Certainly, McDonald's is not a monopoly; it is a single player in a competitive market.  I merely wished to highlight that geographical diversity of the factors of production alone is not sufficient to ensure decentralisation of mining.

The point that "nobody has every competitive edge in everything" is what I'm worried about.  To be clear, I'm not saying that free-market forces cause an industry to converge to monopoly, far from it.  I'm suggesting that comparing Bitcoin mining with a typical industry requires care because the miners have some influence over the very nature of Bitcoin itself.

Sure.  By centralisation here I'm referring to the gradual reduction in the number of block-generating entities.  To be clear, I claim: absent a block-size limit, this centralisation process would occur naturally and that a good relay bandwidth market would accelerate this process.

Always happy to be proven wrong; just want to give you something more concrete to work with.

A bandwidth market can lead to an efficient use of bandwidth but may do nothing to address the potential tragedy of the commons concerning decentralisation.


I submit that pursuit of just these policies would actually encourage centralisation.  A small number of large miners will consume fewer resources than a decentralised mass.  A single trusted data centre could be even more efficient.


A market entity is not restricted to a single geographical location.  McDonald's have locations all over the world.

Yes, the plausible deniability refers to the passphrase, not the mnemonic.

Of note: you could simply use random data in place of the checksum and punch your way through all warnings but I expect that, in most cases, the cons will outweigh the pros.

It's not clear that the current price is not a true reflection of the "value" at all.  It's certainly not clear that the price is being manipulated.

What we can be sure of is that price action over the past two years has not corresponded closely with other metrics of growth.  I fully expect that, in 2013, the price grew far more than other metrics.  This is to be expected because the price does not capture the current situation so much as the expected future situation; the price can move wildly on an announcement from a powerful group where the other metrics all change pretty smoothly with time.


This is largely irrelevant.  Relatively more trades happening off the exchanges likely reflect the reduced utility of said exchanges as government regulations begin to interfere with the market process.  Such trades will probably be happening at a price level similar to exchange levels anyway; any significant, predictable deviation will be met with arbitrage.

This is starting to sound hairy to me.  I can easily imagine that 60% of the largest miners would benefit sufficiently from the loss of the weakest 20% of miners that it's profitable for them to all include some number of plausible-looking transactions between their addresses (thereby causing an inflated median).  I feel that anything involving IP addresses is prone to abuse and much worse than the admittedly ugly fixed-growth proposal.


My own feeling is that we should be looking at "as much block-space as possible given the decentralisation requirement" rather than "as little block-space as necessary given current usage".  However, if you can find an appealing notions of necessity, smallness, or some alternative method of attempting to balance centralisation risk against utility which involves fewer magic numbers and uncertainty than the fixed-growth proposal then it's certainly worth it's own thread in the development section.

It was simply that many heavy-hitters were expressing opposing views that I found the thread informative.


Certainly, a dynamic means of adjusting the block size which could not be gamed by miners would be great.  Linked by Peter was an idea from Gavin of determining an appropriate block size by the times taken by nodes to verify blocks.

Unfortunately, I'm not aware of any proposal which really does this.  I don't know the precise details of your proposal and currently don't see how you intend to guard against large miners simply creating millions of transactions to trick the dynamic algorithm into thinking that very large blocks are needed.


What constitutes "necessary"?  What if there are so many "necessary" transactions that it's impossible for Bitcoin to continue as a decentralised system?  I'd like to see as much block space as possible but will happily work to keep the blocksize smaller than many deem "necessary" to avoid centralisation.

All of these these trendlines consider the price near the beginning of October 2010 a fundamental anchor.  I don't consider such early price data to be worth much myself.  The effect documented on that thread would be far more pronounced if the price history were worked backwards to February 2010.

Of course, there's nothing absolute about the line I've drawn.  I've simply selected to draw a straight line though the turning point of the 2011 bear-market and the point at the base of the April 2013 bubble.  Both points, marking significant changes in medium-term direction, form the basis for the best guess I have.  I consider June 2012 is a little nice support and April 2011 pure coincidence.

I'm not aware of more recent discussions but I found the first three pages of this Feb 2013 thread good food for thought.


There's risk in everything and nothing is absolute.  This attitude would yield the obvious answer: "Don't ever raise the block limit at all".

Good question.  Off the top of my head: I feel some form of insurance would be in order.


Legally obligated? In almost all jurisdictions: yes, where "neighbour" is suitably broad.
Morally obligated? Not in my opinion although I suspect I'm in the minority.


Ah!  That's a rather ugly nest of moral hazards.


Highly subjective.  A yes (resp. no) answer almost defines one as being a collectivist (resp. individualist).


Does wiping out all sentient life on Earth count?  If not then probably "no".

Yeah, this is fraud which is illegal in the US.


Pretty much, yes.  Depending on the amount you may find it difficult to hide yourself adequately but the tools exist.


No, the legality still matters.  The presence of the law causes both the thief and law enforcement to expend more resources.

Does this mean you think we are closer to $1 than $1000?  Are we closer to $0.01 than $1000?  What about -$10? that's only $375 away.

I don't doubt your arithmetic, I'm just not sure that addition and subtraction give us a useful notion of closeness in this context.

Hmm...  Sounds a bit like bitlegal.io to me.

Agreed.

I've not read everything but what I have read is not bad at all.  I was rather hoping to see some detailed economic analysis of the block generation system but I imagine what I'm looking for is beyond the scope of an M.Sc.  This was more of a literary review, and a reasonably fair and thorough one at that.  Some quick notes:

Page 18: What do you mean by:
I would certainly consider bitcoins property.

Page 41: laszlo bought 2 pizzas for 10 000 BTC: thread and pics.

Page 72: It's not clear to me what point you are making with:

Page 75: Chapter 9 seemed to me to carry a political bias which did not keep with analytical nature of the work up to this point.  I draw attention in particular to a sentence from page 78:
It appears that the necessity of regulation is taken as axiomatic and a case is only made for light regulation versus heavy regulation (please correct me if I'm wrong; it's late).  To clarify, I wouldn't expect you to apply a libertarian ethos to this section simply because this is an Austrian perspective, but would hope for something more politically neutral and broad minded where the notion of a state not regulating Bitcoin activity at all is entertained.

Invertible Bloom Lookup Table.

Most of the block-generating peers have most of the transaction data that you have and will be using the similar rules to determine which transactions to include in a block.  Given this, it seems wasteful to send the entire list of transactions of your block to each peer.  Instead you send an IBLT which contains enough data for your peers to, with high probability, construct the precise list of transactions in your block.

At least, this is my understanding.

Example: The coinbase transaction of block 124724 claims 49.999 999 99 BTC where the subsidy was 50 BTC and the total of all included fees was 0.01 BTC.

Of course, there's always the possibility that this block will be orphaned in an epic 3-year reorg, but that doesn't seem too likely.

If the price of a bitcoin drops 3-fold we'll still be in 3 digits (122 USD/BTC).  If the price of a bitcoin rises 3-fold we'll be in 4 digits (1095 USD/BTC).