, once as it is broadcast, and a 2nd time in the block it is picked up in. The entire reason for Gavin's IBLT proposal is to eliminate this wastefulness and take advantage of the fact nodes already have heard of most of the blocks. However even after IBLT is implemented you can still include unannounced transactions in blocks. You just would have to send the whole block and not the IBLT diff. |
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I disagree. From my pov, everybody here has ego issue to some extend. Anonymint just has a slight différent view of the situation worldwide. Maybe more desperatly cynical. But i value his inputs as much as others around here. On the end i think we all want the same: bitcoins success, pocket money, and a fairer world.
At a basic level, we all are here because we believe the current system is broken, that most others are wrong, and that we know why and know of a better system (Bitcoin or some other form of sound money). It takes a certain amount of ego to take on that view of the world. The fact that we are right in knowing that Bitcoin is a better system, is immaterial. It takes a large amount of Ego to believe you are right and the vast majority are wrong. |
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Let me ask again.
Does anyone know the average number of unconfirmed TX's that exist in mempool at any given time, the average size in MB (i know <1) and what % of them get cleared into a block every 10 minutes or so?
https://blockchain.info/en/unconfirmed-transactions2MB, not much. thus, it appears an attacker would have to construct and broadcast all his own fake or withheld tx's to try and perform this bloated block attack which, imo, is way too expensive and risky even though he would be paying himself his own tx fees. Well to be fair, the reason why we don't see this attack is because with the 1MB limit it is not possible to pull off. If BTCGuild started to do this, they could only take 3% of the blocks to 1MB, which is immaterial. I think it would technically be very easy for a pool/miner to add a huge number of transactions into a block. For every address they have with 1BTC, they could create 10,000 transactions with 0.0001 fee each (which they receive back in the coinbase transaction) by simply creating a chain of transactions in rapid succession. With 100BTC, they cloud create 1M transactions at zero cost because they would only include the transactions in their own block and recover the fees. In the real world though, a pool could only do this a few times before miners would abandon them en mass, destroying the pool's business in the process. So it seems unlikely At large solo miner with maybe 0.1% or 0.3% of the hash rate could start to inject very large 1GB blocks every 200 or 400 blocks or so, but in that case I could very easily see the rest of the pools agreeing to ignore those massive blocks. And even if they didn't coordinate to ignore them, the large blocks would propagate so slowly they might not be included anyway. (The attack requires transmitting a full block since Gavin's IBLT wouldn't help here). Another way to address the issue of one or two rouge pools making large blocks, is to set a floating blocksize cap that resets with each difficulty adjustment and is based on an average of the last x number of blocks plus some overhead. Now to implement the attack an attacker would need to create false transactions that everyone mines on to bring up the average, but this would become too expensive since the fees would be lost to other miners. |
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The simple reason why I still do not understand the concerns over increased blocksize and scalability, is because the mining mechanism is not impacted by blocksize at all.
We could end up with 100-1000 very large centralized blockchain maintainers on the P2P network (pools, universities, CBs, paid services, etc), but the mining mechanism would be just as distributed as it would be if we have 10KB blocks and nodes were run on every phone in the world. And this mechanism is very decentralized today.
The scaling concerns are just related to centralization of nodes on the P2P network, but these are just maintainers of a database, a database secured by miners.
I agree with you totally, but it does have a relation and that part of the incentive structure, miners are incentivized to find blocks as fast as possible, and have there blocks propagate through the network as fast as possible so to secure their work, this is an incentive to make small blocks, as larger blocks take longer to propagate and pose a risk of being orphaned. this becomes important and the marginal cost of utility plays out when rewards diminish. on the other hand nodes are just incentivized to store the transaction history and keep the protocol intact, IMO this block size debate is not about block size but other interests. After Gavin's IBLT proposal is implemented, there will be no need to re-transmit transactions in a block, and miners will be incentivized to include ALL transactions in their mempool into a block (since this reduces the likelihood of the diff being too large). The last analysis of miner incentives and transaction fees that I've seen (it has been a bit though) showed that an average transaction needed a 0.0008 BTC fee to make it worthwhile to include in a block (which is higher than the current 0.0001 BTC min fee). The reasoning was the extra time required to transmit a transaction's data slowed down propagation of the block and increased the possibility of another block mined near the same time propagating faster. Most miners will include 0.0001 BTC fee transactions though, even though the math showed none of them should. So the way I've seen it: 1) the upcoming changes to block transmission align miner incentives to include more transactions and 2) miners have already demonstrated behavior that shows they will include unprofitable transactions in order to support the network (because it's in their interest). I absolutely agree that Bitcoin should always be very careful about changing, especially regarding the incentive structures and maintaining it's censorship resiliancy. But ecosystem growth with direct usage is also essential to it's success, and in the blocksize case I only see ecosystem growth pros and immaterial cons. |
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EDIT: On the other topic, I also don't think scalability is this huge doom and gloom issue for bitcoin, so long as we allow it to happen! Worst case, when BTC is adopted worldwide it may not be usable for small payments, and you may need to rent a kick-ass cloud computer to run a full node. But that's an effect of too much success... I wish we had that problem today! :-) This is why I'm not in a huge rush to post my ideas on a scalable blockchain. [today I'm running a full node at home on an old junker laptop I bought for $25 on ebay. We have a long way to go]
precisely. another way of saying it is "you can't have a universal money if it's not universal". The simple reason why I still do not understand the concerns over increased blocksize and scalability, is because the mining mechanism is not impacted by blocksize at all. We could end up with 100-1000 very large centralized blockchain maintainers on the P2P network (pools, universities, CBs, paid services, etc), but the mining mechanism would be just as distributed as it would be if we have 10KB blocks and nodes were run on every phone in the world. And this mechanism is very decentralized today. The scaling concerns are just related to centralization of nodes on the P2P network, but these are just maintainers of a database, a database secured by miners. |
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The age old model is that when the banks get out of control, a few fail (or a few hundred) and it resets as the survivors scoop up the remains. Now with the use of state power, they have taxpayer funded bailouts, bail-ins and all sorts of new ways to destroy wealth.
It was the emergence of the "Too Big To Fail" policy which created this and was effectively codified into law with the LTCM bailout in the late 1990s. To Big To Fail = disabling the clearing mechanism which is necessary for a functioning capitalist society. If you are too big to fail, then you can do anything and be as inefficient as possible, but that inefficiency will never be cleared out of the market. The creation of the FED in 1913 was essentially to formation of a too big to fail policy at the government level (before the US gov would have to go for bailouts itself). But as you pointed out banks and other industry were still allowed to fail. This stopped in the 1990s and TBTF was extended to corporations, which is why every corporate entity from banks to auto manufactures (i.e. GM/Chrysler) have tried to position themselves as too big to fail. This will continue until the dollar fails, effectively destroying the too big to fail enabler. Perfectly stated. TBTF has also been added on the other side of the dollar though with the IMF SDRs (XDR), so we get to break the world now, not just the United States. Here's how: As you noted, LTCM was the catalyst for the smaller side TBTF. Since this happened after we already had the fall of USSR from bond failures, the USA certainly has had a similar risk. XDR are still a small percentage of FOREX trade, but as the USD gets closer to a potential fail point we should see that percentage grow. Jim Rickards postulates that the US might do a gold bail-in and initiate a new gold standard, but I suspect that would be a last resort after the XDR TBTF pops. He details the process the US could use to accomplish this quite well at the end of his last book. Its feasible. Bitcoin could also potentially fill that spot if investment continues to advance. Foreign governments are draining their gold out of the FED and back to their home countries, it's dropped below 6,000 tons for the first time since WWII. Coincidence? I think not. Also notice that the last set of withdraws starting in 2007 before the big crash.  |
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The age old model is that when the banks get out of control, a few fail (or a few hundred) and it resets as the survivors scoop up the remains. Now with the use of state power, they have taxpayer funded bailouts, bail-ins and all sorts of new ways to destroy wealth.
It was the emergence of the "Too Big To Fail" policy which created this and was effectively codified into law with the LTCM bailout in the late 1990s. To Big To Fail = disabling the clearing mechanism which is necessary for a functioning capitalist society. If you are too big to fail, then you can do anything and be as inefficient as possible, but that inefficiency will never be cleared out of the market. The creation of the FED in 1913 was essentially to formation of a too big to fail policy at the government level (before the US gov would have to go for bailouts itself). But as you pointed out banks and other industry were still allowed to fail. This stopped in the 1990s and TBTF was extended to corporations, which is why every corporate entity from banks to auto manufactures (i.e. GM/Chrysler) have tried to position themselves as too big to fail. This will continue until the dollar fails, effectively destroying the too big to fail enabler. |
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Here is nice piece from Brian Forde, director of the MIT Cryptocurrency Initiative. His article draws our attention to the following four problems with Lawsky's proposed BitLicense regulation: 1. Updates to "apps" would need approval before they could be rolled out. 2. Start-ups would require approval from the NYDFS before they could raise new funds (if a new investor provides an investment for more than 10% of the company). 3. Companies engaged in money transmission would still need a Money Transmitter License in addition to a BitLicense. 4. Open-source wallet developers would apparently fall under the regulation as well (even though a wallet like Electrum does not have access to the user's funds). Just the fact that an unelected bureaucrat can propose such sweeping control and power over individuals, without being laughed at and run out of the country, demonstrates that "The People" on which the US was based have failed. |
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Agreed with all. And that is why gold as money worked for so long. Yes there were cycles, but since money never extended too far beyond the base money (M0 gold), the busts were relatively small.
With debt money, as you said 95% of money in use isn't even printed yet, and on top of that is further leverage. This means that the bust would be massive and crushing in a manner that could never happen under a gold standard.
What the US traded was a series of small but easily recoverable busts that continuously cleansed out the system, for a system that appears stable but in reality is not, the series of small busts are simply being allowed to build into one massive bust.
Absolutely. However, governments are now such control freaks (unlike in 1907 when the crash then was considered more like a force of nature, and allowed to work itself out), that the one massive bust to come may well be met with one massive bout of money printing! And this already started in 2008 after which we have seen the largest globally coordinated money printing spree in human history. The thing to remember though, is you can't print money. You can only add units to the ledger, which has the effect of devaluing (I'd call it stealing) current units and replacing them with new units, however the total monetary value of all the units remains the same. What can happen is people simply lose confidence in the existing monetary system and stop subscribing value to it. When this happens the total value of all the units actually decreases. This is why for example during Germany's hyperinflation no one had money to buy anything despite the fact the government was putting wagons full of money in people's hands. Sure Germany was printing units, but the total value of all units (old and newly printed) crashed. So governments can be control freaks to whatever extent they want. But once people stop subscribing value to their units of money, their ability to control crashes. |
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Happened for a few hours today as well. Japan, then Europe. Again though, someone stepped in. This is really interesting. I think it goes back to a fundamental flaw in debt-based money, particularly when FRB means that 95% of a currency is not even government printed "fiat". The flaw is interest, specifically that debt-money which attracts interest is only sustainable long-term if real GDP grows faster than the real interest rate which debt-money requires to service it. Otherwise most money is drained from the productive economy and winds up at the banks where the only cleansing mechanism is bank insolvencies which returns money to the economy. Since bank insolvency is pretty much "banned" by CBs as banks are backstopped by printed money, then wealth transfers and economic distortions continue to build up relentlessly. You just described what happened in the 1920s and then 1930s. And on the first FED cycle they decided against allowing the cleansing mechanism to function, and instead choose monetary inflation. Equity-based money and asset alternatives (Gold, silver, real-estate, Picasso paintings) do not have this flaw, however, until Bitcoin was invented, none of them were suitable for 21st (or even 20th) Century long-distance, fast moving commerce.
And that is why gold as money worked for so long. Yes there were cycles, but since money never extended too far beyond the base money (M0 gold), the busts were relatively small. With debt money, as you said 95% of money in use isn't even printed yet, and on top of that is further leverage. This means that the bust would be massive and crushing in a manner that could never happen under a gold standard. What the US traded was a series of small but easily recoverable busts that continuously cleansed out the system, for a system that appears stable but in reality is not, the series of small busts are simply being allowed to build into one massive bust. |
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