To expand on this, adding a UTXO hash set simply provides nodes a new additional method to engage with the P2P network. The full history still exists and is independently verifiable to anyone who wishes to do so.

With UTXO hashes, a node can optionally decide what level of trust it requires, and can optionally trust that the P2P network has correctly verified the UTXO set up to a given point to save bandwidth, or not if it wants the full history.

We'd end up with 3 types of nodes (vs. 2 types of nodes today):

1) SPV clients - Thin & lightweight nodes that do not contribute to the network. These need to trust their P2P peers to some degree.

2) Full nodes without full history (i.e. UTXO nodes) - Fully functional nodes that are able to fully participate in the P2P network and validate transactions and new blocks. These need to trust that miners and the P2P network correctly verified their starting UTXO point.

3) Archival nodes with full history (i.e. today's nodes) - Fully functional nodes that are able to fully participate in the P2P network and validate transactions and new blocks. They also valid the fully history of a given chain.

Type 3 nodes (I'm calling archival nodes here) would still exist and verify for everyone that a given chain is valid. Given how public this is, I can't imagine and attack were either the P2P network or the full archival nodes wouldn't be able to flag the attack and kick off the invalid chain. What UTXO hashes provide is the option for nodes to save bandwidth by trusting the longest chain, I'd imagine this trade off is OK for some subset of nodes.

The way I've envisioned it is the UTXO hash becomes a part every block's structure (just as the coinbase transaction) and it serves as a marker for the UTXO set as of the current block. This enables nodes to optionally ask for: a) all prior blocks, or b) the UTXO set only.

If there is a re-org, then the new chain's blocks simply have their own UTXO hash in each block and provide a valid reference for the UTXO set on that branch. Each separate chain would have their own UTXO hash that is valid at every block. The cost is adding 256 bits to each block, but this doesn't even have to be a part of the header structure and instead is part of the block itself.

During a re-org a node could ask for either: a) all new blocks since the branch or b) the UTXO set of the latest block on the new chain. Both would be valid options to function on the new branch.

What I like about this is it allows each node to make optimal decisions that alleviate bandwidth pressure on the network. Every time a node restarts after x number of days, it could quickly determine which is the fastest method to catch-up, a) download the newest block or b) download the UTXO set, whichever is smaller. This would allow nodes to minimize their download requests.

As stated in my original post, you'd have to trust the P2P network to reject blocks with invalid UTXO hashes. So yes you are relying on that processes work correctly, which requires more trust than we have today (i.e. from fully trustless to trusting the P2P network) and does introduce a potential attack vector.

However given how visible the blockchain is, I find it difficult to imagine a scenario where someone effectively pulls off the attack. It would be flagged immediately and all honest miners would reject it and go to a valid chain.

I think attacking a UTXO hash will prove to be as plausible as a 51% attack, which is not likely.

You still have to download the full chain and verify the full chain in order to be able to trust that your state is correct. When the blockchain reaches many petabytes that will be an issue.

Hashing, verifying and committing the UTXO set to blocks enables a node to only download headers and the current UTXO set, and still operate in a trustless manner. That is a massive savings in bandwidth, and one that will be needed.

The current update simply reduces the amount of storage and node requires to operate, it does not reduce the amount of bandwidth a node needs to join the P2P network. Even with the update, you still have to download the full blockchain.

Personally I like the concept of adding a hash of the current UTXO set to each block. This would enable a new node to only download headers and the UTXO set as of the last block, and that would be enough to start operating as a full node.

It does reduce the trustless aspect, but only slightly. With this you'd have to trust that the P2P network rejected any attempts to insert an invalid UTXO hash (which has the effect of being able to arbitrarily change unspent outputs). But to attack this, you essentially would have to take over the P2P network. Plus given how visible the blockchain is, I'd say any attempts to do this would be noticed and rejected in real time.

As the total blockchain gets very very large, I think we are going to need something like this. A UTXO hash would enable full nodes to operate without ever downloading past blocks, you'd only need headers (which is small) and the UTXO set. Otherwise we are forced to have new nodes download petabytes of data they'll never keep. Network BW is still a limited resource, so this aspect of bitcoin will become more and more of an issue.

For some reason people only seem to pay attention to the numerator and ignore the denominator, as in: my wealth = my dollars owned / total dollars in existence .

This is how the FED has gotten away with inflationary theft for so long. Yes people are losing money because the denominator is increasing (monetary base expansion) but they think they are doing well because their numerator is increasing as well (# of dollars they own). Never mind the fact that if the monetary base expands faster rate than your holdings that you are in fact losing money. Most people don't see this.

But negative rates reduce the numerator, it is what people see. They will not like seeing the numbers in their accounts go down. Not at all. It will cause people to look for alternatives.

The FED seems to be getting more serious about this as they run out of alternatives, but I think it shows they don't understand human behavior well enough. People will first escape to cash (which has the negative effect of causing bank runs and draining the banks of reserves), then if they ban cash people will try to escape the dollar entirely.

Enter black market economy and bitcoin as the intermediary.

Good point on institutional acceptance. Anything that adds inertia to bitcoin as it exists today is beneficial to the project.

Fully agree that for large scale adoption, Bitcoin must also be embedded with and work with existing institutions and government. In the end this must happen from tax code compliance to legal frameworks.

The outstanding question though is who will change for who? Will society/government change to match bitcoin? Or will bitcoin be changed to match our current society/government?


That is great to hear, but the reality is the people you listed do not determine or shape policy in the end. Policy is determined by regulatory bodies (mostly) and by legislative bodies (somewhat). Take New York for example, Lawsky is none of the above and he is putting New York down a path that makes Bitcoin unworkable there. Other states are taking opposite and positive approaches. At some point it will go federal and it is not known if they will go with the NYDFS's view or something less draconian.

That fact that we can not say for sure who will change for who, is itself cause for concern.

IMHO the best method to make Bitcoin secure, is to make it very difficult for governments to force change into. The more this is true the more they have to change for bitcoin and not the other way around.

Having mining be as distributed as possible is one method to help secure Bitcoin, i.e. if >50% of mining is outside the US it is hard for the FED to force change. Having more mining be P2Pool based instead of centralized pools is even better. Another method is to have as many people use bitcoin through their own wallets with the P2P directly. If everyone uses coinbase wallets, it is easy for the feds to force changes in bitcoin usage, but if everyone uses their own wallets it becomes harder to make enough people switch if they don't see a reason to.

To emphasize how ignorant these people are, a "centralized blockchain" is simply a chained data structure. It is not new or novel. A centralized blockchain is simply a digital API for money. It is the same as if the FED published an open API spec that enabled transferring money between accounts. Yes that would be new for a central bank, but it would not be new from a technology perspective.

What was novel about bitcoin was the "distributed security mechanism". Bitcoin was the very first to create this and there was nothing even remotely like it at the time. This is the reason bitcoin has taken off as it has. It is very simply a fundamentally new construct for humanity that we have never had access to before. Every single person who claims "blockchain not bitcoin" or "centralized blockchain", at a very fundamental level does not understand what Bitcoin is.

Marcus, OT question. What is the algorithm you have as your sig picture?

It's called a Patsy.

One low level person caused the 2010 market flash crash.

But all big wigs who caused the 2008 depression got off free and clear. Hell, half of them were given metals.

They are just trying to get you to go into their system. It doesn't matter how light or heavy handed the initial regs are, because once you are in the system they can tighten the screws as much as they want since you're already captured.

Lawsky is simply realizing the he needs to go lighter in order to capture people into his system.

Don't let it fool you, continue to tell him to fuck off and only work with businesses that reject bitlicenses. I use coinbase, but if they join this, my account is closed.

Most of them do not even understand how federal reserve notes work or what they are (I've worked with enough to see this). But that hasn't really mattered.

What they do understand is how to control government and manipulate the creation of regulation in their favor. Since we left the gold standard this manipulation is all that has mattered. If you want to understand why financials are the #1 donor to all major politicians in BOTH parties, this is why.

Some key outstanding questions are: 1) How useful this control over government and regulation will be under a wide scale bitcoin adoption scenario, this will determine how much the ability to control & influence gov matters and 2) How savvy the new crop of VCs and tech companies will be at playing the same game, this will determine who is doing the controlling.

That is nothing especially for the NYC/NJ area.

1) He looks fairly youngish which means he is at the bottom of the union pay scale. You can be sure that by the time he is 50 his salary will be well above $150K
2) That is the base only. For overtime he gets time and a half (or sometimes double). This can easily double a cop's pay. Have you ever seen them watching road construction at night or at a sporting event, they're getting bonus time for that.
3) The benefits are amazing.
4) They can retire at age 50 and receive not just their salary, but the average of their last 3 years salary+bonus, FOR LIFE. This often translates to $+200K/yr for life.
5) After "retiring" at 50 they can go back and work as "consultants" for the police and earn another 2nd salary, taking their total pay well above $250K

If you look at the pool of people ages 50-65 pulling in well over $250K, a very good chunk of them are not doctors or lawyers, but cops and other senior civil "servants".

What is even worse, is even though it is this bad, no politician will go after the cop's unions, because to do so would bring the full might of the police down on you.

The perfect example of this is Scott Walker who went after every single public sector union in WI, but didn't go anywhere near the cops. No one, not even the president, can go after these criminals.

Edit: For the first 100 years of US history, there were no standing police forces and the country seemed to do just fine. It was only in the late 1800s and early 1900s that the large east coast cities started to create standing police forces. It was a large debate at the time with many on the side of liberty arguing that standing police forces with the law behind them will inevitably become corrupt to the bone. They were proven right.

Government jobs are not representative of production, they are representative of consumption.

That is not a statement that there should be no government jobs, there are of course a whole set of services that are required for a functioning society (courts, education, etc). But again, there are services for the well-being of a society, not production.

In viewing these services as production, we have allowed them to grow and grow and grow, to the point that the US consumes many more services than it produces. This works great as long as the US has a printing press combined with being the global reserve asset. But this over consumption of services is a misallocation of resources, services that are no longer supported by production.

Case in point, the decline of manufacturing and other blue collar jobs in the US, and the hollowing out of all opportunities for advancement for anyone not in the professional class. (with the exception of government jobs)

Really? That's awesome, I didn't know that. Any references? Not that it mattered to the calculation anyway since government workers only comprised an insignificant fraction of the working population.

Kansas Activist Could Face Felony Charges Because Her 11-Year-Old Son Challenged Anti-Pot Propaganda
http://reason.com/blog/2015/04/20/kansas-activist-could-face-felony-charge#.ofyk1n:vjid

and

Kansas Police Shutdown Cannabis Oil Activist's Facebook to Prevent her from raising money for her legal defense
http://kansasexposed.org/2015/04/17/kansas-police-shutdown-cannabis-oil-activists-facebook-to-prevent-her-from-raising-money-for-her-legal-defense/

If only we had some mechanism to transmit money without state control....

Thanks for maintaining a great thread. I used to be quite active at ZH '09-'13 and took solace there, but the ZH comment section significantly degenerated and all the decent original posters abandoned it which is a shame. This thread helps to fill that void....

If the US calculated unemployment the same way as Spain does, the US would be well above 25% unemployment today.

The US unemployment calculation has been modified and manipulated to show good numbers over the past 50 years. The headline number today is the U3 rate, but we used to show the U6 number which included underemployed as well. On top of this none of these numbers include people who dropped out of the workforce and are now on entitlements (which is unemployed). You add this all up and we are well past 25%. If the government ever runs out of entitlement money people are going to see just how bad the employment situation really is.

But we live in the era of twitter politics that generate headlines such as "Unemployment dropped to 5.6% under Obama", never mind the fact that Obama changed the calculation a bit to hit that number, and the number is complete bullshit.

Agreed. Politicians and bureaucrats may be nothing more than feudal court officials, which requires zero brain power. But spending $3,500,000,000,000 per year does buy you intelligence in various agencies.

Heck we already know that the CIA contacted Gavin and Satoshi in late-2010 / early-2011, so someone there noticed bitcoin's potential before most (or maybe any) of us.