For the record, though, I do support large enough network capacity to handle global transactions if at all workable. And I support optional off-chain services that people can choose to use when if doing so best meets their needs. I oppose deliberately limiting Bitcoin to make those services artificially profitable or necessary. If it turns out that no set of technical innovations will allow miners to process extremely high transaction rates at prices that users are willing to pay, fine. If miners could process those transactions profitably but are prevented by protocol from doing so because somebody wants to inflate the value of their preferred alternative, that's not fine. I think we're in agreement. |
|
|
|
What are you saying? That services like Mt.Gox and Blockchain.info should not and will not exist in the future? I'm saying that restricting Bitcoin's transaction processing capability such that most users have no choice but to use off-chain transaction services, including those like Mt. Gox and Blockchain.info, will result in heists, thefts, hacks, scams and losses, cuts off nearly all users from the benefits that Bitcoin promised to provide, and makes the entire project a waste of time. Okay, now I see what you mean. I agree. That's true... BUT, one thing to remember is that Bitcoin is many things. Right now we all refer to it as the value that's trading on Mt.Gox at $70+. However, Bitcoin is also namecoin which now has a value of a few cents at the BTC-e exchange; it's also litecoin which has a value of $.55 on that exchange; it's also novacoin, etc. In other words, the things you cite as desirable for bitcoin transactions - irreversibility, anonymity, etc. - are always going to be available I believe. A person might not be able to conduct a certain transaction with those exact features with BTC at a time, but they could buy 100K NMC to do it, or 700 LTC, etc. As long as any cryptocurrencies of any value at all exist, people will have access to those features. There are all kinds of transactions in the world, high priority ones, public ones, private ones. By and large most people don't always need anonymity, irreversibility, etc. I'm speaking of the current financial system. People's bank accounts are subject to all those vulnerabilities you cite. However, for many people that's not a problem. Those problems become more prominent when government encroaches on payment freedom, but that doesn't make great difference in many cases. For the record, though, I do support large enough network capacity to handle global transactions. All these things are possible now with things like Mt.Gox and Blockchain.info where thousands of users trust these site operators to manage their funds appropriately.
Just a note, blockchain.info encrypts/decrypts the wallets locally on the client's machine. Assuming you have a secure password, blockchain.info can't steal your funds like MtGox could, for example. Yes, I know thanks. However, the majority of Blockchain.info's users trust the site operator to (and have a noncompromised server to) do things that way. That doesn't always have to be the case. Many or most people only know what their screen shows them. |
|
|
|
Bitcoin's design doesn't prevent dishonest operators, disgruntled employees, compromised servers, government-mandated backdoors etc.
All these things are possible now with things like MtGox and Blockchain.info where many thousands of users trust those site operators to manage their funds appropriately. You do realize you're making my point for me, right? What are you saying? That services like Mt.Gox and Blockchain.info should not and will not exist in the future? |
|
|
|
Bitcoin's design doesn't prevent dishonest operators, disgruntled employees, compromised servers, government-mandated backdoors etc. All these things are possible now with things like Mt.Gox and Blockchain.info where thousands of users trust these site operators to manage their funds appropriately. |
|
|
|
I also think that most transactions can be handled off-blockchain Off-blockchain transactions defeat the purpose of using Bitcoins in the first place as they reintroduce the possibility of prior restraint and do not have the same security and irreversibility guarantees as the main chain. Off-blockchain transactions don't help users in any way - they just make the lives of thieves and control freaks easier. this, fucking this. Aargh, another one who doesn't get it! To me this feels like talking to people who think that Bitcoin can't have value because it isn't backed by anything. It's kind of hard to convince both groups; ... Exactly. This is actually the biggest worry I have about this Bitcoin "experiment". My time on the Internet has shown me people can have diametrically opposing views even when answers seem obvious. Bitcoin is decentralized, meaning everyone has a say/vote in a way for how things work. If there is not clear consensus on how to move forward things can get messy, like with the block size issue. This problem intensifies as adoption increases and there are more opinions. For this reason I feel we need to get Bitcoin's software/protocol implementation to a sustainable change-free state sooner than later. |
|
|
|
You don't think PayPal's accounts, for example, can be as secure? Off-chain systems means more security options, something not possible with the decentralized nature of Bitcoin.
PayPal has zero security - they can steal from their users at any time. This is a common feature of all centralized systems, which is exactly why I said that off-chain transactions only benefit thieves and control freaks. I've used PayPal since about 2002 when they first became popular (with eBay). That's over 10 years that they haven't stolen or lost a penny of mine. I'm not saying I'm a PayPal fan. Any problems with using PayPal are that there are no good alternative options. That's the key. |
|
|
|
I am extremely skeptical that an off blockchain system will be able to secure itself against the kind of computing power that miners on the main chain are accumulating.
Why? You don't think PayPal's accounts, for example, can be as secure? Off-chain systems means more security options, something not possible with the decentralized nature of Bitcoin. I think its extremely important to think about being able to scale to this size because all the evidence from other forms of digital adaptation has shown a far higher rate of operation, once its become an option.
I completely agree. People gravitate to what's most effective/convenient. There has already been a massive shift away from physical money to digital money in the form of credit/debit cards etc. because of this, with all the fraud, fees and other problems that entails. Imagine Bitcoin adoption as a superior form of e-payment ability. |
|
|
|
In fact, even before I knew the details surrounding the block size I knew network transactions couldn't scale to global capacity. Still, I had high confidence in Bitcoin knowing off-chain transactions could play a major role. How do you know this? I'm open to this possibility but I'm not going to accept it as a mere assertion. Show your work if you want me to believe you. You're right. I should have phrased that as: "I knew network transactions couldn't [easily] scale to global capacity. " I think it's key any plans for Bitcoin development take into consideration off-chain transactions, which don't defeat the purpose of Bitcoin any more than Casascius coins would (which obviously omit using the chain), because the core network remains an option. As of right now, with no future changes to the protocol, this is false. The core network will not remain an option because once the blocks reach 1 MB no one else will be permitted to use the core network no matter how much they are willing to pay. For the moment completely disregard off-chain transactions. If the network becomes inaccessible due to the 1 MB limit then it is no longer a good option regardless of off-chain transactions. I meant off-chain transactions don't make using the core network less of an option, if it's an option at all. If alternate chains are such a benefit then there is no problem removing the artificial transaction cap on the main chain.
I personally believe that, yes. The problem is I can't speak for the entire community. So the potential problem of altering the cap seems to remain. Miners won't process more transactions than it is profitable to mine on the main chain, and since the off-chain methods are beneficial in their own right then people will naturally start using them. They are beneficial to the users based on their own merits, right?
Yes, I believe that's right. |
|
|
|
I also think that most transactions can be handled off-blockchain Off-blockchain transactions defeat the purpose of using Bitcoins in the first place as they reintroduce the possibility of prior restraint and do not have the same security and irreversibility guarantees as the main chain. Off-blockchain transactions don't help users in any way - they just make the lives of thieves and control freaks easier. Wow. I'm probably the biggest believer in off-chain transactions. In fact, even before I knew the details surrounding the block size I knew network transactions couldn't scale to global capacity. Still, I had high confidence in Bitcoin knowing off-chain transactions could play a major role. I think it's key any plans for Bitcoin development take into consideration off-chain transactions, which don't defeat the purpose of Bitcoin any more than Casascius coins would (which obviously omit using the chain), because the core network remains an option. Different use cases fit different transaction channels. The core network, as I've said repeatedly, is not ideal for making everyday transactions. |
|
|
|
To me the ASIC situation is a big concern, until we can order off the shelf consumer ASIC units any thoughts about scaling up are moot.
For all we yet know a few ASICs produced to finance original development might arrive in consumers hands and thereafter ASIC manufacturers simply go private with their own farms, making hashing a centralised industry thus rendering moot whether mining will be centralised or not.
Look at ASICminer for example, hoarding the ASICs to themselves, denying the use of their hashing power for merged mining, not only monopolising hashing to themselves but also to just one chain of potentially many merged chains. They even commented in some thread or other that they don't even see why anyone would even want ASIC at home, well hey guys I want to mine all my chains and you shitheads are failing to mine most chains, heck you dont even mine namecoin you fuckups! A real company might not even be allowed to do that with shareholders money, they are leaving earnings on the table, thus denying potential dividends to their shareholders, by wasting all that power on just one chain!
-MarkM-
Bitcoin faces some challenges, I think, but we've always known that. I think we imagine most any impediment can be overcome by the creative determined efforts of the community. We take problems as they come. Look at the apparent legal victory, for example, we've recently had with the FinCEN guidance. The difference between ASICS concern and the block size issue is that ASICS, if ever a problem, could be overcome various ways. By contrast, the block size is built into the community itself. If block size is ever a problem, due to the way it's structured, then that problem remains so long as there is no workable, acceptable alternative. |
|
|
|
Wondering if Bitcoin can scale to three or four magnitudes larger than the largest global payment network is just silly. As Bitcoin scales it becomes increasingly more difficult to introduce changes like new block versions that would support that kind of growth. It's much easier to put algorithms in place now that are sufficiently efficient to scale to those magnitudes well before they are needed. Avoiding this discussion in the present is a good way to help people who want to prevent Bitcoin from ever succeeding to that degree. I agree discussion on block size issues are better earlier than later. Actually, I came to this forum section to post a thread asking for current thoughts on the issue. So I'll ask here instead. My belief is most people are letting the information digest as is often helpful with hard problems. Would that be accurate? |
|
|
|
|
There are similarities, but I don't think it's a good idea to try re-defining Bitcoin as a company with shares. For one thing, it's not.
|
|
|
|
FAN-TAS-TIC  Yet another portion of my prediction from the Solution to the Bitcoin Foundation post coming true. ... So far, pretty standard. The difference is, that you will never hold bitcoins for more than a few seconds, as Bridgewalker will automatically exchange them for US dollar as soon as you receive them (and they confirm) and will only buy bitcoins just that moment when you are about to send them. ...
If over 95% of your wealth is usually in gold, for example, are you ever really concerned about a 51% attack, or the possibility of new and better cryptocurrencies? Not really. You only hold a given cryptocurrency for short periods of time, probably based on exchanged rates, and perhaps even managed by a professional.
And as for this: You can therefore use Bitcoin solely as a payment network, while being protected from market swings.
You're not only protected from market swings, but as I also said in my post from 51% attacks: As I pondered the implications of all this I realized this also solves the 51% attack.
In other words, I see a future where people do not use bitcoins (or other cryptocurrencies) as their main store of value. They are too volatile and unpredictable; even further down the line there are many unknowns. Instead people will use crypto-coins for what they are best at which is transferring value. They will probably use gold/pm's for what they are best at, which is storing value. Many people will hold bitcoins, and other cryptocurrencies only long enough to get what they need. There will always be investors and speculators, of course, but primarily no cryptocurrency will be used in the way people now use cash, where they keep 99% of their wealth permanently stored there. |
|
|
|
Or, are all peer nodes now considered "money transmitters" that must register with FinCEN as MSBs.
All nodes that generate blocks (transmitters) must register and (I assume) to be compliant must know both parties of all transactions included in the block. This is impossible and thus the guidelines make Bitcoin illegal [in the US and wherever FinCEN thinks it has jurisdiction :-)] I would urge the US Bitcoin community to discuss Bitcoin with FinCEN. There are positive statements: - bitcoin is not a currency - Users of bitcoin do not need to register. There is good will from the other party :-) That wouldn't make any sense. If you look at the complete FinCEN statement they clearly spell out three categories - users, administrators, and exchangers - and the difference between them. I imagine FinCEN had some help understanding the underlying way Bitcoin works, which is why they address it so specifically. If this is true then they would know simply running the software as a full node is a way to be only a user, the one category they say requires no regulation. I don't think they're looking at the way the underlying network works. I think they're talking about the infrastructure built on top of it. |
|
|
|
Excerpt from prepared remarks of Jennifer Shasky Calvery, [...] Those who are intermediaries in the transfer of virtual currencies from one person to another person, or to another location, are money transmitters that must register with FinCEN as MSBs unless an exception applies. It sounds like they're interested specifically in exchanges. I just re-read that and am now seeing that part being missed in the various initial interpretations of FinCEN's guidance. FinCEN's guidance only addressed transfer of virtual currency when "as part of the acceptance and transfer of currency, funds, or other value that substitutes for currency". But how would an EWallet provider know if I was sending from my EWallet to someone as part of a transfer of currency or if it was a gift, or perhaps I bought something and was paying with bitcoins. From the director's remarks, it sounds like an EWallet would be an MSB (and thus need to obtain identity of the users then). But almost no EWallets require that. And I don't need an intermediary to transfer bitcoins anyway -- I can send right from my own client, without using an EWallet. Or, are all peer nodes now considered "money transmitters" that must register with FinCEN as MSBs. This isn't guidance from FinCEN, this is mis-guidance from the highest level. Yes, that's a good point. I think eWallets would also be regulated. The difference I think between you sending to a recipient directly vs. using an eWallet as intermediary is something we've discussed on this forum, which is fractional reserve. An eWallet holding user funds MyBitcoin.com style can abscond with the funds or misrepresent the amount of funds they had. With virtual currencies having real value and FinCEN essentially saying that's ok, I think it makes sense they want to cover any entities dealing with funds. |
|
|
|
... Social projects will be funded through Kickstarter-type operations, with contractors, corporations and individuals listing the projects they think up, and where everybody will have direct say in where they place their anonymous currencies - not where their government places it for them. This means that services will start to be a lot more like what the people want to see, and funds will transfer relatively directly to projects rather than funneling through inefficient and incompetent bureaucracies. You mean like https://cryptostocks.com ? |
|
|
|
So did BetaMax. Reality didn't care what their opinion was either. WTF man? BetaMax was the bomb!  Sure, but it wasn't first to market, VHS was. VHS won. Betamax wasn't better enough for the early adopters to switch, due to the network effect. Bitcoin has the first to market advantage, and the potential ability to annex any real improvements that an alt-chain can produce anyway. If the 2 minute interval that LTC uses really offers a market advantage, Bitcoin can steal that advantage. There are only a few things about the way the network actually works that can't be messed with, including the 21 M BTC limit. Hmm, actually Betamax was first to market: developed by Sony, released in Japan on May 10, 1975 ... rival videotape format VHS (introduced in Japan by JVC in October 1976 ... But I agree with your sentiment. First to market will certainly have the advantage unless, like you say, competition has significant improvement allowing it to catch up. This crypto-currency movement we're all a part of is interesting, though, because it deals with monetary aspects as well as technical considerations. I do believe at a certain point a crypto-currency is probably beyond challenge due to market share, but I don't believe Bitcoin is there yet. What I see happening is Bitcoin leading the way to global acceptance of crypto-currency. Similar to gold I believe you'll be able to exchange bitcoins for goods and services around the globe. However, we're a very long way from that, so long that I believe alternate market choices to Bitcoin will also spread in adoption to eventually reach the whole globe. Presently it looks like there will be three global blockchains: Bitcoin, Litecoin, and Novacoin. Absent any marked improvement over the offerings of those 3 coins nothing else will gain that level of acceptance. So we will see a "lock in" effect to market share, but this will include more than Bitcoin. |
|
|
|
So did BetaMax. Reality didn't care what their opinion was either. WTF man? BetaMax was the bomb! Seriously, as I said to other skeptics in the thread of my post then: I am underwhelmed and unconvinced.
That's fine. You're part of the market, and free to have an opinion. But the market is larger than you (and me), and if it thinks I'm right then that's how things will play out. LTC was about $0.04 - $0.05 then. Maybe I'll remember to come back and quote this thread when LTC is over $1. |
|
|
|
The problem with an alt blockchain that is too similar to Bitcoin is that bang for the buck in risk diversity just isn't there. It's like trying to protect cheetahs by making identical copies. When a lack of genetic diversity is what is already a primary threat to them in the first place.
I don't see the correlation, but for the record what appears to make cheetahs endangered is as follows: The cheetah is endangered today largely because human beings have taken over much of the cat's habitat and killed off the small antelope the cheetah hunts for food. I don't see how genetic diversity would help with that. But there is another problem with having an alt that is too similar, which is that it is unlikely to thrive well enough to serve as a backup for that place in the ecosystem. LTC may be fine and dandy but because of the choice of inflation rate traction will be very long coming.
Traction is already here. Much of the coin's early life was spent around $.04, and even that was considered traction over the other failed alt-coins which were/are fractions of a penny, which is why I focused on it and not anything else at the time. Today LTC's exchange rate is about $0.50. People around Bitcoin in the early days may remember similar pricing patterns. I actually think Litecoin's inflation rate makes a stronger case for it gaining market traction because there are already as many litecoins as bitcoins in circulation, more so actually due to a faster inflation rate (about 16M LTC currently). We probably need a broad spectrum of inflation rates for diversity's sake, but I speculate that a competing alt would need an inflation rate approximately half that of Bitcoin to gain much traction in the early stages of its development.
I think we will eventually end up with such a spectrum to give the decentralized crypto currencies a tiered system as there is in the debt markets. With risk levels tailored to every need in the various arbitrage markets.
I believe inflation rate plays little role. What's more important is that there is a reasonable cap on total amount of coins. |
|
|
|
|
Show Posts
