DECENTRALIZED crypto currency (including Bitcoin) is a delusion (any solutions?)

[TPTB_need_war]

I beg your pardon for being off-topic.

Afaics, it is not off-topic. Decentralized exchange is an integral aspect of overall decentralization of crypto currency.

But as you have an immense understanding of crypto currencies, I thought I might ask a question regarding a part of the recent conversation.
I'd have asked via PM, but I bet a lot of people are interested in your assessment.

, but the Cryptsy thing pisses me off.  The high level of scuntitude they've displayed and complete disregard for their customers just makes me want to scream.  I did in my car on the way home, but it didn't help.

Why do you scream when you've been incessantly warned that storing your crypto currency with any third party is inherently unsafe and can never be safe.

That is why we need decentralized exchanges, but these have technical challenges that have yet to be overcome.

Don't you think that decentralized exchanges like
MercuryEx or
Blocks & Chains Exchange
are on a good way, because in difference to other decentralized exchanges they use no proxy tokens, but do transactions on the native blockchains.

My understanding is, that MercuryEx has been stopped, because transaction malleability makes using it unsafe until OP_CHECKLOCKTIMEVERIFY is widely available.

And Blocks & Chains Exchange is not as decentralized as some might wish, but for a corporation that might still be ok and much better than the current centralized exchanges.

There was another project for a decentralized exchange I was looking at recently but I can't remember the name off the top of my head. Go to monsterer's thread where he is selling the 200 BTC profit shares in his metaexchange and I put some links there about decentralized exchange. The name of that other project can be found from there. Monsterer could you quote my post from there over here for us? I don't have time to go digging for your thread.

Afaik, the insoluble fundamental problems of decentralized exchanges that operate directly on the block chains of the coins being exchanged are:

• Block chains don't have fast enough transactions and can't handle the trading volume.
• The exchange protocol requires long delays (partially because of the third issue below), which means the paradigm can be DDoS attacked[jammed], thus rendering it unsuitable (since exchange is normally a very time sensitive action).
• Orphaned blocks can lead to one of the parties losing all the coins.

And yes afaik malleability makes decentralized exchange impossible. But even after fixing that, the block chains of all the altcoins need to have special changes made to their protocol (hard forks) and still you will have the insoluble problems I bullet-pointed above.

I think the more viable solution may be to have digital assets as Bitshares has done, e.g. BitUSD, BitBTC, BitShitCoin, etc. And these can be traded on a single block chain in a decentralized manner. So then all the inconsistency and DDoS issues of the latter two bullet-pointed above are afaics ameliorated (but let me dig deeper into that in the future before I can say this will 100% confidence). You'd still have the problem though of needing a centralized exchange to obtain the digital assets, so I am not sure this solves anything. The entire problem of decentralized change seems rather insoluble. The issues that plague decentralized exchange are related to some of the issues that probably make Blockstream's side chains insoluble.

As for the block chain scaling issue of the first bullet-pointed above, that is what I am working on now with my proposed design which was discussed upthread.

As for Bitshares, they have some ideas that are useful, but they seem to shoot themselves in the foot continuously as the following linked posts exemplify:

https://bitcointalk.org/index.php?topic=1319681.msg13566505#msg13566505
https://bitcointalk.org/index.php?topic=1090964.msg13515793#msg13515793
https://bitcointalk.org/index.php?topic=1090964.msg13513902#msg13513902
https://bitcointalk.org/index.php?topic=1319681.msg13501040#msg13501040
https://bitcointalk.org/index.php?topic=1319681.msg13516897#msg13516897

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[TPTB_need_war]

ArticMine PMed me after I wrote that flaming post, and said he would reply after studying my posts. He has not yet replied. Does that mean I am correct and there is no solution for Monero. I think so.

It is fundamental. Afaics, you'd have to completely rewrite Moaneuro.

Rewrite Monero, is not necessary at all but some documentation on how the Cryptonote adaptive blocksize limits actually work is needed, especially given the formula in section 6.2.3 of the Cryptonote Whitepaper is wrong. https://cryptonote.org/whitepaper.pdf. My response will come in time.

Sorry that won't solve the problem, which as smooth pointed out in my vaporcoin thread recently is the generlized ability to move profit to externalities (where I was already mentioning shorting as an attack on PoS coins).

Checkmate.

[TPTB_need_war]

Both are fundamentally broken.

https://bitcointalk.org/index.php?topic=1323408.msg13518156#msg13518156 (Ethereum)
https://bitcointalk.org/index.php?topic=1319681.msg13569087#msg13569087 (Block chain scaling Tragedy of the Commons applies to Monero also)
https://bitcointalk.org/index.php?topic=1319681.msg13569178#msg13569178 (Monero's anonymity is unreliable/unprovable and thus useless for fungibility or other important use cases)

"Broken" and "Success" are relative terms.  Both are broken less than bitcoin and bring attributes to the table that fiat does not.  

If you have any suggestions that are less broken ... I'm all ears.

An absolutist uses words like broken.  A realist uses terms like "best alternative".  Opening myself up to all available options those are the two answering the big questions.  Privacy, programmable blockchain and both more scalable than bitcoin.

What alternatives are less broken than these two I mentioned?

Don't you understand that "fundamentally broken" means they don't work for the features they claim that are an improvement over Bitcoin.

The link I provided to you for Ethereum explains that afaik they never solved the primary economic issue facing scaling programmable block chains, which is that every full node has to verify the block chain, thus every full node has to run the programmable script. But the problem is who to pay the gas (ether) to so that all full nodes are paid for verification? This has DDoS implications as well. In short, they never solved the core economic problem and thus Ethereum is just a fucking toy that can't actually work.

And so the n00bs moved their delusion over to Reddit:

https://www.reddit.com/r/ethereum/comments/41a3nb/is_anonymint_correct/cz0r3d5

Hi, I am AnonyMint. The drama queen allegation is a perception that is mostly irrelevant. Everyone on BCT who posts significantly is a drama queen bcz crypto is dramatic. Your labeling me a drama queen makes you a drama queen, lol. On to the substantive issue...

The OP didn't quote my clarifying statement:

https://bitcointalk.org/index.php?topic=1319681.msg13575212#msg13575212

"The link I provided to you for Ethereum explains that afaik they never solved the primary economic issue facing scaling programmable block chains, which is that every full node has to verify the block chain, thus every full node has to run the programmable script. But the problem is who to pay the gas (ether) to so that all full nodes are paid for verification? This has DDoS implications as well. In short, they never solved the core economic problem and thus Ethereum is just a fucking toy that can't actually work."

A probabilistic argument that says miners who win block rewards get paid fees and it will balance out, is dumb as shit. Just think it out. Unless hashrate is uniformly distributed amongst miners, then some miners get paid less for doing the same verification work. It is also DDoS amplication attack vector.

Also there are variants of attacks, and Vitalik was incorrect to argue that the attacks are unlikely due to cost, because the attacker can profit from shorting the coin:

https://bitcointalk.org/index.php?topic=448923.msg4995521#msg4995521

Come on n00bs, you don't have a clue. Give up. You need an expert. Respect when one is trying to help you understand. Stop labeling him a drama queen. That is B-lister attitude.

I think when people try to be perfectly politically correct, they become so anal that they enter another form of insanity. I didn't think you were being a dick. I just chalk it up to the nature of life. It is no big deal, that is why I put "lol".

Well it is mostly getting exhausted because it is very difficult to write so much and repeat oneself so many times. And also I am not really in a position in life where I can just sit back and relax. I have serious problems in my life and I am under a lot of stress. So I am stressed about consuming so much time writing (instead of for example coding). I also run into the problem that when I am less forceful, then the discussions get overrun with noise by emboldened n00bs. I don't know what the correct balance should be. As I said, it is just life. I laugh it away. No worries mate.

https://www.reddit.com/r/ethereum/comments/41a3nb/is_anonymint_correct/cz0rgdv

You entirely miss the point. The cost of verification in Bitcoin is rather small because the transaction rate is so low, and the block rewards are so high. So the inequality I explained my other post above, isn't such a big deal. But eventually this same issue could plague Bitcoin as well.

The problem is more immediately egregious in Ethereum, because scripts can consume a lot of resources, unlike verification of Bitcoin transactions which is a constant resource cost per transaction.

Again you n00bs should stop trusting your own analysis, because in my excrutiatingly vast experience of reading n00b posts at BCT, you are nearly always wrong.

In Bitcoin I think so, although there was a recent block chain fork because some miners were not doing complete verification, so perhaps the costs of verification are already borderline in Bitcoin and the transaction rate is highly corralled in Bitcoin to a 1MB block size which can't scale world wide.

Also $9 - $16 in electricity cost per transaction isn't going to scale. So eventually PoW must be redesigned to lower the cost. (I have designed that solution)

And Ethereum MUST allow a much greater use of verification resources, simply because scripts consume more resources than highly optimized code for doing one thing of verifying transactions. Ethereum could place global limits on the amount of gas a script can consume, but this is no longer a fully programmable block chain (no longer Turing complete because it requires unbounded tapes) and it is also not a free market, but rather a hard-coded, centralized decision. Just like Bitcoin's block size constant, this will become a political hellhole.

https://bitcointalk.org/index.php?topic=1219023.msg13577344#msg13577344

"Bottom line is any global constant in the protocol is not decentralization. Period. End of story.

The protocol must be able to function in a free market dynamic.

All the arguments about consensus is moving forward from 1MB slowly are irrelevant, because if constants are not decided by the protocol, then the protocol is by definition under a 51% attack always."

Afaics, none of these directions Ethereum is headed deal with the economic issue I outlined in my first post in this Reddit thread:

https://www.reddit.com/r/ethereum/comments/41a3nb/is_anonymint_correct/cz0r3d5

As for their scalability ideas (which again do not address the economic problem of inequality of gas fees I outlined), they are going down the same throught process that I went through in my analysis of how to scale a consensus system. My thought process is far ahead of theirs, and they will later realize that what they have designed is a total failure. The reason is because the CAP theorem is violated by Proof of Evidence aka Proof of Cheating (which is also one of the reasons why Bitcoin's proposed Segregated Witness will fail). Refer to my decentralization thread in the Altcoin Discussion forum at Bitcointalk for more details of the relevance of the CAP theorem. I am not eager to drill down and convince them of this, because I don't want to give then my design.

In short, scalability requires centralization. I ultimately realized it is how the centralization is structured that allows for decentralized control. That was my key epiphany.

Also the tragedy of the commons in both systems is largely resolved if you assume that all nodes mine (or this could be read as only miners and economically important users run nodes at all). That was satoshi's original design. It was pool mining that sort of broke it.

You are assuming a more uniform distribution of hash rate (otherwise gas is appropriately unequally yet all full nodes have to do the verification cost). But the problem is that never will be true due to the economics of cost of electricity, as well the variance issue forces pooling even if everyone could have uniformly distributed hashrate.

[minor-transgression]

Some thoughts on decentralisation and anonymity -

There exists a set of at least two cryptocurrencies 0, 1, ... N. The minimum set
contains at least one cryptocurrency with these characteristics at the limit :
 
*a fixed number of coins. This money can attract no interest. This is preferred
for hoarding and has a deflationary effect on market prices. This tends to
depress the economy. Transaction costs are paid for by fee income. Transactions
are relatively infrequent.

*a known number of coins, with a guaranteed cessation of trading X years in
the future. Accounts holding these coins attract interest at rates approximating to
the geometric increase in the quantity of these coins in circulation. These coins
are preferentially spent into circulation, and have an inflationary effect on
market prices and tend to stimulate the economy. Transaction costs are paid for by
mining. All debts denominated in the coins die with the cryptocurrency.
There are always two or more cryptocurrencies in the market. A voting algorithm
provides a majority of cryptocurrencies the means to ensure that a valid cease
trading order is effective. Ideally, that blockchain should be destroyed.

The intent of this writeup is to show that it is possible to design a system that
should restrict the ability of an elite group to concentrate economic resources
via the use of cryptocurrencies.

While CAP theory suggests that one cryptocurrency cannot know the internal state
of another cryptocurrency, it should be possible for cryptocurrencies to
collectively decide whether another cryptocurrency should continue to exist.

There is thus no restriction on individual choice on whether to begin a new
cryptocurrency or on individual choice on whether to use a new cryptocurrency
for transactions. Total collective freedom of choice.

[sidhujag]

I beg your pardon for being off-topic.

Afaics, it is not off-topic. Decentralized exchange is an integral aspect of overall decentralization of crypto currency.

But as you have an immense understanding of crypto currencies, I thought I might ask a question regarding a part of the recent conversation.
I'd have asked via PM, but I bet a lot of people are interested in your assessment.

, but the Cryptsy thing pisses me off.  The high level of scuntitude they've displayed and complete disregard for their customers just makes me want to scream.  I did in my car on the way home, but it didn't help.

Why do you scream when you've been incessantly warned that storing your crypto currency with any third party is inherently unsafe and can never be safe.

That is why we need decentralized exchanges, but these have technical challenges that have yet to be overcome.

Don't you think that decentralized exchanges like
MercuryEx or
Blocks & Chains Exchange
are on a good way, because in difference to other decentralized exchanges they use no proxy tokens, but do transactions on the native blockchains.

My understanding is, that MercuryEx has been stopped, because transaction malleability makes using it unsafe until OP_CHECKLOCKTIMEVERIFY is widely available.

And Blocks & Chains Exchange is not as decentralized as some might wish, but for a corporation that might still be ok and much better than the current centralized exchanges.

There was another project for a decentralized exchange I was looking at recently but I can't remember the name off the top of my head. Go to monsterer's thread where he is selling the 200 BTC profit shares in his metaexchange and I put some links there about decentralized exchange. The name of that other project can be found from there. Monsterer could you quote my post from there over here for us? I don't have time to go digging for your thread.

Afaik, the insoluble fundamental problems of decentralized exchanges that operate directly on the block chains of the coins being exchanged are:

• Block chains don't have fast enough transactions and can't handle the trading volume.
• The exchange protocol requires long delays (partially because of the third issue below), which means the paradigm can be DDoS attacked, thus rendering it unsuitable (since exchange is normally a very time sensitive action).
• Orphaned blocks can lead to one of the parties losing all the coins.

And yes afaik malleability makes decentralized exchange impossible. But even after fixing that, the block chains of all the altcoins need to have special changes made to their protocol (hard forks) and still you will have the insoluble problems I bullet-pointed above.

I think the more viable solution may be to have digital assets as Bitshares has done, e.g. BitUSD, BitBTC, BitShitCoin, etc. And these can be traded on a single block chain in a decentralized manner. So then all the inconsistency and DDoS issues of the latter two bullet-pointed above are afaics ameliorated (but let me dig deeper into that in the future before I can say this will 100% confidence). You'd still have the problem though of needing a centralized exchange to obtain the digital assets, so I am not sure this solves anything. The entire problem of decentralized change seems rather insoluble. The issues that plague decentralized exchange are related to some of the issues that probably make Blockstream's side chains insoluble.

As for the block chain scaling issue of the first bullet-pointed above, that is what I am working on now with my proposed design which was discussed upthread.

As for Bitshares, they have some ideas that are useful, but they seem to shoot themselves in the foot continuously as the following linked posts exemplify:

https://bitcointalk.org/index.php?topic=1319681.msg13566505#msg13566505
https://bitcointalk.org/index.php?topic=1090964.msg13515793#msg13515793
https://bitcointalk.org/index.php?topic=1090964.msg13513902#msg13513902
https://bitcointalk.org/index.php?topic=1319681.msg13501040#msg13501040
https://bitcointalk.org/index.php?topic=1319681.msg13516897#msg13516897

I think bitshares has made some very good design decisions and are one of the more underrated projects around here. They are due to correct to the mean of top 2 or 3 cryptocurrencies.

[GingerAle]

I feel like the fungibility thing is somewhat off-topic, and again I'm refraining from quoting due to clutter. But I hope I haven't fallen into the Monero pumpers category as described above. Its true - yes, I do not really understand cryptography enough to really understand how monero works and how it might be flawed re: fungibility (an abstraction of privacy, an abstraction of opaque block chain), but your argument seems to be that true fungibility is impossible due to data out of band. And thats always going to be the case. Even with zerocash etc., I'm sure somehow you can get information from non-protocol data.

What is true is based on what I can see and actually use, and right now the best implementation of this tech seems to be Monero (and to address the IP thing, some integration of tor or i2p). The rabbit hole you're going down though has one inevitable end: p2p wireless mesh networks built from home routers and some kind of zero knowledge proof cryptocurrency.

The first doesn't exist, and will have a hell of a time coming into existence. The second will probably exist at some point. But for now, if I want to send money to someone in Australia in less than 2 minutes and have it relatively traceless and private, I would get their address, load up my simplewallet, and then type in transfer 20 <address> amount. Mixin 20 should do the trick. My point is that it is what is implemented now.

The trick going forward is keeping the fiat <-> cryptocurrency channels operating (at least at this point), and might be the *only* reason to keep bitcoin (or other 1st generation currency networks) propped up at this point, decentralized or not. Because thats all that matters at this current moment to give this stuff legitimacy in the eyes of the rest of the people (monetary value).

but I know nothing.  

[YarkoL]

Users can't set the block size, because it is a global setting for all users in a single longest chain rule.

I hope these aphorisms are not totally off the tangent:

The longest chain is just the longest chain, the rule and the block size limit
are logically separate and independent.

Just as a price ceiling distorts that market where it is imposed, a hard-coded
limit becomes a source of inefficiency. No sacrosanct dev group or other entity
should be able to dictate what that limit is.

There is a market for security - getting included in a block provided by
miners. If we can get that market to clear without friction, then no more block size problems.

[TPTB_need_war]

The Chinese are siphoning off our speculator money with their $50 per BTC mining costs:

Anyone know what proportion of BTC is produced in China/held in China/sold out of China ?

Without this info I don't know that I can put too much store in this theory Jorge.

There is practically no reliable info on the bitcoin economy, in particular on the flow and ownership of bitcoin by country. (This is a serious problem for would-be investors.)

We can only note that more than 67% of all new bitcoins are mined by Chinese pools, which probably comprise mostly Chinese miners; and that bitcoin has practically no use inside China, except as an instrument of speculative trading inside the exchanges.  Until last October, variations of trading volume at those exchanges did not seem to be reflected in the USD transaction volume, which may mean that there was little deposit and withdrawal at those exchanges.  

There is efficient arbitrage between the Chinese and non-Chinese exchanges. If Chinese miners sold their coins only in Chinese exchanges, that would tend to depress the price there.  Then the arbitragers would immediately move those excess coins to non-Chinese exchanges, until the prices got equalized.

So, I would guess that it does not matter where the Chinese miners sell: the net effect is that a large fraction (if not most) of the bitcoins mined in China are eventually bought and hoarded by non-Chinese investors.

On the likelihood of fixing Bitcoin:

The problem is that the cost [ of validating a transaction ] grows like N^2 for N inputs.

By the way, there is no excuse for the cost to be quadratic.  That is one of the many crocks in the BitcoinCore implementation, that will take more crocks to work around.  Like the Segregated Witnesses proposal,  malleability and its partial patches, blockchain voting to increase the limit, etc..

There you have another possible failure mode for Bitcoin: runaway code crockification (RCC).  As the code gets more complicated and ugly, fewer competent people will be willing to work on it.  Their place will be taken by incompetent pople, who will add even more crocks -- and so on until the code will fail and there will be no one capable of fixing it in time.

Just a possibility; but after seeing the malleability problems,  the Fork of July fiasco, the "fee merket" plans and the RBF hack, the Seg Wit proposal -- I fear that the RCC may be already underway...

If we understand the reasoning that led to certain details of the design (like the 1 MB limit and the abrupt halvings of the reward) we have a better chance of predicting what would happen if we changed them. 

Those who want to reform bitcoin so that it replaces VISA or ACH should put bitcoin aside and start the design such a system from scratch, choosing at each step the gears and rivets that are better suited to those goals.  But, first, they should justify why the world needs a better option for those goals and why they think that they can design one.

(That said: in fact, I believe that, as a software engineer, Satoshi, was much better than Gavin and Mike, who are much better than all the Blockstream developers -- who are totally incompetent and irresponsible in that regard.)

[TPTB_need_war]

Pertaining to the discussion CoinCube and I were having upthread about the entropic direction of crypto currencies and the trend towards world government control:

https://www.reddit.com/r/btc/comments/4089aj/im_working_on_a_project_called_bitcoin_classic_to/cz0mda4
https://www.reddit.com/r/btc/comments/4089aj/im_working_on_a_project_called_bitcoin_classic_to/cz0vncc

Mankind's goal is the Second Law of Thermo, i.e. trend to maximum entropy. Thus killing all but Bill Gates or uniformly distributing anything, is an anti-pattern. Welcome to my world of knowledge professor Stolfi.

Also, while isolated physical systems tend to evolve in the direction of maximum internal entropy, that does not mean maximum homogeneity or maximum randomness. For example, if one places a cold metal ball in a hot solution of a suitable salt, the system will evolve to a state where some of the salt has crystallized out from the "random" solution as crystal -- a state which has lower total entropy than the starting state, in spite of being more heterogeneous and including a highly ordered phase.

Indeed localized systems can be extract energy from the environment to maintain Coasian barriers to the universe trend. But this energy can't be maintained for ever, just as our sun won't burn forever.

To argue against our theory for crypto currencies one would need to show what is the external energy source which preventing the rise in entropy. Seems to me the powers-that-be have run financial malfeasance at a much higher clip than increases from cheap energy and technology and thus will have difficulty preventing a lurch towards greater entropy via greater human participation in the global economic village. I agree with you that without considering the relationships of local systems, the notion of a universe trend is of such reduced significance so as to be nonsense.

I think the theory about more participation of humans is based less on a universal trend for all of outer space and instead we are referring to the universal trend here on earth, since the external energy inputs to earth is I think limited to the sun.

The earth has in theory collected energy from the sun for eons (since many orders-of-magnitude greater than the epoch of human civilization), so earth has a stored internal energy source which far exceeds the current effect of the environment of outer space. Thus earth should be trending to maximum entropy as it is effectively an isolated system.

Would you please elaborate? Are you claiming the earth is receiving all its energy from the sun or it has its own energy store? Which flow of energy is currently greater, that coming from earth's internal store or the external flows? From where do you claim earth attained its internal store of energy?

I am claiming the internal store of energy on earth dwarfs the external flows. If you disagree, please document your claim, because I am unaware of that.

The following resource states the net external flows is 0:

https://en.wikipedia.org/wiki/Earth%27s_energy_budget#Energy_budget

The key point is the relative flows. Perhaps you didn't realize that was my point. Afaics, earth is much more dependent on its internal energy flows and than external flows, that it is for anything on the scale of 1000 years, a closed system entropically barring any major abberations such as asteriod hit.

I have found the following which says you are incorrect (and they precisely make the same point I was making about relative flows):

https://www.quora.com/Heat-energy-flows-from-Sun-to-Earth-How-does-the-entropy-of-the-Earth-Sun-system-increase-during-this-process/answer/Robert-Reiland

There are some who argue that the absorption of light from the sun by the Earth reduces entropy.  This isn't correct, but for the sake of argument, assume it is.  This hypothetical entropy reduction is much smaller that the entropy increase from photons produced to radiate from the Earth.  Thus, no matter how you look at the sun, the Earth, the two together or the entire solar system, entropy is increasing.

A scientist will check his theory against reality. Anyone who argues the entropy of life here on earth has been decreasing over the epochs seems to be out-of-touch with any sense of reality. The encephalization quotient of the human brain is order-of-magnitude greater (measure of the relative efficiency of energy dissipation to entropy) than primative creatures. And man's civilizations are orderS-of-magnitude higher in Kolmogorov complexity than anything in the primordial earth.

The specification of the state of the system, includes specifying all of its dynamic processes. Obviously there is no way to specify the state of a dynamic system without a dynamic model, for the same reason there is no present because it is gone before you can think about it. You constructed a strawman around your own narrow and incorrect interpretation of what CoinCube could have meant.

You've just contradicted yourself. First you state that static numbers can't capture entropy because randomness is relative and thus entropy must be described dynamically and holistically, then you state the human brain can be reduced to some static number of atoms (which doesn't factor in the higher-level entropic model of life that CoinCube is explaining).

You are highly confused.

I am attacking everything you've been incorrectly indoctrinated with.

The problem you have is that you want to argue for relativity where it supports your argument, while not realizing you are contradicting yourself by doing so. Bottom line is that entropy is always relative to the context in which it is considered. Even work on chaos theory has shown that, i.e. what appears to be entirely random from one model has a strange attactor order from another model perspective.

So our first order of business here, is to determine whether the earth is essentially a closed system given that the flows of energy here on earth dwarfs the external flows..

EDIT: I messaged the professor and told him I need to put this discussion on hold, because I am too overloaded. I suggested we will start by agreeing on what is entropy from first principles. I told him I was ashamed that my posts were so incoherent and disorganized, and that I am too overloaded at the moment.


Update:

Well Life and Intelligence and Human societies run contrary to thermodynamics...

...But begetting information is not easy. Our universe struggles to do so. Our ability to beget information, and to produce the items, infrastructures, and institutions we associate with prosperity, requires us to battle the steady march toward disorder that characterizes our universe and which troubled Boltzmann. To battle disorder and allow information to grow, our universe has a few tricks up its sleeve. These tricks involve out-of-equilibrium systems, the accumulation of information in solids, and the ability of matter to compute. Together these three mechanisms contribute to the growth of information in small islands or pockets where information can grow and hide, like the pocket we call our planet.

So it is the accumulation of information and of our ability to process information that define an arrow of growth encompassing the physical, the biological, the social, and the economic, and which extends from the origin of the universe to our modern economy. It is the growth of information that unifies the emergence of life with the growth of economies, and the emergence of complexity with the origins of wealth...

This is the essence of the debate I was having with professor JorgeStolfi (which I had to put on temporary hold bcz I am so busy on my software project, I had PM'ed him saying I was sleepless, incoherent, ill, and regretted opening the debate when I wasn't capable).

The key is to understand that when a human creates order, he destroys some Coasian barrier to knowledge and via the social network increases the degrees-of-freedom in society thus leading to higher entropy.

I alluded to these processes in the ~2010/11 essay I wrote which is linked in the OP of this thread, and also the Information is Alive! essay I wrote in 2012.

This is why I am now hyper focused on social networking and crypto currency, no longer anonymity. Anonymity fosters barriers thus decreasing entropy.

[TPTB_need_war]

Some thoughts on decentralisation and anonymity -

There exists a set of at least two cryptocurrencies 0, 1, ... N. The minimum set
contains at least one cryptocurrency with these characteristics at the limit :
 
*a fixed number of coins. This money can attract no interest. This is preferred
for hoarding and has a deflationary effect on market prices. This tends to
depress the economy. Transaction costs are paid for by fee income. Transactions
are relatively infrequent.

*a known number of coins, with a guaranteed cessation of trading X years in
the future. Accounts holding these coins attract interest at rates approximating to
the geometric increase in the quantity of these coins in circulation. These coins
are preferentially spent into circulation, and have an inflationary effect on
market prices and tend to stimulate the economy. Transaction costs are paid for by
mining. All debts denominated in the coins die with the cryptocurrency.
There are always two or more cryptocurrencies in the market. A voting algorithm
provides a majority of cryptocurrencies the means to ensure that a valid cease
trading order is effective. Ideally, that blockchain should be destroyed.

The intent of this writeup is to show that it is possible to design a system that
should restrict the ability of an elite group to concentrate economic resources
via the use of cryptocurrencies.

The power law distribution of wealth can't be ameliorated with Coasian barriers.

The wealthy gain inflatacoin from owning more revenue generating businesses, and they can transfer this wealth to the deflatacoin, which they can then use to buy more of the next inflatacoin.

[TPTB_need_war]

I feel like the fungibility thing is somewhat off-topic, and again I'm refraining from quoting due to clutter. But I hope I haven't fallen into the Monero pumpers category as described above. Its true - yes, I do not really understand cryptography enough to really understand how monero works and how it might be flawed re: fungibility (an abstraction of privacy, an abstraction of opaque block chain), but your argument seems to be that true fungibility is impossible due to data out of band. And thats always going to be the case. Even with zerocash etc., I'm sure somehow you can get information from non-protocol data.

I actually argued that fungibility is not anonymity, that they partially overlap, but that fungibility also requires decentralized, permissionless attribute. And that the latter attribute is a higher priority for maintaining fungibility.

[TPTB_need_war]

China can SPV mine, which they do already, but it is risky and puts them at a further disadvantage.

Why? They can control the pool abroad.

A pool abroad is a loser. It just adds latency.

That doesn't add any latency that they wouldn't have already with small blocks.

Yes it does. Block is solved in China. If it is sent to a mining pool in China, that mining pool and the other ones in China receive it right away. If it has to go over GFW twice, as would be the case with a pool node outside China, then there is added latency.

Incorrect. The pool still has to propagate the block solution to the block chain which means all block solutions have to propagate across the GFW (so it always double for incoming/outgoing block solutions regardless whether the pool is inside or outside China's wall). The size of the blocks is irrelevant as I said.

The block solution can be propagated directly to others inside of China even if the pool is also outside.

They would have to build a custom solution to do that, and then deal with maintaining it and potentially being exploited in some manner. If forced, they will likely do exactly that, but they would prefer not to.

I'm not referring to what is theoretically possible (maybe, if there aren't some non-obvious ways to exploit it) but what is readily deployable using existing tools.

1,312,500 BTC mined per year @ $300+ profit = $400 million annually (assuming the very low < $50 costs for mining for 2 cents hydropower and latest ASICs). Chinese are mining an estimate of 67% of that apparently.

They can afford to build that custom software solution.

The Chinese miners are lying.

Expect corruption at the highest levels. Probably are getting subsidized electricity for free. Etc.

Bitcoin has already been 51% attacked. End of story.

We MUST eliminate profitable mining (my design)!

Edit:

Maybe those Chinese miners are puppets for corrupt Chinese ministers?  Maybe due to the crackdown on corruption, electricity for Bitcoin is more stealthily than transferring bank money?

That was also one of my thoughts about the possibilities.

But also consider that the core devs of Bitcoin can't be this dumb. Surely they also know about this and have covered it up.

[Come-from-Beyond]

We MUST eliminate profitable mining (my design)!

Already eliminated in Iota.

[YarkoL]

We MUST eliminate profitable mining (my design)!

Already eliminated in Iota.

Master Yoda?!

[TPTB_need_war]

We MUST eliminate profitable mining (my design)!

Already eliminated in Iota.

Correct (kudos!) and I stated that upthread. But I also stated that since you can't allow PoW to be signed by the payer, then PoW can be outsourced to ASICs and thus centralization results.

Also there was the greater concern about a DAG's Consistency (and I prefer not to repeat that upthread discussion).

[CIYAM]

In regards to decentralised exchanging using ACCT the introduction of CLTV means that malleability is no longer an issue (you don't need to refer to transaction ids that aren't already confirmed).

I have built code that will create a Bitcoin script that works by combining the ACCT and CLTV with a P2SH address and redeem script.

https://bitcointalk.org/index.php?topic=598860.msg13435766#msg13435766

[TPTB_need_war]

In regards to decentralised exchanging using ACCT the introduction of CLTV means that malleability is no longer an issue (you don't need to refer to transaction ids that aren't already confirmed).

I have built code that will create a Bitcoin script that works by combining the ACCT and CLTV with a P2SH address and redeem script.

https://bitcointalk.org/index.php?topic=598860.msg13435766#msg13435766

What about the other issues with decentralized exchange I enumerated?

[CIYAM]

What about the other issues with decentralized exchange I enumerated?

It is only a solution to the malleability issue that rendered TierNolan's original implementation practically unusable (so I just wanted to clarify that malleability is no longer a part of the problem).

I see ACCT with CLTV as being more akin to a street currency exchange than to an exchange like Cryptsy (i.e. useful in the same way as a street currency exchange is for fiat when you are traveling abroad but not very suitable for the purposes of day-trading and cannot be used for high frequency trading of course).

If the purpose of say obtaining LTC for BTC was not to day trade but just to have some LTC as some sort of hedge or to use for some other purpose then you won't need to trust an exchange like Cryptsy being the point.

[monsterer]

May I request that if you want to have a discussion about theory behind graph models for transaction state, that you create a new thread and we will discuss it there. Then after we reach mutual understanding, we will post the summary back in this thread. I don't want to make this thread unnecessarily noisy.

I don't think trees will work and that is why I think we will end up writing a long discussion. And this thread is already getting difficult to follow, being too long to digest holistically in a reader's mind.

This is not specifically about trees; it could be any single, completely linear sequence of chained transactions. In fact, I think the reader would be enlightened by the answer to this simple, direction question about trustless consensus:

Why is it not enough to find one global sequence for all transactions ever made?

As I see it, sequencing is all you need, even in the face of double spends because the first time an output is spent in this linear sequence, subsequent spends of the same output will simply be invalid.

[enet]

CAP does not apply to distributed systems. Sure, state can be inconsistent, but that's not necessarily a problem. Consistency is usually over-rated by academics, and that's how one often ends up with misleading theorems. Any two computers communicating over a distance will be out of sync. The basis of blockchains is Lamport's work on how communication can happen in such a distributed system. In essence there needs to be consensus on a partial order of events. Total consensus on one variable is impossible, since information can't travel faster than light, but it is not required. If node A knows that X = 1, he sends a message to B "X = 1". But it might be that before that message reaches B, that X = 2. This in itself is not a problem. Bitcoin's PoW indeed solves the double-spending problem. Its possible even at a distance to know what happens first, as long as Peers are honest (if A sends message X = 3, although X=1, the result will be false in any case independent of the order). Say in Bitcoin everyone knows that Alice owns 1 BTC. If she sends a message to all peers, that she wishes to transfer her wealth to Mallory, then this message will only be applied after a rather long interval - the block cycle. Blockchains doesn't mean that all nodes agree on a total order of events. It means consensus on partial order of events. The most important article for understanding blockchains very few seem to have read and understood is: http://research.microsoft.com/en-us/um/people/lamport/pubs/time-clocks.pdf . Lamport also came up later with the Byzantine Generals problem.