Currently Bitcoin is fantastic (although not perfect.)  This is understandable because it has not yet been forced to deal with the engineering, market, and political challenges which will appear with significantly increased utilization.

The goal for me here is the try to help ensure that Bitcoin does not fall into the same category as Visa/PayPal, etc.

I've always said that I actually like and prefer Visa/PayPal for certain things at this time.  Most of the things I do in fact.  Bitcoin, however, offers so unique advantages which Visa and PayPal cannot match.  I use Bitcoin for these things (like storing wealth securely, making donations, etc)  and I very much do not wish to see these things vanish from the suite that Bitcoin offers.

In practice, there would probably be three options from the perspective of the micro-blogger.  (Using $ terms for simplicity.)

 - If the tips are, in the range of $0->$10 per month, just provide reference(s) to other processor(s) which are used.

 - If the tips are in the $10->$1000 range, count 'bittip' as one of the off-chain processors you use.

 - If the tips exceed $1000/mo, request native Bitcoin blockchain operations.

In no case would an up-front deposit be necessary for the micro-blogger.

As a person who wished to be the tip-er, I would anticipate choosing one of the off-chain providers I choose to patronize as the sender.  If I was really into giving tips I may go ahead and set up an account with 'bittip' for that reason alone, but I don't expect that that would be terribly common.

Good heavens!  You are already an off-chain processor.  This is great!  It's pretty much sinking in to most people by this time that micro-payments are unrealistic, and a lot of us (including myself) are disappointed...even if we saw it coming years ago.  That is indeed one of the driving forces behind wishing to have a robust 'off-chain' set of solutions.

Your case is a perfect example of a much needed niche to be filled.

If I, as a plain-jane user like someone's micro-blog and wishes to give a micro-transaction in appreciation, I would be happy to see a known entity like 'bittip' or one which I could easily verify as an entity who uses best-practice technology which precludes fraud/theft and produces some reasonable level of transparency.  Happy enough to vastly increase my deployment of 'tips'.

I do anticipate that the same methods which protect your customers from you will be accessible to protect you from any counter-parties you might do business with in an attempt to streamline your operations and reduce costs.

Bitcoin seems like some magic bullet which makes everything free and easy at this point, but that is mainly an artifact of it's being a tiny tiny spec in the global economy at this time.  It will become more expensive and complex as it grows.  We have entities chomping at the bit to subsidize the cost of this growth because they would like to capitalize on some of the value streams it offers.  The larger the entity, and the more they can monopolize the infrastructure, the more value they can realize from the solution.  I, and others, really don't want to see that become the future of Bitcoin.

I might add that whatever the factors, this group buy put sapphires into peoples hand more quickly than any other that I know of, and for a rather modest markup as I see it.

And if ~arklan is one of the probably rare persons in the community who can be relied on to actually perform the desired warranty work over the coming 6 month period, we should count ourselves among the most fortunate Bitcoiners so far.

If the 5 are over and above what is reasonable to have for guarantee work, I say give them to him now so he can sell them for a good price (or I should say, these absurd price which likely won't last for long.)

Seems to me that he's the guy who ran this show so it's legally and ethically right that the units are his outright.  We would not even know about them but for his high level of communications and transparency.

I'd always planned on kicking in another .1 BTC when I got my device and see no reason to change that.  Ya, ~arklan made a mistake or two, but he manned up and admitted it which I think that is cool, and he did a vast majority of things very well.  I learned a lot watching this thing go down and it was very valuable to me to have such good visibility.

I might point out that since the time I first notice this thread, it stated pretty specifically '(us/canada)'.  Yesterday it seems the guy worked is ass off and made the best of the day.  He seemed to have made a choice to mail a large number of US ones at the expense of a few International ones.  That seems like the right choice to me for several reasons, and I believe I would feel that way even if I happened to have been negatively impacted.

Not exactly.

When a person deposits money in any modern bank account, the money both legally and in practice belongs to the bank.  They have a debt to repay to you.  This is not a big deal...it fails catastrophically only once every few generations and is not a major beef I have with banks.  But anyway...

It is perfectly possible to give something to a payment processor which he cannot buy coke with.

Say you wish to make a payment to Bob.  You can tell the processor, "you know that blob I gave you the other day?  I want you to turn some of it into value and give it to Bob."  The payment processor looks around and say, "I found Bob.  Sign this note which will allow me to give some of it to Bob."  I say OK.  Moments later, Bob has some value in his account.

This is a substantively different relationship than I have with my bank, and made possible with advances in technology which the banking system has not caught up with.  And are probably in no hurry to as it would ruin a fair fraction of their revenue stream.  The big difference is that the payment processor has no real incentive to steal my blob because it won't do him any good unless I sign it over to him.

I believe this is the structure alluded to in the video with the "Imagine a plexi-glass bank.  We can use the same methods used to secure the Bitocoin blockchain, blah, blah, blah" but I am only dimply aware of the precise implementation methods.

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Allow me to bring something back from an earlier post of yours because it is awfully confusing:


This is not a completely implausible scenario.

Seems to me that there are two choices.

 - You transact everything on the Bitcoin blockchain which is in now way suitable for that kind of load and creates a single point of catastrophic failure.

 - You utilize a expandable pool of solutions which attempt to meet whatever challenges which pop up and use the Bitcoin blockchain as a static and robust source of truth.

I cannot imagine anyone in their right mind not choosing the latter as the logical way to proceed.

Not true (nullifying the arguments I snipped.)  Just because the payment processor is using some of his own capital to make transactions efficient does not mean that there needs to be a credit relationship between he and his customers.  And he could eliminate any unwanted credit relationship between he and his peers with a bond if they like.  This still allows all of the functions I described.

Again, I personally am happy in some situations to patronize processors who DO have some credit component if that is how they choose to operate, but they would not likely be my primary store of even my spending money.

Not at all.

Firstly, it is somewhat rare to move value from one processor to another vs. buying one's morning Java.  It's common enough for a processor to wish to optimize however.

Secondly, all of the people who did such a transfer in, say, one day would be balanced against those who did the opposite transfer.  If there is a notable difference in value which the off-chain processor does not feel like carrying, he makes basically a single transaction on the block chain which covers all of the day's activity.  This one (supposed) 0.15 BTC cost is then split amongst all of the customers in that time-frame.

Customers win by sharing the fees of a blockchain transaction and Bitcoin wins by lowering the data-rate.

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You may claim that because this is somewhat similar to how banks work, it means that the entities will be just like banks.  I reject that because I claim that the things we don't like about banks are more associated with their dealing with fiat in todays climate than they are with the properties which naturally fall out of the search for efficiency.

If they are attacked successfully, they will splinter.  Just as will happen if/when Mt. Gox get's shut down.

Unlike Mt. Gox who needs to assume the overhead of operating in fiat-land, such (mainly optional) clearing exchanges don't.  This makes them vastly less capital intensive to operate.

Secondly, off-chain processors operate with some reasonable buffer and, to the extent that they need to use such messaging systems at all, can do so at an irregular and relatively low frequency.

Remember that what we are talking about here is not a layout of all transactions in the economy, but rather an aggregation of them which occurred withing the off-chain processor's space.  Even if they find it necessary to comply with cumbersome regulations within their jurisdiction, the only 'customer' then need to 'know' is the off-chain processor.  They simply don't deal with individual users.

Nope.  Aggregation will happen largely within the off-chain processor itself.  That is indeed their primary function and why they are helpful to the Bitcoin network.

If/when it is desirable to clear between processors it could be either through messaging or interaction on one or more light-weight exchanges and squaring on the Bitcoin blockchain, or potentially squaring on some other agreed upon medium.  The exact nature of the solution(s) employed depend a lot on the type of attacks (if any) they need to deal with.

Of course a responsible off-chain provider (or any entity) will be complying with all regulations which apply within their jurisdiction.

It is perfectly possible, however, that at some point regulations might be promulgated exclusively for the purposes of protecting one's benefactors in an an environment rife with cronyism.  I, and I think others, seek a solution which could realistically bow out of participating in the aspects of such an arrangement which serve no useful purpose for in protecting the market participants and general welfare of the citizenry.

Ah, you are legitimately confused then.  If off-chain processors wish to avoid BTC transactions themselves when practical, they can probably trade directly with other off-chain processors on an exchange or via individual relationships.  That's a little tangential, but it is not critical to their operations nor particularly visible to their customers other than that it will further reduce fees and increase performance and feature set.

An exchange or 'clearing house' formed to facilitate such interactions is tiny and vastly more conducive to operating smoothly than one who deals with fiat.  They can easily lurk in the shadows.

Customer's of the off-chain processor still enjoy the protection offered by the Bitcoin blockchain and mathematics.  Off-chain providers who leverage such a 'clearing house' risk only what they have on balance since the last time they squared on the block chain.

tl;dr, the Bitcoin block-chain is THE clearing house.  Other auxiliary ones are perfectly possible.

I just explained it to you in what I thought were very clear terms.

Processors who deal with fiat are encumbered by all of the baggage that fiat systems and their regulatory apparatus bring along.

Processors who deal directly with a free Bitcoin blockchain simply don't have these problems to pass along to their customers.


You can try to employ various annoying rhetorical devices like labeling off-chain processors 'BTC banks' or 'BTC-credit transfer', but in point of fact, it is technically feasible to enforce just about any model one likes.

Other than that, you statement is hard to parse.  As best I can tell, the most legitimate answer to your concern is that, again, the powers that be picking off a second-tier processor is whack-a-mole and does not threaten the entire Bitcoin economy.  This is particularly true if pretty much anyone can bootstrap to being an off-chain processor by running some freely available software which I see as highly probable.

It would be most common, I suspect, that off-chain processors are incapable of inflating or stealing customers funds by use of multiple signature mechanisms and the like.  This contrasts sharply with our current banking model under fiat systems which are forced by law to give customer's funds back on demand.  Until the law changes as we saw in Cyprus.

That said, other flavors of off-chain processors are perfectly viable including those which could be legitimately labeled 'banks' or 'credit transfer agents'.  As I said, under the right set of circumstances which protect my interests I'd be happy to patronize them myself since I don't believe that they are inherently evil or whatever.

From a customer's standpoint, the choice of which processors to make use of shifts from an economic decision to more of a political one.  I'll be looking for diversity in terms of operational jurisdiction, transparency, customer privacy, promotion of mutual interests, etc.

And least we forget, a vast bulk of my assets would be sitting undisturbed and gathering dust in plain old vanilla Bitcoin with a paper wallet in a very safe place.

Really?  Cool!  They might even run on the pile of Soekris net4801's I have kicking around.

I've not received a shipping number and have checked my spam mailboxes.

My data on the spreadsheet says shipped, and that's good enough for me (assuming my device arrives in a few days), but I wanted to give a heads-up in case my experience is unexpected.

That is not clear.  It depends a bit on the attack surface that Tor exposes and how threats to it will be mitigated.

But if you wish to propose basing the block size limit on what technologies are proven to be able to work around coordinated network level attacks, it would be a metric I would be very interested in.

Intermediary processors can realistically be no more free than the medium they process.  The costs of doing business with fiat processors is directly related to the fact that it costs a lot to comply with the the various regulations which they are forced to comply with.  Also, and hardly by accident, the barrier to entry is high fostering end-user gouging and stifling competition.

Off-chain Bitcoin processors would have none of these problems.  If Bitcoin itself can remain free, off-chain processors can as well, or at least have that possibility.  It is inevitable that open-source reference software which defines best-practice transparency and security will also develop and become the base platform which off-chain processors would use.  This would make the barrier to entry very low and their reliability to end users quite high from the start.

Of course off-chain processors who also wish to have a foot in fiat-land are a different story.  At least some of their fees will be much higher, and their life expectancy will not be very good.  I don't see off-chain transactions as the magic bullet for Bitcoin<-->fiat transfers, but I am hopeful that the need to do such transactions will decline.

I might add that if Bitcoin becomes a size when 'a few thousand' entities have the capability to operate the infrastructure, said entities will be at least the size of Dwolla, OKPay, etc.  And as history has demonstrated, they are far from immune from being pressured into whatever compliance is demanded.  Even if based in Russia.  I will have lost confidence in Bitcoin before it gets baited into that trap.

Nobody really knows why Satoshi set things at 1MB.  He didn't leave a comment.

But an interesting thing happened on the IRC channel a few days ago.  The high priests got to scratching their heads about things and noticed that 1MB just happens to put things right near the edge of what is practical to competitively mine off of Tor.  That's how I read the conversation.  Coincidence?  Who can say...

Ignoring the fact that $20 was pulled right out of someone's ass at some point (and is doubled when it does not sound like enough to make a point...)

I mean they aggregate their internal transactions and square periodically with other entities when they need to.  If at the end of the day they have only a $100 imbalance, they don't even bother to square that day.  They'll just cover something like that with their own buffer of working capital.  In any event, the user see's a UI and can drag-n-drop funds as they please.  Again, with minimal fees.