That's a long story. From what I can tell, the transaction fee system doesn't do what it should and has parameters coded into the protocol currently that might have to be changed later. I believe this can be solved, but certainly not as simply as most believe. If you care, see this thread, and also the one linked from there:

http://bitcointalk.org/index.php?topic=6576.0

I get this feeling Bitcoin development is a little heavy on the hacker side right now, and a little fuzzy on design and dynamics. Seriously, the whole transaction fee system, I don't really see where it's going. It's as if every difficult part has been "solved" by adding a free parameter. Where the costs go, who fixes the values in the end -- it's not finished. But we already have millions of dollars in there from people who certainly have differing opinions on this stuff. This can get dangerous.

If Google starts using BTC as currency for the Android market, it's likely that a good part of the forum users here will have the money to buy a new PC, car or house depending on how early they entered.

Seriously. If this goes onto a global scale, which is still very unlikely but could happen, well. It depends where you end up. You see it as something barely notable, like Kenya? GDP $65.95 billion. Or something the techies know and feel, like South Korea? GDP $1.467 trillion?

If macroscopic financial trading shifts to Bitcoin, we can't even estimate prices reasonably, other than wildly guessing when mBTC beats the USD. (Which will happen in any non-failure scenario soon enough because of heavy USD inflation.)

But we're not there yet. Not in users, usability, support, hell I still believe the protocol is not stable after minting. The hype is nice and all, but there's A LOT to be fixed still. Hyping price jumps are nice but only do so much, we need this thing polished, used in more real trading, and designed fit for real market sizes. Prices are either just getting started or they'll just drop again if nobody overcomes current weaknesses. That top-or-flop question is much more interesting than estimating some later price within some scenario.

Hopefully, this kind of thinking will become reasonable standard in the future. I can't think like that yet because BTC price is still jumping like mad. If the market gets bigger and the price settles, I too hope to use BTC as the most solid currency.

Currently, you can use CFR assuming slight inflation or something. USD is shit, they inflate worse than the euro even after the euro zone fuck-up. Here, check out 10-year USD vs CFR. Watch and weep, USD lost half its value even though the CFR has inflation.

http://www.xe.com/currencycharts/?from=USD&to=CHF&view=10Y

If you really want to know, look a little deeper in the referenced thread and another one:

http://bitcointalk.org/index.php?topic=6576.0

creighto and [mike] have a very different opinion on this than I do. What silversurfer proposed is a possible outcome, but if I'd have to guess, I think something else will happen.

Sheer processing power is only known necessary while we mint bitcoins. If other possibilities exist later to have nodes agree on a block as valid, and no longer revert their decision, the requirements for processing power and thus trade fees loosen and it might be possible to use larger limits.

So, most people agree the limit should go, but hardly anyone agrees on what rules should replace it.

Mining will face its destiny when the calendar shows 2013.

Until then, just mine when it's profitable and stop when it isn't. Like any sane person would. But remember current price is paid by investors, keep BTC only if you're willing to gamble like they are.

One question is, how do they make money from that?

The operation is expensive. If they use it to mine, well, who cares? Let them, they work for us. If they use it to split and apply fraud, people will know, and Bitcoin value is likely to fall, they'll have the network and clients against them, etc... so many uncertainties. The danger of this attack depends not only on the value in BTC they can get (and that largely depends on value of BTC themselves) compared to the price for an attack, but also how much the BTC from reverted transactions are worth in the mess after the attack. I'm somewhat not afraid of a large company betting a lot of money on such an operation.

There's one more combination: the company doing it for mining, and a hacker or saboteur gaining control of the mining rigs to apply fraud for himself at the expense of the company's investment. That behaves like any large-scale hack on miners and might also happen if there's a security hole in mining software.

In the end, whenever I think of attacks of this kind, I come down the same path... what will the difficulty be, is high processing power good, is it necessary? I think low, no, no. But that's a large dispute in itself.

As long as we're minting, we have the great advantage that people happily provide their processing power. Remember that botnet? It just helped with mining and earned some money. Why would anyone risk loosing everything for a sub-100% attack profit margin when they can get a good bit of free money instead?



That's no valid analog. Inflationary currencies are something completely different. The size of the newly minted bitcoins in comparison to the existent coins is shrinking every day, and with it the importance of mining within the market. Unless you can make assumptions on future trading fees -- *cough* again that subject *cough* -- you cannot tell whether miners will play a significant role in the future.

Of course, traders would expect price to rise if a large company plans something like that right now. Bitcoin is still small, surely price would rise if that were to happen. But if something else made the bitcoin market grow to a bigger size beforehand, relatively speaking, such an announcement would make only for a small change in price. The fed affects all dollars, miners just the corner they have access to. A very big difference.

For once, everybody shares one opinion. Feels good, too.

Reminds me of "mark as spam" on Youtube. That, too, was abused quite a bit though, especially while not fine-tuned.

You're right that it's better than what we just had. But what about no system? I doubt any of these are going anywhere. If there was a way to distinguish good from medium content for everybody, we'd be using it to fix the world before the Bitcoin forum. Any positive voting system just makes popular statements even more popular. They work against debates, but debates are what a forum like this is, at least partially, about, right?

Forget about it, that system went haywire much faster than I expected. There's already a majority voting inverse... lol I wasn't posting anywhere but here when I got the two negatives, and my post was fairly aggressive, so I guessed it's related. But I didn't want to accuse anyone.

Maybe someone who's not even talking in here voted negative on both sides to make participants in the discussion angry at one another. I feel like a loser now, having been successfully trolled, even if just for a sentence.

It's good I don't have 250 posts yet. I can prove my innocence in reputation wars.

doood, you no longer think I'm a jerk or noob! *feels honored* (you just changed a +1 to a -1, didn't 'ya!)

I must really hold myself back from playing along and producing posts like this one until I reach 250. Not that I want to rate anyone, just help putting the bad effects to display.

Actually, I just noticed something. This is messing with the post count statistics, one of the Bitcoin indicators I use. Newbies want to post faster to reach 250 and join the madness.

Let's just shut the thing down, okay? It was funny for a while, but there's just trouble ahead now.

Edit: Oh you.

Phew... please try to cut me some slack on your exact formulation, or provide a corrected short version. It's hard to write in exactly the style someone might want.


@gavinandresen:

I think it is important that Bitcoin protocol becomes independent as soon as possible. You're doing a great job, so no offense really, but there is no guarantee anyone will be able to control the project once it takes a truly macroscopic scale. At that point, trying to change the protocol can generate disputes, splits, loss of trust, central authorities, so many unforeseen complications could happen! If the protocol is carved in stone and commonly accepted as "finished for all eternity", we might be able to avoid such problems.

An attack would be likely to happen within the months following one of those sharp reward drops, where minting is cut in half. It might happen that half the miners leave at once when this happens.

I agree that it's unlikely to be a problem until minting is down to 12.5 BTC or less, and that the immediate dangers lie elsewhere. But please don't neglect the future the way it's common in politics. The amount of confusion if the protocol is disputed is not to be underestimated. It's mainly psychology and politics, but we should know better than to let a financial system be controlled by such forces. Imagine nodes being mainly run by miners, and they all agree they take the easy "problem solution" and re-start minting the way Timothy Lee suggested! A catastrophe in which miners can damage the entire system to their advantage. There might be many more such scenarios, maybe infinitely many, if major changes in the protocol might happen at any time. We have no safe way out of a protocol dispute!


@stillfire:

Sorry. I added you with the merchants' theory.

Frankly, I think the original statement is wrong no matter how I interpret it, so I was having difficulty re-phrasing it. You say that some merchant would rather keep a rig running than wait for his competitor to do the same... the best more general re-phrase I can think of is either "Tragedy of the commons does not apply to merchants having to pay for the security of all merchants without being forced to" or "I don't believe in Tragedy of the Commons". Both are false, I can't help that, unless there's a cartel or everybody is a convinced communist.

Try to look at the bigger picture -- either why the statement is wrong, or that even with the re-phrased statement, you don't exactly have a model that's solid or generally agreed on.


@caveden:

Oh, sorry, I did indeed fail to understand what you said. Should I put you on the other side or with the "agree, but wait first" guys?

Please keep in mind what might happen when a later try to change the protocol starts a collusion war! If bitcoin becomes a currency, we can expect bribes on the order of dozens or hundreds of millions of dollars to push a protocol change one way or the other. Better act while the system is still controlled by sane people.


@Holy-Fire: Thanks for continuing to answer so much in my place. (Unless I state otherwise, I agree with posts by Holy-Fire.)

doood, that's kinda dangerous, now everybody who gets positive ratings might suspect that you think he's a jerk. Ahaha~ doood you hate us all!!     (Sounds funny when reading this out in my mind... doood, seriously!)

Come on, what did people expect... an anonymous smite system, voting right based on the amount of posts written? This will systematically exclude certain kinds of people, very especially those who have little time to spare on Bitcoin. To make things worse, those abusing it will cast lots of votes, while those only using it for spam or most insightful posts will hardly use it. And there is apparently no punishment whatsoever for absurd voting behavior. I can't use the system, but from what I read, every user can vote all other users at once? So 20 users could give one another a reputation of +19 and the entire rest of the forum -20, and if done slowly enough, people can only guess who's involved?

I claim nobody ever even thought about the dynamics of this. I wrote a comment on it when I saw it, and then changed my mind and deleted it. Some people just wanna watch the world puddi.


Edit: it was too late anyways, the system was already in place when I noticed. Don't worry, I'd have annoyed everybody majorly had I seen it in time.

Please give me a feature "ignore all who down-vote this person". A little like the way freetalk does it. Auto-blacklist, their posts being gone from my vision. I know this makes it less anonymous, but it would improve the quality of this forum so much.

Someone who down-votes db, asdf or epii should not get responses from me. Neither do I want to read what they produce. Auto-filtering them out would be a blessing.

This way, the feature would suddenly become awesomely useful.

Those who agree with me, skip this post, it's ugly meta-arguing, but may be useful.

There's something I'd like to point out now. In this thread, what is the consensus? Apparently, if there'd be a simple yes/no vote, I'd be wrong. But look one step deeper; what are the exact statements and models? I'll go through the thread again, and things said in the follow-up thread.


The side denying a problem (I re-write arguments as good as I can in short form. Frankly, I see them all nonsensical, but I'm doing my best. Sorry if some are oversimplified, I have to keep them short. This list is being edited a lot due to the expected complaints about exact statements.)

• People will add fees to accelerate mining temporarily (theymos)
• Global transaction cost will be spread, generating minimum fees (gavinandresen)
• Limits will not be removed (epii, I agree this would work, though it's ugly)
• Companies will start mining due to orders from customers to secure their current transactions ([mike])
• Many miners will not accept low fees to ensure the price. [This is saying Tragedy of the Commons doesn't exist] (Bitlotto) (revoked)
• The miners will from some sort of self-regulating cartel to make sure that the fees don't go to 0 (da2ce7, BitterTea, vladimir (slightly different wording))
• Merchants will come and fix the system because they need it (gavinandresen, stillfire)
• Inclusion of previous unprocessed transactions will make inclusion expensive enough for miners to live on margins [debunked by own side] (nextnonce)
• Once minting ends it will be at a level dramatically below where it is now. (...) Either that won't be a problem, or if it does become a problem, it will be solvable. (justmoon, FreeMoney, I partially agree but would rather like to be on the safe side.)

There are more, [mike] wrote a lot of them, some of which I think are wrong and some I'd say go into the right direction... but I think the list is long enough now.


The side seeing a problem (if transfer limits are removed, thus epii is on both sides now.)

• Without limits on fees or block size, difficulty falls due to a Tragedy of the Commons. (Vandroiy, Holy-Fire, casascius, db, asdf, gim, probably epii?)

caveden agrees but also stated he doesn't see it as a big problem, I'm waiting for an answer from him to put back into the list. Sorry I added you with a wrong statement.


I know there may be something wrong in the details and I may have unconsciously twisted things to fit. Let me assure you, I seriously tried to be fair in handling both sides and merging opinions. Even if I messed with things a lot, it shouldn't be this extreme. Am I really imagining things here, failing to see the common ground of others? How good are an open source system's dynamics probably if nobody even knows them? If you start reading the actual arguments, things get worse -- because in my eyes, all but three of the upper models have been debunked, two of those three are considered ugly and the remaining means to postpone the problem.

I know I'm not using an actual argument in this post. Feels strange to do that, too. But I think it's safe to say that a solid consensus should not produce this outcome. There is no consensus. There is no generally accepted operating model for Bitcoin after minting becomes negligible. We better find one.

Awesome job, correlation between intelligent posts and negative ratings established. Look at my threads on the equilibrium discussion, those supporting my opinion all got negative votes, especially those using terms like "invisible hand" and "tragedy of the commons". Read and weep, those of you who really understand economics.

I'm wearing my -2 proudly. This system behaves almost like politics; the populists get by far the majority of votes. The outcome does make the administration look a little ridiculous though, if I might add.

Oh, if you want to join the troops shouting "you are wrong" at me... care to add some negative karma? It's a dilemma, to prove this post wrong, you have to add positive. But to try to drown my other arguments, you have to add negative. What do you do now, I wonder?


Edit: just wondering, is there any punishment if I reach 0/-20 or something?

@vladimir:

Sorry about that, but look at the size of the debate. I can hardly keep track of things as is, and it appears I can't keep the threads split either. I must admit that the split into argumentative and constructive part has failed. Think about it from my viewpoint -- I'm fairly convinced that the difficulty equilibrium needs a re-design, but how can I discuss what follows from that with those who believe me in the midst of the first discussion?



@creighto:

Now we're on the same page. What you describe is a hypothetical check of the exact kind I am asking for. But there is one very big problem: an attack can be very short. It might need no more than an hour of control to fool people into believing in the transactions that are to be reverted. The block sealing has to happen fast, within ten minutes or so. We can't wait for a new client version, also we don't want to put too much trust in a client author. So how can it be implemented? How can you be certain you have sealed the correct block, you have the correct hash? All attacks on a web of trust work against this, and more due to centralization. What we need is to formulate this idea to the end, so it can be implemented. That's just not an easy problem. On a side note, whether or not it is in the protocol is only a formal question. Since the clients would have to enforce it, any such rule-set becomes an effective part of the protocol.

The web of trust is one proposed possibility that might remain secure when your ISP or router is compromised. If someone manages to add the security enhancements you describe in a different way, this thread is obsolete and I'm happy with the outcome. I just wonder how exactly to do it, and would love to see it implemented sooner rather than later.



On the contradiction mentioned in my last post: I do not assume the size of an attacker be known in advance. I just assume there is some attacker of some size at some time. I will continue where I left off, showing that one statement must be false.

Statements:

• There is no link between the size of the biggest attacker and transaction fees.
• Any direct attack on the system is expensive relative to the expected gain.

Let me assume the second statement true. This means the amount of the attacker's BTC that can put into transactions simultaneously is worth more than the processing power required to execute the attack times some risk factor. The processing power required to execute an attack is obviously linked to difficulty.

But difficulty is effectively an expression for the amount of mining power present, and that is paid by the total amount of transaction fees: average fee times amount of transactions, put simply. I have now established a link between size of the biggest attacker and transaction fees, with one free parameter, namely the amount of transactions, or market size, if you wish to put it that way.

Thus, if statement two is true, statement one is false. I conclude that one of the statements must be false.



Interpreting this is a different thing. Yes, we need the link to keep things safe, so that's not bad in itself. But there is one free parameter, the market size, and absolutely nobody can tell me what to do with it. Now, if that's not a discomforting sign, what is? As stated before, I personally believe the first statement to be close to the truth, and the second to be false with the current client.

PS: I take the minus reputation as a compliment. At least I pushed hard enough that people feel to use this in place of arguments, displaying how the feature is now used for democratic truth-seeking. Too bad truth is not democratic.

Good job on reading one of my arguments correctly, and the thread's topic: we lack a consensus on desired mining configuration. But you agreeing and adding difficulty as another free parameter makes your statement a blatant contradiction to another thing you said, namely


So the miner configuration is such that an attack does not pay, but there's no link between attacker size and both transaction fees and difficulty. That is a contradiction. At least one of those two quotes must be wrong. Please don't force me to formally prove this.



@vladimir:

I have been discussing why I do not believe in your "self healing and self regulating properties" for weeks. I am weary of arbitrary claims of "the" system configuration "being self organizing". Provide anything close to a model that has not been shown problematic, and I will regard it. Also, please do it in the appropriate thread. The quote I took may have been out of context of your post, but the part I ignored is out of context of this thread. Let me quote myself, the very fist thing said in this thread:


The discussion is crumbling because people keep shouting "no you are wrong" without staying with the argument. Make up your mind: either you are certain that there is a stable setup in place. If so, which one, limits on or off? Provide the model in the appropriate thread, link to it here, end the discussion as irrelevant in a single post. Or we take the option of "let's wait and see how it plays out". These are mutually exclusive. Either you know something, then there is no need to observe it -- or you need to observe it, but then you don't know.

I usually walk away when I face a battle where a logical construct is attacked with sheer mass, be it amount of people or amount of words said. I'm reluctant to do so here, but please note that this discussion is past the point where a blurry claim persuades those who believe there is a problem. If the thread becomes too bloated, I'll re-create the topic again, if necessary on a different site, until it is either solved, shown not a problem or hitting enough non-argumentative resistance to justify giving up. The latter outcome is a very poor way of resolving disputes though.

But please, at the very least, when talking about "current" Bitcoin protocol, specify whether you talk about a future version or want to live with the limits for all eternity. One cannot conjure up the Bitcoin protocol before it's finished. That goes for creighto as well; when talking in #bitcoin-dev, nobody can point me to any rules in place that comply to your claims.

Sigh. What ISP is stupid enough to deliberately block his client from doing money transactions? Seriously, if an ISP does that, it's high time to get a different one.

Maybe they mistake it for a small part of some high-volume p2p traffic though. I just recently was shocked to notice how many people have heavily throttled or otherwise sabotaged connections. If you want to work around that, you'll be fighting a battle against the people routing your traffic, who don't want to actually do their job. This should be a last resort, if there exists no functioning provider. If they change the rules, the adaption becomes useless, and the cycle repeats.

My suggestion to those having the problem: first try to fight the root of the problem, by getting a provider that delivers without asking people to perform a little dance first.

Sorry, but I strongly disagree, strongly enough to make a whole post out of that statement. It is important to show that Bitcoin is not like the other currencies, that it is not patching behind the mess.

If there is an attack and we start fixing after fraud has occurred, it will be known what Bitcoin was not: flawless. The same way it will look when somebody proves the system has been wasting millions of dollars on processing power it never needed. Anybody who paid for transactions will feel fooled when that happens. But Bitcoin could be flawless. Right now, it's still perfectly reasonable to use miners. Nothing went wrong so far, and everybody is astonished by that. That's where the magic lies; people look at things and if they see it flawless, they become advocates of it. People like to find good things and support them. The last thing we need is a fix coming in late, making unbroken belief waver.

Bitcoin. A system ahead of time, superior to other currencies at all times in its history. It can be done from here, but nothing is done by blind belief from those making the system. It is essential that Bitcoin shows no signs of failure, not visibly and not theoretically, until it is well-established; better yet, none ever.

Bitcoin is all about trust and doubt now. Trust is all we have, and all we need. I don't think we should ever risk it. "See how it plays out" is absolutely no option in my opinion.

I suggest building a Web of Trust. You assume participants in the web of trust hold no signature to mark their identity.

Wat? Seriously, what? Okay, since this is apparently necessary, I will add that every participant in a web of trust holds a private key defining his identity. I thought that was common sense. Please, for any statement of mine, try to assume that I'm not a complete idiot so I don't have to paste in the exact definition of everything I say.

Now, assuming we have a "burden of proof" (what the heck, is someone on trial?). Isn't the equilibrium problem description as close as it gets? The cartel structure is the only thing not covered, as it has too many external factors and is bad enough in itself. We cannot just ignore game theory/Tragedy of the Commons because "hey it might work out 'cause all the chaos in the system will make things hard enough". That is just believing something will work.

You say I just believe the network will go to a known equilibrium. Well, you just believe it'll take a nice value, even though you provide no model as to why it shouldn't end up anywhere else. Where's the link between size of the biggest attacker and transaction fees? Is there even a functioning proposed set of rules apart from the arbitrary block size limit? There is nothing in place but the limits, which are a fairly poor long-time solution.

We're still at the proposal "just use high limits", which is known to fail when overpowered, versus an attempt that might be stable even if someone has more processing power. Attack outcome not altered between the two. I see no disadvantage, but a potential benefit.



At scorched earth: two factors. One: scorched earth only ever works on nodes with more trust linking to to sabotaging participants than honest ones. Two: a single node providing the block that came first speedily makes the attacking fraction look idiotic. Yeah, they all had the block all the time, but none cared to send it? Imagine this with a chain of three. The client could mark them as "apparent attackers" without much risk. If they claim they also got it late, the node would ask who sent it with such delay, tracking the origin of the block. It will find the honest fractions in the Web of Trust, all knowing nothing about the supposedly old block. What could they do to sound trustworthy? Someone has to justify the delay, and there just is no reason to create a long delay.

It's just a problem of "which order came first" on a 12 minute time scale in a long-running network. We have the timing, and the chance to remember nodes from the past. We could use this to our advantage, and do what can be done. But we could also just throw the information into the bin and keep hoping we're the strongest petaflop-gang of the world. I don't understand how there can be doubts which is the better option.

I updated to ubuntu 11.4, have the same problem.

I'm still searching that setting you mean... since this is gnome, it has to be somewhere. I'm not too used to ubuntu though, and the upgrade created more than just that problem.