And you like replying to people that are only here to rub their ego

No, really, I'm only here to provoke answers from which I can learn something.  I don't care at all what others might get out of what I'm posting.  I want to test my own ideas and see what reactions they bring, because these reactions may tell me something about my ideas, which is what matters for me.  No, I don't want to help anyone, no I don't want to impress (how can an anonymous pseudo on a forum "impress" what so ever ?), no I don't want to teach anything to anyone.  But sometimes, this can be a side effect of me trying out my ideas.  I couldn't care less about what others gain or what others think of a pseudo on a forum, not knowing who I am for real.

Take a step back, and think of what we are doing here.  We are just writing stuff on a forum, and we are anonymous to one another.  What counts is what is written, not the identifier under which it is written, which only serves to link posts together in order to understand lines of reasoning.  We could just as well all use "anonymous" as identifier ; it would simply be somewhat harder to have exchanges of arguments because one would have to quote all the elements to which one is replying.

Maybe I should abandon my pseudo here and create a new one, so that no "personality" is linked to it.

You are one of these people that cannot distinguish an argument from its author.  That's not a way of having logical arguments.  It is quite useless as a pass-time, especially if the author is a pseudonymous identifier on a forum.  You could just as well argue with a bitcoin address about its personality traits.

Point is, apart from some *technical* tests, the geeky fun of it, and the buzz for a while, I don't see why anyone would use it on litecoin, as long as normal transactions on LTC work very well (and LTC has 4 times more room than bitcoin, and is much less used right now).
Why would one lock one-self in with "a guy on the internet", if one can send the transaction directly to destiny ?
Because if the "guy on the internet" decides to settle, your funds are locked for a certain time in any case.  If the "guy on the internet" decides not to transmit your LN transaction (because his PC is down), you cannot use your funds for a certain time either.  Why go through all these inconveniences when you can send your transaction directly ?
(apart for the geeky fun ?)

You should stop telling people what they should do.  Like it, or don't like it.  Answer, or don't answer.  Read, or don't read.
As I told you, writing concise, well-worked texts is much more work than I'm willing to spend here.

Yes, so ?

Does that make the volume go up too on the exchanges ?

Clearly MOST of the volume and market cap in alt coins is not in the last 500 coins, but in the first 30 or so.  

As I pointed out, market cap can be faked, especially with ultra low volume (create a new coin, premine 1 billion of them, sell one to yourself on an exchange for $10, and you have 10 billion market cap for a second).  But when volume and market cap are more or less in agreement concerning relative ratio's, this is real.  Especially that now, there are no significant exchanges contributing to high volumes without fees.

Worse !  It was a guy on the forum here !
 

He sold me a few bitcoin long ago, and he told me "keep them, one day they will be worth 500 000 dollars !".   So I'm keeping them...

I think ideally, you run the full node you wrote yourself !  As such, you don't have to trust anyone and the reason to run a full node is to verify whether the thing one presents you as bitcoin corresponds to what has been sold/told to you as bitcoin.  If you trust code writers, you can just as well trust block chain writers, and you don't need a full node.

See: now you got it directly from him  


franky1, really, you have a serious, serious misunderstanding of the basics of bitcoin mining.

You are EXACTLY committing the error I pointed out above:


I think it is because you do not understand the difference between a very peaked distribution around 10 minutes intervals, and an exponential distribution with AVERAGE 10 minutes.

This is what I'm trying to point out.  I don't know if it is "lying" or "indoctrinated" or whatever.
But the argument that bigger blocks would lead to centralization, while the centralization already took place, always left me astonished: no-body ever reacted to that.  It is not so much that I absolutely want bigger blocks or whatever - it is that the argumentation is fallacious, and I have a hard time believing that the experts saying so, can't make the same obvious reasoning than I did here, and did several times, just to be greeted with the counter argument "but everyone knows that full nodes matter / keep the network honest / .... " and if that doesn't work, that "I'm a paid shill " or something of the kind.  So, are all these people self-deluded ; or do some of them know this but don't want it to be acknowledged ?

I have difficulties with fallacious arguments from experts.

That said, full nodes are not totally useless, but their only use is for *their owner* who is the only one who can *check for himself*.  But with that knowledge, he can do nothing else but acknowledge "that he has been had" or "that he hasn't been had", but that's about it.  The other advantage of a full node, for his owner, is that his owner can send out his own transactions, and nobody can know that HE was the one sending that transaction, as, being a full node, he would also send all transactions of light wallets connected to him.  So there is some kind of deniable anonymity of the IP address that sent out a transaction.

But that's about it.  These can be sufficiently good reasons to run a full node, BTW.

Of course, it is true that full nodes DID HAVE power of filtering "bad blocks" when mining nodes were connected only to the P2P network to other mining nodes, and didn't talk to themselves directly.  Then the P2P network could stop them from building a chain with which the full nodes didn't agree, because they would not receive one-another's blocks.

But as I explained several times, a miner pool would be crazy to wait for other miners' blocks through the P2P network, while he can just configure his node to connect directly to the other miner pool's node and get it faster, wasting less hash rate.  As this is mutually beneficial, I don't see why mining pools wouldn't do so.

When I look at the LOW orphan rate, I arrive at the conclusion that miners know one another's blocks in about 1.5 seconds on average, which indicates that those blocks cannot really hop from node to node in between.  1 MB blocks, transmitted and verified within 1.5 seconds seems impossible to do over a random P2P path, where each node receives the block, checks it, and sends it out again.

He can, of course.  But I took this as such an indication:


... and have no competition ....

together with:


where he says:
(pool Awins every 10 minutes, zero competition)

and where indeed, he puts as many blocks (100) by pool A as by the 4 other pools.

That's exactly what makes this market entirely a market of speculative assets.  The real economic value (= usage) doesn't matter much in the price determination, which would be 10-100 times smaller if it were.

Of course he did.  He thinks that if there are 5 mining pools, with each of them 20% of the hash rate, and 4 of them switch off, the 5th one will continue make blocks every 10 minutes.

This is the argument he used for a mining pool to leave the agreement he has  with his peers to remain on their mutual protocol, and to switch to the protocol the full nodes want to impose on the miners, because "then he is alone and will make blocks every 10 minutes, pleasing the full nodes and reaping in all the rewards".

My point was that
1) this was not the Gedanken experiment that needed to prove that full nodes can force their protocol onto miners
2) the betraying node is not winning anything, because he's not making blocks at any faster pace than if he remained faithful to the other miners and their agreed-upon protocol.

I need to add something, to lift a potential confusion: the orphaned blocks.

One may erroneously think that there are, say, 5 miners *in competition* and that it takes them *about exactly* 10 minutes of computing to get a block, but that sometimes, it takes the first one only 9 minutes and 59 seconds, and the second one, 10 minutes and 1 second, and they were all almost within a few seconds "in time".

This would be the case if mining a block were a cumulative effort: that the calculation took 10 minutes (and sometimes a few seconds less, and sometimes a few seconds more).

But, as pointed out before, this is not the case.  Mining a block is calculating hashes, and only one out of X hashes is an acceptable one, but calculating more hashes doesn't change the *probability* for the next hash to be good or bad.

As such, at each hash you calculate, you have a probability of 1/X to have a good hash and win the block.  This means that ON AVERAGE you have to calculate about X hashes, before you can hope ON AVERAGE to have a good one.  But this good one could be the first, or it could only come after 3X trials.  The probability distribution of the number of hashes needed to find the first good hash, is an exponential, with an average of X.

This means that miners find blocks at random times.  Sometimes, you find it directly.  The first hash you tried was the good one.  Sometimes, you have to calculate 3X hashes.  It is not that there is a block EVERY 10 minutes.  There is a block at RANDOM TIMES, and the interval is ON AVERAGE 10 minutes of all miners combined, but has an exponential distribution.
Each miner has an exponential distribution of "winning blocks", with an AVERAGE time that is given by

T_av = 10 minutes * (1/fraction of hash rate needed for 10 minute difficulty)


This means that MOST OF THE TIME, when a miner finds a block, HE'S THE ONLY ONE.  So MOST OF THE TIME, a miner wins all the blocks that he can solve, at an average time of T_av.

But it can be that during the small interval of time when the miner was calculating on the wrong (old) block, he happens to find a block JUST after another miner already found a block.  Essentially, the probability of this happening is dT / T_av, where dT is the kind of propagation time of a block from other miners to him.  In that case, our miner didn't know he was mining on the wrong (old) block, and publishes his block, to see that in fact, he was late.  That's orphaning. 

The frequency of orphaning can be estimated as follows:

Let us say in our artificial example that there are 5 mining pools with each, 20% of the hash rate.  This means that for all of them, T_av = 3000 seconds.

They all produce a block according to an exponential distribution, with an average of 3000 seconds each of them.

Suppose that it takes 2 seconds for a block to get propagated and checked by the other miners.  This means that during these 2 seconds, a miner hasn't yet seen and accepted the block of his peer that was published.  He has a probability of 2 s / 3000 s to find a block exactly during this time.  So once out of 1500, he will also publish a block, which will be orphaned.  So every miner will have a block orphaned once out of 1500.  Because there are 5 miners, it means that about every 300 blocks, a block is orphaned.

I hope it is not that bad...

I was promised $500 000,- a coin, so I won't sell mine until we reach that number.
And I will sell for fiat of course, or a nice house per coin.

As I told you, that is *entirely* given by Fisher's formula.  If you are interested in inflation, that is, in the *increase in price of a unit of value as expressed in coins*, then it follows from:

M.V = P.Q

that:

P = M.V/Q

and hence that (full differential):

dP = V/Q . dM + M/Q . dV - M.V/Q^2 . dQ

If we consider ONLY the change in velocity, and keep M and Q fixed, then dM = 0 and dQ = 0, and we have:

dP = M / Q . dV

The inflation is then dP/P = dP . Q/(M.V) = M/Q . dV . Q/(M.V) = dV/V

So we see that the inflation dP/P = dV/V, the relative change in velocity.

Inflation is equal to relative change in velocity, a.e.e. (M and Q constant).

I thought that that was obviously transparent that I didn't need to spell it out.

I think the dishonesty is on the other side, you know.  I never refused to make "handwaving" arguments, but I said that *if* one has a mathematical model of something, then all the knowledge is in there and no handwaving arguments are needed any more.  Fisher's formula gives you all there is to know between the link between velocity, economic value bought with the money, monetary mass, and price of a monetary unit (coin).

However, I also said that a model for the velocity itself is not included in there.

YOU are the one making claims on how velocity is going to turn a deflationary coin into a stable one, not me.  You are regularly advancing as an argument "high speed payment channels".  My question to you is: how does that relate to velocity and how does this relationship prove your assertion of turning a deflationary asset into a stable one so that it can be used as a unit of account ?

Well, it has been pointed out that this is not the case any more for the bigger alts, which are directly fiat/alt.  There are several alts now that are *independent* of bitcoin ; and bitcoin not being a stable unit of value, it is a bad idea to measure the value of something (like alts, or coffee) in bitcoin.  Most fiat is much more stable as a unit of account.

The bitcoin and alt coin markets are getting decoupled.

But it is true that bitcoin having first mover advantage, and having 3-6 years of advance on most alt coins of any significance, its market leadership is still good for quite a while before this erodes away.

Individual coins, yes.  Overall, bitcoin is about half of crypto.  It is a bit more when looking at market cap, it is a bit less when you look at volume.

Right now:

Bitcoin market cap: $28,817,708,481  ;  bitcoin volume $930,818,000    

Crypto total market cap: $52,069,216,063   ;  crypto total volume: $1,912,681,567

It is the *coherence* between these numbers that tells us that bitcoin is grossly half of crypto at this moment.  Half of the capital, and half of transaction volume.

It is of course still by far the individual market leader, but it doesn't hold the crypto monopoly any more.

Last try to make you understand the basics of bitcoin mining.

Consider 5 mining pools, each with 20% of the hash rate and with "difficulty in equilibrium" which means that ON AVERAGE there's 1 block every 10 minutes in all, and each pool wins a block every 50 minutes on average (1/5 of the blocks).

Up to here, I hope you are with me, OK ?

Now, consider that the first 4 pools switch off, but the difficulty level remains unchanged (it will not change for the next 2000 blocks).

Well, the fifth pool will still make his blocks every 50 minutes, and that's it.

So:

1) the fifth pool won't see much of a difference in his rate of winning blocks (namely about 1 every 50 minutes on average, with exponential probability distribution)

2) the total chain now being made by only this pool, the whole chain only wins 1 block every 50 minutes on average.

This is a very elementary notion in bitcoin mining.  If you don't agree, you've seriously misunderstood something.  Go ask elsewhere if you don't believe me.  Until this point is cleared up, there's no point in discussing other aspects of the bitcoin system.

Point is that none of these aspects, namely "store of value in the long term", or "currency to buy and sell stuff" is what is driving the crypto currency market BY FAR.   Almost all people who are in crypto currency (bitcoin and alt coins) are into the speculative aspect of "wanting to gain value" with it.  True, some are into this for the shorter term (wanting gains on volatility, day traders) ; others are in the longer term into it (hodlers), but almost all of them are in it for (hopefully LARGE) gains.

A small minority of people are into crypto to buy stuff with it ; dark markets are the main application, and bitcoin is still (despite its transparent chain) mostly used there.  And yes, a few geeks like to buy stuff legally on the internet with bitcoin (me too).

Another small minority of people are really into crypto, and mostly, bitcoin, to hedge against the potential woos of the financial system.

But, by far, most users are in it for BIG PROFITS (in the short or long term).   This is what keeps the exchanges going, this is what determines market cap, and this is what determines volume.  ==> it are speculative assets to gamble on.

Now, speculative assets derive their "value" (that is to say, their hoped-for potential to make you rich) from the amount of greater fools that flow in (long term hodling and dream of moon) ; or the amount of fellow traders that play, just as you are, on the volatility.

It is true that, concerning volatility, alt coins are superior to bitcoin since a while ; but it is also true that the bigger the existing pyramid is (the higher the given market cap of a coin), the smaller the hope is to find a lot more of greater fools.  At that point, it becomes interesting to look at smaller pyramids with larger growth potential - even though the big pyramids are still attractive and feel somewhat safer.

I guess the recent shift of inflowing capital from bitcoin to dominantly alt coins, reflects this: smaller pyramids have higher potential growth in greater fool games than already very big pyramids, but the big pyramids are still filling in big layers of newcomers at high prices.