The thing is: it is hopelessly naive to think that a block chain based crypto currency can be, well, a daily currency.  The idea that every transaction, everywhere, has to be copied all over the world and remembered for ever, makes that this burden is making this totally non-competitive with respect to fiat money.  The trustlessness aspect of crypto makes it clunky compared to the lean payment systems of trusted systems like fiat.  You simply can't compete.  The resource hog in networking, storage and processing that trustlessness requires is at this moment, making that crypto cannot scale to be a daily currency at large usage potential.  In a few decades, maybe.  But not now.  1 MB blocks means 3 coffees bought per second IN THE WHOLE WORLD.
100 MB blocks means 300 coffees bought per second in the whole world.

Tax evasion is a good thing, but bitcoin is not well designed for that.  Tax evasion (state theft evasion) is one of those niche applications of crypto.  The one you mention: hindrance to free trade of labor, too.  Crypto can go there where fiat is difficult to use.

That's called a banking network.  It can only work through centralization.  LN hubs are banks, knowing you, knowing what you do, and blocking what you want to do eventually, reporting you, asking you to pay for their services.... like normal banks.  If you are fine with that, why not use normal banks and fiat ?  It works since ages.

Buying coffee with bitcoin is going to be ridiculous.  A block chain based crypto simply can't in the next 10-20 years.  It simply doesn't scale well.  What you CAN do, is to build banks on top of bitcoin (like the lightning network) and to trade bitcoin IOU for coffee, only settling between banks "every other day" on the block chain.  Bitcoin is then like the central bank.  You don't use a central bank account to pay coffee.  You use your commercial bank who has given you central bank IOU (called "a banking account").   And banks settle through their central bank accounts.  But why would you prefer to use a bank on top of bitcoin, instead of a bank on top of a national currency, if prices are denominated in national currency and you have an exchange risk ?

So no, *general currency use* in everyday life with a crypto currency is simply not possible.  That was the salesman snake oil they sold you.  But no block chain crypto can handle that.  A block chain crypto is seriously impaired as compared to trusted fiat currencies (such as banking currencies), because the burden of "trustless, decentralised" make it heavy, clumsy, etc...

Crypto can only be used in those cases where using fiat is problematic.  When fiat is easy to use, crypto is not competitive.

So forget that.


Bitcoin's current value proposition is the influx of money from greater fools.   Most bitcoin buyers buy it "because it will rise".  That is greater fool theory.  You need greater fools streaming in to buy it and think they will be able to sell it for even more.

This greater fool theory (also called "adoption") can last still quite a while, so I'm confident that bitcoin's value proposition will still be valid for quite a while.  

If bitcoin were used as a currency and as a currency only, then Fisher's formula would give its price, and I think it would be of the order of 10 dollars a coin or less.

Taxation is what makes the elite rich.  Since the first kings.  Only very few people become rich by their merits.  Most rich people become rich because of state money, state contracts, etc... Taxes is stealing from the poor to give to the rich, while telling the poor that it is the opposite and distributing some cookies.  The best way to become rich is to have a company that delivers to the state and some lobbying.

But with a transparent ledger revealing all of your transactions to the world, graved in stone, you must be a hell of an idiot thinking that you can hide from taxes using bitcoin.  This is because the government hasn't yet caught up.  Once they do full ledger analysis, all those trying to hide on a transparent ledger will be seriously disappointed about the privacy lack of bitcoin.

What is especially terrible with bitcoin is the finite amount of it, making it deflationary in the long term.  This allows entities that can print fiat at will, to obtain a large stash of it "for nothing", like they do with gold, and then, being a "free whale", manipulate the thing like hell, as a pump of value from the "innocent speculator" to the "manipulating whale" (central bank).   Whenever central banks will start buying bitcoin (with freshly printed fiat), people will cheer on the forum, and not see that this is the ultimate end of bitcoin as a free (as in freedom) currency.

If a node "blocks" (considers invalid) a single block, and that block is part of what the miners call the main chain, then that node simply stops working.   While the miners continue happily to make the block chain.   Suppose that I don't want to see a specific transaction, and I write node software that considers a given transaction invalid (a soft fork !).  Well, that node will take the block chain until it finds the block with that transaction, and considers that block invalid.  And will never ever hear about another block that follows it, and come to a halt.  Period.  In what way did my node stop that chain to be built ?

You think that if almost all non-mining nodes do that, miners will be obliged ?  Why ?  They connect amongst themselves and continue to make the blocks THEY have a consensus on.  And users (say, exchanges) don't want their nodes to stop, so they connect directly to miner nodes to get the growing chain.  Because the other nodes simply don't send anything any more.  In what way do non-mining nodes interfere ?

Of course, miners may be sensitive to the fact that most non-mining nodes don't want this, and might "vote in the market" if they don't comply to users' wishes.  They might be afraid that the market cap of their coin drops.  So miners will most probably take into account this "market sentiment" signal.  But that's it.

Non mining nodes have 0 to say about the block chain.  The ONLY thing that non mining nodes can do, is to signal to miners what the MARKET SENTIMENT might be if they do or not do something.  Because miners are sensitive to market sentiment: after all, it are the users on who the miners dump their gains in coin, and it are the users that finance the miners.

But that's it.

I've written already quite some posts about this total misunderstanding of how a proof of work consensus system works, and WHY non mining nodes are totally meaningless (apart for their owners).   Please read this:

https://bitcointalk.org/index.php?topic=1821817.msg18175256#msg18175256

https://bitcointalk.org/index.php?topic=1821817.msg18170595#msg18170595

https://bitcointalk.org/index.php?topic=1821817.msg18178541#msg18178541

https://bitcointalk.org/index.php?topic=1820846.msg18155418#msg18155418

https://bitcointalk.org/index.php?topic=1827198.msg18192654#msg18192654

TL;DR:

A crypto currency is a group of miners making the block chain, and a group of users doing transactions on that block chain against value.  Users need to get their transactions into the block chain by miners, and miners need to obtain transactions from users, and sell their gains to users.    Miners need to communicate well amongst themselves to build the block chain and not get their blocks orphaned.  So a strong miner network, and good network infrastructure by them towards users, is all that is needed.

This "centralization" issue because of nodes is ridiculous.  Bitcoin is a proof of work consensus system.  The power resides in those that have proof of work: the miners.  Nowhere else.  What is that power ?  It is the power to decide:
1) what new block to make, and what transactions to include
2) on what previous block to build
3) according to what protocol

in other words, the pools.

But this power is balanced by the power of users to determine market value.  Pools are not going to do things that make users crash seriously the market value.

When you look at the pools, bitcoin is already an oligarchy.  The pool bosses can easily sit together in a room, and represent a large majority of hash rate.

Yes, I hear you say, they are only the pools, they don't possess the mining hardware.  But mining hardware doesn't decide about blocks.  Mining hardware is only providing hashes for pools.  The choice an owner of mining hardware has, is to join pool X or pool Y, and that will solely be determined by how much pool X or pool Y pay him for his hash rate.  The mining hardware doesn't determine protocol, chain on which to build or whatever.

So how can block size centralize even a bit more bitcoin ?  By the network quality between miners.  The network latency BETWEEN MINERS makes those miners that have a poor network connection TO THEIR PEERS receive the latest blocks later than the others, and makes them put their blocks at disposal of the others later than their peers' blocks.  The time lost to get the latest block, and the time lost when putting your block at disposal, is wasted hash rate, and higher probability to get your block orphaned.

THAT is the ONLY disadvantage larger blocks bring, or, the only "economy of scale" that larger miner pools have: they can invest in better network links between them. 

Imagine that bitcoin has, say, 20 important mining pools.   Then the full power over bitcoin is in the hands of these 20 entities.

Now, imagine that 18 of these pools are linked together with a 100 MB/s network backbone but that miners 19 and 20 have only 1MB/s links.   Currently, they have to receive a block and it takes them 1 second, and when they send out their block, it also takes a second.

This makes that they have 2 seconds lost on 10 minutes.  If now, the block size rises to, say, 50 MB, they would lose 50 seconds at the start when receiving a block, and 50 seconds at the end, when sending a block.  They would lose almost 2 minutes on the 10 minutes: when other miners have 10 minutes to hash a block, they only have 8 real minutes.  20% hash rate lost.

So, 50 MB blocks would seriously hinder a 1MB/s linked miner: he would lose 20% of his investment.

In fact, the wise thing to do, would be to upgrade his network link.  Compared to the cost of 20% of his hash rate, a higher network capacity might be a good investment.

But there's of course worse: miners with good links might send out some rubbish to their peers to keep their links saturated.  But that goes in two directions: if miners start to DDOS one another, they might get hurt more than they are hurting the other miner.  I think that the miner starting to DDOS his peers is going to get cut off.   So they won't play that game.

So block size starts to accelerate bitcoins (unavoidable) centralisation from the moment that blocks are so big, that the network infrastructure to transmit them becomes more expensive than the cost of proof of work itself, and that only the biggest factories of proof of work can permit themselves such good network connections.   I think that this must run in the size of many GB blocks before this becomes relevant.

Ah, yes, and the nodes of people ?  Doesn't matter.  They don't mean anything.  Bitcoin is a proof of work system.  If you don't deliver proof of work, you don't have anything to say.

I seriously hope not.  This is bringing too much visibility, too much speculation.

You think that it is likely that in the coming years, internet capacity goes down ?   Without some big cataclysm ?  Seriously ?

Indeed.  The only reason why crypto can live on a overblown market cap as compared to its usage value, is "greater fool theory", and there's still a whole world of greater fools potentially to be taken.  It will only come down, once the last layer of greater fools start to realize that they were the greatest fools, and that there aren't any left.  But that can still be many, many years away.  Or it could be next year.

I split a few coins on Kraken without problems.   I don't invest in crypto, but I play with a few coins for fun.

That kind of argument is a fallacy (I think it is called "fallacy of catastrophic expectations"), because, even though unlikely, the hypothesis is not impossible, the hypothesis makes that the problem at hand is not an important problem any more.

This is like "one shouldn't put a roof on a house, because when there's a meteor impact like the one that killed the dinosaurs, the roof will not resist".  If there's a meteor impact like the one that killed the dinosaurs, the problem of the solidity of your roof is not a problem worthy of attention any more.

If society is so fucked up, by technical or political reasons, that computing and internet connectivity falls drastically backwards, "crypto currencies" are not something to worry about any more. (trying to survive from the dictatorship or trying to find food, is).

The problem for them is that segwit is a soft fork.  That means that if ever it gets activated and 50% of miners applies it, it is FORCED upon all miners.   However, BU is a hard fork.  That is forced on nobody, as even a minority of miners can decide to go on the old chain.  They need to express sufficient support for BU, so that segwit doesn't happen.  And not sufficient support for BU, so that the hard fork seems without risk.  So that they can keep the small blocks of today.

In other words, support for BU from a miner is most probably just a vote against segwit, not a vote for BU.  But sufficient support for BU can make segwit impossible, which is the idea.  And nobody will DARE to make a HF with less than 90% actual support, which will not happen either --> status quo, what the miners actually want.

I'm going to invest in a factory that makes 56kbit line modems.

Not really.   The fee is proportional to the number of bytes taken on the block chain.  And each input takes about 180 bytes.  So your fee is more or less proportional to the number of inputs.  If the fee for 180 bytes is higher than the UTXO value, then this UTXO can never be spent.

My grandma told me to learn to calculate with paper and pensil, because if all pocket calculators would one day fail I could still do my sums with paper and pencil.

No, on the contrary.  This is big gains for an exchange.  If you list both coins, each camp gets "free money" on the other chain, which he will want to exchange for the coin he estimates.  As exchanges take fees on exchanging, the first exchange that allows you to do so, reaps in a huge amount of exchange fees.

Suppose that bitcoin's chain splits in bitcoinA and bitcoinB, in a ratio, say, 85% - 15% mining hash rate.  If an exchange only lists bitcoinA, people will take this as "their bitcoins".  However, if you list both, people have both.  If you had 5 (old) bitcoin, you now have 5 bitcoinA and 5 bitcoinB.  You think that bitcoinB is rubbish.  So you want to sell your bitcoinB (free money) to buy more bitcoinA.  However, some people will prefer bitcoinB.  They will sell their bitcoinA, and buy more bitcoinB.  The market will determine an exchange rate between bitcoinA and bitcoinB.   Say that bitcoinA is worth 5 times more than bitcoinB.  The guy with 5 bitcoinA and 5 bitcoinB, can now sell his 5 bitcoinB, and buy one extra bitcoinA which he considers "the real bitcoin".  However, another guy had also 5 bitcoin, and sells his 5 bitcoinA, to buy 25 bitcoinB.  BitcoinB is worth less, but he has more of them.  Maybe bitcoinB will rise.  Maybe it will fall.

But most people will probably change their bitcoinB in bitcoinA, or vice versa: can you see the high EXCHANGE flux that that exchange can take fees on ?

If you are the FIRST exchange to list both, you may get away with most of this flux.  $$$

I don't see why you say that, because pedrog's stance is exactly a form of consensus dynamics that may very well be at work: different antagonists that cannot come to a collusion over a change of rules that gives (perceived or real) advantages to some, and disadvantages to others ; in the same way that people cannot collude over changing the block reward.  The block reward is not changed, because one cannot find enough collusion over doing that: it would give advantages to some, and disadvantages to others.  This is why it cannot be changed.  In the same way, the block chain is not re-done: eliminating blocks and former transactions would bring advantages to some, but disadvantages to others.  One cannot come to a "consensus to change", so by default, one comes to a consensus not to change.

Small blocks and limited number of transactions is extremely lucrative to miners.  Releasing the pressure on the fee market is not in their interest.  

All users need then to get 2 MB/s continuous block chain data, all over the world.

Ah, you mean, BANKING on top of bitcoin ?  Like they did with gold IOU ?