That is because bitcoins are a unique collectible unlike anything the world has seen since gold. Unfortunately much like gold some characteristics limit its direct use as a mean of exchange. Gold's shortcoming is in its physicality, Bitcoin's own is the decentralization tradeoff.
I think Bitcoins are absolutely a unique collectible. I hate to "call up" authority but its own creator was well aware of that: Maybe it could get an initial value circularly as you’ve suggested, by people foreseeing its potential usefulness for exchange. (I would definitely want some) Maybe collectors, any random reason could spark it. - Satoshi Nakamoto It might make sense just to get some in case it catches on. If enough people think the same way, that becomes a self fulfilling prophecy. -Satoshi Nakamoto
Aug. 27, 2010: Bitcoins have no dividend or potential future dividend, therefore not like a stock. (They’re) more like a collectible or commodity. - Satoshi Nakamoto
Satoshi quotes which are correct, but also relate to when BTC was the only cryptocurrency. Today http://coinmarketcap.com has about 600 listed, including - if I choose one at random - Monero. So, is a monero a unique collectible unlike anything the world has seen since gold? Yes or No! YES! Now are they as "rare" by my definition than Bitcoin? No. But by all account they have obtained a significant amount of "collectors". People will collect just about anything. I'm not sure how relevant that is, but it is certainly true. I understand people collect even centrally-issued virtual assets and trade the for significant money. It is quite an odd human phenomenon. But to deny it is to deny how humans actually behave. Yes! But I'm sure you will agree the different properties and scarcity of these items will define their own market value and make them unique in their own right. I think we are getting a little too far from my original point so I guess we should leave it at that.. |
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That is because bitcoins are a unique collectible unlike anything the world has seen since gold. Unfortunately much like gold some characteristics limit its direct use as a mean of exchange. Gold's shortcoming is in its physicality, Bitcoin's own is the decentralization tradeoff.
I think Bitcoins are absolutely a unique collectible. I hate to "call up" authority but its own creator was well aware of that: Maybe it could get an initial value circularly as you’ve suggested, by people foreseeing its potential usefulness for exchange. (I would definitely want some) Maybe collectors, any random reason could spark it. - Satoshi Nakamoto It might make sense just to get some in case it catches on. If enough people think the same way, that becomes a self fulfilling prophecy. -Satoshi Nakamoto
Aug. 27, 2010: Bitcoins have no dividend or potential future dividend, therefore not like a stock. (They’re) more like a collectible or commodity. - Satoshi Nakamoto
Satoshi quotes which are correct, but also relate to when BTC was the only cryptocurrency. Today http://coinmarketcap.com has about 600 listed, including - if I choose one at random - Monero. So, is a monero a unique collectible unlike anything the world has seen since gold? Yes or No! YES! Now are they as "rare" by my definition than Bitcoin? No. But by all account they have obtained a significant amount of "collectors" because of its own rather unique property, as smooth pointed out. |
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You can't really compare itBit and Gemini, they are two different beasts.
ItBit is a foreign corporation from Singapore with very little backing and even less hype.
Gemini is a domestic NY Corp with lots of backing from the bitcoin community and a ton of hype.
ItBit did their thing, they were a company nobody ever heard of and they slid in out of nowhere to become the first licensed BTC exchange in NY, too bad nobody uses them.
I'm afraid you are slightly misguided. itBit was one of the first company in the sector to receive venture investement back in 2013. At that point they were indeed based in Singapore but the backers were far from insignificant (RRE, Canaan) Since then they have headquartered in New York and successfully obtained a banking trust charter with sponsor from, amongst others, former FDIC chairman Sheila Bair. All while raising an additional 25$m series A from new & existing investors. That makes them legal in all states, not only NY. They are, by all account, a very significant player in the industry with some of the most important names in finance backing them. Trading hasn't picked up much on their exchange but I expect they will eventually become a major force seeing they have an extremely competent and experienced team behind them. You don't "slide in" into a NY bank charter trust license. This indicates serious commitment and connections within the existing financial world. So far the only thing Gemini has against them is exactly what you've said : hype but not much to show for it. |
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My advise to you is to start looking at growth in another light. While it seems reasonable to track "adoption & growth" by an increase in the userbase, I have recently come to the conclusion that what might be even more preferable is a growth in capital.
I guess this comes back to our different idea of Bitcoin's value proposition but to put it shortly, my opinion is that more expensive transaction fees on the blockchain will hardly hinder the adoption of capital looking to buy a spot and park their money in the unforgeable ledger. That is because bitcoins are a unique collectible unlike anything the world has seen since gold. Unfortunately much like gold some characteristics limit its direct use as a mean of exchange. Gold's shortcoming is in its physicality, Bitcoin's own is the decentralization tradeoff.
This is just for the record as Peter is doing an admirable job of explaining things, I have highlighted the fundamental failings in your logic which makes you come to the wrong conclusion. I fully expect you to ignore this and hand-wave it away, but here goes... 1. Growth in capital is a reactive process, it is a market response to the growth of the whole ecosystem. There have been altcoins with enormous early capital such as Auroracoin where $100 million in market cap rapidly went to zero, like morning mist in the sun. This was because the capital temporarily existed but there was no ecosystem to maintain it. 2. Bitcoins are not a "unique collectible" because while bitcoins are truly finite, cryptocurrency is infinite. Litecoin is just Bitcoin with a different name and a few minor software changes. Many new coins exist such as Monero and NXT and Etherium. ALL of these could do the job of Bitcoin if Bitcoin vanished. The only thing keeping Bitcoin at No.1 is a positive feedback loop: ecosystem usage (transactions) > utility value -> market price -> mining power -> PoW security of blockchain -> more public interest -> more ecosystem usage The problem with the 1MB is that it will eventually cripple this all-important feedback loop. Your Auroracoin false equivalence does not stand. An irrational pump & dump does not compare in any way to a collector's item. I think Bitcoins are absolutely a unique collectible. I hate to "call up" authority but its own creator was well aware of that: Maybe it could get an initial value circularly as you’ve suggested, by people foreseeing its potential usefulness for exchange. (I would definitely want some) Maybe collectors, any random reason could spark it. - Satoshi Nakamoto It might make sense just to get some in case it catches on. If enough people think the same way, that becomes a self fulfilling prophecy. -Satoshi Nakamoto
Aug. 27, 2010: Bitcoins have no dividend or potential future dividend, therefore not like a stock. (They’re) more like a collectible or commodity. - Satoshi Nakamoto
This typical "cryptocurrency is infinite" reply seems shortsighted and IMO shows a misunderstanding of Bitcoin's origin of value. If we were to derive the latter from "ecosystem usage" as you represent it : transactions on the blockchain, then we should argue Bitcoin is a pretty low value network since the velocity of transactions on the network is, frankly, very low. Have a quick look at the top 500 (you can even go up to 20,000) on the website here http://bitcoinrichlist.com/top500?page=40. A very short glance should make it very clear that most bitcoins rarely move on the blockchain. In other words, very little people actually use Bitcoin for exchanges of goods and services traded on the blockchain. Therefore, I believe, the "utility" value in your feedback loop is incorrect. The actual primary use case of Bitcoin is for people to store wealth by exchanging fiat currency for bitcoins or, in the case of miners, work/energy. This is exactly how a collectible comes into existence. An organic process where an "unforgeably costly commodity repeatedly adds value by enabling beneficial wealth transfers." (1) Beneficial wealth transfer, in our case, is not transfer of goods or services, but an exit from the fiat system and/or also a speculative move. By creating value that way, its market prices increases which encourages miners to put more energy into creating them therefore increasing their rarity by making them harder to forge. This increasing price and growing rarity attracts more collectors and on it goes. This is what the feedback loop looks like to me. The current rarity of Bitcoin may very well be a product of its first-mover advantage but it is pointless to dismiss it in the present. That is why Bitcoin should not be thrown into the same bucket as other crypto. Don't get me wrong, Bitcoin will eventually evolve into a much larger network where an increasing amount of goods and services will be traded for them but I expect this "utility" to remain marginal until Bitcoin grows its collector base by a couple order of magnitudes and ultimately peak when Bitcoin is used as a unit of account. For all these reason I believe my conclusion still stand and no, 1MB will not cripple this feedback loop. (1) http://szabo.best.vwh.net/shell.html#Attributes of Collectibles |
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Here is what I'm thinking: considering you are hell bent on selling the world on the value of the Bitcoin payment network, do you reasonably believe that Bitcoin is gonna make it to Paypal's level of TPS only in 2024? What if we get there less than 5 years from now? Is this really "unlikely"? I honestly don't think so especially if you and others have your way and attempt to fit every single transactions on the Bitcoin blockchain. Remember that "supply creates its own demand".
My concern is that I'm not sure it is safe for the decentralization of the network to try to handle 32mb per blocks within 2020, much less 64. In my mind this would necessarily imply an important if not dangerous decrease in the range of entities who are able to run full nodes. I don't want to hear anything about the amount of nodes as it is not a reliable indicator. As much as cypherdoc would like to believe that an individual running multiple nodes improves the decentralization of the network this is obviously not the case. Finally I'm also worried we would find ourselves in a much worse spot than we already are in regards to mining centralization.
My point is this reliance on block size increase as a scaling solution is a slippery road. One that if we do not travel through cautiously could seriously hinder the security of the network and ultimately result in turning Bitcoin into pale copy of Ripple.
Thank you for this response. I think it is was valid and I can appreciate your concern. I also think it serves to illustrate the ideological divide between you and me. Me, I think the most probable way that Bitcoin fails is by lack of adoption and growth. I see the 1 MB limit as the greatest technical blockage in this regard. You, on the other hand, seem to be most worried about failure via centralization, and see a larger block size limit as contributing to the very failure mode you see as most likely. And therein lies the problem. Although we both want success for Bitcoin, what I see as a panacea you see as a poison. For the record, here's my take: we probably all remember the first time we received a real bitcoin transaction. I do. I was using the blockchain.info wallet on my iPhone and had purchased about 0.4 BTC from canadianbitcoins by depositing $20 cash into their RBC bank account. I remember a couple hours later my phone made a funny noise, and sure enough, boom, there was $20 of BTC in my wallet! I thought that was pretty amazing!! I then sent coins back and forth between different wallets, watching the transactions nearly instantly propagate, and the enormity of what was happening really sunk in: these transactions were being relayed to every node across the world, double, triple, quadruple checked, and then being logged to an unforgeable ledger that was stored redundantly at nodes all across the world. And all this was happening--not because of some bank or government initiative--but because normal people came together to make it happen. And because it was a peer-to-peer initiative, access was so affordable that even the poorest of people on the planet could participate. I think more people need to share that experience. And for that, we need bigger blocks. While I share your nostalgia, I happen to think that the experience of the users of tomorrow, the mainstream public you would like to see adopt Bitcoin, will be so unlike anything we are experiencing it makes little sense expecting this on-boarding process to remain "the same". You might disagree with me but my opinion is that the masses, as they exist right now, will never approach the level of direct engagement we currently experience with Bitcoin, the blockchain and the related ecosystem. By that I mean that you can forget about them ever being introduced or interested in the concept of nodes, transaction propagation, redundancy, block explorers. A regular person is not approaching or trusting a blockchain.info wallet, much less trusting it with their money. Now, as for the last statement, that may change. In fact I expect it to and that is why I am very confident (to the dislike of some perhaps..) that customer focused approaches such as Coinbase, Circle, BitReserve and others will have tremendous success. These customer experiences will not only surpass the one you described but make it look ancient & obsolete by its abstraction of almost anything Bitcoin and the presence of familiar user experience. As much as you'd like to convince yourself of the contrary, the existing popularity of such services confirm that most people simply do not care whether or not their transaction is settled directly on the Bitcoin blockchain. We should all hope this will eventually change and I too share the dream of "everyone being their own bank" but this is frankly a dangerous utopy at this point There is a whole world of abstraction needed before ever pretending to a potent mainstream consumer adoption of Bitcoin. My advise to you is to start looking at growth in another light. While it seems reasonable to track "adoption & growth" by an increase in the userbase, I have recently come to the conclusion that what might be even more preferable is a growth in capital. I guess this comes back to our different idea of Bitcoin's value proposition but to put it shortly, my opinion is that more expensive transaction fees on the blockchain will hardly hinder the adoption of capital looking to buy a spot and park their money in the unforgeable ledger. That is because bitcoins are a unique collectible unlike anything the world has seen since gold. Unfortunately much like gold some characteristics limit its direct use as a mean of exchange. Gold's shortcoming is in its physicality, Bitcoin's own is the decentralization tradeoff. Fortunately Bitcoin being digital, the technical solutions to this problem are unlimited and will only improve in quality, reliance and decreasing need for trust. I understand this is not a popular position but let me make it clear: I absolutely propose that in the future any Bitcoin user will have to consider the cost of transacting on the blockchain and perhaps opt for other options if they feel there is no need to have their transaction validated under the "ultimate" trustlessness of the blockchain. |
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What would be so bad about hitting the higher (and constantly increasing) limit earlier than historical extrapolation would predict? [not that I think that's likely, but still] To then go back to our previous argument, let's pretend that your 8 MBs blocks get filled a year before your scheduled doubling then what happens?
Then fees would be more than what's suggested in my paper. What would be wrong with that [in the unlikely event it happens]? In fact, it would just be something like the realization of the "high" growth curve shown here:  I guess my point is that modeling transactional demand based on historical growth is a surefire way to shoot yourself in the foot.
There are several "transactional demands" modelled in the above graph. They would all work fine with BIP101. It's just that in the case of the "high growth" curve, the fee market might begin to be affected by the block size limit, rather than strictly due to economic supply and demand. How do you propose this is "shooting yourself in the foot?" Here is what I'm thinking: considering you are hell bent on selling the world on the value of the Bitcoin payment network, do you reasonably believe that Bitcoin is gonna make it to Paypal's level of TPS only in 2024? What if we get there less than 5 years from now? Is this really "unlikely"? I honestly don't think so especially if you and others have your way and attempt to fit every single transactions on the Bitcoin blockchain. Remember that "supply creates its own demand". My concern is that I'm not sure it is safe for the decentralization of the network to try to handle 32mb per blocks within 2020, much less 64. In my mind this would necessarily imply an important if not dangerous decrease in the range of entities who are able to run full nodes. I don't want to hear anything about the amount of nodes as it is not a reliable indicator. As much as cypherdoc would like to believe that an individual running multiple nodes improves the decentralization of the network this is obviously not the case. Finally I'm also worried we would find ourselves in a much worse spot than we already are in regards to mining centralization. My point is this reliance on block size increase as a scaling solution is a slippery road. One that if we do not travel through cautiously could seriously hinder the security of the network and ultimately result in turning Bitcoin into pale copy of Ripple. |
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That is all true only if Q* stays within the range of your assumptions.
That seems like a strange way of wording what I already said: " As long as the limit is far above the transaction demand (much greater than Q* in the figure), then the supply is constrained economically rather than algorithmically." See this is exactly what I'm talking about. Pretending you can predict future transaction demand and set an arbitrary limit "much greater". Sounds like something out of the FED. To then go back to our previous argument, let's pretend that your 8 MBs blocks get filled a year before your scheduled doubling then what happens? I guess my point is that modeling transactional demand based on historical growth is a surefire way to shoot yourself in the foot. |
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I don't know, but you are saying we shouldn't do anything, because doing something might not be quite enough?
I'm saying that the pretense that 1 MBers are playing central bankers seems funny in the light considering most block increase proponents are the ones arguing for arbitrary control of supply. really? I must have missed something along the way, couldyou please share pointers to evidence on which the bolded claim is based? (serious question) Blocksize limit = supply. Unless you advocate lifting it completely most block increase suggestions amounts to a control of supply based on projected demand. (of course 1MB is an equally arbitrary quota but that is beside the point I was making) In classical economics, one defines a "supply curve" where the unit cost of the commodity (block space) is a monotonically increasing function of the quantity produced. If demand grows, producers increase production to meet it (at an increased price). This is how the free market works.  Your comment that "blocksize limit = supply" is false except in the case where the supply is constrained by the protocol rather than by economics (this continues the debate we had earlier). As long as the limit is far above the transaction demand (much greater than Q* in the figure), then the supply is constrained economically rather than algorithmically. The limit thus serves as only an anti-spam measure--that is, it continues to serve the original purpose it was designed for. That is all true only if Q* stays within the range of your assumptions. |
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I don't know, but you are saying we shouldn't do anything, because doing something might not be quite enough?
I'm saying that the pretense that 1 MBers are playing central bankers seems funny in the light considering most block increase proponents are the ones arguing for arbitrary control of supply. really? I must have missed something along the way, couldyou please share pointers to evidence on which the bolded claim is based? (serious question) Blocksize limit = supply. Unless you advocate lifting it completely most block increase suggestions amounts to a control of supply based on projected demand. (of course 1MB is an equally arbitrary quota but that is beside the point I was making) |
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I notice the OP there isn't adressing the issue that when Blockstream received their funding, LN wasn't yet around, so it's a bit hard to see how their business plan that got them 21 million USD could have relied on pushing people towards LN... This was indeed pointed out to him by me and several others. What blockstream are trying to do is the contentious issue, when they get the tools is not relevant, eg when the nuclear bomb was discovered is not important nor is when you get the nuke, what is relevant is if you intend to use it' and that's relevant. What you fantasize about what blockstream "are trying to do" and are actually doing is two different things you know? Unless you have facts to verify your conjectures the courteous thing to do would be to give the runner a chance. i did. but look what happened:
I'm not interested in reading your usual drivel. What has happened since that confirmed your assumptions & previous conjectures? Seems to me you are still very much coming up with your own delusions of what Blockstream "are trying to do" without any valid information to support your position. Are you gonna hold the fact that they are cautious about block size increase against everything they try to do? Again, I'm gonna need some more convincing that you are actually an adult person. |
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I notice the OP there isn't adressing the issue that when Blockstream received their funding, LN wasn't yet around, so it's a bit hard to see how their business plan that got them 21 million USD could have relied on pushing people towards LN... This was indeed pointed out to him by me and several others. What blockstream are trying to do is the contentious issue, when they get the tools is not relevant, eg when the nuclear bomb was discovered is not important nor is when you get the nuke, what is relevant is if you intend to use it' and that's relevant. What you fantasize about what blockstream "are trying to do" and are actually doing is two different things you know? Unless you have facts to verify your conjectures the courteous thing to do would be to give the runner a chance. |
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This is a fundamental disagreement on the value of Bitcoin then which IMO is first SOV then payment network. There is no such thing as a store of value. You've described the religious approach to understanding money. I kinda knew you'd pop up with this argument. The point is Bitcoin is nowhere near ready for adoption as retail transactional currency. Not unlike gold, most bitcoins are currently sitting untouched in vaults paper wallets. It is by all evidence not a consumer product as it stands and we should not expect it to gain adoption because of the features of its payment network, at least not anytime soon. |
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Not at all. I suggest that the block space will get filled at close to the historical rate of growth, as illustrated by either the "high" or "moderate" curves in this chart:
Well I sure hope you can understand some people are wary of making such assumptions. Before bitcoin can be digital gold, the world needs to understand its value. The first step is to build a payment network for planet earth
This is a fundamental disagreement on the value of Bitcoin then which IMO is first SOV then payment network. Bitcoin will become a global refuge for wealth way before it gains any relevant traction as "a payment network for planet earth". https://medium.com/@allenpiscitello/what-is-bitcoin-s-value-proposition-b7309be442e3 |
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I don't know, but you are saying we shouldn't do anything, because doing something might not be quite enough?
I'm saying that the pretense that 1 MBers are playing central bankers seems funny in the light considering most block increase proponents are the ones arguing for arbitrary control of supply. So yes, we shouldn't do anything but optimize the current infrastructure under existing parameters and observe how the network reacts. The notion that there be dragons at the capacity limit is unfounded and reactionary. We have to make the journey and find out what is, in fact, there at the edge - as many others have argued in the list. This is our opportunity to make scientific observation and discovery for the benefit of Bitcoin - while it is still in its early years and the capacity limit untested. http://lists.linuxfoundation.org/pipermail/bitcoin-dev/2015-August/010179.html |
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Also, I think we've onboarded most of the speculative investors we are going to get in this phase -- we need a wave of utility next. I have a hard time believing this utility use moves from once per month to multiple daily txns. Rather it will be monthly txns becoming weekly txns driven by B2B, remittance, and intermittent online purchases by bitcoin users. And it will be colored coin and ledger use (which LN cannot optimize).
I have to disagree and I think is far removed from reality. Utility use cases are and will remain marginal until we onboard many many more waves of speculative investors. Institutional investors wave is next. Take it from the mouth of one of the reasonable guy in the industry (Vinny Lingham): I think the whole idea of bitcoin is so consumer unfriendly, I can't see it taking off and we're the largest consumer site on the blockchain. It's not going to go mainstream. http://www.coindesk.com/keynote-2015-fintech-voices-join-blockchain-conversation/ |
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All transactions are equal, but some are more equal than others
I guess that's where we disagree. I know, Napoleon. So are you suggesting I shouldn't be allowed to pay more fees to get priority? No. Now answer my question: are you suggesting raising the block size limit prevents that phenomenon? No... but I honestly fail to see the point you're trying to make. Why then the argument that "all transactions are equal"? It's not *my* point it's Piscitello's Mempools can be bounded, such that only the top priority transactions are stored. Low priority transactions are passed on or rejected once the limit is reached or are replaced by higher priority transactions. This prevents nodes from crashing due to being overwhelmed by transactions. He is suggesting explicitly rejecting valid transactions because they don't pay enough fees as a way to solve the issue of the mempool ballooning if the block size is not large enough. Assuming that what will happen is that people will just pay higher fees to get in the block. The protocol defines a valid transaction, and if a transaction is valid it accept it into the mem-pool => All transactions are equal Piscitello defines 'priority' (a more palatable name for 'fee size') and says we let things back up and reject low fee transactions => Some transactions are more equal than others Nodes will not be overwhelmed by transactions because they aren't economically viable to include in a block, they will be overwhelmed by transactions because the block size limit prevents them from including those transactions. Let me draw you a picture of a theoretical scenario of not allowing a f(r)ee market to develop:  I understand your point. But it seems to me that anyone who supports this position effectively suggests that the block size limit should be lifted altogether (at least that's the stance of PeterR & a couple others). Otherwise all you're really doing is moving your quota line to the right. Assuming we increase the limit to 8mb. Do you propose that the additional supply will NOT get filled relatively quickly and if it does what step is next, increasing the limit again? |
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All transactions are equal, but some are more equal than others
I guess that's where we disagree. I know, Napoleon. So are you suggesting I shouldn't be allowed to pay more fees to get priority? No. Now answer my question: are you suggesting raising the block size limit prevents that phenomenon? No... but I honestly fail to see the point you're trying to make. Why then the argument that "all transactions are equal"? |
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All transactions are equal, but some are more equal than others
I guess that's where we disagree. I know, Napoleon. So are you suggesting I shouldn't be allowed to pay more fees to get priority? |
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All transactions are equal, but some are more equal than others
I guess that's where we disagree. |
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Right, that would make sense until you realise in both cases (lightning and sidechains) these technologies need bigger blocks to scale. But before they need to scale, they just might need some help convincing potential users they are even necessary at all. Are you suggesting they are not? I'm suggesting that it is putting the cart before the horse. Let bitcoin scale. Let LN/Sidechains succeed on merit. Have we not yet come to an agreement that raising the block size is not exactly a scaling solution? Have we not yet come to an agreement that LN/Sidechains are not a scaling solution * without bigger blocks* I'm not against bigger blocks. I simply disagree with the urgency suggested by some of their proponents as well as the current proposed implementations (especially the very dangerous XT fork) |
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