No, it's you who don't understand.

It's fair to claim that every single person in the world over the age of say 4 has heard of gold and knows is valuable. What do you think the comparable figures are  for Bitcoin? Probably 20% have heard of it if we're lucky and only maybe <0.01% who think it's valuable.

Good luck with forming a settlement layer on top of that.

A huge amounts of capital will move into the currency because it is the only one in the world with a mathematically enforced limited supply, uninterdictable transactions, and unfreezable assets. The unique immutable ledger in existence.

Bitcoin is best used to store value out of the hands of state governments policies, taxes and inflation. Are you suggesting there is no demand for this utility?

How does scaling bitcoin separate the store of value bitcoin holds from it's function as a payment network? The two are inseparable and go hand in hand.

How can bitcoin retain it's function as a base store of value when it loses its active userbase to other block chains?

Ps. Don't be rude

It's important to know why money becomes money in the first place, you can't put the settlement network idea befor the idea of a university accepted money and expect it to be adopted without mapping out the economic incentives that would facilitate it.

It is important to understand that units of a settlement network represent money, they are money. If settlement is achieved, then those units represent a monetary base. In our existing system, cash and central bank credit represent this base layer of money and, as such, the settlement layer.

On the other hand, saying something is a payment network simply means it's units represent credit -- i.e, temporary placeholders for money. So when you send someone money using a credit card, the reason it happens so quickly is because the network is promising to settle later. That isn't to say that credit units don't have value, just that their value derives from the fact that, ultimately, they can be exchanged for more trustworthy forms of value.

So the goal of a payment network is really to provide utility. If the utility fails, people move to another payment network. The goal of a settlement networks, on the other hand, is provide confidence/trust. If confidence fails, the currency collapses.

In the current financial system, central banks represent the settlement layer, whereas companies like Visa represent payment network layers. No one really cares that Visa is a company, its power centralized, because its role is to provide utility. But that central banks -- also centralized institutions -- control the settlement layer, i.e., control base money, is deeply troubling to many people because the role of the settlement layer is to provide confidence and trust (and it is becoming increasingly hard to trust a tiny handful of unelected people).

Some people think the success of Bitcoin is going to come from its utility and they tend to favor increasing the block size. The problem is that in increasing that utility, you are also weakening the settlement layer of Bitcoin by increasing mining centralization and eroding trust. They don't see a problem because they are thinking of Bitcoin solely in terms of utility, like Visa.

But if Bitcoin is going to become a global money, then its settlement layer is far more important than its utility, assuming utility functions -- like the number of transactions the network can handle -- can be handled/processed by third parties. In the same way Visa doesn't erode confidence in the dollar simply because it is a third party company independent of central banks and governments, companies that provide more utility to the Bitcoin network won't erode confidence in it either. All that is important for confidence is the base money, the settlement layer, in the same way that confidence in fiat currencies depends on confidence in government and central banks. We don't expect governments and central banks to provide the utility of payment networks, just to provide confidence and trust that gives the underlying currency value.

Bitcoin's power is really going to come from confidence in the network, specifically in its decentralized nature. I know many people have begun to question how important decentralization is, but they don't tend to impress me as really understanding how essential trust is to money, they take it for granted. (Or they don't think the goal of Bitcoin should be to be a money.)

Without decentralization, for a money to retain value the central authority controlling that money must be trusted, which is precisely why all money today is (at least theoretically) controlled by the state (governments are the institutional power we trust most). A currency whose trust foundation is not dependent on a human institution, however, is intrinsically more trustworthy than even the state. Nevertheless, if decentralization fails and centralization occurs, then Bitcoin becomes vulnerable as those centralized powers can be easily targeted. If it becomes vulnerable, confidence erodes and people return to wanting state-run money, perhaps now in the form of Fed-coin.
As faith in central banks and institutional/human controlled money wanes and fades in the 21st century, I believe block chains are going to replace central banks. But cryptocurrencies that are controlled by an institution -- whose code can be changed by dictate because mining is over centralized -- will suffer the same loss of confidence that central banks face. The 21st century is the century of decentralized power, not of top-down institutional power of the 20th century model.

Bitcoin cannot succeed on the basis of utility alone for the simple reason that that utility can be replicated by other institutions. Its success depends on its ability to do what even imitation coins cannot. Fedcoin, IMFcoin, whatever institution you like can ultimately make a Bitcoin replacement with all the same utility. What they can't make is a coin that gets its trust layer from no institution.
Put simply, if Bitcoin isn't decentralized, then it will be replaced by a centralized cryptocurrency whose central authority we trust (more than whoever is running Bitcoin). If it is decentralized then the financial system is slowly going to migrate to it because it is inherently more trustworthy as a settlement layer.

The reason Bitcoin succeeds is not because of utility alone. The reason Bitcoin succeeds is because the settlement layer, the foundation of money, cannot be replicated by institutional power, and that is for the simple reason that Bitcoin is post-institutional. It is not controlled by any power, it is decentralized, and this makes it inherently more trustworthy. So its deep value comes from this decentralization, and it is this decentralization that ultimately makes it competitive and potentially the foundation for a new global financial system!

Every effort should be being made into increasing this decentralization . . . instead we are doing just the opposite.

3% of power production ($50,000 per BTC) is within the real of possibility but I do not think $500,000 per BTC (30%) is.

Desperate to keep up the appearance of this being a balanced debate, when in fact the opposite is true.

Then  shut the hell up with your MP pronouncements and references to crap articles like yesterday's.

I support modest increases in line with hardware improvements (until and unless software/protocol improvements are made to allow even larger blocks to be supported safely). That's probably something like 2-3 MB at this point. I don't support automatic increases to the moon or removing the limit or anything radical like that.

No one cares about an altcoin boasting 5x Bitcoin's capacity...because it's not Bitcoin. But if it boasts 100x Bitcoin's capacity, that's a game-changer. We have to at least get in the ballpark. Watching from the sidelines is not going to cut it, and I refuse to call that in any way conservative, patient, or careful.

it should be clear to everyone involved that BIP 101 will have the economic majority onboard.

petertodd commented on Jun 26
Note to readers: in its current form there is a near zero chance of this getting merged due to a number of BIP-level issues in addition to debate about the patch itself. For instance, Gavin has never given any details about testing; at minimum we'd need a BIP16 style quality assurance document. We also frown on writing software with building expiration dates, let alone expiration dates that trigger non-deterministically. (Note how my recently merged CLTV considered the year 2038 problem to avoid needing a hard fork at that date)

Until these issues are addressed I an many other contributors will be muting this thread and ignoring comments until the BIP itself is fixed. Much of the discussion we see in conversations around this subject is highly repetitive and a big timesink; don't interpret silence as agreement.

you sound pretty nervous tho.

so much for credibility

lol, your arguments have dwindled to nothing except for a smiley face and you resort to bringing in assistance.  haha.

Sorry but if I cannot use btc as an easy form of payment then it certainly loses its appeal as a private currency.

Precisely.  And as "just a payment system" Bitcoin is not an especially great one: The design requirements for decenteralization
impose considerable costs.  To the extent that the technology in Bitcoin is useful at all for building "just another payment system" this technology in in the process of being agressively copied by parties with deep fiat relationships (including in partnership with centeral banks).  If the focus for Bitcoin's competative advantage
becomes exclusively "better" payments then it will almost certinatly fail in the market-place against competing systems which avoid the Bitcoin currency adoption related obsticles (but also gain none of Bitcoin's important social/political promise).

Also, critically, if Bitcoin's security properties are manintained and enhanced then Bitcoin can be used to build secure systems which _also_ accomidate those applications and we can have both. But if Bitcoin'ssecurity properties are not strong then then advanced tools cannot be built for it. E.g. atomic swaps make trustless trades with external systems possible; but they are especially sensitive to long reorginizations by miners... so they can only be securely used where
those reorgs are infeasable.  So while I agree that we must be willing to tolerate not catching every conceivable use case; most of the time all that means is addressing them via a less direct but more focused solution rather than ignoring them completely.

lol, what a piece of junk article.  just another MP regurgitated screed.

what's really laughable is watching little kids like you, Michael Goldstein, & Pierre Rochard dream of becoming Kings.  look, i'm already a 1 percenter and was long before Bitcoin came around.  yet i seem to see more fairness in Bitcoin's potential than you guys.  whodathunk?  i find it sad that youngsters like you can't see what's better for humanity.

furthermore, i guess you're admitting that the 1MB choke is exactly what you want; it is meant to be forever.  for you, it's about boxing out the masses and making them pay you homage.

completely misleading, sounds like a new religion.

First mover advantage will get you out front with a hefty lead, but you're fooling yourself if you think there is no, and will never be, competition between cryptocoins. If you believe some posters in this thread, XMR has already supplanted BTC in a technical sense.

Capital owners may see 3 tps as a competitive disadvantage with other value storage and transfer networks, and may be  subsequently less likely to seek a position in such a network. Gold is not a great analogy because it is limited by natural forces and is protected from competition. Open source software enjoys no such protection and will be in constant competition with alternatives with quite similar characteristics.

The other side of the spectrum (huge blocks leading to unacceptable levels of node centralization), is also unattractive. There needs to be a balance between the two, commensurate with current technological limitations but also considerate of the fact that these limitations diminish over time. This is why I like Jeff's proposal, it's small enough to not place dramatic new requirements on nodes, but also large enough to quantify and analyze the effect of maxblocksize growth.

no.  Bitcoin has always been about being your own bank and taking individual responsibility for your money.  it's the ppl's money and about moving control of that money away from gvt.  it's about removing unfair subsidies to large entities and returning incentives and fairness to the individual.

therefore, the more individuals and ppl that use Bitcoin, the more decentralized and more powerful the outcome.

Bitcoin not suitable currency for pervasive dominance, pushing it into every heart&mind around globe no different from religious zealotry

how so?  by wanting Bitcoin to replace gold as sound money?  by understanding that key to achievement of that goal is for Bitcoin to be easily used/accessed cheaply by everyone worldwide?  by understanding that something virtual and intangible has a higher bar to clear to replace the physicality of gold as a SOV?

you'd better go back to school while you're young enough.

There is more economic incentive to secure and decentralize a network with 1 M users holding 10T$ worth of wealth than 1 B users under a 100 B$ market cap.

users have the one thing that has made Bitcoin great for them being taken away; fast, easy, cheap payments.