This article is well over a year old.

Proof of Stake has one little problem. Stake does not equal exposure once a derivatives market develops. So go long the coin and get the "stake", then go short the derivatives for an equal amount to create zero exposure, while keeping the "stake".

Bitcoin has to hard fork in order to address the 1 MB max blocksize limit. If it does not it will not be able to scale. The main reason I have invested in Monero is to hedge against the risk of Bitcoin not biting the bullet with this hard fork.

Edit: Here is a thread on the subject of the 1 MB max blocksize in Bitcoin and the discussion it generates. https://bitcointalk.org/index.php?topic=709970.0 The technical people understand the need, but there is also considerable fear and opposition.

In other words it is all about the networking and given the target group and room price it highly likely that those who go there will get way more value out of their experience than their cost. I live quite far away in western Canada, (10 time zones away to be exact), nevertheless the next time I am in Europe it is a destination well worth my time to visit.

High transaction fees for trading and in particular for taking delivery of gold are in fact the major weakness of gold as a form of money and led to the development fractional reserve banking and fiat currencies. The net result of these costs is that gold is worth less not more since it becomes easier to short gold and more importantly maintain the shorts. This is critical to understanding the source of the Rothschilds' wealth. The premise is that owners of gold would deposit their gold with Rothschild and use their promissory notes for gold instead of gold as money in order to avoid the the above mentioned fees and costs. Rothschild would then issue promissory notes for gold in excess of the gold on deposit and profit from the interest rate spread on the notes that were created "out of thin air". This worked because only 10% of the depositors withdrew their gold because of the fees, troubles and costs of taking delivery. Now what happens if these fees and costs were suddenly removed, people would redeem their notes and withdraw their gold from the bank, since there is now no advantage to holding the promissory note for gold rather than the gold itself. This causes the bank to collapse in a massive short squeeze, since there are more notes than gold, and the price of gold to rise sharply.

How does this apply to BTC and XMR? Well with BTC we saw pirateat40 build a massive short position in BTC in late 2011 and early 2012. This had the effect of depressing the price of BTC in 2012 allowing those of us who were buying BTC at the time to benefit from depressed prices. When the short position blew up in August 2012 it set the stage for the sharp rise in 2013. The key advantage of BTC over gold is that with BTC it is trivial in cost and time to take delivery and thereby squeeze the shorts to the wall. Mark Karpelès of MTGox was also likely taught this same lesson. In fact I would not be surprised if there is another sharp rise in the BTC price in the aftermath of this latest short squeeze. So trying to "pull a Rothschild" with BTC is doomed to failure, at least for the time being. This brings me to my next point. The 1MB blocksize limit in BTC. If this is not addressed. this will cause transaction fees to rise sharply, fractional reserve banking to become viable as with gold, and prices to fall. It is for this reason and not privacy that I have purchased a substantial position in XMR as a hedge on my BTC position. XMR does not have this problem, in fact some would argue it has gone somewhat too far in the opposite direction.

The bottom line is that for XMR we need to keep fees at a minimum to cover actual costs, in order to maximize the value of the currency not the other way around.

My experience with shorting Bitcoin is to profit handsomely, at the expense of the shorts from their failed bear raids on Bitcoin. I am talking of course about pirateat40 who in late 2011 and 2012 built a massive BTC short position that had the effect of depressing prices, keeping prices in the 2 USD per BTC to 10 USD per BTC. Those of us who bought at those prices and took delivery of our BTC are now sitting on very substantial profits. When pirateat40's massive short pyramid collapsed the BTC / USD rate rose sharply in 2013 taking out a few other shorts in the process including I suspect MTGox. Taking delivery is by the way the most effective way to squeeze the shorts to the wall and increase the profitability of the longs.  

So I say go ahead and short, there are those of us ready to profit from taking the long position even if the shorts manage to temporarily drop the price to 200 USD.    If you do go ahead and short BTC there is a good chance you may need the services of a bankruptcy trustee.

This should not be considered financial advice.  

I am going to mention this thread https://bitcointalk.org/index.php?topic=709970.0 because these issues also as well apply to Monero. The difference with Bitcoin is that I am on the opposite side of the argument here. We need to reduce the growth of the blocksize, rather than allow for its increase as is the case for Bitcoin. For this reason I am making the same suggestion here as I did in the above thread; namely to in addition require an increase in difficulty in order to allow for an increase in blocksize. So an increase in blocksize or the use of the fee penalty rule is only permissible if the difficulty is higher than the median difficulty of the last N blocks.

I consider the increase in difficulty requirement on its own a necessary but not a sufficient condition, while the CryptoNote / Monero solution or something similar also a necessary but not a sufficient condition. My proposal is requiring both as a necessary and sufficient condition. Both suggestions have been made before individually but I have not seen a proposal that required both of them.

The problem of 100MB blocks needs to be considered not just in terms of current technology, but in terms of technology costs down the road. (2, 5 10 years etc.) I run a full Bitcoin node on an over ten year old laptop (that still has its Windows 2000 logo, and a floppy drive), that is way inferior in performance from what one can buy used for say 100 - 200 USD today.

The efficiency of centralization argument is on the surface very valid, furthermore my desktop can also handle "40,000 TPS with a simple ledger system, giving nearly instant confirmation". The problem arises when an individual with value on your desktop wishes to do business with an individual with value on mine. It is then when the fees and costs start to get really expensive. There are two problems here:
First businesses left to their own devices tend to not co-operate with their competitors in order to allow each other's customers to do business. They instead prefer to keep their customers for the most part locked up in their own "walled gardens". Just witness the behaviour of Apple with IOS or while on the subject of coffee Keurig adding DRM to their coffee makers in order to prevent customers from purchasing coffee from suppliers other than those approved by Keurig.
The second is regulatory if we both are in different jurisdictions then we both have now to comply with two sets of regulators. As the number of jurisdictions is increased so does the number of regulators, and even worse the sometimes conflicting interactions between the various regulators each provider has to deal with.
These are the reasons why we see many innovative payment methods that work only within one jurisdiction but only few and expensive options across international borders. Paying 2.50 USD for coffee at the local coffee shop is not where Bitcoin shines, but paying 2.50 USD for a good or service from a provider across the world is where Bitcoin can really shine. Centralized and semi-centralized solutions do have a role to play in reducing blockchain bloat, but cannot not by themselves solve the problem. For example: Coinbase provides both exchange and merchant services to persons in the US, and requires a US bank account. if one of their exchange customers make a purchase from one of their merchants with Bitcoin, this transaction does not need to go through the blockchain. One the other hand if I in Canada makes a purchase from a Coinbase merchant my transaction does have to go through the blockchain, and I, by the way, obtained my BTC from Virtex, who requires Canadian citizenship as a requirement of doing business with them!

One thing to note about Monero and Bytecoin is that Monero has two orders of magnitude the transaction volume by value (BTC or USD) over Bytecoin for very similar capitalizations, so the stress test of bloat should happen in Monero long before it happens in Bytecoin, even though Bytecoin is the older coin.

First I should point that I am familiar with many of the old threads and the arguments in them. Ironically I came across CryptoNote and Monero while researching these old threads. I will address first two points miner incentives and decentralization because they are both very valid. They also form part of most of the arguments against increasing the 1 MB block size limit.

This is all very true but it can be addressed by making an increase in difficulty a necessary requirement for an increase in the blocksize limit. In short if the miners are not receiving the proper incentives then the difficulty can not also be rising at the same time. This is why I included the second requirement of a rising difficulty for a blocksize increase in my suggestion.

The problem here is that a fixed blocksize does not take into account that these hardware and bandwith costs are dropping at an exponential rate. Furthermore this also does not take into account that what will likely limit the "economic majority" namely consumers form verifying transactions is not cost but rather the fact that they choose to cede control over their devices to large centralized corporations such as Apple and Microsoft.  An iPad or a Surface tablet may have the processing power and memory to handle a full Bitcoin node but is not able to do so because the DRM in the device. Now for under 20% of the cost of an iPad one can purchase a used laptop running GNU/Linux that is perfectly capable of handling a full Bitcoin node. If the 1-2% of Bitcoin users, who choose to run GNU/Linux, are the only ones verifying transactions that still provides enough decentralization to secure the network. Furthermore it avoids an attack by a propriety OS vendor who could use the DRM in their OS to cripple Bitcoin. One thing we must keep in mind here is that those who run a propriety OS do not control their devices they only think they do. Crippling Bitcoin with a 1 MB block size limit is not going to solve the centralization issue.

This brings me to the third point
  True but this is essentially self defeating. If it turns out that a centralized or semi centralized solution can be competitive with Bitcoin in certain situations then so be it. This however should be a result of true market forces and not an arbitrary limit placed on Bitcoin.

Edit: With respect to CryptoNote and Monero, I do see merit in the argument that the fee penalty alone may not be enough to constrain blocksize; however when combined with the difficulty increase requirement the picture changes. As for the specifics of the Monero blockchain there are also other factors including dust from mining pools that led to the early bloating, and we must also keep in mind the CryptoNote and Monero also have built in privacy which adds to the blocksize by its very nature.

The 5.34 USD price per BTC in the background. That is my favourite part. 

My suggestion, to get this discussion started, is a dynamic block size limit that is based on the following two parameters:

1) The median size of the a set of the previous blocks. A good example is the model of the CryptoNote coins, for example Monero (XMR). https://cryptonote.org/inside.php.
2) We could also add the requirement that for an increase in the block size limit the difficulty must be rising and for a decrease the difficulty must be falling.

I would have to agree; however this is from the perspective of someone living British Columbia, Canada where our largest city Vancouver is in the midst of a major real estate bubble.

They have budgeted to spend a fixed amount of fiat over approximately the next six months, so they need to hedge their risk. https://www.ethereum.org/pdfs/IntendedUseOfRevenue.pdf.

The recent drop from 620 USD coincides with the Ethereum IPO. The BTC that were traded for ether were subsequently sold for fiat. It is about the right amount of BTC and with a few hours delay. Just a theory.

This makes a lost of sense particularly when considering the GST.

Thanks for the info. I am trying to get a handle on possible solvency issues here.

An interesting theory I must say. My theory is more along the lines of MTGox running a BTC fractional reserve all along that turned into a very ugly BTC short squeeze at the end. One thing to keep in mind here the problems with MTGox would materialize right after a sharp rise in the BTC / USD price both in 2011 and twice in 2013. This would also explain the missing fiat.

I suspect that the suspension of USD withdrawals in June 2013 had a lot more to do with MTGox's solvency than any action of the US Government or the banking sector. Furthermore if one wishes to defraud members of a community with a large component of libertarians and crypto-anarchists blaming the "state" and in particular a very large superpower state does make for a very good cover.
 

May I ask what kind identification they already have on file for you. For example do they have a driver's license or identity card on file for you?

One can even combine both attacks.  
1) Gradually build a position in both the coin (long) and derivative market (short).
2) Unwind both the long and short position in (1)
3) Launch memory attack.
The advantage for the attacker over a straight memory attack is keeping price fluctuation in the coin low during (1).
Edit: There is another advantage for the attacker in that there can also be "nothing at stake" during the build-up in (1) because of the hedged position.

The problem with proof of stake is that stake in the coin does not equal exposure to the coin if a derivatives market in the coin exists. I explained this attack in this post and the subsequent discussion. https://bitcointalk.org/index.php?topic=694436.msg7946409#msg7946409 Basically one hedges one's stake in the coin by taking an equivalent short position in the derivatives market to create zero net exposure to the coin in order to launch the attack.