Why does this keep getting worse and worse and even worse?

Now, you suggest a large miner that splits the block chain for profit! To prevent people from placing their transactions into the chain before the large miner has gathered enough funds to start his lengthening burst, the miner is interested in splitting the block chain at a point in the past. This is the only way his clients get the fast transaction but cheap transactions published around the same time, included by a cheap miner, don't. If the miner does not use this method, he has no sale argument and will fail!

We have only one version of your model remaining: a single miner killing all other block chains, constructing a natural monopoly. (Man, are you serious? What a decentralized currency!) The dynamics of that? (Edited here, error removed) The one miner gaining full control of the price and the ability to split any concurring miners out of the chain. That is the very definition of a vulnerable state! Now, we have eliminated all cases except going back to microscopic parties. Return to my first post to see why statistics ruin prices.

Your proposal is the apocalypse! If this is the future, the earlier I'm off this boat, the better!



Let me say this loud and clear:

DO NOT remove the transaction limit before someone has applied the relevant statistics, mathematics and game theory to describe transaction fee equilibrium at all times in question! People stupidly doing this has now risen into my top failure scenarios of Bitcoin.

And please think your scenarios through, this thread is becoming a nightmare. Who is responsible for modeling system dynamics when making Bitcoin design decisions? I'd feel a lot better if those people had a word here. If people agree on removing the transaction limit, we might enter a path of no return, so I'd be very happy if someone laid out current plans and consensus, if one exists.

Thanks! That's great, and the growth is incredible!

Are current stats and graphs visible somewhere? This is a great indicator for personal+technical interest in Bitcoin, maybe the best we have.

If someone posts up-to-date graphical forum stats somewhere, I'd probably follow them more closely than the exchange prices.

That! I just didn't know that. There is a fixed limit for the amount of transactions?

I was totally not expecting that. I guess I have to read up some more now.

Edit: interesting thread. The limit on the amount of transactions will mean that micro-transactions will happen in Paypal-like services. (Mybitcoin?) It's a little disturbing to have a hard limit though, making Bitcoin change behavior depending on the size of the network, and ultimately limiting its size. But my fears of a crash or dDoS destruction are no longer valid.

Thanks for the answer. I was getting nervous there, and totally didn't know about this.

Wait, these points are not exactly reassuring.

The transaction network cost is not something the miner pays. If there's a pool checking the transactions for him, this gets even worse: the miner has to pay close to nothing to include a transaction; the price is paid by the network! If he is running his own node, including the transaction will cost the miner a tiny bit of space and traffic -- and everybody else in the network will have to pay the same, but will not receive the fee!

The ECDSA signature cost, does it scale with the difficulty? If it doesn't, Moore's law will make things worse over time!

So now, in addition to miners profiting from dumping prices, they can flood global node bandwidth and HDD space in the process? Not reassuring at all!

What is the advantage of spamming transactions? Can this money sustain Bitcoin?

Edit: assuming big miners in relation to system size is a problem. Bitcoin did not require single large organizations in the past. I am not convinced this can be ascertained on a macroscopic system.

Consider for now, we're in the future, and miners only gain from transaction fees. I assume now that including a transaction is cheap, and generating a block is, in comparison, expensive. (Is that true?)

Any single, small miner intends to maximize profit. His decision on what transactions to include doesn't create a big change in the height of fees. Thus, the miner will include all transactions that pay any fee, even very low fees, to have maximum profit.

This results in the price for transactions dropping. In turn, those miners who already were hardly profitable have their earnings further reduced and quit. This reduces hashrate, difficulty drops, and the circle repeats. By this reasoning, difficulty is likely to drop close to zero.

Is this a problem? Will Bitcoin break down if we have very few miners?

Edit: This has been answered by epii a few posts below. The maximum block size limits the amount of transactions, so if Bitcoin has a decent market size, there will be competition for acquiring a transaction slot. This competition will drive transaction prices.

Edit 2: The thread is beginning to show something I find frightening. There exists no generally accepted model or even set of rules for Bitcoin in the future. A portion of people claim that removing the transaction limit will do no harm, the others use it as the last argument why Bitcoin will not enter the failure scenario described.

Please join in on the discussion and let us find a consensus on this. User opinion is important, if people suddenly agree on a rule change it might happen too fast to be stopped.

A sure win isn't silly, if you ask me.

Bitcoin succeeding and being super-valuable isn't carved in stone, otherwise people would buy like mad now. Yes, prices are rising, but certainty isn't in there just yet.

Anyways, this is closed since the bet is not happening.

Quote from Timothy B. Lee on his blog:

I'd say, with this, the theory's objective credibility is as low as it gets and this post will be closed unless anyone wants to make a further statement. I wish him luck with his crystal ball TV into the years 2021 and beyond.

Please use this little intermezzo to counteract the repeated quoting and linking to a post that does not deserve it. There have been multiple voices calling for this, but this is a way to objectively measure what a person believes -- and this guy believes we are fairly safe from his "collusion problem" for an entire decade. What more do people need to stop hyping that post?

If a contrary belief exists, please post an offer for a bet to quantize it. If nobody keeps this going, feel free to close this thread -- or I will do so on my next visit here.

Sorry, I was too slow editing. See the last case in the edit in the first post: I say we call the bet off, as the result is arbitrary if bitcoin is small and weak, since in that case, many people can dictate the result by pushing the block chain one way or another.

How about we define the bet content first?

I have a new proposal: If the last X blocks of the longest block chain originating from the current genesis block (ludicrous chains throwing away the difficulty not counted) are dominated by blocks creating significantly more money than currently planned, we loose. I'm editing this into the first post.

A crash of Bitcoin... hell, take any reasonable indicator. If we argue about that, the bet has become a fraudster game. It should happen on a functioning market, not on ruins. That's when the bet becomes meaningless. I'll think of a reasonable indicator, let me edit the first post for the bet winner indicator first.

I have the feeling that the discussion on the claim on http://timothyblee.com/2011/04/19/bitcoins-collusion-problem/ is not going anywhere.

So here's something to underline arguments a little. Want to make a bet on it?

Please state clearly your failure scenario. My try on a formulation: splits of the block chain allow creating additional Bitcoins, causing a massive disturbance or inflation. This must happen before Bitcoin fails, if it does fail. If you think other failures are more likely, I accept the idea of being paid in BTC, such that if I win the bet, I gain nothing if Bitcoin failed due to other reasons. But I'm also fine with canceling the bet in case a different failure scenario happens.

I'll start with an offer: I place 1000 EUR or equivalent in USD (1458), you place 670 EUR or equivalent in USD or BTC at the rate valid when both sides agree on the bet. If Bitcoin gets massive problems due to collusion, as proposed in your post, within the next two years, you win all. Otherwise, I do. I'll leave the exact formulation for after you replied.

If you want to formulate the bet in a different or more precise manner, please go ahead. If you want to go into other failure scenarios of Bitcoin in more detail, I can adapt, but please be aware that I'm not certain about Bitcoin in general, I just claim that your proposed attack will not happen or not be successful.

If this bet happens, I will look for a well-trusted member of the community to hold my money during the bet. (Maybe someone who wants to join in, to raise the stakes? ) Fraud on my side will not be an issue that way.



Edit: exact description of the bet -- this might be necessary, now that people want to join in.

My current proposal:
Failure scenario A: If a split of the block chain is followed by a crash ending Bitcoin altogether (to be defined), we loose.

Failure Scenario B: Consider the last 10 000 blocks of the longest block chain originating from the current genesis block (ludicrous chains throwing away the difficulty not counted). Are they, at any time during the bet, dominated by blocks creating significantly more money than currently planned? If so, I/we loose.

Timeout: If two years pass, I/we win.

Bet called off: If there is a crash (to be defined) of the Bitcoin market due to a reason not linked to block chain splits, the bet is called off. (Blitzboom seems to want to take a higher risk concerning this, but he wants a symmetric bet in return. I guess we'd negotiate this.)

Nanotube is correct.

Also, Iceberg orders should be added for a simple reason: they can be achieved by using bots anyways!

Thus, NOT having iceberg orders is actually a current weakness of mtgox. Independent on the whole dark/semi-dark discussion, the feature should be added.

hiro: By all means, please do it! Grain is the best backing ever from an investor's standpoint, better than gold. Oil reserves are depleting, and food prices might rise due to agricultural products being used to synthesize fuel. The traders will get a stable currency, BitCoin a more solid economy, win on all sides!

The thing is -- you may have a hard time explaining BitCoin to people who trade in grain, and to get things rolling. But if you manage to do so, this would be a great success.

I think there is much to gain there. "Normal" markets just don't know of the great possibilities of BitCoin yet. The question is just how to do it right.

Any news on this? The thread must be revived!

I also pledge minimum 20 BTC for a functional lightweight android client, but I might donate more if I like it and it turns out being actually used by other people, so I can exchange money with them wherever I am without juggling change.

Please continue this, I think it's quite important for BitCoin to have a portable version that's easy to use -- otherwise it's not much of a wallet.

Of course it is a viable plan. If you truly believe in Bitcoin independent of what this one person does, you will catch the remainder of the sale at the latest at .39, and if you don't, he can keep the offer standing, remove it, or whatever. Unless the entire system breaks down because of that 500k offer (which is not within the likely failure events I see for Bitcoin), an open sale would be the reasonable thing to do.

The seller is in no hurry and wouldn't mind pushing the market down a bit further if he really is satisfied with a rate of .4 for the 500k.

And what "transparency of exchanges" are you talking about... the dark pooling on mtgox maybe? lol

I tend to believe the other users: there probably are not 500k BTC involved, just one or two people interested in getting prices to drop. I don't see someone sitting on 400k, believing they're worth just .40 and not taking bids above .70 -- doesn't sound credible.

Can I have your attention please?

This forum is called "Marketplace". There exist multiple discussion forums more suitable for the topic at hand, especially: Bitcoin Discussion; Economics; Trading Discussion.

Edit: thanks for moving.

GlobalBitTrade (GBT)

Arguments: emphasizes the advantage of a global currency. Sounds strong and international. "Trade" is common for stock exchanges, see eTrade.

The abbreviation GBT is not commonly used in a financial context. This might become the actual common word. "I bought them on GBT."

One could make variations of this. I would have liked the "Global" anyways, since it emphasizes the BitCoin advantage. But if you even take it as a company name now... it could really be in the common name too.

GlobalTrade is surely taken, and GlobalBitCoinTrade is a bit long, but... options.

@BlitzBoom: I think it's good to sound conventional when using BitCoin. Things should feel established, move away from being too geeky. This might help to bring in conventional traders -- and that's where the real money lies. You know these people don't move their markets just 'cause someone runs in with 100,000 USD. That's the target audience you need for the long run, and to them, dealing in BitCoins might push one far enough to the "unconventional" side.

10 minutes! That's what I call impatient... you should do some SEPA transfers. Up to 72 hours may pass before mtgox even sees the payment!

I have MagicalTux on IRC right now. He is working on the EUR deposit system, where a few deposits have been delayed, mine included. He says he intends to finish before going to sleep, which should mean within hours. I don't see why LibertyReserve transfers should be affected though, maybe Keefe has told the correct explanation.

Okay, okay, you're right, I'm shutting up. Everybody should know that, it should be needless to say.

We shouldn't be hijacking the Technical Analysis thread for this anyways.