That is why the window of opportunity to get it right has to be used, particularly for hard forks that could have any possibe economic ramifications. When Satoshi put in the 1 MB blocksize limit in 2010 in Bitcoin, Satoshi did not forsee that this would become such a fiasco 5 years later.

Edit 1: One thing to keep in mind here is that the protocol does not need to be perfect. It only needs to be "good enough". SMTP is a perfect example.

Edit 2: The 1 MB blocksize limit in Bitcoin was easily forseen that it would become an issue later.

This debate about governance is missing the whole point of a decentralized virtual currecny; namely that we should not need to keep hard forking the coin in order to keep the coin viable. Ideally the protocol should be set at launch and cast in stone. In practice there is a window of opportunity when the coin is still young and the community small to get the consensus necessary for hard forks; however just because a hard fork is possible now it does not mean that the same hard fork will be possible say a year down the road.

The key lesson here for Monero is to ensure that all hard forks that are necessary for the long term viability of Monero are in the protocol as soon as possibe, because it will not be possibe to make those same hard forks later on.

The Bitcoin price data going back to July 10, 2010 can be downloaded from CoinDesk http://www.coindesk.com/price/ It is the CoinDesk BPI. The difficulty data going back to January 3, 2009 can also be downloaded also from CoinDesk http://www.coindesk.com/data/bitcoin-mining-difficulty-time/. In both cases click on Export in the chart and select CSV Chart Data. There was some Bitcoin trading before July 18, 2010 on New Liberty Standard and Bitcoin Market both of which have gone defunct. The New Liberty Standard site is still up with the 2009 data. http://newlibertystandard.wikifoundry.com/page/2009+Exchange+Rate however the early 2010 data is now gone. I did manage to download the early 2010 data in November 2013 before it was lost. Send me a PM and I can send the file. LibreOffice (.ods) format only to preserve the download timestamp.

One thing to keep in mind is that difficulty measure price in terms of computing resources. As for the time period for Bitcoin the best is 2010 - 2012. Still there is an evolution here from CPU, GPU and then some FPGA before ASIC mining. One other option that would be clean is actually Monero over the last 14 months since in the Monero case the technology has not changed.

... but if price of transacting on the main chain is low enough there will be no incentive to move to the side chain or Lightning Network. Blockstream does need bigger blocks but only at a controlled rate that they can influence and / or control. Bitcoin XT throws a monkey wrench into this business model.

Yes there are alt-coins one can use instead. There are even alt-coins with adaptive blocksize limits such as Monero that avoid what got Bitcoin into this mess in the first place. The point of XT and the bigger blocksize limits is to preserve what is left of the value in the Bitcoin ledger. You are correct that the Lightning Network will need much larger blocksize limits in the neighbourhood of 133 MB according to their paper https://lightning.network/lightning-network-paper.pdf; however in order to ensure the investors get their profits the fees on the Bitcoin blockchain have to rise significantly and that can only be accomplished by keeping the blocksize artificially low.

Edit: Bitcoin XT also has a serious flaw namely the 8 GB limit. Gavin is in effect saying that "8GB blocks ought to be enough for anybody". This reminds me of the famous "640K ought to be enough for anybody" quote attributed to Bill Gates and the IBM XT computer with 640K of RAM.

That remains to be seen. The investors in Blockstream would not be very pleased with the 8MB blocks.

A Monero/Fiat exchage will be very welcome if as I strongly suspect Bitcoin becomes difficult or impossible to use due to the fixed blocksize and core vs XT issue. By the way my Bitcoin holdings are now down to less than 0.5% of my portfolio.

Edit: September, just in time for the next Bitcoin stress test.

Monero but for a different reason. The biggest threat to Bitcoin right now is the XT vs Core fight over the blocksize limit. This is a direct result of a fixed blocksize limit baked into the protocol that requires a hard fork to change. Monero does not have this problem since 1) It uses an adaptive blocksize limit and 2) It has a small perpetual emission that ensures the viability of the adaptive blocksize limit.

The key issue in my mind is that the coin must not be hard coded to todays tecnhnology. This is the problem with Bitcoin and its 1 MB blocksize limit and even Gavin's proposal is ultimately flawed since he is proposing a hard 8GB blocksize limit. My take is that age has a lot to do with this issue. Young people have a phonomenal grasp of the current technology; however when it comes to the rate of change, or first derivative, of technology the prespective of a 50 year old or a 60 year old actually wins hands down.  

How many people on this forum have actually progammed with punch cards, used a teletype to communicate with a computer that had 2 KB of RAM, or got an error message from the mainframe of a major Canadian University because the program they wrote required over 2 MB (the total memory capacity of the mainframe)? I have. To put things into prespective a punchcard holds 80 bytes, and an 8in floppy holds 80 Kilobytes. Now today does it make any significant diffrence in the cost of sending an email that has an 80 byte or 80 kilobyte message? 50 years ago sending an 80 byte message over the telegraph network would cost around 10 USD (in todays dollars), while the other hand sending an 80 kilobyte telegram would have cost around 10,000 USD in todays dollars.  

The critical advantage that Monero has is that it does not have a hard coded (requiring a hard fork) limit that throttles the coin to today's technology. This is the critical factor in my opinion.

Now while I am writing this post my sell Bitcoin buy Monero order is being filled. In the meantime let us see if Gavin gets his way and Bitcoin is allowed to scale from the punchcard to the CD 5.25in floppy disk.

Edit: Corrected CD (640 MB) to 5.25in floppy disk (640 KB)

The slack would be built into the spread between the minimum fee for relay and the suggested fee to the user. If the user goes out of her way to pay just the minimum fee then she would run the risk of her transaction not being relayed. The averaging over a number of blocks is designed to dampen the impact of a sudden rise in difficulty. I am not convinced that users would go out of their way to delay transactions in order to speculate on lower fees since the cost of delaying the transaction would be larger in most cases than any possible fee savings.

The problem I see with using fees paid as a measure of the value of XMR is that unlike the difficulty this could be easy to game. A spammer could gradually ramp up the spam since as the total fees per block increase then individual per kb fees would drop. This would leave the actual base reward before the inclusion of fees and / or penalties as the optimal parameter for R_A.

XBT/USD down due to the blocksize issue.

Yes but we must also take into account the impact of the blocksize issue on Bitcoin. If anything the stock market crash may have slowed down a crash in Bitcoin over the blocksize issue.

Thanks for the clarification. It is a critical distinction that the minimum fee is not enforced in the blockchain but rather by convention. among the nodes. So if this became an issue node could simple start relaying transactions with lower than the minimum fee without creating a hard fork. 

Yes. In order for the difficulty to be a surrogate for the value of XMR one needs to factor in the actual block reward, So the formula would look as follows:

F = F₀*D₀*R_A/(D_A*R₀)

Where

F₀ is a constant comparable to the current per kb fee
R₀ is a constant comparable to the current block reward
R_A is the average block reward of the blocks N-2K to N-K
D₀ is a constant comparable to the current difficulty
D_A is the average difficulty of the blocks N-2K to N-K
N is the last block number
K is a constant for example 1000  

One could replace R_A by the average of base block reward namely by netting out fees and penalties; however then it would not track value as closely particularly if fees were to dominate the actual block reward in the future.

The question of the responsiveness of the difficulty to a sudden increase in price is valid to a degree; however it is tempered by the fact that the increase would be temporary, the increase would hit XMR holders at a time when they are experiencing a significant increase in the value of their XMR,  and in the worst case scenario any drop in transaction volume would likely temper the sudden price movement.  Attacks based on manipulating the hash rate I do not see as an issue here simply because any impact on fees is extremely minor compared to the risk of a 51% type attack.

My main concern here is to not create a situation similar to what is currently happening in Bitcoin with the blocksize debate. It is fairly easy to get the necessary consensus to fork an 18 month old coin, it is quite another matter to try to undo the fork 5 years later; particularly when there is no immediate threat. This is the critical lesson we must learn form Bitcoin.    

Everyone is entitled to their opinions. To understand what prompted me in my decision I suggest reading this article https://letstalkbitcoin.com/blog/post/confessions-of-an-r-bitcoin-moderator and the following thread https://bitcointalk.org/index.php?topic=1157912.0. There is a serious sickness in the Bitcoin community which goes far deeper than the fear of a drop in price. The recent closure of the following thread going back to 2012 is a perfect example. https://bitcointalk.org/index.php?topic=68655.0.

Edit: This thread has a poll. Let me guess: "CIA" is code for Gavin's proposal, in order to avoid this thread from being closed.

Thanks for the quote. All I can say is that I just finished selling the bulk of my remaining Bitcoins for a mix of 80% CAD (Canadian Dollars) and 20% XMR (Monero)

The reality is that Bitcoin has to fork and allow the blocksize to increase if it is to remain relevant. The problem is the resistance in certain quarters to increasing the max blocksize over 1 MB that has led to the XT solution and the current impasse. All I can sadly say is that I have followed Bitcoin since August 2011 and have owned Bitcoin since October 2011, yet this is the first time I have serious doubts about Bitcoin's future.

Edit 1: Bitcoin XT with just the blocksize increase and none of the "extras" is a perfectly viable solution.
Edit 2: The market is trying to tell the Bitcoin community something. It is time we listened.

I am proposing for discussion making the minimum per kb fee, F, a function of the difficulty as follows

F = F₀*D₀/D_A

Where

F₀ is a constant comparable to the current per kb fee
D₀ is a constant comparable to the current difficulty
D_A is the average difficulty of the blocks N-2K to N-K
N is the last block number
K is a constant for example 1000  

Rationale: The concept is that the difficulty is an approximate measure of the cost of hardware, bandwidth etc in terms of XMR. The minimum fee is would then approximate that adverse impact of the spam it is intended to prevent. Furthermore as the purchasing power of XMR increases the fee in XMR would decrease, while if the purchasing power of XMR decreases the fee in XMR would increase. The remaining suggested fees for both nodes and miners could also be dynamically set in terms of the minimum per kb fee.  

There has been a significant amount of damage done to Bitcoin already by the whole blocksize debate. Unfortunalty I have come to the conclusion that this will very likely get worse before it gets better. This begs the question what to do with a Bitcoin holding even if one already has a significant exposure to Monero. I came to the conclusion that my case 80% CAD 20% XMR mix would out perform 100% XBT with considerably lower risk under most scenarios, and have acted accordingly over the last couple of days, by selling the bulk of my remaining XBT for an 80% CAD 20% XMR mix.

First welcome.

There is no max blocksize limit baked into the Monero code. The blocksize limit is dynamic as explained in the code quote above. I must say that I have been concerned about the max blocksize limit in Bitcoin for well over two years and actually found out about Monero while researching this issue back in June of 2014. I will also add that most of the POW altcoins have baked in  max blocksize limits because they were forked from either Bitcoin or Litcoin, so the ticking time bomb may be there also.