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

[jonald_fyookball]

 More blocksize essentially means more opportunity to capture transaction fees. This necessarily leads to an incentive to create bigger and bigger blocks therefore considerably increasing the cost of running a full node.

Yes but...

1. non mining nodes are already doing this altruistically.  
2. Technology is getting better and cheaper all the time.
3. As adoption widens, there may be more nodes coming on board, even if that hasn't happened in the last 2 years
4. The more you move things offchain, the more you introduce centralized elements.

So, you may have some arguments against bigger blocks, but I'm not like, you know, super convinced.

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[knight22]

Will mining centralize around one single miner?  No one knows.  This is why Bitcoin is still a risk.  
But if this doesn't happen--if there remains more than a single miner--then the fee market does exist.

I think the point of contention is really about this conclusion.

My understanding is that it may also happen with several miners if they have an incentive to synchronize their mempools (with a mechanism like IBLT).

Do you agree that this conclusion applies to the way the network is now and the way it has always been?

I ask, just because I want it to be clear to readers that this "point of contention" is about a hypothetical future scenario.  And that we already know that there are hypothetical future scenarios, such as mining centralized around a single super pool, that would be bad for Bitcoin.  

It absolutely doesnt. Miners already optimize for profit by centralizing in various ways. The recent SPV mining near-catastrophe is an excellent example.

Your conclusions hold under no existing and future scenario. It makes assumptions that are untenable and require absolute altruism from miners.

The crux of the issue is that miners incentives are not aligned with the network's users. The max block size cap mitigates the fact that they are expected (for security reasons) to prioritize financial profit over network decentralization. Yes, there might be no other way to align these incentives than by forcing it through consensus code.

hey! i disagree!!

in my view miners are nothing if it was not for the users they validate the transactions for: users do the speculation, users gives bitcoin its value, which then makes it profitable to mine (and not any other altcoin) .

remember what happened btc price wise when ghash.io almost had 50% of the network? massive sell out..

hence, miners do have an incentive to keep on mining the longest VALID chain, which, by definition means the one that has the more value potential.
so they better not screwing around with some power grabbing fork, else they loose everything...

this is bitcoin's consensus.

I agree with most of what you said but I don't believe it really addresses my point.

The GHash situation is very different as it was very public.

The centralization I refer to relates to geographical and technical optimization that give larger miners a slight advantage over smaller ones that slowly but surely dries out the smaller miners revenue.

It is not something that is immediately apparent to most users and the extent to which such centralization can occur is difficult to examine.

That is not to suggest they are expect to fork off or create immediate damage but it is a slippery & dark road that can slowly lead to a level of centralization that enables considerable throughput hence the centralization pressure externalized to the network nodes.

I don't think it is such a dark path as long as the market has the hability to fork if the system becomes too centralised. If that happen the market will reacted because they is no incentives for them to use such a system.

How do you judge when the system becomes too centralised, particularely when it comes to nodes?

You guys have been suggesting the market is interested is in a global payment network/currency unrestricted by a transaction bottleneck. A more centralized network offers exactly that.

Are you not worried that miners can slowly capture the participants up until a point where they control a great majority of the network nodes and can trivially change protocol rules? At which point users might be presented with a choice to stay at the behest of miners and assume that they will act in everyone's interest or fork the coin and risk severely undermining the trust in cryptocurrencies in general (causing important financial losses).

I guess nearing 50% hashrate centralization is enough for the market to start panicking as shown by the Ghash episode and another similar episode with another pool which I can't recall ATM.

We all know the advantages decentralized system have over centralised one. And no, I don't think a centralized miner will be able to fool everyone as long as the system remains open. The blockchain is too heavily monitored for this to happen.

[hdbuck]

Will mining centralize around one single miner?  No one knows.  This is why Bitcoin is still a risk.  
But if this doesn't happen--if there remains more than a single miner--then the fee market does exist.

I think the point of contention is really about this conclusion.

My understanding is that it may also happen with several miners if they have an incentive to synchronize their mempools (with a mechanism like IBLT).

Do you agree that this conclusion applies to the way the network is now and the way it has always been?

I ask, just because I want it to be clear to readers that this "point of contention" is about a hypothetical future scenario.  And that we already know that there are hypothetical future scenarios, such as mining centralized around a single super pool, that would be bad for Bitcoin.  

It absolutely doesnt. Miners already optimize for profit by centralizing in various ways. The recent SPV mining near-catastrophe is an excellent example.

Your conclusions hold under no existing and future scenario. It makes assumptions that are untenable and require absolute altruism from miners.

The crux of the issue is that miners incentives are not aligned with the network's users. The max block size cap mitigates the fact that they are expected (for security reasons) to prioritize financial profit over network decentralization. Yes, there might be no other way to align these incentives than by forcing it through consensus code.

hey! i disagree!!

in my view miners are nothing if it was not for the users they validate the transactions for: users do the speculation, users gives bitcoin its value, which then makes it profitable to mine (and not any other altcoin) .

remember what happened btc price wise when ghash.io almost had 50% of the network? massive sell out..

hence, miners do have an incentive to keep on mining the longest VALID chain, which, by definition means the one that has the more value potential.
so they better not screwing around with some power grabbing fork, else they loose everything...

this is bitcoin's consensus.

I agree with most of what you said but I don't believe it really addresses my point.

The GHash situation is very different as it was very public. The SPV mining fiasco is a better example of a situation users were not readily aware of yet causes considerable risk to the ecosystem. The miners do have incentives to maintain the users trust but they have a certain flexibility and ability to optimize for profit in a "bend but don't break" manner. Anyway, Peter Todd always makes a good point that we should not build this system based on "best-behaviour" assumptions but rather expect any potential attack.

The centralization I refer to relates to geographical and technical optimization that give larger miners a slight advantage over smaller ones that slowly but surely dries out the smaller miners revenue.

It is not something that is immediately apparent to most users and the extent to which such centralization can occur is difficult to examine.

That is not to suggest they are expect to fork off or create immediate damage but it is a slippery & dark road that can slowly lead to a level of centralization that enables considerable throughput hence the centralization pressure externalized to the network nodes.

ah yea well, do not underestimate the weight of real bitcoiners (as in early libertarian paranoid adopters with most bitcoins) that would seriously damage btc value by a click the minute they sense a security hole that some soft centralization would ultimately imply.

+ i think that besides the noobs over here and reddit, most of us know why we are here, and would retaliate (or even abandon ship, or stick to a more "core version") the second we feel our investment's security would be put at risk by the greedy corporations/banks/gov/ph0undation/etc.

Yes that all goes without saying.

The exercise here is really in pointing out to the noobs the risks and holes behind their "demands".

Sometimes I do wonder why it is I spend so much time doing it   I guess it also helps me to model and sharpen my understanding of Bitcoin as a whole....

eheh, im done tho, half the forum is on ignore now..

[brg444]

 More blocksize essentially means more opportunity to capture transaction fees. This necessarily leads to an incentive to create bigger and bigger blocks therefore considerably increasing the cost of running a full node.

Yes but...

1. non mining nodes are already doing this altruistically.  

Less so than ever before and increasing costs will not help.

2. Technology is getting better and cheaper all the time.

Technology would not keep up under a scenario without a blocksize cap. Moreover security systems can not be built on assumptions of technological progress.

3. As adoption widens, there may be more nodes coming on board, even if that hasn't happened in the last 2 years

Increased costs makes this unlikely. The number does not necessarily matter, it is the barriers to entry that do

4. The more you move things offchain, the more you introduce centralized elements.

The importance is to leave a choice: "Bitcoin is a trustworthy court enforcing contracts between parties. It's possible to take every contract to the judge, but it is rather inefficient." -gmaxwell The simple fact that Bitcoin holds the truth and can rule over and sometimes enforce contrats between user and third-party necessarily diminishes attempt for the third party to fraud.

[brg444]

How do you judge when the system becomes too centralised, particularely when it comes to nodes?

You guys have been suggesting the market is interested is in a global payment network/currency unrestricted by a transaction bottleneck. A more centralized network offers exactly that.

Are you not worried that miners can slowly capture the participants up until a point where they control a great majority of the network nodes and can trivially change protocol rules? At which point users might be presented with a choice to stay at the behest of miners and assume that they will act in everyone's interest or fork the coin and risk severely undermining the trust in cryptocurrencies in general (causing important financial losses).

I guess nearing 50% hashrate centralization is enough for the market to start panicking as shown by the Ghash episode and another similar episode with another pool which I can't recall ATM.

We all know the advantages decentralized system have over centralised one. And no, I don't think a centralized miner will be able to fool everyone as long as the system remains open. The blockchain is too heavily monitored for this to happen.

See here:

What really matters to miners is a market thinking that mining is decentralized, not a really decentralized mining ecosystem.
It's important to remember that most (all ?) available statistics describing the (de)centralization of mining rely on weak (and easy to cheat) heuristics.

Also you have again conveniently ignored my point that hashrate centralization is not the only centralization concern.

[knight22]

How do you judge when the system becomes too centralised, particularely when it comes to nodes?

You guys have been suggesting the market is interested is in a global payment network/currency unrestricted by a transaction bottleneck. A more centralized network offers exactly that.

Are you not worried that miners can slowly capture the participants up until a point where they control a great majority of the network nodes and can trivially change protocol rules? At which point users might be presented with a choice to stay at the behest of miners and assume that they will act in everyone's interest or fork the coin and risk severely undermining the trust in cryptocurrencies in general (causing important financial losses).

I guess nearing 50% hashrate centralization is enough for the market to start panicking as shown by the Ghash episode and another similar episode with another pool which I can't recall ATM.

We all know the advantages decentralized system have over centralised one. And no, I don't think a centralized miner will be able to fool everyone as long as the system remains open. The blockchain is too heavily monitored for this to happen.

See here:

What really matters to miners is a market thinking that mining is decentralized, not a really decentralized mining ecosystem.
It's important to remember that most (all ?) available statistics describing the (de)centralization of mining rely on weak (and easy to cheat) heuristics.

Also you have again conveniently ignored my point that hashrate centralization is not the only centralization concern.

Well remove hashrate and my point still remain the same.

[knight22]

 More blocksize essentially means more opportunity to capture transaction fees. This necessarily leads to an incentive to create bigger and bigger blocks therefore considerably increasing the cost of running a full node.

Yes but...

1. non mining nodes are already doing this altruistically.  

Not necessarily. Payment processors have an interest to run a full node to more efficiently broadcast their transactions to the network.

[brg444]

How do you judge when the system becomes too centralised, particularely when it comes to nodes?

You guys have been suggesting the market is interested is in a global payment network/currency unrestricted by a transaction bottleneck. A more centralized network offers exactly that.

Are you not worried that miners can slowly capture the participants up until a point where they control a great majority of the network nodes and can trivially change protocol rules? At which point users might be presented with a choice to stay at the behest of miners and assume that they will act in everyone's interest or fork the coin and risk severely undermining the trust in cryptocurrencies in general (causing important financial losses).

I guess nearing 50% hashrate centralization is enough for the market to start panicking as shown by the Ghash episode and another similar episode with another pool which I can't recall ATM.

We all know the advantages decentralized system have over centralised one. And no, I don't think a centralized miner will be able to fool everyone as long as the system remains open. The blockchain is too heavily monitored for this to happen.

See here:

What really matters to miners is a market thinking that mining is decentralized, not a really decentralized mining ecosystem.
It's important to remember that most (all ?) available statistics describing the (de)centralization of mining rely on weak (and easy to cheat) heuristics.

Also you have again conveniently ignored my point that hashrate centralization is not the only centralization concern.

Well remove hashrate and my point still remain the same.

Your point doesn't really hold unless you predicted the SPV mining centralization that occured recently and caused a fork of the network.

The miners action are far from transparent.

[brg444]

 More blocksize essentially means more opportunity to capture transaction fees. This necessarily leads to an incentive to create bigger and bigger blocks therefore considerably increasing the cost of running a full node.

Yes but...

1. non mining nodes are already doing this altruistically.  

Not necessarily. Payment processors have an interest to run a full node to more efficiently broadcast their transactions to the network.

You'd be surprised by the amount of wallet services provider that don't actually run a full node.

Also, I have no interest in a network where only payment processors run nodes.

[jonald_fyookball]

 More blocksize essentially means more opportunity to capture transaction fees. This necessarily leads to an incentive to create bigger and bigger blocks therefore considerably increasing the cost of running a full node.

Yes but...

1. non mining nodes are already doing this altruistically.  

Less so than ever before and increasing costs will not help.

2. Technology is getting better and cheaper all the time.

Technology would not keep up under a scenario without a blocksize cap. Moreover security systems can not be built on assumptions of technological progress.

3. As adoption widens, there may be more nodes coming on board, even if that hasn't happened in the last 2 years

Increased costs makes this unlikely. The number does not necessarily matter, it is the barriers to entry that do

4. The more you move things offchain, the more you introduce centralized elements.

The importance is to leave a choice: "Bitcoin is a trustworthy court enforcing contracts between parties. It's possible to take every contract to the judge, but it is rather inefficient." -gmaxwell The simple fact that Bitcoin holds the truth and can rule over and sometimes enforce contrats between user and third-party necessarily diminishes attempt for the third party to fraud.

I'm all for choice.  Nothing against third partys running offchain payment solutions.  However, forcing it via cap = less choice.

[knight22]

 More blocksize essentially means more opportunity to capture transaction fees. This necessarily leads to an incentive to create bigger and bigger blocks therefore considerably increasing the cost of running a full node.

Yes but...

1. non mining nodes are already doing this altruistically.  

Not necessarily. Payment processors have an interest to run a full node to more efficiently broadcast their transactions to the network.

You'd be surprised by the amount of wallet services provider that don't actually run a full node.
 

Do you have anything that can supports that claim or is it just an assumption?

[brg444]

 More blocksize essentially means more opportunity to capture transaction fees. This necessarily leads to an incentive to create bigger and bigger blocks therefore considerably increasing the cost of running a full node.

Yes but...

1. non mining nodes are already doing this altruistically.  

Not necessarily. Payment processors have an interest to run a full node to more efficiently broadcast their transactions to the network.

You'd be surprised by the amount of wallet services provider that don't actually run a full node.
 

Do you have anything that can supports that claim or is it just an assumption?

It is well known that blockchain.info for example did not run their own node until very recently. There was a lot of discussion about this on the dev mailing list. A lot of companies rely on services like chain.com, blockcypher.com, etc. They have somewhat valid reasons as they don't have to build the whole software infrastructure for node indexing that these services have already built.

[iCEBREAKER]

My paper says nothing about this.  It just shows that a distorted transaction fee market insufficient for the Bitcoin network to be able to pay for its own security exists without a block size limit

I fixed it for you.

Your most glaringly flawed assumption is to ignore the fact

block space is a scarce resource that is sold, but not paid for, by the miners...which is why a "tragedy of the commons" situation can only be avoided by a block size cap.

[jonald_fyookball]

My paper says nothing about this.  It just shows that a distorted transaction fee market insufficient for the Bitcoin network to be able to pay for its own security exists without a block size limit

I fixed it for you.

Your most glaringly flawed assumption is to ignore the fact

block space is a scarce resource that is sold, but not paid for, by the miners...which is why a "tragedy of the commons" situation can only be avoided by a block size cap.

Peter is not ignoring it, he just doesn't agree with it.

We already debunked that myth if you were paying attention.  Just because it was said on reddit doesn't mean it's true.

https://bitcointalk.org/index.php?topic=1162684.msg12348544#msg12348544

[iCEBREAKER]

My paper says nothing about this.  It just shows that a distorted transaction fee market insufficient for the Bitcoin network to be able to pay for its own security exists without a block size limit

I fixed it for you.

Your most glaringly flawed assumption is to ignore the fact

block space is a scarce resource that is sold, but not paid for, by the miners...which is why a "tragedy of the commons" situation can only be avoided by a block size cap.

we already debunked that myth if you were paying attention.  Just because it was said on reddit doesn't mean it's true.

So you are claiming which of the following?

A. block space is *not* a scarce resource
B. miners *don't* sell block space
C. miners *do* pay for block space
D. tragedy of the commons *won't* ensue
E. tragedy of the commons *can't* be avoided by a size cap
F. tragedy of the commons can be avoided by something *besides* a size cap

I think you're going for F. but since you simply assert debunking with no elaboration I can't really be sure.

It doesn't matter, because we know from empirical data 1MB is already too large to completely prevent the negative externalities, false economies, and negative marginal returns which are occuring due to information/accountability/incentives destroyed or perverted by subsidizing free riders in the mining and user subsystems.

Peter's shiny new illustrations are indeed excellent.  But besides the slick graphics to impress the Redditurd mob, his paper is a giant obfuscatory nothingburger.  Cite: https://botbot.me/freenode/bitcoin-wizards/2015-08-30/?msg=48477664&page=1

#REKT

[iCEBREAKER]

Practically every sentence Greg types is cryptic and technical. 

He's actually excellent at making intelligent analogies and "dumbing-down" material for casual users.

Let's be charitable and assume English is not jonald's first language.

Because if it was, there would be no excuse for not recognizing gmax's pellucid prose as exceedingly precise and articulate, with proper adaptation for its intended audience, and drawing on a vocabulary befitting a senior at an Ivy League law school.

Many brilliant engineers can't write for shit, but he is not among them.

I guess the problem is jonald disagrees with gmax, but can't think of a less pitiful argument than to just critique the dude's "every sentence."

Peter's Paper, much like Hearn's XT Manifesto (*snicker*) are both monumental frauds deployed in support of the Gavinistas' social engineering attacks on BTC core governance.

Watching them get #R3KT as they attack an antifragile system is very enjoyable and inspiring.   

[jonald_fyookball]

My paper says nothing about this.  It just shows that a distorted transaction fee market insufficient for the Bitcoin network to be able to pay for its own security exists without a block size limit

I fixed it for you.

Your most glaringly flawed assumption is to ignore the fact

block space is a scarce resource that is sold, but not paid for, by the miners...which is why a "tragedy of the commons" situation can only be avoided by a block size cap.

we already debunked that myth if you were paying attention.  Just because it was said on reddit doesn't mean it's true.

So you are claiming which of the following?

A. block space is *not* a scarce resource
B. miners *don't* sell block space
C. miners *do* pay for block space
D. tragedy of the commons *won't* ensue
E. tragedy of the commons *can't* be avoided by a size cap
F. tragedy of the commons can be avoided by something *besides* a size cap

I think you're going for F. but since you simply assert debunking with no elaboration I can't really be sure.

It doesn't matter, because we know from empirical data 1MB is already too large to completely prevent the negative externalities, false economies, and negative marginal returns which are occuring due to information/accountability/incentives destroyed or perverted by subsidizing free riders in the mining and user subsystems.

Peter's shiny new illustrations are indeed excellent.  But besides the slick graphics to impress the Redditurd mob, his paper is a giant obfuscatory nothingburger.  Cite: https://botbot.me/freenode/bitcoin-wizards/2015-08-30/?msg=48477664&page=1

#REKT

Mostly I'm saying D -- tragedy of the commons won't ensue, or at least not fatally.  

The reason is simple.  The endgame "tragedy" of miners not securing the network will never happen
because an equilibrium will be reached where 1. some miners will stay profitable and
2. Those remaining miners will charge enough to achieve an acceptable network hashrate,
even with NO subsidies and NO blocksize limits.

How do we know 1. will happen?

This:

However, how does the pool that is driving everyone out
pay their bills?  They have to eventually raise their
fees to at least cover costs.  

Any way you slice it, a new equilibrium will be reached.

How do we know 2. will happen?  

Well, to be fair, we don't know for sure. There are too many variables such as what will the transaction
volume be, and what an "acceptable network hashrate" will be.  However, it stands
to reason that if the community agrees it needs a certain minimum hashrate and
calculates what the minimum fee should be to support that hashrate, users would
likely pay it if miners charged it... and it would be in the miner's interests to charge it
both in terms of profitability and supporting the network.

Furthermore:  If the users won't pay the fee because its simply too high, what makes you think
they will pay it when its enforced by the blocksize rather than the miners directly?  (It would
actually have to even HIGHER because now we are artificially limiting the number of
transactions).

Or do you think they won't pay it for another reason...but somehow will under your
scenario with small blocks?

Or do you think the miners will just refuse to charge that much and leave us with
a lower hashrate?

What exactly do you think will happen under this "tragedy" scenario?

Regarding your "empirical data", what data do you have?  You claim "negative marginal returns".
To me, that means you have P/L numbers from major mining companies.  Do you?

Now, as to the question of:  Could you get MORE revenue to the miners by instituting a cap, just as you can get more money to egg farmers by fixing prices?  Probably.  But I would also bet that the increase would be limited, probably less than an order of magnitude and thus not overwhelmingly impactful as far as changing the security.  In other words, users might pay a dime for a transaction, but they ain't gonna pay a dollar...Not when they can use litecoin or whatever.  A very simplified example but hopefully you get my point.
  

[sergio]

Bitcoin as it is works fine and it can scale globally as it is, the proper way to see things is to think that bitcoin simulates gold with the added property of being portable.

you would not buy a soft drink using gold or a $100 dollar bill, for that reason alt coins like litecoin o dash have a purpose, we do not need 500 alt coins, but maybe a few are needed.

Moore's law does not hold on the long term, only on the short them, and something that must never be sacrificed is the fact that Bitcoin is decentralized, increasing the block size centralizes Bitcoin that it is very bad and should not be allowed.

As of now the Bitcoin DB is over 50GB with a 1MB block, on the long term if the block where to be x times bigger the DB would be x times bigger, as of now the DB is too big to be on cell phones, and on an average laptop, lets keep the 1 MB limit to prevent centralization.

If we think of bitcoin as gold and litecoin or dash as silver combined we can cover both large transactions and small ones.

Another thing to consider, The code-base for Bitcoin must be 100% bug free for security reasons, ask any developer and they will tell you that is something very difficult to achieve, but since Bitcoin is a currency security must take the biggest priority, in general small computer programs can be made very secure and 100% bug free, but as the size of code increases security goes down,  take for example an operating system. Do we have a 100% bug free OS? We do not and that's because the amount of code is very large, and some of that code is complex. The same applies for Bitcoin, if we end up with a very large and complex code it will be very difficult to keep it 100% secure, the ideal codebase is lean and mean, meaning keeping as simple as possible that keeps the code secure.

Forks are a bad thing specially in a digital currency, now that it can be seen that the fork is failing bitcoin has started to go up in price.

For Bitcoin to succeed certain things must be assured not to change ever:
for example the 21 million limit must not change.
decentralization
the ability to pay anyone directly with the need of a third party.
All coins have equal value, opposite of colored coins.
Consensus has to be respected.

As of now 1MB block limit is fine, and it helps to prevent spam, you raise that limit and then the blockchain will get full of spam that the people that run full nodes will have to pay for, and for that reason large blocks creates a big security risk.

Of course if the day comes that a cell phone has 1 TB of data storage, and the bitcoin user base is 100 times larger, then and only then by consensus with a very careful study done not to break with the security model, could the block size be increased. But what Bitcoin-XT had done was recklessness, a total disrespect to the security model and the principals of decentralization, and for what bitcoin stands.

[RoadTrain]

Mostly I'm saying D -- tragedy of the commons won't ensue, or at least not fatally.  

The reason is simple.  The endgame "tragedy" of miners not securing the network will never happen
because an equilibrium will be reached where 1. some miners will stay profitable and
2. Those remaining miners will charge enough to achieve an acceptable network hashrate,
even with NO subsidies and NO blocksize limits.

How do we know 1. will happen?

This:

However, how does the pool that is driving everyone out
pay their bills?  They have to eventually raise their
fees to at least cover costs.  

Any way you slice it, a new equilibrium will be reached.

That's all fine, but at which point do you think the hashrate will settle? If we go down to 1PH/s, for example, would you be happy about that when the rest of equipment is worthless and can easily be used to attack the network? Also, don't you see a vicious circle of lower fees -> lower hashrate -> lower security -> lower price -> lower hashrate -> ... ?

Moreover, you say we will reach equilibrium. I'm not sure it matters if we end up with fees like 1 satoshi per tx and miniscule hashrate.

[xhoneyael]

lower fees -> lower hashrate -> lower security -> lower price -> lower hashrate -> ... ?

price of it depends in coin supply and how hard to earn it and also the security.
maybe they dont know that if this will happen price of bitcoin can go lower single digits.
this is the worse thing that can happen in bitcoin..