And the rally is looking better hour by hour. Here is the 3-day resolution chart from Bitstamp that shows the penetration of the resistance trendline that I drew back to the November 2013 peak. I suppose that fiat holders waiting for prices to go even lower are buying back in a panic now. This happened to me last summer and I vowed never again. I am going to the the Bitcoin ATM to buy my daily fractional bitcoin.  |
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Comments from the Bitcoin core developers mail list . . . - Referring to the subsidy for miners as "wasting it on miners" isn't going to garner you much favor.
I subsequently removed the word "waste" from the paper and substituted "effort" where needed. |
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Thanks Andrew for your thoughtful comments. I will keep them in mind as I devise the system test plan, that in turn guides the code to be written.
I will attempt to orchestrate public test scenarios that include the bad things you describe, and show whether the system works or not. If the system works, then indeed proof-of-work will be shown to be a wasteful Bitcoin design. If the system handles various byzantine faults and misbehavior, then the algorithm's adopted from Nick Szabo and others I reference will manifestly demonstrate a solution to what up to now has not been solved in Bitcoin.
As the tests proceed next year, I hope first that the simple tests work, and second that you and others propose more difficult challenges.
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I will revise a small portion of the Bitcoin Core C++ source code, and create a reference pool Java software program before the end of 2014
Why Java? Almost all CryptoCoin's and their associated programs are written in either C, C++ or Python. Java isn't really seen in a good light in the CryptoCoin community. Sorry - that statement is no longer operative. I love Java but after a month of study I realize your point entirely. Everything related to bitcoin core will be C++. There will be no reference pool software, because there are no mining pools in the final design. I will use python to needed testing tools, beyond what has been already contributed to bitcoin at GitHub. |
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This rally is looking more like a real breakout above the resistance trendline that goes back to the November 2013 peak.  |
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Very interesting paper! Thank you for discussion here.
"In contrast, incumbent credit/debit card payment systems are faster [3] and more certain for consumers. Incumbent bank wire transfer, e.g. Swiftnet [4], is faster and more certain for business-to-business users. Incumbent payment transfer systems have data security policies that Bitcoin lacks [5] with regard to protecting host computers and customer data, e.g. private keys."
I disagree with these statements. Incumbent systems do have advantages but they are not necessarily faster or more certain (can be reversed up to months later). As for security policies the incumbent systems are all way behind (pull system, no triple accounting, etc).
When I say faster, I mean the typical customer check-out experience at point-of-sale. You verify the payment account at a terminal, swipe a card, and collect the receipt. When I say more certain, I mean to cover the odd case where a bitcoin transaction makes into a block after a certain delay, or the less likely, but worse case when the transaction never gets into a block. The bitcoin network forwards transactions on a best effort basis. There are no guarantees that the transaction will be recorded into the blockchain.
Why? There is no reason to use proof of stake. Saying that miners use too much energy is simply saying miners are not smart, not that there is a problem with proof of work. Miners are free to use as much energy as they like. Proof of stake looks to me like a solution in search of a problem.
Proof-of-stake was immediately recognized as a very attractive idea when first proposed back in 2011. It is the main reason why PeerCoin has the 4th highest market cap. Satoshi admitted that his design would eventually force miners to congregate in locations with the least expensive power, as math shows that competing miners will use all the block reward to support their efforts. |
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One problem I have started to think about a lot about PoS in general is long-range attacks: what if you try to 51% attack a PoS blockchain straight from (or very close to) the genesis block?
To explain this, consider the following. First, suppose that 90% of all coin owners suddenly disappear. Will it be possible at all to generate any more blocks? Suppose yes. Then, an attacker with 10% stake will be able to fork the blockchain at some point 3 years ago, and then let it develop inside a virtual server. After generating a few million cost-free blocks, the attacker now publishes this new chain. How does a new node differentiate between the legitimate chain and the offending fork?
The second problem is long-range nothing-at-stake. Slasher fixes the short-range nothing-at-stake problem, but if a fork does start 50000 blocks ago, then there still is no incentive not to mine on both in parallel. Even with transactions-as-proof-of-stake, transaction senders have the incentive to send conflicting transactions into the other chain in order to double spend themselves. But maybe this issue will turn out to be not that important in practice.
Yes this is a problem that this design does not handle directly. Rather I consider it the sort of catastrophe that is best dealt with by a network operations center. In the case of current Bitcoin, the lead core developers can issue an alert, and mobilize the community to download a new software version. In constrast, enterprise data networks, especially the incumbent financial data networks have network operations centers that rehearse detection of, and recovery from such faults. This design provides funding for such a center, run in a decentralized manner by autonomous trustless agents to the greatest possible extent. |
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The whitepaper is in its final draft. There is no working code yet so the ideas are half-baked so to speak. I want to code everything minimally by year end 2014. I am used to Java and enterprise style regression tests, automated builds and continuous integration servers. I have forked the GitHub repository for Bitcoin and will keep my branch up to date with the main branch.
I like NetBeans for Java, and will first experiment with getting C++ installed there. My development box is Ubuntu and I also run a local Ubuntu server.
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This could be the long awaited breakout. 6 hour resolution on Bitstamp. Another week or so above the resistance trendline would be good.
you think so? This little price jump is nice, but I think everyone may be overreacting, just because the market has been so flat as of late... What is significant about the price jump is that it went through the resistance trendline. Every single previous price jump since the November 2013 peak has failed to do so. This is the first one. If it simply goes back down to 430 or so, then who cares. But if the Bitstamp price can stay above the trendline for a significant period of time - that is important. According to my logistic model, prices need to climb almost $10 daily to stay parallel to the long term up trend. |
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This could be the long awaited breakout. 6 hour resolution on Bitstamp. Another week or so above the resistance trendline would be good.  |
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Huobi is penetrating the resistance trendline drawn from the November 2013 peak with good volume. I would like this to continue into next week - going sideways is enough.  |
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The number of transactions excluding popular (gambling dust) addresses chart continues to rally. This could be a confirmation that the bottom of the November 2013 bubble collapse is behind us. The last few months of this data series may now be impacted by the purported increasing portion of economic bitcoin transactions that are occurring off the blockchain, e.g. as immediate exchanges of value between Coinbase accounts.  |
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The sideways sort of rally on Huobi is about to touch the resistance trendline drawn from the November peak. Every other time this year the price could not convincingly penetrate that trendline. Note also the declining volume. Is this time different? Log chart at 3 day resolution . . .  |
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SS2 (Scrypt 2.10 MH/s) is down... losing time here  Thanks. I added 8 hours to compensate for the 4 hour outage. There was a power failure that took down this rig and SS1 - and they did not automatically reset when the power was restored, as they should have. This happened while I was asleep. When I awoke and checked the rigs, I manually reset them. In the months I have been leasing the rigs this sort of outage has happened perhaps twice for each rig. Very sorry, and thanks for helping my rigs become the most-rented on LeaseRig. |
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1. Bitcoin achieves efficient trusted payment between pseudoanonymous peers without the need for a trusted third party. Because the non-Bitcoin economy is greatly burdened by rent-seeking trusted third parties, e.g. banks, Bitcoin has great disruptive potential that is drawing substantial venture capital and entrepreneurs. The payment mechanism is a public ledger and programmable money. Bitcoin is a extendable technology platform - analogous to the Internet.
2. Bitcoin provides a deflationary store of value because a maximum 21 million bitcoins will ever be created. The substitution of bitcoin for fiat will substitute the virtue of savings/prudent spending for the vice of dis-saving/immediate indulgence. Bitcoin as currency will profoundly impact on the world's economy and culture, e.g. no more ruinous boom and bust credit cycles. Not analogous to the Internet.
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so the end of 2014 looks to be around $6k and end of 2015 looks to be about $100k. Not a bad little chart. Im guessing 2014 will be higher than the chart has it, and 2015 will be a little lowe
I would guess the opposite. 2014 may be more like 2012 because 2011 was the great bubble, and 2013 had two bubbles. I suppose a bubble this summer and then a drop back to $3000 through year end. The model value for May 12, is $1259 and the recorded price of $442.5 is a record -.454 Log10 units below the trend. |
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. . . In fact, if my interpretation of SlipperySlope's model is correct, we are either in a "Moment of maximum opportunity" but also "Maximum risk of model breaking" because we are so close to historical boundaries of model itself.
That is my appraisal of the current situation too. |
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The moving average of adjusted quantity of bitcoin transactions is on track to surpass an April peak this week. To me this indicates that the long term downtrend in the price series from last November may indeed break within the next four weeks on Bitstamp, and perhaps in two weeks on Huobi.  |
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Regarding trading bots and systems for Bitcoin, I am very much hopeful that Chinese exchanges while expanding outside the mainland, bring with them the high volume and good order depth that resulted from their competitive policies of zero-fee trading.
I would like to see OKCoin or Huobi host the BTC/USD currency pair with zero fees.
It pains me to add up the round trip commissions that I paid Mt. Gox. I wrote a Mt.Gox bot but never deployed it. Market making bots, e.g. Volume Weighted Average Price algorithm, use realtime technical indicators to make frequent trades near the spread. Exchange commissions make operating such bots unprofitable.
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