2012-11-29 LondonNewFinance - Digital Money Seminar (videos)

[adamstgBit]

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.

mining is hard to explain, and its extremely hard to understand why having computers solve pointless number crunching problems acutely gives the network security.

[1715595603]

1715595603

[hazek]

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 are right, so I made another attempt:

Imagine that every "Bob sends 1 bitcoin to Alice" transaction is an envelope. What Bitcoin mining is is listening to the Bitcoin peer to peer 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 them 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 following the rules of Bitcoin.

So, many people are doing this, they are gathering up all these new envelopes(transactions) and trying to tie a bow on the new package. Who ever is first to successfully tie a bow on the next new package, gets to send this package to everyone else in the network. They also automatically insert their own special envelope that isn't coming from anyone but is addressed to them with a reward of X bitcoins (was 50, now is 25) for doing all of this and that is the block reward and it's how all bitcoins will be issued.

When the rest of the network receives his package they check the bow and the contents of the package and if the package looks like it's following the Bitcoin rules they add a copy to their chain of packages they already received and if it doesn't they simply ignore it, hence why no one can cheat in Bitcoin and issue themselves more bitcoins then allowed by the code.

Then everyone tries to bundle up all the next new envelopes that aren't included in any of the packages yet into a new package of their own again and thereby starting a new round of competing for the reward for successfully doing so.

The reason this is done so is because Bitcoin is decentralized. If you have a central authority that keeps track of all the envelopes(transactions) you don't need this complicated system. But because Bitcoin is decentralized this is the only way yet discovered how it can work and it does work very well. Instead of a post office keeping track off all packages and deciding how much new bitcoins are issued, everyone part of the network is doing it, and everyone is issuing the new bitcoins through this lottery of tying a bow on the package. And that math problem is analogous to a lottery because it's random who solves it first although the faster your computer the higher your chances.. Also it's difficulty is dynamic meaning that if more people participate in the lottery it self adjust and gets harder to win so that there is an insured constant rate of 1 new package added to the chain every 10min on average.

All of this, the difficulty, how the bow must look like, the reward amount, when it's being cut in half was decided and embedded in the code of Bitcoin and cannot be changed anymore because to do so, you'd need to convince everyone part of the network to download a new version with new rules, which is pretty hard but more like next to impossible given that it's open source and anyone can read the entire code.

[beckspace]

I think that the audience was a bit harsh with Amir, but...

I liked the part where someone ask how spend some digital money in blow'n'hookers hiding from the wife.

First guy:
- Hum, we wanna empower the users, blablabla

Amir:
- With Bitcoin, you can, it is digital cash.

Third Guy:
- Err, companies will face competition, blablabla


Then another question: How do you guys manage microtransactions?

First Guy:
- Err, there's always a limit, you know? Today our company can transfer 1 dollar, but in the future, who knows? Blablabla

Amir:
- With Bitcoin, you can.

Third Guy:
- Yeah, I think Bitcoin nailed it.

[DeathAndTaxes]

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.

This +21,000,000.   The whole meme of "print free internet moniez your computer for solving puzzles" is a determent for further expansion.  Anyone that meme would have appealed to should have joined 3 years ago.  Today the margins on mining are small and shrinking.  It is requiring real capital, real planning, and involves real risks.   Today most people hearing "free moniez for solving puzzles" either will be pissed to find out this free moniez is going to require putting out thousands (possibly tens of thousands) of dollars into a complex, high risk venture or will just dismiss it as a scam.  Face it the initial reaction to "free moniez" is SCAM. SCAM. SCAM. SCAM. SCAM. 


Bitcoin is a currency and a payment system.  Lets start there.  What is the purpose of mining? Not HOW does Mining work but WHY do we have mining?  PayPal doesn't have mining, VISA doesn't have mining.  Why does Bitcoin have mining?  More importantly what is the only aspect of mining that "Joe Consumer" gives a flying crap about?  It sure as hell isn't "free internet moniez".  Mining keeps his transactions (and thus the value of the coins he holds) SECURE.

Mining = Transaction Validating = Security = Value.  Far more people buy gold then try to excavate their own gold.  The "mining" sales pitch immediately tunes out 99% of potential users.  Personally I wish the word mining would go out of the vocabulary but please please for the love of Satoshi drop this "free moniez for solving puzzles" nonsense.

There is a very simple logical progression.

1) START WITH COMMERCE.  That is what your audience cares about.  Bitcoin is commerce.  Bitcoin enables the end user to send value anywhere in the world, nearly instantly, and at very low (sometimes zero) cost.  Bitcoin enables the user to receive irreversible payments which can't be reversed due to fraud.  If you aren't starting here at commerce and the benefits you are doing it wrong.

2) After you explain the benefits of Bitcoin it becomes immediately obvious that the network must be secured.  The network must ensure coins are only spent once.  To do that requires the work of "transaction validators" = miners.  Miners put transactions in a block and secure them by proving that a certain amount of work was spent to find a solution which solves the block.  This ensures an attacker would need to "spend" just as much work to make a forgery.  Blocks are combined into a blockchain which grows by consensus and .... FORMS A PERMANENT TRANSACTION RECORD which secures transactions against misdirecting funds, forgery or duplication.  The bold part is the only part consumers and merchants care about.  If you don't discuss the why then you are 100% wrong.

3) Now (and only after #1 & #2 are explained and if you have 10 minutes to talk then 9:30 should be spent on #1 & #2) miners are compensated for this WORK they perform to SECURE the network.   Miners receive small transaction fees (far lower than VISA or ACH, or Western Union).   However when the network is young the amount of transactions may be insufficient to justify the expenses of miners to secure the network.  So the network provides a SUBSIDY to miners.  This subsidy is rewarded per block solved and decreases over time until the subsidy is gone.

My guess is most people who talk about Bitcoin are "mining nerds" and thus talk first about mining but honestly if gives a distorted view of Bitcoin and comes off as kinda ponzi/weird/scamish.   It would be like explaining to someone what a personal computer is and starting with a very detailed explanation of how to play Counterstrike.

[proudhon]

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

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.  

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!

I had the same response to the first interview I saw with Amir over a year ago.  It made me cringe.  He kept brining up Anonymous, etc., etc. and seemed to be answering questions nobody was even asking.

[World]

the second video "Panel Discussion "was interesting