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6061  Bitcoin / Development & Technical Discussion / Re: why still so many blocks with 243kB? on: June 02, 2013, 01:59:26 AM
You know the transaction fee is nothing compared to the mining reward, right? 0.5 BTC is about the maximum you will get for a block atm.

You are ignoring the increased orphan risk.  An orphaned block is worth exactly 0 BTC.  If hypothetical Joe miner can collect say 25.5 BTC with 0.5% orphan risk why would he then scoop out thousands (and yes sometimes there are litterally thousands) of no fee tx so he can still collect only 25.5 BTC but now with a 1.0% orphan risk.

More work for less net revenue?
6062  Bitcoin / Project Development / Re: Bitcoin ATM ,25 mil insurance bond needed. on: June 02, 2013, 12:28:06 AM
People shouldn't take casual comments as exactly literal.  In the US each state has bonding requirements and they vary depending on the state, how well capitalized the company is, the transaction volume, the number of locations, etc.   There is no magical $25M "MT across America unlimited" bond.

Generally a surety company will provide (a well capitalized company) a bond for 3% to 6% a year prepaid (i.e a $1M bond would require ~$45K a year) but once again there are literally dozens of variables, how risky is this enterprise, how successful is the management team, how much experience do they have, what is the existing case law, how enthusiastic is government regulators, etc.  The application for a surety bond generally is a couple dozen pages and looks into the financial background, criminal records, and experience of not just the company but key employees too.

It would much lower cost and risk for a company (any company) to use a surety bond writter to cover the bonds and just pay the marginal annual fee.   That being said you are talking about two years and millions of dollars assuming your company has an excellent management team, years (hopefully decades) of experience, and advanced talks with regulators already complete.  We are talking about fifty different state regulators each with their own procedures, forms, processes and all of it moves at the speed of government.

There is a reason there are about a dozen companies in the entire WORLD (not Bitcoin companies but all companies) with MT licenses in every state and territory.
6063  Economy / Economics / Re: Is it true that the Fed is privately owned on: June 01, 2013, 05:29:39 PM
This is my question. If there would be no state monopoly on violence (=regulation), what would stop me from killing my competitor instead of improving my product? A bullet is surely cheaper than investing in actual innovation is.

Well there never has been a stateless (post-state) society so there are only theoretical answers.  If most of your customers are law abiding they may choose to not support your unlawful (in natural law sense) actions against another.   The question also becomes IS killing a competitor lower cost and lower risk then arbitration, licensing, marketing, or other non-violent means.  I mean trying to have your competitor killed could get you (or someone you care about) killed.  Once again all theory but if private security forces replaced police states then you could find your security contract revoked per a condition in the contract.

Still I wasn't really talking about the lack of a state. We have never had a post state society so it is all theoretical and any theory is just that.  I was just pointing out the power of the cartels is a direct result of regulation, namely the prohibition on certain substances, not a lack of regulation as you seem to claim. 

The US government through ineffective regulation created the cartels and the criminal violence problem in Mexico.  The cartels and the power they have simply couldn't exist without the massive profit margins and massive barriers to entry created by the actions of governments.  If governments wanted to they could end the cartels tomorrow.  As an unnatural market they simply can't exist without the continued support of governments. 
6064  Economy / Economics / Re: Is it true that the Fed is privately owned on: June 01, 2013, 04:51:57 PM
This is a valid point, but in a free market, the same things that would topple a natural monopoly would topple or disintegrate a cartel.

Such as?

Quote
As I said, you have to go through proper channels to get a monopoly in the US.  If you don't, the penalties are harsh. But if you do, the benefits are enormous.

So we agree that the market is currently regulated to avoid monopolies then? (And yes, it is regulated to enforce certain monopolies as well.)

Quote
They need peaceful means of dispute resolution. Such as arbitration.

By whom? How would this work? Elaborate please...

Quote
My point was that the drug market is anything but "unregulated." It's been regulated to death, in fact.

Yeah? Who is doing the regulating in Northern Mexico?

The answer is: nobody. That's the whole point. It's a failed state (in that region).

You can't look at one area in isolate.  The profit margins for the cartels are massive becomes the US with it regulation on illegal drugs is the largest importer of said illegal drugs.  Billions of dollars worth of drugs flow inward and billions of dollars flow outward to drug states like Mexico, Columbia, etc.   The higher purchashing power of Americans becomes a multiplier effect.  Americans (on average) have more disposable income thus prices are higher so the cartels gain a massive economic advantage over the state trying to control them.   Now if the cartels were legal businesses they likely would use that economic advantage in different ways (supporting candidates, lobbying, making smaller competitors uneconomical, etc) much like major corporations do in the US.  However cartels are criminal enterprises.  They leaders are already facing life sentances for hundreds of violations of the law.  At that point the more efficient use of power is direct ... violence, death, terror.   

If the US (for good or bad) legalized drugs do you think Americans would still be buying product on the street corner shipped in from criminal enterprises in Mexico?  Hardly.  Much like 99.9999999% of Americans don't buy illegal alcohol or tobacco either.  It would be mass produced by major corporations, the supply would go up, prices would go down and the economic power of the cartels would be greatly diminished. 
6065  Bitcoin / Development & Technical Discussion / Re: Please do not change MAX_BLOCK_SIZE on: June 01, 2013, 03:35:45 PM
at the rate transactions are picking up, it is only a matter of time before a full node needs to run on a small cluster of machines, e.g. a db machine, a tx verification machine, etc. imo, increasing the block size limit is a must.

Not really.  CPU is not much of a bottleneck.  RAM requirements may eventually require machines with above average memory but even they are modest through 70tps or so.   Storage is dirt cheap and getting cheaper all the time so it is less of a concern for existing nodes.  Now bootstrapping a 400GB blockchain for new nodes will require some optimization but it isn't impossible.  Bandwidth is the key limiter.  Residential connections only have so much throughput and while improved (optimal) tx and block relay procedures can reduce that average nodes bandwidth requirements by 75% or more pretty soon one is going to hit the limit of what a residential connection can handle.  Assumming sufficient disk space and bandwidth I wouldn't see the need for clusters of machines until tps reaches well into the hundreds of thousands per second (which is likely never).

6066  Other / Politics & Society / Re: How Job Creators Could Fix The Economy (& How Bitcoin can Help) on: June 01, 2013, 07:24:22 AM
Why not raise the minimum wage to $1,000,000 annually?  Then everyone is a millionaire and "rich" right?

Lol. The goal is not inflation. The goal is to get everyone off welfare. Please read the original post.

Millionaires aren't on welfare.  Problem solved. 
6067  Other / Politics & Society / Re: How Job Creators Could Fix The Economy (& How Bitcoin can Help) on: June 01, 2013, 07:17:17 AM
Why not raise the minimum wage to $1,000,000 annually?  Then everyone is a millionaire and "rich" right?
6068  Bitcoin / Bitcoin Discussion / Re: Bitcoin will fail on: May 31, 2013, 05:05:02 PM
And  I would feed the sweat equity the coins and captial necessary to build all of that.

I am sure you wouldn't do it at a $6 exchange rate though. Smiley
6069  Bitcoin / Bitcoin Discussion / Re: Bitcoin will fail on: May 31, 2013, 05:03:12 PM
Why bother with bitcoin, why do I not just go get a loan from the bank, or find a private investor who may or may not take my land if I endure a drought.

I think you may be a little self centered.  Just because Bitcoin doesn't work for you for your one very specific and niche usage today doesn't mean Bitcoin has failed.

I can't buy a candy bar with a dollar in Spain.
I can't buy just about anything with a gold bar.
It doesn't mean dollars and gold are useless they just aren't useful in all circumstances.

6070  Bitcoin / Development & Technical Discussion / Re: why still so many blocks with 243kB? on: May 31, 2013, 04:59:13 PM
Yes, I am just surprised that miners(most of them pools) still care that much about transaction fees, to the extent that no-fee transactions would sometimes take forever to be included into a block, I thought the 25 BTCs reward is already enough for them to take minimal care about how many free transactions they have to include, especially given that we are still nowhere near the size limit.

I (and just assuming here) think it is more the potential loss due to orphans.  Let hypothetically say a 1MB block has a 1% higher chance of being orphaned than a 250KB block.  To avoid losing funds (relative to just mining 250KB blocks) one would only produce a 1MB block if it produced 1% more revenue.  Otherwise the miner is operated as charity.  Accepting lower revenue (and potentially losing hashing power to more competitive pools) in order to subsidies free users.  Now looking at blocks almost all miners DO include a certain number of high priority tx (i.e. not dust spam) with no fee but they cap that amount.  The amount is likely a balance between being altruistic and maximizing revenue for current block (and damaging reputation of Bitcoin).

Still the long term solution is for more users to include (even very small) tx fees with their txs.  If a miner can earn 2% more by mining a 1MB block and that will only result in a 1% increase in orphans rates then miners are leaving "money on the table" by not picking up those transactions.  Eventually some or all miners will and those who won't will be less competitive and lose hashing power to those who do.  Note: miners is the entity creating the block, most "miners" are nothing of the sort they are just selling hashing power.

6071  Bitcoin / Development & Technical Discussion / Re: why still so many blocks with 243kB? on: May 31, 2013, 04:53:54 PM
Yes, I am just surprised that miners(most of them pools) still care that much about transaction fees, to the extent that no-fee transactions would sometimes take forever to be included into a block, I thought the 25 BTCs reward is already enough for them to take minimal care about how many free transactions they have to include, especially given that we are still nowhere near the size limit.
Are you really so cheap that you can't afford a 13 cent (0.001 BTC) transaction fee? 0.001 BTC is enough for most transactions to get into the next block.

In my experience even 0.0001 (per KB) is good for inclusion in the next block most of the time and that is ~1 penny. 
6072  Other / Beginners & Help / Re: Anyone Interested In Buying Bitcoin With Paypal? on: May 31, 2013, 04:19:23 PM
when you purchase anything in paypal and its sold to you as a gift (to avoid paying fees) you also lose protection as a buyer. That means if you don't get anything and claim a refund then you may or may not get your money back.

Which is why the buyer should insist on escrow with a reputable person.  

You send BTC to escrow.
You pay seller.
You notify escrow.
Escrow sends BTC to seller.

Everybody wins.
6073  Other / Beginners & Help / Re: Anyone Interested In Buying Bitcoin With Paypal? on: May 31, 2013, 04:18:55 PM
A PSA for noobs:  If the seller agrees to escrow then you have little to lose (other than high price) with this deal.  If the seller doesn't well your alarm bells should go off.  If you use escrow make sure the person is reputable like John K and also make sure it is actually escrowed.  Your payment address should come directly from the person providing escrow.

To the OP just a warning:
Excessive use of "gift" payments will result in PayPal taking a close look at your account.  In the real world nobody gets hundreds of gifts from people all over the planet.  Do you know anyone like that?  Pretty easy for PayPal to pick out the unusual activity and they will eventually.   How much is too much?  Well that is likely something you won't find out until after the fact, like an overdose.  Ooops that was too much.
6074  Economy / Speculation / Re: Area under the 2013 exponential trendline is nearing the area above it on: May 31, 2013, 03:58:19 PM
Bid sum in MtGox has lost 25% of its strength in the past couple of weeks and keeps going down. There is nothing coiled.

Ask sum has as well.  MtGox has lost about 20% marketshare in the past couple weeks too.

Now if you had a combined order book of all exchanges and the combined bid sum lost more than the combined ask sum then you might be on to something.
6075  Bitcoin / Development & Technical Discussion / Re: Please do not change MAX_BLOCK_SIZE on: May 31, 2013, 03:49:55 PM
Recalling the 5430 dust limit controversy, can the 1MB limit be customized by each miner to suit their needs?

That would essentially be an unlimited blocksize.  It is possible and I don't want to say it shouldn't be done but I would point out that the reality is mining is heavily centralized.  If the x largest pools (where x is >51% of hashing power) decide to use a 100MB block it doesn't really matter what you think as virtually all miners will accept their blocks or risk (due to >51% control) falling permanently off the longest chain.  

To avoid a continual set of hard forks any limit imposed on blocks created by other miners would need to be soft limit.  As an example the node would not consider the chain with blocks greater than its limit longer until it is some x (also decided by node) ahead of the longest "compliant" chain.  This would result in soft forks that overtime would be resolved and in theory could work.  In reality I personally believe it will add a lot of complexity with no real benefit.  Game theory says that it would be optimal for the largest players (say top 3 or 4 mining pools) to agree on a certain size to avoid orphans between each other.  Those major pools attract hashing power by keeping their revenue high and that means orphans low.  Agreeing on a set block size would ensure the pools aren't competing against each other.  Other pools even if not in the official agreement will have little choice but to follow that as blocks larger than the agreement won't be extended by the largest pools and have a mathematical certainty of always being orphaned eventually.    The settings of every other node will be meaningless as the limit is soft and they will adopt the larger blocks once x block ahead (which will always happen eventually).
6076  Bitcoin / Development & Technical Discussion / Re: Please do not change MAX_BLOCK_SIZE on: May 31, 2013, 03:35:25 PM
Anyone here seem to agree that sooner or later we will get to that point when we will have to say 'enough is enough'.

Agreed however there is a debate on if 1MB is "enough".  Most people would say it isn't and that likely means "enough" will be moved to a higher number at some point in the future and in some manner.  It would be smarter to focus on the how & when given that an increase eventually is an almost certainty.

Quote
So why not to just keep this point at the 1MB, as Satoshi originally designed?

Bitcoin was never designed with a 1MB limit initially.  You can check it doesn't exist in the early versions of the source code.  That was added later as a safety limit to prevent an early attacker from massively bloating the blockchain and thus killing off the project.  Imagine if in 2010 there was no block limit you had to download a 5TB blockchain just to start using this experimental currency with very little actual value or use.  Most people wouldn't and the "ecosystem" might have died in the crib.  1MB limited the size of the blockchain to no more than 52GB per year.  High and luckily early volume was much lower but it provided an upper bound while Bitcoin was young.  When the average block has 2 to 8 transactions it doesn't make sense for a single bad actor to add GB worth of transactions to hinder future users.  Bitcoin is far more developed now so it likely is time in the near future to take the training wheels off.

Quote
If you don't increase MAX_BLOCK_SIZE people will naturally start using BTC payment processors, which will take the load off the net, and which has to eventually happen anyway.

Sure.  However the debate becomes at what point and how much goes off blockchain.  In a perfect world I would say MAX_BLOCK_SIZE should be large enough to allow anyone to run a full node with "reasonable" resources.   Reasonably to be loosely defined as the resources (storage, computational and bandwidth) available to the dedicated user willing to pay for being a peer in a global network (in other words not everyone will be a full node but most "could" be a full node).  Yeah that is a very gray term but it is more important to look at what the MAX_BLOCK_SIZE does conceptually to the idea of centralization:

Lets look at two extremes futures where Bitcoin is massively adopted (say 100x current usage in terms of users, merchants, tx volume both on & off blockchain, etc):
average block size = 1MB.  max annual on blockchain tx volume = ~3.6 million transactions.  tx fees relatively high.  overwhelming majority of tx occur off blockchain.  the blockchain becomes sort of an open interbank settlement system *
average block size = 5GB.  max annual on blockchain tx volume = ~18 billion transactions.  tx fees relatively low.  most non-micro tx remain on blockchain.  the blockchain in theory can be used by anyone however the cost of a full node exclude most**

* At 1MB average block, while the cost of running a full node is relatively trivial the cost of transactions would exclude all but the largest bulk transactions.  Remember as subsidy declines the tx fees pay for the cost of securing the network.  So either Bitcoin is popular and thus fees are high (because only ~3.6 million tx can occur annually) or Bitcoin is unpopular and thus becomes less and less secure as the subsidy declines.

* at 5GB just about anyone running a full node can directly interact with the blockchain with low transaction cost however the resources for a full node would be on the order of:
- 262TB per year in storage requirements
- 500 mbps connectivity (bidirectional) this likely can be reduced up to 80% by optimal tx and blockheader sharing but it would still be high
- memory pool of ~2 blocks worth of tx would be ~26 million transaction thus RAM requirements (to avoid painfully slow disk lookups in validation) would be say something like 32GB.
- The UXTO is likely very large as the number of independent direct users of the blockchain are high.  It is hard to estimate but we can expect the UXTO to be large and efficient validation requires at lest a significant portion to be in high speed memory.

Both extremes result in centralization.
The low limit results in a centralization of transactions.  It becomes too limited and expensive to transaction on blockchain so most occur off blockchain.
The high limit results in a centralization of nodes. The extreme cost of running a node means there will be less of them.

The "optimal" blocksize would be one that perfectly balances the centralization of transactions against the centralization of nodes.   Now 1MB obviously isn't that perfect limit and whatever the limit is raised to likely isn't either but it certainly moving in the right direct.  In other words a 10MB limit is closer to optimal than 1MB is.
6077  Bitcoin / Development & Technical Discussion / Re: Please do not change MAX_BLOCK_SIZE on: May 31, 2013, 03:21:01 PM
Is Gavin talk available on video?  I saw it at the conference but it might help in the discussion if the OP could link to the talk.
6078  Bitcoin / Development & Technical Discussion / Re: Please do not change MAX_BLOCK_SIZE on: May 31, 2013, 03:20:09 PM
This isn't about microtransactions.  It's about a currency system that is supposed to be global, but can only handle 6 tx/sec.  That's just not enough, even if we somehow limit all transactions to 250B and >10 BTC.  There's no question that blocksize should be limited.  The question is whether 1 MB was the correct answer.  I think the answer is a resounding "no."  Bitcoin can't do what it was supposed to do at 1MB.  All other properties of the system can be maintained with a higher blocksize limit, but Bitcoin can't grow with the current one.

Well said.  To put it into context PayPal is about 50tps.  I think a short term goal of Bitcoin eclipsing PayPal in transaction volume would be a pretty impressive milestone and that would require an average block size of ~10MB and given the transaction volume distribution by hour of the day (hmm maybe interesting to chart that out) that might require a max block size of ~20MB.
6079  Bitcoin / Development & Technical Discussion / Re: Please do not change MAX_BLOCK_SIZE on: May 31, 2013, 03:10:32 PM
Increasing MAX_BLOCK_SIZE to a larger but reasonable limit will still allow a fee economy and most users will still be able to run a full node.  Personally I believe block size needs to be limited, it just doesn't need to be limited at 1MB.  Raising it to some larger limit (5MB, 10MB, 20MB) would provide "breathing space" and time to develop a more comprehensive strategy for scaling bitcoin.

I think there are lots of differing views on MAX_BLOCK_SIZE and some try to make it binary choice.  These are just the views I have seen expressed:
a) "1MB now, 1MB tomorrow, 1MB forever"
b) Don't raise the limit "now" (where now can be anywhere from this year to next couple years)
c) Raise the limit but don't remove it                                                                                     
d) Remove the cap and hope the "free market" (which Bitcoin mining isn't) adapts without destroying this $1B experiment.
e) Implement some algorithm for raising the blocksize deterministically overtime.

In theory I prefer e over c but it should be discussed, analyzed, peer reviewed, and tested over an extended period of time, thus in the short term I prefer c.  I would also point out that despite the blocksize being 1MB most blocks (even with unconfirmed tx) are much smaller which means major miners are taking a cautious aproach to raising the actual block size they create.


As for low bandwidth residential users what I think really needs to happen is for the "wallet" and "node" functions of bitcoind to be separated*.  This would allow someone to run a full node on a VPS and their local wallet would communicate securely with their node.  The link between nodes won't get any lighter but the link between the user's wallet and their own full node will.  There are also alternatives like electrum, future SPV clients, eWallets, etc but I think the ability for a user to run a full node in the "cloud" and then connect securely to it would be powerful especially as the demands for a full node continue to rise. 


* Yes devs I have looked at the code and refactoring it will be a nightmare but it is something which needs to be done IMHO for a lot of reasons.  I would gladly contribute towards a bounty if someone with extensive knowledge is interested.
6080  Bitcoin / Development & Technical Discussion / Re: why still so many blocks with 243kB? on: May 31, 2013, 03:06:00 PM
25 BTCs is still a lot for 3 times more free transactions, no?

Not sure what you are saying.  A miner can get 25 BTC for no free transactions.  Including more free transactions doesn't increase their reward however (in theory) a larger block does increase the chance of orphans.  Some more free transactions = less net reward over time.  Most pools are "nice" and knowing it supports Bitcoin ecosystem, which supports exchange rates, which pays their bills will still include "some" free transactions but increasingly people should start to consider Bitcoin "low cost" not "free".  Of course if you think this is "wrong" you can always start mining and include nothing but free transactions.  Smiley   I stopped mining in February so I no longer have a horse in this race.

Bitcoin is free as in free speech not free beer.
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