Bitcoin XT - Officially #REKT (also goes for BIP101 fraud)

[brg444]

I think some of the "heat" regarding the block size limit and multiple-implementations comes down to the existence of two opposing visions of what Bitcoin is.  Some think Bitcoin is ultimately governed by mathematics, others think it's the market.  

My opinion is that Bitcoin is ultimately governed by the market; only over the short term is it governed by mathematics (the source code).  Because this is my view point, multiple implementations are a good thing to me because they remove friction and allow the market to more easily meet its demands (e.g., a larger block size limit).  If someone has the opposing view, then I could understand why they might view multiple implementations as a danger (e.g., the rules could be changed by the market).

What's interesting is that the answer to who's vision is correct is, at least partly, testable.  If the market-governance theory is correct, then it should not be possible to drive a fee market significantly above the free-market equilibrium.  The market will tolerate a block size limit to the right of Q* (i.e., a limit serving as an anti-spam measure but not affecting the free market dynamics).  



However, the market will not tolerate a limit to the left of Q* (a limit that results in a deadweight loss of economic activity).  



If the market wants to be at Q*, how can that same market force it to be at Qmax instead?  

If the market theory is correct, then the total miner fees should never significantly exceed the total coins lost to orphaning over a sustained period of time.  This would be one way to refute the market-governance hypothesis.  Since Q* is now very close to bumping into Qmax, perhaps we'll have our answer within a year or so.


Cross posted: https://bitco.in/forum/threads/block-space-as-a-commodity-a-transaction-fee-market-exists-without-a-block-size-limit.58/page-6#post-1944

In the Bitcoin economy the market = consensus

Until consensus approves a block size increase then you might as well say that the market does not agree to one either.

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[Peter R]

In the Bitcoin economy the market = consensus

Until consensus approves a block size increase then you might as well say that the market does not agree to one either.

I agree. 

[johnyj]

This has been debated during 2013 fork incident, let me recall this:

Suppose that all the blocks are full on the core chain and now miners are starting to raise the fee. People who want to do micro transactions cheaply will protest by moving to XT chain. XT chain acts like a side chain to reduce the load for the mainchain. So rich people who often do large transactions stays with core chain while poor people who do micro transactions go with XT

Because of the fork, all the prefork coins can be spent on both chain, the rich guys on core would like to dump their prefork coins on XT chain, and poor guys on XT would also like to dump their prefork coins on core

Because the XT chain participants are mostly poor, they can not support its exchange rate, it will just crash to single digits or even less. while the rich guys on core chain will be busy collecting coins dumped by XT guys

So a fork without super majority will never be able to grow and reach any meaningful size of economy

[brg444]

In the Bitcoin economy the market = consensus

Until consensus approves a block size increase then you might as well say that the market does not agree to one either.

I agree.  

You are yet again guilty of the very sophism Carlton Banks pointed out. The reason the market consensus tolerates a limit to the left of Q* is because of the OBVIOUS & CONSIDERABLE negative externalities brought about by an unbounded block size.

On the other hand, what consensus does not tolerate is your pathetic repeated attempts to hand wave away this issue as trivial and non-important when it is fundamental to the incentives of Bitcoin

[Peter R]

...a fork without super majority will never be able to grow and reach any meaningful size of economy

Agreed.  I would actually go further and predict that there will never exist two competing blockchain forks over a sustained period of time. 

[Peter R]

The reason the market consensus tolerates a limit to the left of Q*...

You have your hypothesis and I have mine.  We will only be able to determine which is correct with the benefit of hindsight.  Like I said upthread, the nice thing is that these hypotheses are at least partly testable.  If your theory is correct (that the market will tolerate a limit to the left of Q*) then that would have the affect of pushing aggregate fees above the aggregate cost of production for block space.  If the total miner fees collected over a six month period in the future were, for example, twice the total block rewards lost due to orphaning, then I think I would agree that your theory is correct.  

Time will tell.

[brg444]

The reason the market consensus tolerates a limit to the left of Q*...

You have your hypothesis and I have mine.  We will only be able to determine which is correct with the benefit of hindsight.  Like I said upthread, the nice thing is that these hypotheses are at least partly testable.  If your theory is correct (that the market will tolerate a limit to the left of Q*) then that would have the affect of pushing aggregate fees above the aggregate cost of production for block space.  If the total miner fees collected over a six month period in the future were, for example, twice the total block rewards lost due to orphaning, then I think I would agree that your theory is correct.  

Time will tell.

My hypothesis is supported by current observations of the network dynamics.

Yours is based on faulty assumptions derived from your "paper" that pretend "cost of production" (which I presume is another name for orphan costs) are non-negligible on the long-term and that it is not trivial for miners to overcome them by cooperating/centralizing.

By all account you are wrong as miners have already shown a tendency to optimize for profit. An unbounded block size will only grow this incentive.

[Carlton Banks]

We will only be able to determine which is correct with the benefit of hindsight.  

Did you catch Max Keiser today? He was talking about the blocksize debate with Jaromil, and both were referring to your little putsch in the past tense.

Time appears to be telling on you.

[bambou]

The reason the market consensus tolerates a limit to the left of Q*...

You have your hypothesis and I have mine.  We will only be able to determine which is correct with the benefit of hindsight.  Like I said upthread, the nice thing is that these hypotheses are at least partly testable.  If your theory is correct (that the market will tolerate a limit to the left of Q*) then that would have the affect of pushing aggregate fees above the aggregate cost of production for block space.  If the total miner fees collected over a six month period in the future were, for example, twice the total block rewards lost due to orphaning, then I think I would agree that your theory is correct.  

Time will tell.

My hypothesis is supported by current observations of the network dynamics.

Yours is based on faulty assumptions derived from your "paper" that pretend "cost of production" (which I presume is another name for orphan costs) are non-negligible on the long-term and that it is not trivial for miners to overcome them by cooperating/centralizing.

By all account you are wrong as miners have already shown a tendency to optimize for profit. An unbounded block size will only grow this incentive.

Miners will mine the coin with the most value.

Anyway, how about you both get lost with your "hypothesis"?

Only Mathematics rules, and no, it does not encompass any democratic procedures within it...

In Vires Numeris.

[Peter R]

The reason the market consensus tolerates a limit to the left of Q*...

You have your hypothesis and I have mine.  We will only be able to determine which is correct with the benefit of hindsight.  Like I said upthread, the nice thing is that these hypotheses are at least partly testable.  If your theory is correct (that the market will tolerate a limit to the left of Q*) then that would have the affect of pushing aggregate fees above the aggregate cost of production for block space.  If the total miner fees collected over a six month period in the future were, for example, twice the total block rewards lost due to orphaning, then I think I would agree that your theory is correct.  

Time will tell.

My hypothesis is supported by current observations of the network dynamics.

Currently, aggregate fees are less than aggregate orphan costs.  

By all account you are wrong as miners have already shown a tendency to optimize for profit. An unbounded block size will only grow this incentive.

I agree that miner's will optimize for profit.  That's the working premise of my fee market paper.  

Your [hypothesis] is based on faulty assumptions derived from your "paper" that pretend "cost of production" (which I presume is another name for orphan costs) are non-negligible on the long-term and that it is not trivial for miners to overcome them by cooperating/centralizing.

The market-governance hypothesis is falsifiable.  However, currently the empirical data does not refute it.  

Regarding the transaction fee market, empirical evidence already shows that on average bigger blocks contain more fees.  Additional fees are necessary to offset the larger block's increased chance of orphaning.  Approximately 1% of blocks are orphaned, resulting in a loss to the miner.  This is what creates a fee market as described in this talk at Scaling Bitcoin.  

[bambou]

We will only be able to determine which is correct with the benefit of hindsight. 

Did you catch Max Keiser today? He was talking about the blocksize debate with Jaromil, and both were referring to your little putsch in the past tense.

Time appears to be telling on you.

Yep, there it is: https://www.rt.com/shows/keiser-report/317750-episode-max-keiser-819/

[brg444]

The reason the market consensus tolerates a limit to the left of Q*...

You have your hypothesis and I have mine.  We will only be able to determine which is correct with the benefit of hindsight.  Like I said upthread, the nice thing is that these hypotheses are at least partly testable.  If your theory is correct (that the market will tolerate a limit to the left of Q*) then that would have the affect of pushing aggregate fees above the aggregate cost of production for block space.  If the total miner fees collected over a six month period in the future were, for example, twice the total block rewards lost due to orphaning, then I think I would agree that your theory is correct.  

Time will tell.

My hypothesis is supported by current observations of the network dynamics.

Yours is based on faulty assumptions derived from your "paper" that pretend "cost of production" (which I presume is another name for orphan costs) are non-negligible on the long-term and that it is not trivial for miners to overcome them by cooperating/centralizing.

By all account you are wrong as miners have already shown a tendency to optimize for profit. An unbounded block size will only grow this incentive.

Miners will mine the coin with the most value.

Anyway, how about you both get lost with your "hypothesis"?

Only Mathematics rules, and no, it does not encompass any democratic procedures within it...

In Vires Numeris.

I'm on your side, just playing along with Peter for entertainment 

[Peter R]

...Only Mathematics rules, and no, it does not encompass any democratic procedures within it...

It sounds like you believe that Bitcoin is governed by mathematics, rather than by the market.  Is this an accurate assessment?

Under what conditions (if any) do you believe it is possible for the Bitcoin protocol rules to be changed (e.g., adopting a larger block size limit)?

[knight22]

The reason the market consensus tolerates a limit to the left of Q*...

You have your hypothesis and I have mine.  We will only be able to determine which is correct with the benefit of hindsight.  Like I said upthread, the nice thing is that these hypotheses are at least partly testable.  If your theory is correct (that the market will tolerate a limit to the left of Q*) then that would have the affect of pushing aggregate fees above the aggregate cost of production for block space.  If the total miner fees collected over a six month period in the future were, for example, twice the total block rewards lost due to orphaning, then I think I would agree that your theory is correct.  

Time will tell.

My hypothesis is supported by current observations of the network dynamics.

Yours is based on faulty assumptions derived from your "paper" that pretend "cost of production" (which I presume is another name for orphan costs) are non-negligible on the long-term and that it is not trivial for miners to overcome them by cooperating/centralizing.

By all account you are wrong as miners have already shown a tendency to optimize for profit. An unbounded block size will only grow this incentive.

Miners will mine the coin with the most value.

Anyway, how about you both get lost with your "hypothesis"?

Only Mathematics rules, and no, it does not encompass any democratic procedures within it...

In Vires Numeris.

I'm on your side, just playing along with Peter for entertainment 

You're only making a fool of yourself. I hope you know that.

[bambou]

...Only Mathematics rules, and no, it does not encompass any democratic procedures within it...

It sounds like you believe that Bitcoin is governed by mathematics, rather than by the market.  Is this an accurate assessment?

Under what conditions (if any) do you believe it is possible for the Bitcoin protocol rules to be changed (e.g., adopting a larger block size limit)?

None.

[Peter R]

...Only Mathematics rules, and no, it does not encompass any democratic procedures within it...

It sounds like you believe that Bitcoin is governed by mathematics, rather than by the market.  Is this an accurate assessment?

Under what conditions (if any) do you believe it is possible for the Bitcoin protocol rules to be changed (e.g., adopting a larger block size limit)?

None.

Thank you for the honest answer.

[VeritasSapere]

If we cannot trust that the majority of the mining power will do what is best for Bitcoin then Bitcoin has already fundamentally failed which I do not think is presently the case. In order to orphan all non-abiding blocks a single entity would need to be able exert control over more then fifty one percent of the mining power, if this happens Bitcoin has already been undermined anyway. I do not think it will be possible to enforce such policy across every jurisdiction in the world, this is however more of a question for geopolitics.

My point still stands: larger blocks increase mining centralization pressures. Truth is, even with a single miner you can trust that it will do what's best for Bitcoin. But it doesn't have to. It's all based on incentives. Mining centralization is hard to prevent, as the past tells us, and even harder to undo. You likely won't notice until the bad happens.

I agree with you that mining centralization is difficult to prevent, because of centralization of manufacture and economies of scale among other reasons, to a certain extend I have accepted this reality however. I still do not think that increasing the blocksize would increase mining centralization since miners do not run full nodes.

In my position for instance I just point my hashing power towards a pool of my choice that I think reflects my beliefs well and acts responsible, increasing the block size does not effect my mining operation whatsoever and the majority of the hashing power is under the control of people that are in a similar position to myself.

Increasing the blocksize does introduce centralization pressures but not in regards to mining. Keeping the blocksize at one megabyte also introduces centralization in the form of an increased reliance on third parties. So for me considering this balancing act, increasing the blocksize is the most decentralized option with everything considered.

You don't say anything new; in fact, you're reiterating your claims as if I never challenged them.
I'll try again, the last time: there are network topology issues which result in an uneven block propagation. Uneven propagation alters the orphan race outcomes for different players (mostly pools), making some of them more profitable. The larger blocks get, the larger is the financial difference. This is what alters the incentive structure.

This is exactly my point, it effects the pools not the miners. This is a very important distinction, since if miners are not effected it does not increase mining centralization, it could effect pool centralization if increased to much however for pools it is trivial to setup a full node inside of a data center, which is why pools can support much larger blocks without increasing centralization. It is important to point out the distinction between mining centralization and pool centralization, what you are discussing effects pool centralization, therefore increasing the blocksize does not increase mining centralization.

You are claiming that you can vote with your feet, and I hate to repeat that a lot of hashing power is industrial scale, and is attached to a particular pool. Whether there is a million 1 GH/s miners going back and forth is irrelevant, their combined hashpower is what matters. I don't have any statistical data, but I suspect the majority of hashpower is already industrial-scale and is rigid w/r/t to pools.

I do not think that hashpower is rigid with pools, after all over seventy percent of hashpower is currently concentrated in public pools: https://blockchain.info/pools?timespan=4days

The majority of hashpower is already industrial scale however that does not mean that this hashpower is exclusive to particular pools, it is after all very easy for a miner to switch between pools. If we had one hundred industrial miners responsible for the majority of the hashpower spread over 20 pools this would still be very decentralized, there are small miners or "home" miners like myself but I suspect that the hashpower that these types of miners represent would not be much more then one of these larger industrial mines. This is the reality today, it would be better if there where more small miners like myself.

I can tell you with absolute confidence that an increase in the blocksize would not effect my ability to compete with the larger industrial mines. It is very simple really, as a miner I do not run a full node, therefore increasing the difficulty of running a full node does not effect my mining operation.

In response to the incident of Antpool SPV mining and causing a fork a few months back, since then Antpool has lost a lot of its mining power which proves my point exactly, such a pool is incentivized to attract more miners by acting responsibly and when they act irresponsibly they lose support, proving the points that I have been making. I very much doubt that Antpool would make such a mistake again since they lost a lot of money because of the reward and reputation that was lost, if miners understand one thing it is profit.

I believe this is a common logical fallacy known as post hoc ergo propter hoc. Moreover, I couldn't find anything that can support your claim. According to organofcorti, there were no significant plunges in AntPool hashrate during June-August, and it has risen over that two-fold in the period. And has risen since then as well.

Fair enough on Post hoc ergo propter hoc, I can not prove with absolute certainty that the decrease in the hashrate of Antpool was because of this incident. However since I tend to keep an eye on pool distribution I do distinctly remember Antpool having over thirty percent of the hashpower before the time of this incident and now they only have sixteen percent. One aspect of that has been the recent increase in the overall hashpower since I am looking at the percentage not the hashrate. I do share your concerns about mining centralization, however I do not think that increasing the blocksize would effect mining centralization for the reasons I have explained here. That is a good website by the way, thank you for linking it, there is some very good analysis on there.

[bambou]

...Only Mathematics rules, and no, it does not encompass any democratic procedures within it...

It sounds like you believe that Bitcoin is governed by mathematics, rather than by the market.  Is this an accurate assessment?

Under what conditions (if any) do you believe it is possible for the Bitcoin protocol rules to be changed (e.g., adopting a larger block size limit)?

None.

Thank you for the honest answer.

I'll push it just a bit more for you, since you like honesty:

You abide or gtforko to any altcoin that suits your corporatist mirage.

[brg444]

...Only Mathematics rules, and no, it does not encompass any democratic procedures within it...

It sounds like you believe that Bitcoin is governed by mathematics, rather than by the market.  Is this an accurate assessment?

Under what conditions (if any) do you believe it is possible for the Bitcoin protocol rules to be changed (e.g., adopting a larger block size limit)?

None.

Thank you for the honest answer.

I'll push it just a bit more for you, since you like honesty:

You abide or gtforko to any altcoin that suits your corporatist mirage.

[RoadTrain]

You don't say anything new; in fact, you're reiterating your claims as if I never challenged them.
I'll try again, the last time: there are network topology issues which result in an uneven block propagation. Uneven propagation alters the orphan race outcomes for different players (mostly pools), making some of them more profitable. The larger blocks get, the larger is the financial difference. This is what alters the incentive structure.

This is exactly my point, it effects the pools not the miners. This is a very important distinction, since if miners are not effected it does not increase mining centralization, it could effect pool centralization if increased to much however for pools it is trivial to setup a full node inside of a data center, which is why pools can support much larger blocks without increasing centralization. It is important to point out the distinction between mining centralization and pool centralization, what you are discussing effects pool centralization, therefore increasing the blocksize does not increase mining centralization.

I can't see how this distinction is of much value, as in the end most miners will have to mine at pools, which are being centralized.

Pools are masters, and miners are slaves. Yes, miners can change their masters, but they can't get free. In the end, the pools that give the most (more income due to natural reasons) will attract most miners.

Just imagine an extreme situation with ~8Gb (read: very large) blocks. In this case, apparently the most effective configuration would be 1 single pool, or a couple pools located in the same data-center. And you miners wouldn't be able to do anything with this centralization.