I believe a large part of the solution, which will evolve naturally, will be off-chain transactions. You may want to see my post on it: https://bitcointalk.org/index.php?topic=146896.0...
I've said off-chain transactions should exist with Bitcoin. Primarily I had scalability in mind, but also think of the progression of money. People once traded physical gold. People then traded claim checks for the gold instead since that was more effective (easier to carry, not subject to shaving, etc.). Today we use credit cards, PayPal and other methods to trade digital claims on paper dollars since that's even more effective than trading the paper.
...I've also had a far simpler transfer method in mind which I call Bitcoin Clearing Houses (BCH).
A BCH starts with an entity that can garner general trust, say MtGox, Blockchain.info, the Bitcoin Foundation, etc. The BCH sets up a server with website interface allowing users to register with email addresses and deposit or withdraw bitcoins. Those transfers take place on-chain. However, since the BCH is widely visible many other users and merchants could also have accounts there. Then coin transfers happen within the BCH, or between multiple ones. A BCH also provides an API so that eWallets like WalletBit or MtGox can pass on transfers from their members without the members having accounts at the BCH.
Using a BCH has obvious advantages. Transfer is instant, no waiting for confirmations. Transfer is free or very low cost (profit might come from ads or features). Finally, of course, is scalability is helped greatly. (people could also send to email addresses eschewing wallet addresses)
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You are not solving anything (replacing one exchange, MtGox, with another). What Bitcoin needs is a multitude of exchanges to pop up across the world, to spread load, users, trades, DDoS, infrastructure, etc. I pretty much agree and a multitude will pop up as time goes on. The problem is right now of all exchanges in existence, and there are many, Mt.Gox has about 80% of all trade volume by themselves. As Bitcoin grows, and it has been doing so exponentially, so will the magnitude of Mt.Gox's top heavy share of trade. That's why they got over loaded - their press release even says so - and why I think the solution is supporting and recommending other exchanges now. |
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I agree a pure P2P system is the nirvana, but how do you transfer the other item for trade? Meaning where does fiat enter the system, and how? To my best understanding a pure P2P exchange would still require a clearing house for the transfer of fiat or some other commodity that is not a digi-coin, such as LTC or another digi-coin. Also to my best understanding of the macro view of any human group is that there does need to be some kind of central authority. It exists in the very fabric of BTC in the BTC devs are a central authority. Imagine if BTC splintered like Linux? I'm no Linus expert, but to my understanding is that even if all flavors run the latest Linux kernel that does not mean each runs the same way. So BTC and the world does need a large driving central force behind providing liquidity to BTC. I'm trying to solicit ideas for how to make this centralized force as open source and purely democratic as possible. I actually haven't had time to read through the first two links. The last thread is mine (someone posted the other links in my thread) for a much simpler idea: the community supports existing exchanges more. |
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F**K!!!!!!
If you have any amount of coins or funds in ANY online Bitcoin account, where you would say "F**K!!!!!!" if that online service went belly up you have too much stored there. |
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Yes this bubble pop was a good thing but I have news for you: bubbly speculation will return.
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Those threads are related to the very real problem of centralized BTC trading, but they offer technical solutions. I agree we should attack the problem on all fronts, but this thread is a simple proposal about people just adjusting behavior a bit. I really can not recommend BTC-e. Their site doesn't work with firefox. And they don't respond to help requests.
We all take a remarkable risk with exchanges. Any smart exchange operators should do all they can to develop trust and reliability.
I like how BTC-e shows all the pending trades--this is so much better than Gox which is a black box.
Another thing is I don't like how CampBX does the "know your customer" bullshit. What exchanges operate outside the US mafia territory?
And last, bitcoin has to develop anonymity by default. I've heard of mixer services built right into the client that I think are great ideas.
You're right about developing trust and reliability, and so far some exchanges have done a good job IMO. They include (besides Gox) CampBX, BitStamp, TradeHill, and BTC-e to name a few. Mt.Gox has many more trades than BTC-e and a different looking order book view. Any exchanges that deal with moving money are pressured into anti-money laundering know your customer (KYC) procedures. That's the only way to be seen as a legitimate part of the existing banking system, which is global. I agree about building better anonymity channels into Bitcoin software. I believe that will happen as things evolve. |
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Cavirtex.com is a solid Exchange that I have been using
That's a great looking site! Thanks, yes, as Bitcoin grows globally we should highlight country targeted exchanges like this one in Canada. Such exchanges may eventually accommodate global trading too. BTW, everyone might also take a moment to read this Falkvinge article: http://falkvinge.net/2013/04/12/what-we-learn-from-this-bitcoin-correction/Any more exchange suggestions? Come on! Let's get some pledges! I pledge to look to exchanges other than Mt.Gox first! |
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Many are bashing Mt.Gox, but there are two sides to a story. Mt.Gox has been a powerful force for good concerning Bitcoin. Bitcoin is experiencing exponential growth, something we knew could happen, but with too much centralization i.e. pressure on Gox we find weakness that affects everyone. The market will sort this out but as a community we can help (not least because we mostly are the market). Apparently new exchanges are being planned but we can immediately help by simply supporting and recommending other exchanges. I'm guilty too. Although I have accounts with multiple exchanges when it comes to serious trading I look first to Mt.Gox. That should change. It may be inconvenient, but fairly easy to look to other exchanges first. If we all do this, and recommend it to others, we will rapidly shift that monstrous 80% of all BTC trading that occurs with one exchange, to the increasing detriment of us all. Two great exchanges that come to mind are BitStamp.net and CampBX.com, both of which to my knowledge having never had a security incident. |
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Nice post. I particularly liked this line: The related problem is that nobody had bitcoins or was setup to handle them except a few wierdos. I imagine anyone poking around on a contraption with only 3 text websites could be considered pretty weird too  |
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Aztec, I don't think bitcoins are finished rising. I've often said they could be worth $100K each. So I don't think you've missed all of the opportunity in Bitcoin. However, there may be another even greater. Right now if you have $1,000 to invest you'll get about 5 bitcoins. If/when bitcoins reach $1,000 each you will have made $4,000. The way prices have been going they might hit that in less than a year, and a 400% increase on your money in 1 year isn't bad by any standards. There is another story. In October 2012 due to developments in this community - namely the creation of a power consolidating "Bitcoin foundation" - I realized it would be healthy for there to be market alternatives to Bitcoin. In a post called Solution to the Bitcoin Foundation I advised people to support other cryptocurrencies like Litecoin. My conclusion in that post is relevant to your question: ...
I think everyone (TBF opponents in particular) should begin adopting, promoting and using Litecoin to diversify cryptocurrencies in the market. People should have cryptocurrency portfolios, I think with BTC and LTC starting things off. Exchanges, eWallets, and merchants should add support for multiple cryptocurrencies so people can switch between them easily. Vircurex.com and Btc-e.com currently reflect this well.
The exchange rate for Litecoins I estimate should be around $3, which is about 4 times less than Bitcoin's current rate, because there will be about 4 times as many Litecoins than Bitcoins in total. I personally will be working hard to help the community move in this direction. It also means broader wealth distribution as there are already about the same number of LTC as BTC in existence.
At the time I wrote that litecoins, which had the most traction of all alternative coins, were worth about $0.04-$0.05 each. Today they are worth about $4 each. At that time bitcoins were about $12 each which is why I concluded litecoins should be worth $3 or four times less, since there are four times as many litecoins as bitcoins total. I still believe litecoins should be about 4 times less than bitcoins, and while the market for them has obviously picked up I think it's still behind (bitcoins currently ~$200). Litecoins jumped from about $0.60 to almost $6 recently correlating with the surge in bitcoin prices. If you do the math investing that same $1,000 in litecoins, should they ever settle at 4 times less than bitcoins, you'll make a lot more than 400%. https://btc-e.com/ |
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So the longer I think about the block size issue, the more I'm reminded of this Hayek quote: The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.
F.A. Hayek, The Fatal Conceit We can speculate all we want about what is going to happen in the future, but we don't really know. So, what should we do if we don't know? My default answer is "do the simplest thing that could possibly work, but make sure there is a Plan B just in case it doesn't work." In the case of the block size debate, what is the simplest thing that just might possibly work? That's easy! Eliminate the block size limit as a network rule entirely, and trust that miners and merchants and users will reject blocks that are "obviously too big." Where what is "obviously too big" will change over time as technology changes. What is Plan B if just trusting miners/merchants/users to do the right thing doesn't work? Big-picture it is easy: Schedule a soft-fork that imposes some network-rule-upper-limit, with whatever formula seems right to correct whatever problem crops up. Small-picture: hard to see what the "right" formula would be, but I think it will be much easier to define after we run into some actual practical problem rather than guessing where problems might crop up. Well, thanks for weighing in. Under the circumstances you're the closest to a leader this leaderless grand experiment has, so it means a lot. We simply must get some resolution to this so we can move forward. As I alluded to earlier no action could ever satisfy everyone nor be provably correct. I'm a bit torn on this avenue, because on one hand I believe strongly in the ability of the market to work effectively. So your rationale it will self regulate block size makes sense to me. On the other I consider this the riskiest route for things which can go wrong and consequences if they do. However, this is one of the reasons I began pushing alt-coins. The more options a free market has the better it can work. In the end, because of that, I can live with any decision for Satoshi's version of Bitcoin that resolves block size without an economically and confidence damaging fork. So I say let's start pushing forward with such plans. It will be better for all interests if we do. |
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Okay here is a proposal which IMO is "safe" enough to win support, but first a quick question. Infinite block sizes appear dangerous for centralization, but also DOS attack and chain bloat by tx's with no/trivial fees which size limits and higher fees help prohibit. Has there been good answer for the latter? (apologies for having missed it if so)
This new proposal builds on Gavin's model, but IMO makes it "safer":
Increases of 4MB every 26,400 blocks (every 6 months) if block.timestamp is after 1-Jan-2014 and 95% of the last 4,400 blocks (1 month) are new-version.
Pros:
- no action until future date gives market time to respond gracefully
- no change as default, means no fork risk
- allows possible increase of 16MB in 2 years and has no final limit
- puts increases in the hands of miners; even the small ones have a say
- should not be prone to gaming due to large sampling size, but worst case is 8MB per year increase
Cons
- advocates of infinite size will likely find it conservative
- ?
Please note in my view Bitcoin could survive with a 1MB limit and not be "crippled". I think one thing to remember is Bitcoin would not exist if government was completely out of money. Bitcoin only has value because it allows people to control their stored wealth and the free market to work. Regulation is the reason payments come with fees and inefficiency. A truly free market would have long since given users better and cheaper options. Indeed, payments existing outside the "system" was PayPal's original idea believe it or not.
So what Bitcoin allows are services to be built on top of it, e.g. ones which rely less on the block-chain, to extend its user empowerment. What I'm saying is Bitcoin is not only the block-chain; it's the idea of allowing free market efficiency the chance to work, so off-chain Bitcoin transactions can be considered Bitcoin too as Bitcoin makes them efficiently possible.
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Anyway, ultimately this will be decided by Gavin and so far he's been saying he wants to raise the block size limit.
That gives us pretty much zero information. I'm sure 99% of us "want to raise the block size limit". The question is how. Do we raise it to 2MB or 10MB or infinite? Do we raise it now? If not now when? Do we raise it once? What about dynamically? Dynamically using data or preset parameters? Do we consider hard fork risks in the decision? There are many ways to raise the limit and all have different ramifications. No matter the precise course of action someone will be dissatisfied. Actually, what Gavin said, quoting directly, is this: A hard fork won't happen unless the vast super-majority of miners support it. E.g. from my "how to handle upgrades" gist https://gist.github.com/gavinandresen/2355445Example: increasing MAX_BLOCK_SIZE (a 'hard' blockchain split change)
Increasing the maximum block size beyond the current 1MB per block (perhaps changing it to a floating limit based on a multiple of the median size of the last few hundred blocks) is a likely future change to accomodate more transactions per block. A new maximum block size rule might be rolled out by:
New software creates blocks with a new block.version
Allow greater-than-MAX_BLOCK_SIZE blocks if their version is the new block.version or greater and 100% of the last 1000 blocks are new blocks. (51% of the last 100 blocks if on testnet)
100% of the last 1000 blocks is a straw-man; the actual criteria would probably be different (maybe something like block.timestamp is after 1-Jan-2015 and 99% of the last 2000 blocks are new-version), since this change means the first valid greater-than-MAX_BLOCK_SIZE-block immediately kicks anybody running old software off the main block chain.
I think this shows great consideration and judgement because I note and emphasize the following: 100% of the last 1000 blocks is a straw-man; the actual criteria would probably be different ... since this change means the first valid greater-than-MAX_BLOCK_SIZE-block immediately kicks anybody running old software off the main block chain.
What I think is of greatest value in Gavin's quote is that it's inclusive of data from the field. It's not him unilaterally saying the new size will be X, deal with it. Instead he essentially says the new size can be X if Y and Z are also true. It appears he has a regard for the ability of the market to decide. Indeed no change remains an option and is actually the default. I think Jeff Garzik's post on the issue is apropos, particularly his last point: Thanks for that link. I hadn't seen that post and I think it's brilliant. It probably aligns with my views 99.999%. Ironically it's his last point I disagree with most: Just The Thing people are talking about right now, and largely much ado about nothing.
I completely disagree. Think how easily this issue could have been solved if in 2009 Satoshi implemented a rule such as Jeff suggests here: My off-the-cuff guess (may be wrong) for a solution was: if (todays_date > SOME_FUTURE_DATE) { MAX_BLOCK_SIZE *= 2, every 1 years } [Other devs comment: too fast!] That might be too fast, but the point is, not feedback based nor directly miner controlled.
I think the above could be a great solution (though I tend to agree it might be too fast). However, implementing it now will meet resistance from someone feeling it misses their views. If Satoshi had implemented it then it wouldn't be an issue now. We would simply be dealing with it and the market working around it. Now however there is a lot of money tied up in protocol changes and many more views about what should or shouldn't be done. That will only increase, meaning the economic/financial damage possible from ungraceful changes increases as well. I also note early in Jeff's post he says he reversed his earlier stance, my point here being people are not infallible. I actually agree with his updated views, but what if they too are wrong? Who is to say? So the same could apply to Gavin. That's why I think it's wise he appears to include a response from the market in any change, and no change is the default. |
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In addition, if the transaction rate is growing because of increased adoption bitcoin will be spreading into entirely different sectors than just home users; there will be more bitcoin-based businesses. It's not a given that the decrease in the number of home users running full nodes will exceed the growth in the number of businesses running full nodes.
It would be silly to assume that the composition of users during the extreme early adopter phase will be in any way representative of the composition of users in the future as Bitcoin moves higher up on the adoption curve.
I agree. |
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Okay, here's some numbers so we are all on same page and not throwing around "vagaries"
The maximum size of the blockchain growth at present 1 MB block limit is 52.5 GByte per year.
At an increased block limit of 5 MByte => 262.8 GByte per year.
Similarly for 10Mbyte, max. growth => 525.6 GByte per year.
When someone says "they want to increase the block limit so that the network can grow", they can mean only one thing, they want the number of transactions on the network to grow since clearly the number of new people willing to run a full node with increased storage decreases (above some limit) as the size of the blockchain increases. So just to be clear here, they do not mean they want the network to grow but that they want the usage of the network to grow, which is not the same thing.
So as long as everybody is clear that increasing the size of the blocks is limiting the number of full nodes then that is okay, but what you are using as the metric for the "size" of the network is important here.
Is the size of the network the number of nodes or the number of transactions? What is the stated goal here, maximizing transactions or maximizing network nodes?
I don't think storage is a big problem, even storing the full blockchain with 10MB figures. Memory has kept a good pace at becoming cheaper, more so than higher bandwidth options. Even with today's costs you could handle the 10MB figures for about $65 per year in storage costs, which will only get cheaper. Dell Price $129.99 - 1TB Hard Drive
http://accessories.us.dell.com/sna/productdetail.aspx?c=us&l=en&s=bsd&cs=04&sku=A4489204&dgc=ST&cid=248711&lid=4318543&acd=12309152537461010 |
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Well, one thing seems clear to me by now. No amount of continued arguments will change entrenched views here. So, on to the next question. What do we actually do?
In negotiations where parties are far apart and demonstrably unwilling to move the only solution AFAIK is one where nobody gets what they want entirely, but instead uses something all can live with.
In my opinion that would be a change that appears most "safe". That seems like raising the limit by some safe appearing amount and seeing how things go. I estimate that would be raising the limit to something like 5-10MB.
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People are conducting transactions using Bitcoin, and complaints about transaction times only arise in a tiny minority of instances, therefore transaction time is not a problem.
Actually I've noticed more and more threads lately about confirmation time stretching over an hour, I think due to Bitcoin growing in general, hence more transactions. Aside from that if you poll the community on whether they would rather have instantly trustworthy transfers or deal with confirmations I'd be willing to put bitcoins on what the result would be. In addition to this, Bitcoin confirmation is faster than any other means of online transaction, when you compare like to like.
Please be practical. We're not out to dissect bitcoin and financial services. We're simply asking what people would likely prefer to do in the future. An "instant" PayPal transfer is reversible for at least several months, and probably indefinitely.
The thing about reversibility is not important for the majority of transactions, which are largely legal. If you pay a dentist, or for a cup of coffee are you really thinking reversibility will be an issue? Also, a company can offer a no-reverse transaction option. Bitcoin transaction also show up within a matter of seconds and are typically irreversible within an hour.
A Bitcoin transaction merely showing up is not considered by the community (for good reason) to be a good indicator a transaction is valid. I've addressed reversibility above. Assuming equivalent UIs, what theoretical advantages to your third party off-chain service provide have that zero confirmation Bitcoin transactions don't already provide?
Assurance the transaction is valid. Although I've got other things to do I'm happy to continue addressing your concerns to try and convince you, because I think I'm right. However, if you are unwilling to be convinced please let me know so we can save both of us and this thread some time. |
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This is a false dichotomy. The same interface can be built for either type of system and in practice transaction confirmation time in Bitcoin isn't a problem.
I agree about the interface. I was mostly referring to confirmation time. When you say in practice Bitcoin confirmation time (which is unpredictable and can stretch over an hour) isn't a problem are you speaking for yourself or everyone? |
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Let me ask you something. Do you think most people in the world would want to? I don't know and neither do you. So let's not take the option away from them before we find out. Well, let me ask it another way. If you could send bitcoins to any person or business now, like you currently can with the block-chain, but the option was available with PayPal-like interface and immediacy which would you choose for common legal transactions? You really think that's unpredictable? |
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