Bringing back up the explanation:

  This is because the aggregate their transactions and perform them periodically.

I fully expect off-chain processors will both denominate in BTC and be able to prove non-fractional operations.  If that is the customer base they cater to at least.

For certain of my spending money stash,  I'll be looking forward to using off-chain processors who ARE using fractional methods.  This because they can pass some of the benefits that they realize down to me.  Of course I'll be demanding visibility into their books or they'll not count me as a customer.

You see, a world with choices is a much more fertile field to play in.  If there is transparency in the core reserve solution, there can be transparency in the second tier.  If there is not, there cannot be.  That is a giant void in our current mainstream monetary solutions and one of the reasons Bitcoin appeals to me.  It offers the potential to remedy this problem.

You've conveniently ignored (and snipped) the salient part.  By focusing on the the 'buying your morning coffee' role for Bitcoin, you are betting that Bitcoin's head-start will be a sufficient advantage to compete with systems which do all of these things much better.  And compete in perpetuity.  That is, to me, a huge gamble (and almost a certain loser.)

Bitcoin has the realistic potential to shine as a trusted reserve currency if it retains a highly distributed profile and the security which comes along with it.  And it is a very high value (and much needed) role to fill.  I don't wish to seen that tossed out the window in pursuit of an untenable pipe-dream of the one-world currency for everyone.


As I've said, moving between different off-chain solutions should be frictionless and nearly cost free.  This is because the aggregate their transactions and perform them periodically.   If it's costing you something more than a trivial amount then stop using the ones which are screwing you and choose one of the many which are not.

The easy and free Bitcoin transactions did not save me from Instawallet folding because I would have had to have a time machine also.

Anyway, it would not be impossible to create obstacles to off-chain processors absconding with funds or using opaque and covert fractional schemes.  This was much less the case several years ago when Instawallet was developed.  Off-chain processors who do not erect barriers to fraud in this day and age probably plan on being fraudulent.  So, just choose a different one.

Although I've not studied it extensively, I find much to agree with in Libertarian theory (and plenty to disagree with as well, to be fair.) 

My biggest issue is that I find theory and practice often diverge.  Of course this is not unique to Libertarians, but it seems to me more pronounced with this group than with many others.  It may well be an artifact of your being particularly keen to expound on theory however.

I have.  Many times.  I believe I am more right than wrong about the nature of the off-chain solutions which are likely to appear under a truly free Bitcoin, and that you are more wrong than right.


Again, the point is that a second tier player is dispensable.  It will not be game-over if they fail, and they may fail for one of any number of reasons.

This is very much like the Bitcoin vs. Instalwallet issue.  I had a small fraction of my BTC with Instawallet and they lost them.  Bummer, but it was nothing at all like loss of access to the Bitcoin network would be.


And I thing that at some point there will need to be a choice between 'low cost' and 'decentralization'.  It is not right this moment, but neither are we even hitting the 1MB limit, and certainly not hitting it hard enough to understand the economics.


While you bring up the subject of risk again, let me point out one other thing.

Bitcoin used in it's native form has some severe dis-advantages.

 1)  It has proven rather difficult for individuals to secure their BTC value against loss or theft.  You can hand-wave about how this could be addressed, but ultimately you are betting that it will be, and given the state of computer systems and user mentality, I'm dubious.

 2) Bitcoin in it's native form has a fair amount of latency which introduces a huge inconvenience for purchases of things which are to big to walk away from.  Other current and theoretical systems lack this.

 3) Bitcoin in it's native form has some half-baked anonymity features which don't really work well (except for marketing the system to newbies.)

So, if you throw all of your (our) eggs into the 'best exchange solution ever' basket, you risk being overtaken by systems which are so demonstrably better that you fail.  You might have the fasted camel in the Gobi, but if you show up at the Kentucky Derby you are going to get slaughtered.  Even with a head start.

The funny thing is that a solution to all of the three, and probably the solution which will be chosen (by you), is, in fact...wait for it...off-chain transactions (and/or third-party assisted ones.)

I'll be truly impressed with this group if some a-hole does not come back with a bogus report of 5 missing units.  I hope to god that you end up being able to mine with them given the magnitude of the group-buy coordination effort.

Jeez, what were you going to do if you met him?  Hump his leg?


Always happy to do my part.

A subtle advantage of a minimalist design.

I was planning to wait until the 2nd/3rd generation ASIC's came out before getting into mining, but if/when this form factor gets down into the sub-$25 range I'll be sorely tempted to buy a good USB hub and go to work.  Except...

...now I'm paranoid about the popularity of sha256 in the future world and think it might be nice to have at least access to some FPGA.

I think you (~fpgaminer) do some design work on FPGA stuff, right?  Looks like USB power is just not practical for any semi-decent FPGA.  Have you ever thought about a tiny headless SBC with whatever FPGA can be run via PoE?

Someone kindly posted this recently:

  https://bitcointalk.org/index.php?topic=219519.0

Kaminsky was on the security one (at least...that's the only one I saw live.)

After midnight when my bandwidth become free I'll watch some of the ones I missed in person.  Satellite connection.  Bummer because I just got bitcoind (along with openssl, boost, berkeleydb, etc) compiled and I would like to be running it to see how it does on a high latency connection.

Glad to hear it.  I actually hold a fair amount of BTC (and no other crypto-currencies currently) so, in addition to believing that it is the right thing for humanity, I also believe that my argument is the right thing for my own pocketbook.  It is defiantly not BS that Bitcoin is valuable to me in direct proportion to it's resistance to regulatory pressures and other like attacks.


I think you will find that most people who think along the lines that I do are not glued to the 1MB number.  We simply want to be very careful about this aspect of the system as it is one of the more critical avenues of attack and points of failure.  Opening up the data rate it is what pilots might refer to as a 'box canyon' meaning one won't be able to turn around once it is entered.

I think that even some of those who are not as adamant on the point as I (and to be honest, not many people are) still wish to push into the limit a little to find out empirically what the economics are.  That will give more input into how to structure the engineering tradeoffs.

I would like to think that we have some time, but I do fear the potential for a external factor (such as the Cypress thing) to produce a flood of traffic.  I hope that people working both on the core Bitcoin and possible off-chain solutions of one form or another are at least considering this as a possibility.

For my part I mostly hope that as many people as possible are considering as many of the issues as possible once this thing comes to a point where it absolutely must be addressed.  We are yet in the almost embryonic stages of Bitcoin's lifecycle, and my confidence in this assertion waxes and wanes but tends to grow stronger by the month.

I'd call it a much more high-stakes gamble to design around an assumption of a friendly and compliment operating environment and prostrate oneself to the tender mercies of the regulatory authorities and network carriers.  I'm doubtful that Bitcoiners will be getting the 'seven strikes' or whatever afforded to media pirates.

And if that is the path chosen, I hope that the stakeholders have saved up some significant lobbying funds.  Enough to get close to matching those of the financial industry.  I'll likely not be around to chip in.

Nobody is arguing that going much higher than 1MB is not possible as things stand today.

Some people are arguing that it is patently absurd that governments, when they feel threatened, will induce network carriers to attack solutions which threaten them.  I think these people are short sighted, and very probably fatally wrong.

It is also worth note that anyone who mentions HDD size either misses the danger issue, or expects that their audience will.

Bitcoin adoption is likely to be driven mostly by failures of alternate solutions.  It won't be at all associated with Moore's law (or Gate's law.)  So it is probable that adoption rates will be very spiky and not correlated with the steady (and imho unimpressive) increases in computer/network capabilities available to consumers.

Lastly, nobody in their right mind thinks that home users(*) are going to be running VISA+ scale systems.  So the use of native Bitcoin will increase until it stops increasing where-upon use will be off-chain in some form of another.  The only real question is do we stop when an ordinary geek could still operate the infrastructure?  When 'a few thousand enterprises' can?  When '6 large entities' own the blockchain?

I argue that the end result will always be off-chain transactions (hopefully of the variety ~retep talks about where the possibility of counter-party fraud is minimized) so we might as well stop growth when the actual core blockchain is as nearly universally accessible as possible.  Because, again, in that state the core system is nearly impossible to successfully attack.

Edit: (*) home users other than ~ArticMine.  See following post.

I personally consider Apple to be more Mach then BSD since I place significance on the kernel structures, though the userland is related to FreeBSD.  Probably would have been, or would now be, closer to Linux but for license issues.

And BSD vs. Linux have some pretty significant differences in things like the USB stack so 'very similar' is arguable.

Very.  That is exactly what I see happening as the ability to operate the system progressively squeezes out all but the more well capitalized participants.

One big take-away from the 2013 conference is that most of the devs seem to have very few qualms about introducing 'taint' or 'tarnish' into the system as a means to deter crime.

If this happens at a time when the system is operated almost exclusively by entities who cannot walk away from the investment they have in infrastructure (because they are bound by corporate law if nothing else), I predict that it will be the end of core Bitcoin in anything like what we know it today.  This because the infrastructure operators will be under pressure to leverage the tarnishing system to achieve political goals and will have no choice but to comply.

End users who by necessity, are relying on SPV will have not much say in the matter if there are no SPV servers which they can attach to so they will mutter, but continue to upgrade to software which actually allows them to access their BTC value.

Bitcoin is, by design, a finite resource like gold.

I see no reason why cheap transaction fees will change the reality that the wealthy eventually obtain a fair fraction of the wealth.

In actual fact, it would probably be a lot easier for those with the financial resources to do so, to reach out and grab the BTC if they are flying around at high velocities as Joe Sixpack buys his morning coffee.

Keeping 'native Bitcoin' lite and accessible is mostly a mechanism to keep the actual 'lords with the chain' being pretty much any geek of any nationality situated in any jurisdiction.  Or even floating in the ether between jurisdictions if need be.

snip - we are going around in circles on the likely look and feel of BTC-backed second tier processors.  We're not likley to reach a useful conclusion on this so we'll just have to wait and see.


There is no limit to the amount of value which could be moved around at 7 transactions per second.

If one could have the same confidence in Bitcoin as they have in gold, it seems likely to me that Bitcoin would end up acting a lot like gold does today on a global level.  While it is downplayed in the West, behind the scenes there huge stockpiles and large (often 'virtual') transfers of it.

In certain societies where there is a cultural affinity (e.g., India), it is common that gold his held as a individual or family store of value.  In other cultures it is not common to do so, but perfectly possible...and has worked out quite well for some.

Two huge advantages that Bitcoin (or something like it) have over gold is that it is inherently auditable and globally fluid.  The latter being important since the barrier to entry for anyone to own it is low.

If real Bitcoin grows to the point where only a relatively small number of highly capitalized entities can operate the system, Bitcoin loses it's value proposition as a reliable store of value.  At least to me and some fraction of the potential user-base.  And if it becomes even mildly popular (by my definition of popular) globally for raw native use, it WILL reach that condition.  In fact, if I were tasked with coming up with a strategy to destroy Bitcoin, this very well may be the approach I would take.

And as I say, with all due respect, you seem to also.  I reject (fairly vociferously) that there would be a mechanism to promote significant centralization while you assume it would be the case.  I am certain that we won't see the kind of regulatory capture and verndor strong-arming that has put VISA and MC where they are.

Now, it may well be the case that people choose, en-mass, to use one payment processor for the other services they offer (authentication, convenient wallet access, whatever.)  That's lamentable, but it would remain a free choice since any number of alternatives would exist.

I actually think that a very likely outcome would be that people would choose a payment processor who was affiliated with causes they believe in for one reason or another.  Jesuscoin.org, greenpeacecoin.org, nracoin.org, etc.  (The latter will be for sale someday, BTW )

I'll be using some combination of native Bitcoin, some off-chain processor who respects privacy, one who is jurisdictional secure, and probably several who are associated with causes I believe in.  I expect to have a simple UI to effortlessly and inexpensively transfer value between the various off-chain solutions I use.


Soon.  As soon as we can find it in our hearts to stop stawman-ing one another.


Going full circle, the 1MB (or reasonable) limit is simply to keep the kernel of the distributed crypto-currency ecosystem widely distributed and having a realistic chance of survival under the most significant and coordinated of attacks.

I cannot say that I don't care about the 'spending money' second-tier organs (or 'off-chain processors') but they are in my mind very secondary and very dispensable relative to the actual value core.  They need to compete and offer more options to end-users which I see as a good thing and a much more safe outlet for the urge that everyone feels to have things grow and improve.

Thanks for the reply.  It's helpful.  I was/am actually interested in several things:

 - I am supposed to get one of those USB miners pretty soon.  It's much sooner than I had anticipated obtaining any mining gear.  So, I'm delinquent in developing a good understanding of the different software and options.  I have a cable modem in one home and a satellite connection in another, the latter being capped at 15G/mo, so this is a factor in what I decide to do where.  I have actually not decide whether to even try to mine with it.  It's as much a memento (and possible vanity address generator) as anything for me.

 - More generally I would like to try to project how the mass availability of convenient 300MH/s-ish devices might play out in different scenarios, and how it might impact the participant's feelings about Bitcoin growth strategies.

Natural monopolies are...well...natural in some environment.  Namely one's where the barrier to entry is high.  They are also artificially created when possible.  Visa/MC are probably a little bit of both.

I conjecture that efforts based on a freely accessible Bitcoin network will have a very low barrier to entry and can arrange an endless array of unique incentives so I very much doubt that they would fall victim to the natural monopoly effect.

We may have to agree to dis-agree on this, but it is pretty clear to me that we are both handwaving to some extent.


OK, even if Bitcoin growth happened to stop at a point when a few thousand entities could still operate it...

As I've mentioned on previous threads, there is much more value in having a broad footprint in the network and using it to harvest business intelligence information than there would be in collecting penny-ante fees.  So, entities who have a realistic ability to tap into this source of value will be able to subsidize the services they offer.  This will drive out competition and create a vicious circle of centralization. 

For an example of this, consider how e-mail has evolved over the past 10 years ago.  Relatedly, look at how much more centralized the e-mail solutions most of us use have become.  You think that this happens just because some CEO felt like giving something back to the community?  Think again.


I'm looking forward to his work along these lines.

< I apologize, but I must trim a little for brevity. >


I do NOT believe that this is why we see centralization in mainstream banking institutions (to the extent that we do.)  The entire mainstream monetary system is built on a system of trusting the power of governments (and having the capitalization to influence them.)  To me, the centralization at the institutional level is most a reflection of the propensity for capital itself to centralize.

A system backed by Bitcoin (and thus, mathematics) will not be prone to the same innate pressures to centralize.  To me, the struggle to keep Bitcoin free of the pernicious effects of monopolization via the necessity for capital intensive systems.


You are basically making my argument for me here.  That is why it is critically important to me that the system remains lite enough such that the barrier to entry is minimal AND that the communication protocol is conduce to reliable function even under coordinated attack by network carriers.  Or at least the kernel of the system (i.e., Bitcoin) because if that remains functional, auxiliary systems can be re-born overnight if they are somehow killed off.

And as the OP points out and is in the process of demonstrating, it is perfectly possible for off-chain providers to provide as much proof (and as little 'trust') as they need in order to attract the users they want.

Lastly, with a very solid core (like Bitcoin of today) the trust between off-chain providers themselves needs to be minimal.  At most they need to trust one another only until the square up, and it would be foolish to put one's solvency at risk by extending this interval.

That was mostly a mistaken interpretation on my part of what you wrote.

I just got around to having a peek at the web site now that it has some content.  Cool!

I implore you to 's/stenography/steganography/g' on both the site and in IRC

  http://en.wikipedia.org/wiki/Steganography

---

I might clarify that my interest in Bitcoin and my interest in this aspect of Bitcoin is NOT really a reflection of my dis-satisfaction with our mainstream economic systems today.  Unlike many here, I think these are actually working surprisingly well.  My concerns are very much focused on what the landscape looks like tomorrow (figuratively speaking.)  And it is highly political to me.

Distributed crypto-currencies have a very real potential to be disruptive to mainsteam economic systems, and these systems are of extreme value politically.  We're not playing tiddly-winks here.  To be dismissive of the potential for a very significant backlash is unbelievably naive to me.  I would be completely amazed if 'the powers that be' rolled over and played dead as distributed crypto-currency technologies advance unless they have simply no other realistic alternative.  In other word, I expect every chink in the armor to be mercilessly explored.