I think there's some confusion here.

Currently, it is possible to get a tx pushed with no fee, but the commit times are horrible and there's no guarantee that it will even work. Nothing really changes here, and miners can still do whatever they want, however stupid it may be.

Also, while gmaxwell did propose a mechanism for forwarding lists of tx, this was primarily intended to give the bots some pre-verified tx they could use to mine into their own blocks. In other words, only real miners can produce such a list (since only they can verify the previous tx of the blockchain) and the only way a bot's block could be included at all is if it voluntarily included some tx's sent to it. In other words, you've got it backwards; if a miner doesn't want a 0 fee tx, it can dump it on the bots.

However, I suggest against that simply because it might give people an incentive not to include a fee, and still be able to get their tx committed, thus robbing potential fees from miners who actually own their equipment. A stolen mining rig costs nothing, so even if they only processed 0tx fees they could still compete and drive down prices.

(basically what theymos said, but with a bit more detail)

Well, you wouldn't be doing very good business if you actually had to depend on tx fees, which is mostly the point. Admittedly it's a difficult problem to define an acceptable threshold, but if push comes to shove it could be done. However, unless a lot of miners start purposefully killing their tx throughput that shouldn't be an issue at all. If mystery really is running sans a blockchain, which seems to be the case, then only he would be affected since the stingy miner can still produce the minimum verification, whereas mystery could not.

If mystery finds a way to run with the blockchain with his stolen computing power, then he could continue to do business, but would be running like a normal miner, problem solved. Given his current cushy 16% market share, however, nothing short of chasing him out would motivate him to go to that kind of trouble. Downloading a 2GB file onto thousands millions of computers you don't own without being noticed would be nothing short of a miracle, and not our problem, for that matter.


That's a lot of freaking clients. And also, that's probably exactly what's going on, or something very close. I'm glad someone knows how this crap works .

I'm afraid I don't know that much specifics about how much of the blockchain is actually required in order to validly mine tx. However, gmaxwell's system uses the input data from the previous block's tx, the input data from the tx currently being mined, and the output data, which is added to the current coinbase in order to create a sort of "signature". If the rig isn't validly mining tx, then it wouldn't be able to include valid tx data from the tx it's mining, nor a valid signature.

If they can get around that by using a few servers for distribution, then it seems to me they should also be able to validly mine tx. Problem solved.

However, after re-reading this a few times it seems to me that the primary reason mystery does not do this (or use a mining pool) is because his computing power is probably stolen, and anything that could be used to trace him would put him up shit creek. In that case, the only way to deal with it is to give him the stick. If he tries to get around it, he makes himself traceable, game over.

That would depend on who you're communicating with, I would guess. If someone is operating without tor, you would probably have to connect through an exit node at some point. As long as the people you're sending to or receiving from are using Tor, if BTC was a hidden service then you would be operating completely internally and be virtually invisible, spare the transaction level limitations on anonymity. There's some talk on the dev list about improving that, as well.

As long as the miners use it, the vast majority of the BTC network could be run invisibly. That might cause some complications with the mining pools, but I figure they'd work that out in the development process.

The solution I proposed doesn't force anyone to accept any given tx, however it does require that they include valid tx data, rather than just ignoring the blockchain. If a mining rig is already accounting for the blockchain, then it would be nonsensical for them to exclude every tx, especially if some of the tx going through their network include substantial fees. There's a big difference between a miner getting few tx because of high fees and one producing token 1tx blocks just trying to look valid. The solution I proposed would make it dead obvious if any miner wasn't using the blockchain, so those blocks would be thrown out completely and the coin they generated would be invalidated. No more carrot, no more problem.

Of course, it would be nice if mystery was actually contributing, but it might be more difficult to implement the means for that to happen, and there's no guarantee that he/they will adopt it even then. Kicking them out would definitely work, although with less potential upside.

So basically, unless validating the tx hashes of blocks is ungodly more complicated than rigging remote serving of the blockchain, then the stick is the more viable and assured option.

If you put your coins through some sort of anonymizing system that mixes them up, isn't it basically impossible for the recipient to track what address the coins were sent from?

If that's the case, then wouldn't validation via signature be impractical, or at the very least require some breach of anonymity?

It does, depending on how the botnet is handling tx. If the botnet is running off a few servers providing the blockchain, then that botnet would increase the amount of computing power needed to hit 51%. As it stands, since the botnet is blind, it can be incorporated by an intelligent attacker to make up 51%. At the current botnet size, it gives about 15% leverage either way, although this may increase or decrease in the future.


Well, in 2013, when that becomes relevant, then we can talk about what a reasonable fee is. 1 bitcent isn't bad, but it can't be predicted how the value of BTC will respond to the drop in subsidy, or what kind of losses that will mean to the miners (or not). If the value of 1 BTC goes to $10, then an even smaller fee would suffice, since technically the miners wouldn't be losing anything.

Let's just say mystery saves, say, 25% of costs by not running the blockchain, and the value of BTC doubles, then he will still have no incentive to play nice, and may even decide to take a larger chunk. The only way that would not be the case is if bitcoin's value appreciated more slowly than the subsidy decrease, or if fees became fairly exorbitant.

The main problem is that, for the time being, the BTC community is fairly vulnerable, and it is precisely during this time when that 15% of total processing on the network would be the biggest liability to BTC's survival. If someone with the will and the resources figures that out, we could have a big problem. Even if not, that's still 15% of all BTC produced going towards someone who isn't investing in the actual function of the network. Ideally, the means should be provided so that tx's can be mined properly without the cost of a full blockchain, then mystery would be adding 17.5% or so to the total processing power of the network rather than wasting 15% running in place.

Also, I don't see how gmaxwell's proposal, with my revisions, would open up the BTC network to "gaming". Every block must be cryptographically valid as well as providing proof that it's running on correct blockchain information. It's pretty hard to make an attack within those constraints.

You would require a very large number of slaves to compete with people who will donate blood for a reasonable fee. It might be possible, but you're talking nonsense. I don't believe any such thing exists in the world today.

Also, consider a car factory. Prior to Toyota's development of the Kaizen system, it required 2-3 days in order to raise, align, and preheat the stamps used for fabricating the various parts of each kind of car they produced. Every time they had to change over and produce something else, they had to change out the stamps, which occurs multiple times per week since each factory produces everything that Toyota makes.

After Kaizen, it now takes them only 2-3 hours. In order to achieve this, it requires that the workers all contribute, both to eachother's working environment, and to the smooth flow of operation.

Consider a slave-run car company, Slavola. If the giant 20 ton 3000 degree metal stamp falls on the manager, crushing him and melting him into a puddle, will the slaves care? If every bolt on the cars is loose and they literally disintegrate within a week of driving, will the slaves care? If the braking system or the engine or whatever is put together wrong and the cars either run into a wall or off a cliff or seize and stop working randomly, will the slaves care?

EDIT: Or if it takes a week and a half, or perhaps a month to change out the stamp.

Who the hell is going to buy a car like that, period, no matter how many they are able to produce?

Ok, in the example you gave, you're saying around 10%. Each block yields 50BTC, equiv $250 USD, at 10%, that would be $25 USD, or 5 BTC. 5BTC/80tx = .0625BTC = $0.31 per tx. Still pretty high for a tx, especially if it's for small amounts.

If $0.31 causes there to be less than 80tx per block on average, that means even higher fees will be required to maintain 10%, which is a further disincentive to making tx. Until the number of coins generated drops significantly, and until the number of average tx increases significantly, this is still not enough of a disincentive for the botnets to stop mining empty blocks, nor is the incentive high enough for them to take on the whole 2GB blockchain on every one of their nodes.

While this isn't a huge problem right now, if nothing is done to deny their entry into the network, it could eventually become a 51% attack, or could be used as a stepping stone for one. Artificially beefing up the miner's pocketbooks would be a far more expensive and less effective solution than simply changing the code to exclude freeloaders. Depending on how much BTC appreciates, the opportunity cost of freeloading might continue to be justified even after 2017. It also depends on the cost of running dummy miners vs miners w/ full blockchain. If the savings is significant enough (apparently it is for the moment), then direct disincentive will be required to prevent them from competing with legit miners or else the performance and the security of BTC will continue to be compromised.

Gavin's proposal would reduce their % by delaying the empty blocks such that most of them expire.

gmaxwell's proposal would require them to maintain the list of tx in order to have their blocks accepted at all. That is, if they don't have access to the primary blockchain/tx data, they cannot even construct valid blocks. That would be very hard (although not necessarily impossible) for a botnet to get around.

In the case that they did somehow get around it, Gavin's proposal could be used on top of gmaxwell's to delay "cheap" blocks and reduce the total impact on the network. I don't think that would even be necessary, and the more miners depend on tx fees, the less of a difference it will make.

However, in order to produce a similar income to coin mining, at 80tx per block, it would require a fee of around 0.5BTC, or US $2.50, which is pretty exorbitant even for an ATM withdrawal. While that would certainly give miners an incentive to boost their capacity, it doesn't actually solve the freeloader problem and it would create a disincentive for BTC users. Such a rate hike would be far above the design of the currency.


Again, that behavior is part of the design of the currency, and should not be a concern. It's also not an appropriate solution to the problem at this stage of the currency's development.

I disagree, I think it should be fairly easy. In terms of fees, for the moment, the gain from mining coins is larger than the gains from any reasonable transaction fees. After looking over the numbers, the drop in coin production is likely to be met with a corresponding rise in FX rate, which will probably cover most of the cost of mining, and is already taken care of within the BTC framework.

However, I second Theymos in supporting gmaxwell's proposal. I think Gavin's idea would probably lead to a threshold war with the botnet(s). However, in contrast to gmaxwell's proposal:


This seems to me to be basically pointless. As miners become more reliant on fees and less reliant on coin generation, they will not likely want to donate their tx fees to some non-contributing bots. The programming effort implied would be wasted towards placating non-contributors without actually providing any benefit to legitimate operators. BTC would be better off just giving them the stick.

Elsewhere it has been proposed to extend bicoind to allow for remote one:many serving of the blockchain, and if that were implemented it might allow the botnet to contribute legitimately for very similar costs. This addition might also lower the cost of current and new mining rigs since it eliminates the need to store the whole 2GB block chain on every rig, and it would allow users to serve their devices from a BTCBank or from a machine they own. Of course, I don't know enough specifics about BTC to know if this is actually feasible, but it sounds good anyway .

At the time when slavery was at its peak, it was very profitable for two reasons:
1: Labor in the American colonies was in short supply, so even the half-assed labor of slaves was better than nothing.
2: Cotton was very expensive at the time, and farmers had a large incentive to grow it (to the demise of the delicate soil in Georgia, in fact).

However, towards the end of the American Civil War, cheap Egyptian cotton started pouring onto worldwide markets and killed the price of cotton. This was one of the main factors (along with their lack of industry) which lead to the fall of the confederacy. I should also point out that "freeing of slaves" during the civil war was not an issue of ethics, but rather they were turned around and used as cannon fodder by the union.

Depends on what they mean by "higher risk". Lenders and investors generally avoid "high risk" investments for a reason. (see: CMBS)

Well, normally that wouldn't be a big issue, but it's the USD I don't trust . One of these days all the inflation the US has been exporting is going to come back and bite it where it hurts. I wouldn't want to have any investments in USD when that time comes.




Yeah but usually they're not allowed to beat you up and steal your stuff after a week of a 70% interest loan. Usually it requires some sort of legal action.


Well, actually I've been digging through the lending forum to see what info I could dig up. I found out a lot about the lending criteria people are using, their accounting practices (or lack thereof), and the relative risk of default that they face. In general they see about 1 in 10 loans default, and usually for very small amounts so that it doesn't cause too much problem. I can already see a number of simple mistakes people are making that could be avoided as well. Basically, the problems faced with BTC banking are no different from any other free-market bank, and the same universal principles of banking apply. Either when doing lending yourself or when choosing a bank, the same criterion for what "good" is apply.

Also, I haven't seen anyone throwing a fit about pirate, and he's been running insane interest rates and been going at it for a while now. There's also several other individual bankers, and I haven't seen very many complaints at all about not getting interest payments, or for any other reason. Business seems to be good enough.

I'd never heard of Wonga or anything like that. That's pretty insane. However, personally I'd rather deal with the challenges of the unsupported free market and come up with solutions myself than to rely on government control to make my business work. The world will never evolve if nobody steps up to come up with new solutions.


His risk level isn't really a factor. See above.


Maybe, you won't know till you look. As for bank capacity, you may be right. Current BTC banks are very primitive, and generally don't have the automation capacities to handle a lot of depositors or borrowers. If you know how to screen borrowers, you could lend yourself and probably manage it. However, I think the case for BTC banks stealing your coin or blowing up is overblown. Apparently, at one time when everyone was inexperienced and BTC was new, things were much less reliable, but I don't see that much today. The worst I've seen is the WBX collapse, which failed only on the AUD side, and is being liquidated much more responsibly than, say, MF Global or Lehman.


That makes better sense. Not terribly uncommon around the world, either.

Oh, and for the record, I was only curious x.x. I'm not Mr. D. Pockets, nor am I trying to argue with anyone lol.

Going from gold/silver to fiat is very, very easy; print money, forget about it. Going from fiat to gold/silver means the state somehow has to collect enough gold/silver to back their fiat, through some means like taxation. Also, depending on if the conversion rate is fixed or floating can cause various sorts of trouble. Without knowing the specifics of how the British tried to do it, it's impossible to say what they did wrong, and my history isn't that good .

Also, the point isn't necessarily that the value always rises, but that there's no central bank to interfere with the market's decision as to which way it should go. That, and an inflationary currency is like a company that continuously releases new IPOs. Every current shareholder loses money as more shares are created and eventually the stock is worth next to nothing (called stock dilution). That's probably the simplest and most direct way to think about it.

Finally, I've seen the "BTC hoarding" argument before, but given that it's only a few years old and still in its high-inflation stage, it's too early to make concrete statements like that. Additionally, from what I have read most recently, BTC trading patterns are stabilizing into smaller, more day-to-day transactions, and is not particularly being hoarded any longer. Since BTC has no commodity value (there's no commodity...) its value is primarily based on the trading community built around it, so it would be worthless if nobody actually bought or sold anything with it. While possible, it'd be pretty superfluous to use BTC just for FX trading. BTC is a currency built on pure voluntarism.

I do understand how that works, but consider that if the value of BTC went to $10kUSD, then I as a lender would have been better off simply holding my BTC and doing nothing. Technically I (probably) wouldn't lose purchasing power, but the opportunity cost would be a killer. I also dislike USD in general .


I'm not blaming anyone for anything, that's just something I heard and was curious about. I also hear it's legal for them to send loansharks to your house to beat you up if you don't pay. I don't know that it's true but crazier things have happened.

Also, 2% per year is doing "well" for USD, but 2% per week is around the average I've seen for BTC, although it varies. If you're lucky enough to have an account at FirstPirate, you can get 4-7% per week, depending on how much coin you drop. At 2%/wk, that's 180%/y, and at 7% it's 3,270%/y, if you compound. Either number is pretty freakin insane, even at 33% BTC inflation for 2012.

That aside, dollar interest rates are pushed artificially low by the fed. Although I personally don't know much about getting international USD loans, if he could figure it out they should be around 5%, which would be doing way better than the 20% he was offering. I'm fairly certain he could beat 20% at any rate, which certainly isn't bad, and he'd have inflation on his side.

Most BTC loans are also short term, since it's better as a saving platform than as a debt platform. The USD is centrally planned (read: print) to favor debtors and allow for cheap long term mortgages and other artificial borrowing conditions, but saving in USD is a futile affair. USD favors instant gratification and bank ownership, while BTC favors delayed purchase and outright ownership. Ideally, you could borrow USD for the deposit, then stash the rent savings in a BTC bank . Eventually the interest from the BTC account would more than pay for rent.

33% deflation would be insane. However, what you're probably referring to is currency appreciation, as the inflation rate falls and the value climbs. More realistically, the amount of deflation caused by lost coin, and the amount spent on transaction fees is probably less than 1% total. It would take 100 years or more for that to have a notable effect.

The effect of currency appreciation is largely unknown, however the main effect is numerical rather than real. That is, while it may appear that things you bought last year were expensive and you're "losing money" in nominal terms, you may still be making money in purchasing power terms. Again, the larger and more rapid the change, the more potential damage it can do to the BTC economy. You could compensate via inflation (a la governments), but that will only give you two problems instead of one. However, if the extent of the change is known, businesses can adjust their accounting to account, and as long as the change is either steady or short-lived, then the effect would largely be mitigated by individual action. As long as the currency isn't jumping up and down all the time, the economy can adjust.

About banks, BTC banks work much closer to the fundamentals of a real, legitimate bank than do any of the banking institutions which carry fiat. The banks can't inflate the currency (and therefore cannot create economic bubbles), don't have "prop trading desks", and usually don't have problems with solvency. There's no "credit default swaps" or anything like that, just straightforward lending mechanics. Also, unlike Goldman Sachs, if a BTC bank decides to rip off its customers, there's a considerable community backlash. It's not like they can get away with running a ponzi indefinitely, and there's nobody to bail them out if they do.

Aside from the occasional scam service (something which could be improved, I'm thinking about a Bit-Better-Business-Association) the worst I've seen in terms of bankruptcy is the WBX disaster, which seems to have happened because the guy running it wasn't too smart and got his AUD bank accounts scammed or something. The BTC end of the business remained secure the entire time, however, and the liquidation looks like it's being handled properly (and will probably finish years before they ever finish liquidating Lehman, which they still haven't).

Compare to MF Global. "Oops, sorry, the CDS holders get all your money. Too bad."
Honestly I don't believe a bank should even be allowed to list on a stock market. That's a huge conflict of interest, added to the multitude other conflicts of interest in the modern banking system, many of which are provided directly by the state(s) in order to shield them from otherwise corrective market forces (and pitchforks).

What vault? Owned by who? Where?
If one person generates the coins and then sells them at a "1:1 ratio with fiat", isn't that just a fiat ponzi scam?

Another thing, probably just as relevant: the inflation rate for BTC is 33% for FY2012, or 4x the USD inflation rate (per shadowstats). At that rate it's honestly shocking that BCT trades for ~5 benny bucks as is. For FY2013, the inflation rate falls of a cliff to 12.5%, or only 1.5x the USD rate, and by 2017 it will be half the USD rate. If you're worried about the BTC being "too cheap", wait a year and see what happens.

Actually financial disasters do destroy wealth, since the people who are normally the ones creating it get shafted by bankrupt governments and banking cartels. People need money to do business, when the money goes bad so does the business. When the business goes bad the wealth goes out the window. There's not even a way to measure how much wealth was really lost since it simply never happened at all.

And that's before they lose their life savings when the too broke to fail banks implode and make their accounts disappear. Also, I'm pretty sure the last number I heard from ZH was a 70% haircut for lenders, not 50%. The chances of lenders getting one euro back from greece are laughable, and the likelihood of more violence is about 100%.

So yeah, PM short train, or even BTC. PMs are probably a bit safer right now (although it varies), although if more/smarter entrepreneurs start surfacing BTC could really take off.

I think it would be relevant to point out that mechanization of factories actually produced a lot of jobs and put people to work anyway. The main reasons people get laid off today are:

1. Loss of consumer trust. Consumers are feeling the effects of the big banks stealing everything from everyone, and are not willing to discretionary spend. No spending = no business.

2. Loss of normal bank lending services. With the credit crunch and everything going greek, banks are stingy about lending, especially shadow banks and the small banks which support small business. No loans means less business can be done.

3. Other government programs such as the healthcare bill which make it difficult or expensive to hire and/or keep employees.

Nothing to do with advanced technology or even an overabundance of labor. Labor shortage is the natural state of any economy.

Also, "deflation" really doesn't apply to what's occurring in USD and EUR. There may be some price deflation as people spend less and less or as they withdraw funds from the market, however the primary trend is inflation, which at least as far as the US goes is coming back to greet us as soon as China, India and Russia are successful at killing the petrodollar. Right now most USD are floating around the world being used as "reserve currency" to buy oil. Basically, instead of prices going up in the US from our inflation, prices go up everywhere else. Eventually people will get sick of it and send us our dollars back, and poof $10 for a gallon of gas, $15 for a big mac meal.

Unfortunately, since most of the big governments are working together to manipulate the situation, there's not really a whole lot you can do except opt out of contaminated markets.