Bitcoin Forum
July 01, 2022, 07:29:35 PM *
News: Latest Bitcoin Core release: 23.0 [Torrent]
  Home Help Search Login Register More  
  Show Posts
Pages: [1] 2 3 4 5 6 7 8 9 10 11 12 »
1  Bitcoin / Bitcoin Discussion / A cryptostar in a galaxy far far away on: February 18, 2020, 07:48:39 PM
The cryptocurrency industry can be regarded as a cryptostar in a galaxy far far away. No man on earth could reach this star in his life time, people can only communicate this star through internet

Each cryptocurrency represent a country on this star. Buying cryptocurrency is like buying land of each country

Why would people on earth to buy lands in a star far far away?
1. it is delivered right away and you have full control and ownership once you have the key
2. the star is far away from earth thus secure from earth violence
3. the limited supply ensures its exchange rate will rise against forever-increaseing fiat money supply

2  Bitcoin / Development & Technical Discussion / A graphic presentation of Synthetic fork on: October 25, 2016, 03:38:33 PM

Just made a short PowerPoint presentation of Synthetic fork. It combines the benefit from both soft fork and hard fork, and is a new way to safely upgrade the bitcoin protocol. Welcome with your comments!

The idea is formed over several months, but the latest breakthrough is from this thread:
3  Bitcoin / Bitcoin Discussion / Todays TOP post in Chinese forum: Terminate the hard/soft fork debate on: October 15, 2016, 10:40:59 PM
We all know that the biggest worry about a hard fork is that the minority hash power might extend and permanently split the chain

But what if a hard fork can prevent this from happening just like a soft fork? This is the latest post in chinese forum

"Terminate the hard/soft fork debate: A safe hard fork works the same as a soft fork"

Put is shortly: A very smart Chinese engineer from the best science university in China analyzed the behavior of soft fork and concluded that the same behavior can be setup in a hard fork to achieve the same result, making sure that no chain split would ever happen

Let's look at an example: A new bitcoin version reduced the block size limit to 0.5M. This is a soft fork since it is a tightening of the rules. If majority of the miners are running the new version, then the old miners who produce 1M blocks will get nothing: All their mined blocks are rejected and orphaned by the miners running the new version. So their economy incentive will be quickly upgrade to the new version to avoid loss

If this new version increased the block size limit to 2M, that will be a hard fork, since it is a loosening of the rules. If majority of the miners are running the new version, then the minority miners who only accept 1M blocks would still working fine: All their mined blocks are accepted by the miners running newer version

The breakthrough is coming from here: In a safe hard fork, all the upgraded miners will reject those small blocks produced by the minority miners, and extend the chain with small blocks mined by them, thus orphaning those small blocks

As a result, non-upgraded nodes would incur huge loss and will immediately upgrade to the new version, quickly make the hash rate on the new version almost 100%

And for those full nodes running old version, they will not be affected as long as the new version still produce less than 1M blocks, so after a while when all the hash power are already on the new version, they could upgrade to enable the bigger blocks, since they don't command any hash power, their impact to the network would be minimum
4  Bitcoin / Development & Technical Discussion / <<How Software Gets Bloated: From Telephony to Bitcoin>> on: April 07, 2016, 12:17:16 AM

In my experience, software bloat almost always comes from smart, often the smartest, devs who are technically the most competent. Couple their abilities with a few narrowly interpreted constraints, a well-intentioned effort to save the day (specifically, to save today at the expense of tomorrow)
As systems get bloated, the effort required to understand and change them grows exponentially. It's hard to get new developers interested in a software project if we force them to not just learn how it works, but also how it got there, because its process of evolution is so critical to the final shape it ended up in. They became engineers precisely because they were no good at history
5  Economy / Economics / Economically, Segwit and LN are similar to changing the 21M coin supply on: March 20, 2016, 12:28:05 AM
The purpose of Segwit's 1/4 discount for witness data is mainly for online wallet companies: They have many small outputs from customers, and when those outputs need to be swept together, they must pay fee for all those signatures. Give a 1/4 discount will make Segwit more attractive for online wallet providers like BTCC, save them a couple of hundred dollars daily, and no doubt so many wallet companies are supporting segwit

However, driving users to centralized offline service providers means that majority of users will face a risk like MTGOX, where centralized service providers work like a bank. Those service providers are already running on a fractioanl reserve basis, they take customer deposit and invest them into mining infrastructure. So if there is a hard fork and people withdraw coins to be spent on another chain, they will go bankrupt, that's also the reason BTCC strongly against a hard fork

But we all know that fractional reserve banking is against the very principle of bitcoin: Being your own bank. The purpose of being your own bank is just to prevent fractional reserve banking from creating more and more money flow into the economy, thus bring inflation

And now Segwit and LN especially encourage this kind of practice, so they are indirectly increase the money supply of bitcoin monetary system. No one can increase the base money supply of 21 million bitcoins, but by doing fractional reserve banking, they use the money multiplier to effectively create many times more money flow than 21 million bitcoins, thus dramatically increase the inflation
6  Bitcoin / Development & Technical Discussion / Do you need to manually reset the nodes every week? on: February 18, 2016, 04:40:16 PM
You can see from this site, for more than 10 days, the mempool size steadily grew beyond 80MB, and the operator did a restart of the process, then it start to build from 0 again, but it always goes up no matter what is the queue size of transactions

And this is not the same as I see on tradeblock, they seems to have it under 10MB most of the time
7  Bitcoin / Bitcoin Discussion / 21 inc shows how to do Lightning Network the right way on: February 18, 2016, 07:42:01 AM

This is a fully functional and very neat micropayment channel, but using a second layer approach without modifying the bitcoin protocol. It seems those 100 million dollars really can make some difference  Cool
8  Bitcoin / Bitcoin Discussion / Bitcoin round table on: February 11, 2016, 03:12:35 PM
This is your new Federal Reserve  Grin

9  Bitcoin / Bitcoin Discussion / Soft fork is a deadly virus on: January 27, 2016, 08:25:55 AM
A soft fork is a deadly virus, everyone should be extremely careful, since it forcefully turn the old legitimate miners into zombie miners of the network. If soft fork practice gains traction, bitcoin will suffer from soft fork infection from time to time, and eventually die from it  Sad

After weeks of research, this is my conclusion, correct me if I'm wrong Wink

A more technical explanation is here:
Why soft fork is a very bad idea and should be avoided at all costs
10  Bitcoin / Development & Technical Discussion / Why soft fork is a very bad idea and should be avoided at all costs on: January 27, 2016, 12:34:26 AM
I was surprised by the latest announcement of Pieter that a SegWit implementation which changes pretty much everything in bitcoin can be implemented via a soft fork, where it does not require all the nodes to upgrade to be compatible

After a bit research, this is possible because you can always give old data new meaning in a new implementation, while the old nodes simply do not know how to parse that data

In principle, with this method, you can move all the transaction data out of the block, not only signature data, so that old nodes always see empty blocks

As a result, a new block will be accepted by the old nodes because they appear to be valid blocks, but in the new implementation, they are just a small subset of the new data structure, all the transaction data is in another related block

More importantly, after further analysis, it shows that although normal nodes can still run old client, all the mining nodes will have to upgrade, otherwise the blocks mined by them will simply be orphaned, because the new nodes do not accept old blocks, and new nodes have majority of hash power

As a result, such a soft fork is to force 100% of the mining nodes move to the new implementation so that there is no slightest chance of the old mining nodes forking into their own chain: Their fork will always be orphaned since they accept the longest chain

What this means in practical?

If one type of nodes, Classic for example, controls over 51% of hash power, they can implement whatever change they like by simply use this soft fork trick: Let all the old Core nodes accept their new format blocks while Classic nodes will reject Core blocks, so that Core blocks all get orphaned due to less hash power

The most deadly part is that Classic nodes do not need to ask for permission of Core nodes, they simply enforce it by orphaning blocks mined by those Core nodes. And Core nodes have no way to fork into another chain by rejecting Classic blocks, since they can not tell which block is Core block and which block is Classic block

As a result, a miner running core will simply lose money, he either trash his miners and quit the game, or bite the bullet and upgrade to Classic so that his hash power can still mine him some coins. I guess majority of the miners will upgrade. And they might start another round of similar soft fork to regain control when they accumulated more than 51% of hash power

This is very bad, since it totally removed the freedom of choice for those old mining nodes, you can call it a forceful take over of bitcoin network rules by 51% hash power. It totally break the major consensus rule and the spirit of bitcoin, so that with only 51% of hash power, you can implement whatever you want and force it upon rest of the miners and their hash power will be captured

Sure, Core nodes can change to another PoW fork, but since the value of the coin is always roughly the same as the mining cost due to arbitraging, that coin will not get more value than litecoin and will be forgotten quickly

Unfortunately, it is almost impossible to prevent such thing from happening by current design, so it is very important in mining community to widely spread this information so that miners are fully aware of the deadly effect of a soft fork, and reject such attempt as much as possible. At mean time, trying to find a solution to fix this security vulnerability

11  Bitcoin / Bitcoin Discussion / Why a soft fork is harder for miners than a hard fork on: January 23, 2016, 07:07:32 PM
This is because the miners do not have a choice in the case of a soft fork. They can not run the old client to mine, since those mined blocks will be orphaned by the new clients which supposedly have larger hash power and do not accept old blocks. As a result 100% of the miners have to upgrade, they don't have a choice

In a hard fork however, old miners can still run their small fork and see how that works (of course it will die eventually due to less support, but it is their own choice to run a minority fork), their mined blocks will not be orphaned, so it is not so hard as a soft fork
Look at the button of this page, it is very clearly explained by Charlie Lee

So I think a soft fork will be much more difficult to get miner approval since it leaves them with no choice
12  Bitcoin / Bitcoin Discussion / Keeping 1MB forever seems like a hunger marketing scheme on: January 23, 2016, 07:03:30 AM
"More and more business are using the hunger marketing strategy as it is simple to operate.

The business brings products to market with an attractive price to lure potential customers then restricts the supply, resulting in an imaginary shortage that can raise prices and therefore generate higher profits.

“Branding” is a factor that runs through the whole hunger marketing operation and the strategy must rely on a strong brand appeal. The ultimate effect of hunger marketing is not just to raise prices, but also to create higher added value for the brand, in order to establish a high-value brand image.
The best example of a “hunger marketing” strategy in action is probably Apple.

When they launched new versions of iphones and ipads, the devices offered innovation, great design and the latest technology to a trendy, fashion-conscious audience.

Apple “was not able” to provide enough supply for the market which made customers want their latest devices even more"

"The activity of competitors in the market can affect the impact of your campaign.

As such, it is important to monitor your competitors’ marketing strategies in order to ensure that you can distance your brand from the competition.

Hunger marketing works only when potential buyers cannot easily find substitutes. "
13  Bitcoin / Bitcoin Discussion / Keep Calm And Bitcoin On | Valery Vavilov, Co-founder Bitfury on: January 19, 2016, 06:51:45 AM

FACT 1: Bitcoin Is Not an Electronic Payments System Like PayPal

FACT 2: Bitcoin Is Not and Should Not Be Free to Use

FACT 3: Bitcoin Transaction Processing Is Not Presently Clogged

FACT 4: Miners Embrace Bitcoin’s Popularity

FACT 5: Bitcoin Mining Is Decentralized

FACT 6: Mass Rule is Not Appropriate for Bitcoin

FACT 7: Bitcoin XT Would Not Have Solved Bitcoin’s Challenges


I think FACT 6 is worth debating, because if mass rule is not working, less rule is even less likely to be working. Maybe Valery is threatening to overtake bitcoin by building a miner's consortium  Cheesy
14  Bitcoin / Bitcoin Discussion / How to solve "one-size-fits-all" problem of transaction fee on: January 18, 2016, 07:45:17 PM
Today, it costs the same to transact 1000 bitcoin or 0.01 bitcoin, since you have no way to tell which input is actual spending and which input is the change. So the fee is not percentage based but per transaction based

This is a feature by design. It is similar to airline ticket price must be the same for everyone, because it must allow poorest people to travel, so it must drop the ticket price to the same level as bus or subway

As a result, more and more rich people will love to use bitcoin since the fee is almost non-existing for them, and this will cause the major user group to be middle class and above. Then when the user base largely consists of these rich people, then you can not support those developing countries with extremely low income because these rich users will control majority of the infrastructure of the whole bitcoin ecosystem

15  Bitcoin / Bitcoin Discussion / Will you keep block size at 1MB if that makes bitcoin value rise? on: January 15, 2016, 11:21:56 PM
Of course keeping the block size at 1MB will make the transaction more and more expensive, but then people will ask: What makes this system more and more expensive to do transaction? Then after a little research they will understand that this is due to a designed limited transaction capacity to ensure the agility and decentralization of the system. However, a rising fee is a good indicator of increased transaction demand. So when they see the fee is rising, they will understand the usage is higher and the demand is higher, they will foresee a rise in price due to higher demand and buy more bitcoins, so the bitcoin price rises. This is similar to: When the miners see the mining difficulty has gone up, they don't quit mining but invest in new generation miners instead

My observation is: There is almost nothing in this world becomes more valuable because it is cheaper and cheaper to use. Going the cheap route usually result in the decrease in value

Just look at those capital goods that have a high transaction cost: Gold, Stocks, Real estate ... They are never meant to be cheap to transact but still gained higher and higher value over time. On the other hand, those things that have cheaper and cheaper running cost, like car, tv, pc, mobile phone etc... they all goes down in value over time

I always think that low fee is a marketing trick from early adopters to attract those who don't really understand bitcoin and dump the coins on them. But to get true believers on board, they should be attracted to bitcoin by their own research and understanding, not by some marketing campaign. The hype caused by such campaign is always short lived. I'm quite sure the bitcoin hardcore supporter did not come to bitcoin because of its low fee

If someone can show an example that something's value goes up with lower and lower usage cost, please share it
16  Bitcoin / Bitcoin Discussion / Some good concerns against bitcoin on: January 13, 2016, 03:11:39 AM
This is a good article with lots of research and observation

1. The parameters of the currency could be changed.

2. There could be an attack on the network.

3. Transaction volume moves off the Bitcoin blockchain into side chains or permissioned chains.

4. The system does not successfully transition from being subsidized by the block reward to being paid for by transaction fees.

5. The Chinese firewall or another Internet issue causes the global Bitcoin network to be split for a few days.

6. The lack of a central authority prevents the protocol from progressing.

7. A competing protocol could overtake it.

8. World events prompt a crackdown.

9. Government regulations in one part of the world put the whole network at risk.

10. People get burned by it as an investment.

Among these concerns, 4,5 and 6 should be the most relevant currently, and it seems they are all related to the block size limit debate

It is interesting to see the author put the possible change of money supply as the biggest threat, I guess that's also the reason that the money supply is prohibit from being changed in bitcoin wiki
17  Bitcoin / Bitcoin Discussion / At what level do you need 100% trustless on: January 09, 2016, 06:51:21 PM
Trust is not always a bad thing, it increases the efficiency and reduce the cost

For example, when you purchase a cup of coffee, you would simply trust the organization that handles the transaction, since they have no reason to fool you and destroy their reputation just for a cup of coffee. It will be absurd to write a contract for each coffee purchase

However, when you purchase a house, the trust of the dealer must be ensured and there must be a legal document behind that purchase. So the required trust raises when the transaction value increases. But still, you don't need all the people from the world to make sure your purchase is valid, a signed contract that have legal status is enough

However, when it comes to money creation, you need all the people from the world to make sure the money creation is honest. If you rely on any single entity, and this entity go rougue, you will have no way to avoid a loss, and that loss is imposed on every user of that money

The genesis block indicated that bitcoin is created to solve the problem at the money creation level, e.g. central banks bailing out commercial banks using money out of thin air. There is a built in payment mechanism in bitcoin to do the initial coin distribution, but user level traffic is not typically a monetary system's task. In above examples, you just need a little bit regulation/insurance on those institutions so that they can be trusted by average consumer

Bitcoin is first a monetary system, then a settlement system, and last a payment system. The amount of trust involved at all these different levels are different, and should be treated differently. Trying to apply the same trust-less model on all these different transactions would result in large waste of resource and extremely low efficiency

18  Bitcoin / Bitcoin Discussion / Is your bitcoin safe in cold wallet? on: December 14, 2015, 05:13:52 PM
Do you think your bitcoin in cold wallet is protected by law of mathematics and also the most powerful computer network in the world? Think again

The recent proposal by Pieter Wuille revealed that core devs can push in a soft fork change that pretty much changes every way bitcoin works, thus hackers can spend your money without your consent

How is that possible? Because bitcoin is essentially an agreement (protocol) among nodes, if majority of the nodes around you agree that your bitcoin is gone, then it is gone! It does not matter how strong ECDSA is, all it takes is a group of nodes around you changed their rules (or so called sybil attack)

Somebody might wonder: Aren't miners suppose to be the honest nodes and stop all this? Unfortunately, in this case, miners or so called most powerful computer network in the world can not do anything about it

Why? Because everything in bitcoin is decided by its agreement among nodes. If the nodes changed their way of calculate blocks, then all the miners will be dropped from the new network, and all those ASICs in large mining farms will just become paperweight

This becomes a real threat when mining has become too centralized, e.g. only a few large pools are doing mining. So, even they are running the original version of bitcoin, if large group of nodes have upgraded to a different version, these miners will just be ignored as minority (new version can easily change the way that miner works). Of course without hash power the new version will worth nothing later on, but I guess the thieves only need to sell their stolen coins before others realize the problem

The critical point that have real financial impact are exchanges and web wallet services. If one of these nodes together with a group of malicious nodes changed their protocol, then they could easily take others' coin, sell on exchange and profit. If you are really paranoid and assume that every exchange might be a potential malicious actor like MTGOX, then they have many ways to profit unethically through a protocol change

19  Bitcoin / Development & Technical Discussion / Is there any chance the fee will rise to replace block subsidy? on: December 12, 2015, 06:12:38 AM
At each reward halving, to keep the miners running with same incentive, either the bitcoin price need to double or the fee income per block would compensate for the loss of the block subsidy, but it seems that the fee per block is impossible to rise in near future:

Currently the fee income per block is around 0.5 bitcoin, very little comparing with the block subsidy. So the only thing works to keep the miner's incentive is to raise the bitcoin price by 100%, otherwise miners will shutdown their operation due to unable to profit, resulting in weak security

In general, there is an extra delay when including one transaction, and that delay will increase the risk of a block being orphaned thus lose the whole block subsidy and fee income altogether. If you include 2000 transactions today (1MB block), that will add up to 1 minute delay when broadcasting to the whole network, which is about 5% risk of being orphaned (not precisely calculated from Poisson distribution, just an example, 10 minutes delay means the block will have a 50% chance of being orphaned), so 5%x25btc=1.25 btc is the cost of 1MB, divided by 2000 transactions, you get 0.000625 btc fee per transaction, which is a fee that is accepted by all the miners today, means the real cost is lower

If the cpu/network speed doubles at next reward halving, then each block can include double amount of transaction at the same opportunity cost, e.g. 4000 transactions for 5% risk of being orphaned. However, the block subsidy is 12.5 coins by then, 5%x25btc=0.625 btc will be the cost of 2MB, divided by 4000 transactions, that is 0.00015625 fee per transaction

So the fee per transaction will be cut to 1/4 at next reward halving, if bitcoin price doubled, then it means the fee is getting 1/2 cheaper for end user. If bitcoin price quadrupled, then the fee costs the same as today

Following this route, when block subsidy is cut by half, the fee per block will also be cut by half, with double amount of transaction capacity, resulting in 1/4 of the btc fee per transaction. It seems that the fee per block will stay small relative to block subsidy in foreseeable future, unless there is a fee market driven by limited transaction capacity

It is possible that during a bubble next year, the transaction per 10 minutes raised to 8000, then they will be competing for 2000 transactions per block, causing a rise in the fee dramatically. But that is a situation much more difficult to analyze, since they will also reduce the transaction frequency and even use clearing based services to avoid high fee

And this is the case that you directly use blockchain to do transaction, if you use clearing based solutions then the fee can be 0 for end user, and the real traffic on blockchain might grow even slower

So, as long as bitcoin scales well, the fee income for miners will never be able to rise to replace block subsidy
20  Economy / Economics / Bitcoin does not need to be spent constantly to maintain its value on: December 10, 2015, 07:43:34 PM
There is a common misleading concept: Money's value comes from its transaction demand, without transaction demand money worth nothing

The reality is, throughout human history, money's value has never come from transaction demand, be it grain, gold, or fiat money. It comes mainly from the property that it can be trusted to hold value in a relatively long time, and secondly it can be accepted widely

No matter how much the transaction demand is, if a money is quickly losing its value every day, it will be refused in transaction. This is also the first mandate of FED, e.g. low inflation rate

Whether a person trust certain kind of payment medium depends on his financial knowledge. Some people would like to accept Euro when they are in US, because they often travel to Europe and know that Euro is accepted there. Managers of large enterprises would accept stocks and options as payment medium because they know they can liquidate them at exchanges for fiat money any time

From this point of view, as long as people knows there is an easy and quick way to exchange their bitcoin for fiat money, then they would accept them the same way as they accept foreign currency, stocks or options

Bitcoin is not used a lot in transaction. Its value ultimately comes from people's trust of its limited total supply, thus continuous purchase of bitcoin to store value. It is a superior form of store of value given you have enough IT skill

For traditional money, you need merchant acceptance to be useful, so it never goes beyond boarder of a country. But bitcoin is more universal form of money, you don't really need merchants to accept the payment, you can easily exchange to what ever currency they accept. It is amazing that you can exchange it to any currency on localbitcoins, no other currency in the world have this kind of worldwide exchangeability

Of course with the help of payment processors, merchant will also accept bitcoin. But since most of them just convert to fiat money behind the scene, it is still exchanges that matters most. And who is buying on exchanges? Those people who purchase bitcoin for long term saving or speculation, and international remittance sometimes
Pages: [1] 2 3 4 5 6 7 8 9 10 11 12 »
Powered by MySQL Powered by PHP Powered by SMF 1.1.19 | SMF © 2006-2009, Simple Machines Valid XHTML 1.0! Valid CSS!