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Author Topic: 2012-11-29 LondonNewFinance - Digital Money Seminar (videos)  (Read 2187 times)
julz (OP)
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November 30, 2012, 05:49:51 AM
Last edit: November 30, 2012, 07:12:39 AM by julz
 #1

Some videos released from the London New Finance November 2012 Seminar: Digital Money


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Amir Taaki, Founder of Intersango - Bitcoin, a virtual currency
https://www.youtube.com/watch?v=I-DVOYyx_6U


Panel Discussion - The FinTech Strategic Space
Digital Money
https://www.youtube.com/watch?v=iFWPOxSfxgc&feature=plcp



I haven't watched it all yet - but I have to cringe at what I've seen so far from Amir.
He seems to have launched into a spiel about it as a 'subversive' tool..  Is this really the audience for that???

Answering the mobile phone on stage... really??  Fine, you forgot to turn it off - embarrassing enough, but to answer it.. 'hello?'   Good grief, either just turn it off at that point, or answer straight away with 'sorry I'm in a conference I'll call back'.


From the panel discussion, we see Amir fluffing his way through an answer that didn't seem to bear any relation to the question. He completely failed to point out how Bitcoin manages to separate Identity from payments. A gift ...on a plate, thrown away.  Huh

Quote
Audience Question: Are you all assuming that payment is the killer app for wallets... or is it for example identity, because you have to separate identity from transaction flows from funds flows.. the concept of a payment is a mixture, depending on the context of all 3.

Amir: Ah.. so yeah it's like 1 in 35 1-pound coins is counterfeit and there's like.. a lot of the arguments I've seen .. people saying oh yeah we need to move to these like cashless payments.. is..oh yeah.. there's this huge level of fraud .. or that there's all these costs inherent in the system that... and a lot of the solutions I've seen proposed always involve somehow externalizing that costs onto the users as opposed... away from the financial processors.. and I don't really see that like as a winning argument.. if we wanna.. move forwards.

Other panel member: A simple answer to the question. No I don't see payment as the killer app, I see it as a necessary - to allow anyone to play in the game. So I think the killer app is something that drives the customer to perceive they get value from the wallet but it doesn't have to be measured financially.


Not sure If I can bear to watch it all.
edit: My apologies if I'm being a bit harsh.. I know it's a tough job to get up in front of people and speak!




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November 30, 2012, 08:40:46 AM
 #2

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Where does the supply come from?
Mathematics!
*facepalm*

How are people supposed to understand Bitcoin if that's how it's explained?!

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November 30, 2012, 12:44:56 PM
Last edit: November 30, 2012, 12:56:20 PM by damnek
 #3

I think that comparing mining to "solving mathematical puzzles" gives too much credit to what mining really is. Mathematics is all about recognizing structure in the "puzzle" at hand, while bruteforcing SHA is actually the opposite of that.

edit: I'd think the best way to explain mining to an audience like that is by calling it number crunching.
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November 30, 2012, 01:10:14 PM
 #4

I think that comparing mining to "solving mathematical puzzles" gives too much credit to what mining really is. Mathematics is all about recognizing structure in the "puzzle" at hand, while bruteforcing SHA is actually the opposite of that.

edit: I'd think the best way to explain mining to an audience like that is by calling it number crunching.
I always thought that calling it "solving math puzzles" made it seem silly and probably put many people off, as it seems like a pointless way to earn rewards. I personally call it "securing the bitcoin ledger using crypto-math that prevents others from adding fraudulent payments". To me this sounds like something that miners ought to get paid for as they provide a function that everyone can agree is important. Once they have that overview understanding, which doesn't sound frivolous, then it's up to them if they want to dig into the math that achieves this. But it more favourably depicts what miners actually are paid for.

IMO the continued use of "solving math puzzles" is detrimental to people casually getting interested in Bitcoin.

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November 30, 2012, 02:53:50 PM
 #5

I like to think of it more like a combination lock that gets randomly reset for each block & miners have to guess the code to receive the reward.  You could also talk about how digits are added & removed from the lock depending on how fast previous codes have been solved to keep it at a steady rate.  The miner can also collect more rewards by adding transactions to the block.

The only reason to limit the block size is to subsidize non-Bitcoin currencies
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November 30, 2012, 03:47:12 PM
 #6

I think that comparing mining to "solving mathematical puzzles" gives too much credit to what mining really is. Mathematics is all about recognizing structure in the "puzzle" at hand, while bruteforcing SHA is actually the opposite of that.

edit: I'd think the best way to explain mining to an audience like that is by calling it number crunching.
I always thought that calling it "solving math puzzles" made it seem silly and probably put many people off, as it seems like a pointless way to earn rewards. I personally call it "securing the bitcoin ledger using crypto-math that prevents others from adding fraudulent payments". To me this sounds like something that miners ought to get paid for as they provide a function that everyone can agree is important. Once they have that overview understanding, which doesn't sound frivolous, then it's up to them if they want to dig into the math that achieves this. But it more favourably depicts what miners actually are paid for.

IMO the continued use of "solving math puzzles" is detrimental to people casually getting interested in Bitcoin.

Mining is really simple: it's voting. Yes, when you look up close it looks like solving puzzles for a reward, but if you step back and look at the effect over long periods of time fundamentally it's about the majority of participants voting on what order transactions take, and that vote is done according to computing power people dedicate to solving those puzzles.

I also find that if you explain Bitcoin in terms of voting it makes a lot more sense to people. In particular I've found that it makes intuitive sense to people that if there isn't a central authority imposing consensus, a voting system allows consensus to still arise. It also makes it clear that solving those puzzles isn't meant to provide any sort of "useful service", rather it's just how you prove how much computing power you control so you're vote is counted correctly.

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November 30, 2012, 04:49:13 PM
 #7

Mining is really simple: it's voting

It's really not. It's enforcing.

Voting means there's a voting result that gets imposed on all the voters. In Bitcoin if two groups of miners enforce different rules both can operate, they just create a fork and thereby their own currency, that's all.


I'm quite convinced that mining = voting in Bitcoin is the biggest misnomer we have and should do everything we can to rot it out and not in the least try to perpetuate it.

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November 30, 2012, 05:15:39 PM
 #8

In Bitcoin if two groups of miners enforce different rules both can operate, they just create a fork and thereby their own currency, that's all.
It's not the miners who determine the rules, it's merchants. Miners don't have a say about rules: they only choose what transactions to include.
Even if some of the miners choose to mine a different currency without the merchant support, their currency will be worth next to zero.
Now, if you don't create your own currency and stick with bitcoin rules, then the larger group of miners will always be able to enforce its opinion about the transaction set. How is that not voting?
This "mining = voting" is not a misnomer, but rather a misfeature of the bitcoin protocol, making it vulnerable to 51% attacks.

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November 30, 2012, 05:23:00 PM
 #9

In Bitcoin if two groups of miners enforce different rules both can operate, they just create a fork and thereby their own currency, that's all.
It's not the miners who determine the rules, it's merchants. Miners don't have a say about rules: they only choose what transactions to include.
Even if some of the miners choose to mine a different currency without the merchant support, their currency will be worth next to zero.
Now, if you don't create your own currency and stick with bitcoin rules, then the larger group of miners will always be able to enforce its opinion about the transaction set. How is that not voting?
This "mining = voting" is not a misnomer, but rather a misfeature of the bitcoin protocol, making it vulnerable to 51% attacks.

Ever heard of a fallacy called begging the question?

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November 30, 2012, 05:29:33 PM
 #10

Ever heard of a fallacy called begging the question?
I heard about that. How is it relevant? Are you saying that the assumption that the bitcoin merchants will be sticking to bitcoin rules is infeasible, or what?

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November 30, 2012, 05:38:32 PM
 #11

Ever heard of a fallacy called begging the question?
I heard about that. How is it relevant? Are you saying that the assumption that the bitcoin merchants will be sticking to bitcoin rules is infeasible, or what?

I think you answered your own question.

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November 30, 2012, 05:51:27 PM
 #12

Thank you for making your point very clear. /sarcasm

I guess we disagree on the definition of bitcoin merchant then. I define bitcoin merchant as a person who is willing to provide goods or services for bitcoins as verified according to the Bitcoin protocol.

You have a different one. Am I right? I had to guess using very incomplete information, you know.

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November 30, 2012, 08:06:46 PM
 #13

Mining is really simple: it's voting

It's really not. It's enforcing.

You can-not enforce without force. You choose to value transactions by the strength of the proof of work, but nothing is forcing you to do so other than a consensus.

Voting means there's a voting result that gets imposed on all the voters. In Bitcoin if two groups of miners enforce different rules both can operate, they just create a fork and thereby their own currency, that's all.

I'm quite convinced that mining = voting in Bitcoin is the biggest misnomer we have and should do everything we can to rot it out and not in the least try to perpetuate it.

I disagree with you quite strongly on this one. The thing is there are two separate, but related, issues here: transaction validity and transaction order.

Consider for instance the Iraqi dinar. I'm oversimplifying, but essentially after the fall of the Iraqi Government during the second gulf war there wasn't any force backing the dinar in the way fiat currencies usually are. However the dinar retained its value. Essentially a group of people had a consensus to follow a certain set of rules about the dinar, namely that pieces of paper that looked a certain way were accepted to have value. Even banking survived somewhat, thus in addition there was another set of rules that transactions following accepted accounting principles could be considered to be equivalent to those pieces of paper. This situation lasted until the coalition forces imposed their own will, essentially shifting this consensus to allow an additional rule: the coallition forces are allowed to make more dinars.

Of course all of this happened by consensus purely out of trust that the consensus would continue for however long you wanted to hold dinars.

Bitcoin is of course also a consensus, specifically that transactions that follow rules that the Satoshi client audits should be considered valuable. The thing is it is not miners who enforce those rules. The consensus enforces those rules, simply because the consensus is that any transaction that doesn't follow those rules is considered worthless. It'd be theoretically possible, albeit totally impractical, for someone to decide to accept a transaction after carefully checking the whole blockchain by hand to determine if the rules were being followed. Bitcoin clients simply automate this process.

If you could somehow trust people not to double-spend you would not need mining. However we can't trust people, just like we can't (blindly) trust people not to write checks that will bounce. Thus Bitcoin has an additional rule where we consider a transaction invalid if a transaction spending the same coins exists and has a stronger proof of work. If we could somehow timestamp transactions directly, and in addition have some mechanism to be absolutely sure that everyone has an up-to-date knowledge of every transaction made, again we wouldn't need mining.(1)

Miners of course choose what transactions to include in their blocks, and that part of mining I don't (strongly) consider to be voting. Where the voting comes into play is which block they decide to use as the previous block for their block creation attempts. Sure the outcome of any individual block is discretized in a way that no normal voting system would be - only one lucky miner will solve the proof of work - but after repeated blocks the outcome is effectively a vote proportioned by hashing power. This is particularly evident with cases like non-standard transactions and new types of transactions, and we speak of a "majority" and a "super-majority" of miners for a very good reason.

There are strong parallels in how governments work: you have the law, which enforces how politics and voting is conducting, and then you have the votes themselves, which decides who gets into power. It's just that in Bitcoin takes the "first-past-the-post" effect to the extreme, so much so that changing the rules is exceptionally difficult.


Anyway, more to the point, we're talking about how to explain Bitcoin to non-technical people. Analogies are never perfect, and yes, the analogy that mining is voting certainly has flaws. However I strongly think that using the analogy of voting to explain what mining is, and laws to explain what the transaction rules are, makes far more sense to people and gives them a much better mental model of how Bitcoin works than starting with a much more technical explanation that immediately jumps into the proof-of-work and enforcement. After all, saying that solving a difficult math problem somehow enforces something just doesn't make sense to most people. Saying that you solve that math problem to prove that your vote should be counted does. Your explanation is more technically correct, but the vast majority of people have a good intuition for what voting is, and no intuition at all for what a proof of work is.

1) As a thought experiment, consider what would happen if every Bitcoin client had a magical radio that could broadcast a signal so powerful that every other Bitcoin radio was guaranteed to receive it, and at the same time, everyone had access to one or more radio receivers in secret locations that they used to ensure they weren't just receiving a faked, directional, radio transmission. If everyone could leave their client running 24x7, and everyone had access to a secure time source, you could replace mining with simply the assurance that you would always know what transaction was valid simply because you were guaranteed to see the valid one first. Equally you would know you could spend your coins because everyone else could do the same verification as well. (bootstrapping your client does of course pose problems with this scheme)

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November 30, 2012, 10:26:18 PM
 #14

Yes you are right, I made a mistake (I made the same mistake once before) of calling it something it's not. See, I do it too.

It's not enforcing, because it's not forcing anyone anything.

It is however validating, and definitely not voting.

Oh and the reason why I don't even address your merchant theory is because I too could say I vote everyday with my feet and my money for products and services on the market but that really isn't voting in the literal sense of the word but it describes something else entirely. Problem is words have subjective definitions, so while yes, merchants and users deciding to use a specific Bitcoin code could be called voting as in expressing their preference and validate that they agree with this service it isn't voting in the literal sense where voting means tallying of ballots and imposing the result on everyone precisely because as you've correctly pointed there is no force involved.

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November 30, 2012, 10:33:42 PM
 #15

Analogies are never perfect, and yes, the analogy that mining is voting certainly has flaws.

It has a catastrophic flaw in this "Give me democracy!" infected world of leaving the false impression that rules that govern Bitcoin are not fixed but depend on the outcome of some vote in the literal sense when the truth is that rules can't change, anyone can either choose to follow them or not.

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November 30, 2012, 10:40:24 PM
 #16

I like to think of it more like a combination lock that gets randomly reset for each block & miners have to guess the code to receive the reward.  You could also talk about how digits are added & removed from the lock depending on how fast previous codes have been solved to keep it at a steady rate.  The miner can also collect more rewards by adding transactions to the block.

I kinda liked that one.
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December 01, 2012, 01:19:33 AM
 #17

How are bitcoins created? 

I usually explain that its like a 'random lottery' where 50...or now 25, bitcoins are given out every 10 minutes and people are competing to get them, but that it is a professional market. If you wanted gold, you wouldnt go learn how to mine gold...you would trust that other people are out doing that and you would just buy some gold at the market rate.

Then tell them that there will never be more then 21 million bitcoins, and that there are currently 10.5 million in circulation.
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December 01, 2012, 10:49:48 AM
 #18

Here's my analogy:

Imagine that every "Bob sends 1bitcoin to Alice" transactions is a envelope. What mining is is listening to the network for any new envelopes flying around and gathering them. At the same time you're gathering all these new envelopes you're trying to bundle those that you already gathered up into a package and tie a nice bow on it. To tie a bow you have to solve a math problem, and the solution to that math problem is the fabric that will give the bow the right shape, a shape everyone else in the network will recognize as valid. So, many people are doing this, they are gathering up all these new envelopes and trying to tie a bow on the package. Who ever is first to successfully tie a bow on their package, then sends this package to everyone else in the network. When someone successfully ties a bow on the package they also automatically insert their own special envelope that isn't coming from anyone but is addressed to them with a reward of Xbitcoins for doing all of this. When the rest of the network receives his package they check the bow and the contents of the package and if all looks like it's following the rules they add it to their chain of packages they already received. After that they again try to bundle up all the new envelopes that aren't included in any of the packages yet into a package of their own and thereby starting a new round of competing for the reward for successfully doing so.

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Peter Todd
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December 01, 2012, 02:54:03 PM
 #19

Here's my analogy:

Imagine that every "Bob sends 1bitcoin to Alice" transactions is a envelope. What mining is is listening to the network for any new envelopes flying around and gathering them. At the same time you're gathering all these new envelopes you're trying to bundle those that you already gathered up into a package and tie a nice bow on it. To tie a bow you have to solve a math problem, and the solution to that math problem is the fabric that will give the bow the right shape, a shape everyone else in the network will recognize as valid. So, many people are doing this, they are gathering up all these new envelopes and trying to tie a bow on the package. Who ever is first to successfully tie a bow on their package, then sends this package to everyone else in the network. When someone successfully ties a bow on the package they also automatically insert their own special envelope that isn't coming from anyone but is addressed to them with a reward of Xbitcoins for doing all of this. When the rest of the network receives his package they check the bow and the contents of the package and if all looks like it's following the rules they add it to their chain of packages they already received. After that they again try to bundle up all the new envelopes that aren't included in any of the packages yet into a package of their own and thereby starting a new round of competing for the reward for successfully doing so.

My objection to this sort of explanation is that while it is technically correct, it gives absolutely no insight into why any of this is happening; what's the point of all this bundling and bow-tying anyway? Or who is resetting that combination lock and adding and removing digits from it? You have to convince people that Bitcoin is legit and secure, and in doing that communicating why things are done is much more important than communicating exactly what is being done.

Saying that mining is voting on the order that transactions happen lets you very easily explain why determining transaction order is a problem in the first place, especially when you make analogies to overdrafted cheques, as well as how the problem is solved. In addition it's an explanation that sounds natural and fair; bringing groups to consensus through democratic voting, rather than imposing a central authority, is an explanation that resonates with people.

Sure it's unfortunate that some people start thinking they can swing votes and what not, but again, explain that the voting mechanism is purely about the order of recent transactions and nothing else. (in addition you can also explain that to change a block in the past, you have to have enough computing power to outvote the sum of every subsequent vote) If you want to change something else you'll have to convince a super-majority of the people using Bitcoin to change all at once, and just like, say, replacing the constitution doing that is very difficult, even for changes everyone thinks are reasonable. (I said super-majority for a reason: in practice if a super-majority change, the minority will update their clients as well in practice)

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December 01, 2012, 03:56:49 PM
 #20

Finally came to watch the videos.

And I must say, especially at the second video you can see that Amir is awfully nervous. In the beginning of the video, just look at his body language and compare it to the current speaker.

As much as I admire efforts like this, it shows that we desperately need more people that feel comfortable in such an environment and actually like promoting Bitcoin and going to such events.

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