Yes I understand. They check the blockchain.. But how can they tell which blocks in the chain are legitimate? If the small minority of miners changes to new rules unanimously, there wont be a fork and everyone will be forced to use the same longest blockchain now being generated under new rules. So how then does a client reject a transaction that is in the blockchain it uses I ask?

I thought the merchants only sent and received transactions and had nothing to do with the blockchain unless they were miners themselves?

EDIT: Also my initial argument was that due to how the system is designed it will eventually lead to a really small minority control 100% of miners and when the switch happens it would be 100% of miners not 95%, what then?

Please explain to me how they can do that?

Wouldn't you say that when the price falls at a certain difficulty it forces the weaker miners out first since the miners with better equipment who are more invested are willing to take and usually can afford some small losses before they'd have to quit?


What I'm asking for is please show me how the number of individual miners is net growing and why and how the number of individual miners isn't net shrinking as I outlined it is. Cause when I look at the Bitcoin history there was a time when there were a lot more individual miners than there are today, so I don't see how you could possibly be right.

I believe this to be false with the rising difficulty without a rising price of Bitcoins.

EDIT: My thinking in this OP is flawed by my lack of understanding of how the Bitcoin system works.

So I did some more thinking about my post here and specifically the lesson about if there's centralized power to be auctioned off, the auctioned will always follow and a really alarming thought crossed my mind:

I fear I may have discovered a fatal flaw in Bitcoin's design.

(I know what you're thinking: "oh no, not one of those again.." but please hear me out. I'd much rather you prove me wrong than me being right, I just fear that I'm not wrong.)


The fatal flaw is in how network gets secured through CPU power and more specifically the way the reward is tied to the hashing difficulty. Think about it, if you examine the current situation of who the miners are, not the mining pools which are irrelevant to this problem, but the specific individual miners.. who are they? I'll tell you! They are those individuals among us  that have the right equipment and can get electricity at the right price in order for mining to be a profitable venture for them.

Do you see the problem yet?

Miners, in other words those who safeguard the Bitcoin system against any attacks on the system as it is but also safeguarding against a new client with a change of the pre agreed upon rules, are getting whittled down to a small minority that has the capital to compete! Don't you see? It's a clear example of concentration of power! As the difficulty rises less and less miners are able to stay afloat and compete and smaller and smaller is the number of safeguarding individual miners!

It doesn't take a crystal ball to figure out where this is leading.. Eventually you are going to have a few powerful corporations running all the mining power and we're all going to be at their mercy when it comes to the rules of the system. And believe me, it's a given that such concentrated power will inevitably get auctioned off!

Btw this is how Satoshi envisioned the system staying secure in his Bitcoin paper:

Can we really count on a small minority of nodes to remain honest? The entire human history says: NO!


I'm a bit shaken just by thinking about this so please, someone, please put my mind at ease and show me how I am wrong, how the scenario I just laid out isn't going to come true?

Did you read the sentence before last? 

Oh boy 

Thanks for the advice  Btw I like your signature!

tl;dr: What if miners demanded insurance on a proposed BIP and we had company offering such insurance instruments forcing it to examine every proposal for it's risks and being financially motivated to get their assessment right putting the miners minds at ease and forcing the developers to be open and honest about their proposals?

[TOPIC]
As we are facing this dilemma about which BIP is the best way forward I see a few potentially very dangerous paradigms shine through the discussions I see on how to solve this dilemma and prevent it in the future. For example genjix deals with the later question in this article: http://bitcoinmedia.com/cathartic-progress/

I spoke to genjix last night about a few of my objections to his idea and explained to him my own idea. I would like, as a thought experiment, introduce my idea to everyone, to see what kind of reactions it would get, whether it has any merits and potential legs.


[INTRODUCTION]
It is my strong belief that Bitcoin will not succeed if it can't maintain it's integrity of the promised rules embedded in the original client. It is these rules(scarcity, security, sovereignty in control) why I support and believe in Bitcoin so strongly. And it's why any potential breach of these rules will instantly make me lose faith and leave never to return to Bitcoin ever again.

I speculate I'm not the only one who shares these beliefs so I think the big question is how do we insure the integrity of these rules? How do we insure the whole system doesn't get corrupted by a small group of people and changed in a profound way.

To answer this question I believe the best approach is to look to the real world for examples of what exactly enables such events. And from all of my research into human history on this particular subject this one lesson speaks volumes to me: If there is centralized power or influence to be auctioned off, the auctions are soon to follow. (hence the corporatism, often mistaken as capitalism, in today's real world)

Because of this lesson I do not believe any one individual, or one group of individuals, elected or picked otherwise, should hold centralized power or influence over everyone else no matter what the issue is. As soon as we make this mistake, however well-intentioned, the auctions are going to follow and eventually we're going to end up with a system that will look much like what we have in the real world today.

[CONCEPT]
But how then one can solve a dilemma such as we face without centralizing power or influence you ask? Well I think the answer is pretty straight forward:

The main problem any of the proposed changes has is the attached risk factor. The risk of making the wrong step in the development complicating future developments, the risk of making the whole system more susceptible to attacks, the risk of making mistakes causing damage(bugs), the risk of dividing the community, ect..

Well, if it's all about risk, then I ask you, what do we do in the real world when we face a credible risk? We insure ourselves! And my main point of this post is: Why don't we do the same?

Think about it. Who bears most of the risk? I would argue the most risk lies with the miners since they have the most invested in this system and are making a profit from it. Second most lies with all the Bitcoin holders but even so, their holding is irrelevant if there aren't any miners to enable them the use of it, so I'd argue the risk in both cases lies primarily with miners.

[IDEA]
Here comes my thought experiment: What if we had a insurance company, or more companies competing with each other.., that offered the miners insurance on a proposed change to Bitcoin going bad in any way? What if miners wouldn't agree to a proposed change unless they could get a good insurance deal? What if they would weigh which proposed change was better by how good the insurance deal they could get for it was? What would happen?

My theory is that if such a company existed and miners demanded insurance on proposed changes it would need to have people employed who were capable assessing the risks carried by a particular proposed change. If a proposed change carried too much risk, the insurance deal wouldn't be good enough for miners to feel comfortable taking the risk so they'd reject it. It would force the developers to be as open and as helpful to the insurance company's experts in order to convince them how small or non existent the real risks attached to their proposed change is. It would punish the insurance companies for being wrong in their assessment by being liable for a big payout if the risky event came true. It would put miners minds at ease without the need to completely understand the intricate technical details of each proposed change. There would be no need for any kind of centralization of power or influence in which proposed change should get adopted, instead there would be a ratting attached by a company financially incentivized to get this rating right, especially if it had competition!

[END]
Insurance companies are also how I personally believe we could have the real world without any need for governments and their coercive services but that's a whole different topic.

Anyway, I invite you to please share your opinion about this idea, and please don't get hanged up on the fact that we don't have such an insurance company or how it could possibly operate, the thought experiment is about a scenario where we have one. Thank's for your attention!

Basically no matter what anyone around here says, this guy knows what are the facts of reality when it comes to economic theory and there's no convincing him otherwise hence why I didn't bother even trying.  

How nice of you to notice! 

Of course not, what you said makes perfect sense and you backed it up with real world evidence.

I just get a rage fit at zombies who don't investigate their beliefs and just blindly repeat something someone else taught them with zero evidence to back it up. It's the attitude more so than the person. And since the majority of people at no fault of their own weren't taught any critical thinking skills in school, just like I wasn't, I really don't have any patience left to give BS credibility by elevating my way of communicating to a civilized debate so I just end up in a rage.

Half jokingly but still, I'm starting to get the feeling SgtSpike is payed to spread the status quo economics 101 propaganda BS over here.

Well well, so you are merely repeating what you heard or read from someone else pretending as if you're teaching some facts of reality. What if your precious "basic economics" has it all wrong? What then dear sir?


Please. You can shove those basic 101 economics up where the sun don't shine. Those same basic economics are what enable these huge socialistic and oppressive governments, it's those same basic economics that enable the governments around the globe to wage all these different wars, it's those same basic economics that enable wealth distribution through the invisible hand of inflation via fiat money created out of thin air by a small number of people, benefiting their friends who get it first and growing the wealth disparity bigger and bigger, it's those same basic economics that are what caused and are exacerbating the current depression and it's those same basic economics that completely failed to see it coming.

Here's an interesting thing though, not all economic thought is the same. The Austrian school of economic thought for instance strongly disagrees with the basic economics you hold so dearly, it perfectly predicted this crisis we're in right now and it's aftermath and has completely different solutions to the problem. So while your glorious basic economics has zero evidence of credibility and a long resume of disastrous failures, forgive me if I take a big steamy dump on it, and listen to the other theory that got it exactly right in every single case so far.


BULLSHIT. Citing other people saying what you're repeating after them IS NOT EVIDENCE.

Hmm looks like I really didn't understand what the 51% or more hashing power attack was suppose to look like or do.

I reread this:

And am now even more confused than before. If I understand this right, then this shouldn't be under the "Probably not a problem" category and am actually surprised we haven't had this type of an attack yet. I still don't understand why the need for 50% or more, why say 30% wouldn't be enough..

How does that happen if the blocks you found are fraudulent and will get ignored once the "good guys" find a block?

What? What do you mean ahead for a few hours/days? I thought the 51% attack was carried out by getting lucky with the 51% of hashing power or more to get at the min 6 consecutive blocks found by your miner so that you can insert a fraudulent doubles spent transaction into the block chain and fool someone it is legitimate before you run out of luck and some other miner finds a block invalidating your transaction?

I thought all the amount of hashing power you have raises the odds of finding 6 consecutive blocks high enough to make it worthwhile to even attempt such an attack and that 51% was deemed where these odds get high enough?

I wished people knew statistics and realized that you need far more than 51% in order to pull of what you're suggesting.

There you go again..  


SAYS WHO?! HOW DO YOU KNOW ALL THIS?! FKING STOP SPREADING BS WITHOUT EVIDENCE. Did you know that there's an entire economic school of thought out there that completely DISAGREES with every single word you just wrote there? Stop making bogus statements and start supporting them with evidence and proof otherwise please, just STFU.


You know people, according to SgtSpike savings are BAD! So you better not save, you better not think of using money that has properties which will cause it to appreciate cause you're going to destroy the economy. Unless of course you're saving in a depreciating currency, then by all means, save away!

What utter nonsense.