The fork

[notig]

It's pretty clear that the lead developers want to raise the max block size. From what I've read it seems like a good idea because it will improve the network. Anyways...... this requires a hard fork. Do you think the chances of this fork are 100% ?  When do you think the fork will be?

edit: [I posted this in here because I don't want it to be a technical discussion. But rather a general discussion of an impeding fork(if that's even possible). That seems a little too important to leave in the developmental forum]
edit2:

Why wouldn't miners reject interactions with miners who set the block size too high, for instance?

Yes, I believe they would. So far, most miners and pools are VERY conservative; I think the idea that they will create huge blocks that have a significant risk of being rejected, just so they MIGHT get an advantage over marginal miners that can't process them fast enough, is loony.

But I might be wrong.

So I'd like to wait a little while, think deeply some more, and see how miners and merchants and users react with the system we've got as transaction volume increases.

BTC

[deepceleron]

There is no indications that any core developer want to change the block size. Maybe when you can't get a transaction in the next block by paying an adequate fee it might be time to consider such a change. There was just one thread with a whole bunch of me too responses from people who think they should get to spam the network with their martingale bot. That's where your post should have been added.

[DannyHamilton]

It's pretty clear that the lead developers want to raise the max block size.

Really? Why do you say that?

From what I've read it seems like a good idea because it will improve the network.

Really? Improve it how?

Anyways...... this requires a hard fork. Do you think the chances of this fork are 100% ?

No.

When do you think the fork will be?

If it happens, then my prediction is that it will be when there is less than a 75% chance of getting a 1kb or smaller transaction with inputs totaling more than 0.1 BTC included in the next block with a fee of 2%.*


*This is a completely arbitrary and unsubstantiated claim that I've made up on the spot simply because it sounded good to me.

[notig]

First of all I'd just like to say I posted this in here because I don't want it to be a technical discussion. But rather a general discussion of an impeding fork. That seems a little too important to leave in the developmental forum.

Really? Why do you asy that?

I think we should put users first. What do users want? They want low transaction fees and fast confirmations. Lets design for that case, because THE USERS are who ultimately give Bitcoin value. - Gavin Andersen

Did I completely misunderstand him when he said this is another thread? Doesn't lower transaction fees and fast confirmations mean a larger block size?

Really? Improve it how?

You seem to be saying that we should subsidize inefficient miners by limiting the block size, therefore driving up fees and making users pay for their inefficiency. - Gavin Andersen

Once again........ am I completely misunderstanding what he is saying here? He is saying limiting the block size (as it is currently ) drives up fees and makes users pay for their inefficiency. Does this not mean that Gavin is for raising the block size limit which means a fork?

[tvbcof]

If it happens, then my prediction is that it will be when there is less than a 75% chance of getting a 1kb or smaller transaction with inputs totaling more than 0.1 BTC included in the next block with a fee of 2%.*

*This is a completely arbitrary and unsubstantiated claim that I've made up on the spot simply because it sounded good to me.

I guess (hope) you mean more or less a flat rate which would be around 2% on a .1 BTC transaction?

If so, I've always thought that Bitcoin's best hope is to become something of a 'reserve currency' in which largish base transactions can occur.  So it is not something I'd be particularly opposed to as one path forward for Bitcoin.

If not, and a 2% transaction fee is in the ballpark of what people are gunning for, I believe it would pretty rapidly suck the life out of the economic actors who are not capable of providing actual infrastructure support...and the barrier to entry here is rapidly making this non-tenable for most.  Such a solution would be no more desirable than current mainstream financial institutions to my way of thinking.

[DannyHamilton]

Really? Why do you say that?

I think we should put users first. What do users want? They want low transaction fees and fast confirmations. Lets design for that case, because THE USERS are who ultimately give Bitcoin value. - Gavin Andersen

Did I completely misunderstand him when he said this is another thread? Doesn't lower transaction fees and fast confirmations mean a larger block size?

Really? Improve it how?

You seem to be saying that we should subsidize inefficient miners by limiting the block size, therefore driving up fees and making users pay for their inefficiency. - Gavin Andersen

Once again........ am I completely misunderstanding what he is saying here? He is saying limiting the block size (as it is currently ) drives up fees and makes users pay for their inefficiency. Does this not mean that Gavin is for raising the block size limit which means a fork?

From that same conversation, I see the following qote from that same person:

- snip -
So, as I've said before:  we're running up against the artificial 250K block size limit now, I would like to see what happens. There are lots of moving pieces here, so I don't think ANYBODY really knows what will happen
- snip -

That would seem to indicate to me that there hasn't been any decision to increase block size any time soon.  As a matter of fact, the blocksize has been artificially decreased for many miners to gain knowledge on which to base future decisions.

The quotes you posted appear to be used as an argument against a particular reasoning that blocksize has to remain small forever for the sake of inefficient miners.  This is in no way an argument that the blocksize needs to increase soon, only that the possibility of raising it in the future shouldn't be eliminated.

[hazek]

The quotes you posted appear to be used as an argument against a particular reasoning that blocksize has to remain small forever for the sake of inefficient miners.

It's an argument over what ramifications for the security and the decentralization of Bitcoin removing the block size limit would have. Please don't spread Gavin's manipulative reframing. No one in that thread cares if less efficient miners can't "hack it", they all care what that would mean for Bitcoin. And if less efficient miners are part of what makes Bitcoin secure and decentralized then absolutely they need to be thought off when considering a hard fork type change of the protocol.

[DannyHamilton]

It's an argument over what ramifications for the security and the decentralization of Bitcoin removing the block size limit would have. Please don't spread Gavin's manipulative reframing. No one in that thread cares if less efficient miners can't "hack it", they all care what that would mean for Bitcoin. And if less efficient miners are part of what makes Bitcoin secure and decentralized then absolutely they need to be thought off when considering a hard fork type change of the protocol.

The point wasn't to spread manipulative framing.  The point was to respond to notig's use of Gavin's words to claim that "It's pretty clear that the lead developers want to raise the max block size".

Notig was claiming that Gavin was arguing for a need (or desire) to increase blocksize.  As I saw it, Gavin was arguing that a loss of decentralization isn't enough reason to avoid increasing blocksize.  I don't see those two as being identical, do you?

[greyhawk]

DDOS SatoshiDice out of existence. Problem solved.

[Technomage]

The block size limit will most certainly need to be raised either as a "one time" event or changed to a dynamically changing limit, if a suitable method for that can be agreed upon. It's not a matter of if, it's a matter of when. If we don't do anything about it, Bitcoin will actually start shrinking in usage, because it will only be usable for high value transactions.

SatoshiDice has nothing to do with it. It has only accelerated the need for this. Killing SatoshiDice would delay the need but it would not remove it.

[hazek]

It's an argument over what ramifications for the security and the decentralization of Bitcoin removing the block size limit would have. Please don't spread Gavin's manipulative reframing. No one in that thread cares if less efficient miners can't "hack it", they all care what that would mean for Bitcoin. And if less efficient miners are part of what makes Bitcoin secure and decentralized then absolutely they need to be thought off when considering a hard fork type change of the protocol.

The point wasn't to spread manipulative framing.

Does it matter what your point was? You spread manipulative framing, don't do it.

[Anon136]

It's pretty clear that the lead developers want to raise the max block size. From what I've read it seems like a good idea because it will improve the network. Anyways...... this requires a hard fork. Do you think the chances of this fork are 100% ?  When do you think the fork will be?

edit: [I posted this in here because I don't want it to be a technical discussion. But rather a general discussion of an impeding fork(if that's even possible). That seems a little too important to leave in the developmental forum]

i for one would not go along with such a fork. i think many others would agree with me. So long as there are atleast a few other people who agree, a hard fork will not be possible.

[DannyHamilton]

Does it matter what your point was? You spread manipulative framing, don't do it.

That's just silly. Of course it matters what the point was.

Notig was using Gavin's words to imply that Gavin had a certain intent.  The only way to point out that Gavin had a different intent was to point out what that different intent was.

[Technomage]

i for one would not go along with such a fork. i think many others would agree with me. So long as there are atleast a few other people who agree, a hard fork will not be possible.

This change is (eventually) such a critical and needed change, if we want Bitcoin to be used for small payments as well, that it will simply be done. Anyone who disagrees will form their own payment network.

The alternative scenario is that for some reason the dev team doesn't have the will to do this, and users eventually start to flock to other cryptocurrencies.

[Technomage]

It's also important to note that there are many upgrades that can be done to Bitcoin if a hard fork is needed anyway. It's actually very beneficial. It will allow Bitcoin to stay competitive with smaller and more agile cryptocurrencies.

[Anon136]

i for one would not go along with such a fork. i think many others would agree with me. So long as there are atleast a few other people who agree, a hard fork will not be possible.

This change is (eventually) such a critical and needed change, if we want Bitcoin to be used for small payments as well, that it will simply be done. Anyone who disagrees will form their own payment network.

The alternative scenario is that for some reason the dev team doesn't have the will to do this, and users eventually start to flock to other cryptocurrencies.

This problem can be solved with centralized services. I know this sounds ominous, but since these servers would only be used for transactions that were too small to be efficiently sent through the bitcoin network it really wouldnt be a big deal at all. I would probably only have a tiny fraction of a percent of my assets held in such a system at any given time.

[prezbo]

i for one would not go along with such a fork. i think many others would agree with me. So long as there are atleast a few other people who agree, a hard fork will not be possible.

This change is (eventually) such a critical and needed change, if we want Bitcoin to be used for small payments as well, that it will simply be done. Anyone who disagrees will form their own payment network.

The alternative scenario is that for some reason the dev team doesn't have the will to do this, and users eventually start to flock to other cryptocurrencies.

This problem can be solved with centralized services. I know this sounds ominous, but since these servers would only be used for transactions that were too small to be efficiently sent through the bitcoin network it really wouldnt be a big deal at all. I would probably only have a tiny fraction of a percent of my assets held in such a system at any given time.

So you feel like 7 transactions/second will always be enough? 

[mintymark]

As I understand it, Satoshi DID intend to increase the block size, and he intended to do it without a fork.

I think its worth remembering that Satoshi's view ought to get a certain amount of respect just because, he is Satoshi.

Various complex ways of adjusting the blocksize dynamically have been discussed, but mostly these sound too raw to me, and need a much longer period of discussion. The blocksize will likely need to be increased THIS YEAR, or some of the properties of Bitcoin may start to be eroded. Thats the current situation.

I say a moderate hard coded increase should be planned for now (this is not a fork) and more complex proposals FULLY evaluated over the next year or so.

[prezbo]

I say a moderate hard coded increase should be planned for now (this is not a fork) and more complex proposals FULLY evaluated over the next year or so.

How is it not a fork? Correct me if I'm wrong, but older clients will just drop larger blocks, and never be able to sync when one block in the chain is larger then the limit set in their client?

[Anon136]

As I understand it, Satoshi DID intend to increase the block size, and he intended to do it without a fork.

I think its worth remembering that Satoshi's view ought to get a certain amount of respect just because, he is Satoshi.

Various complex ways of adjusting the blocksize dynamically have been discussed, but mostly these sound too raw to me, and need a much longer period of discussion. The blocksize will likely need to be increased THIS YEAR, or some of the properties of Bitcoin may start to be eroded. Thats the current situation.

I say a moderate hard coded increase should be planned for now (this is not a fork) and more complex proposals FULLY evaluated over the next year or so.

by properties of bitcoin being eroded you mean people will not be able to get their transactions included in a block with out paying a fee right? This is actually desirable because in the future transaction fees will have to replace block rewards.

[Anon136]

i for one would not go along with such a fork. i think many others would agree with me. So long as there are atleast a few other people who agree, a hard fork will not be possible.

This change is (eventually) such a critical and needed change, if we want Bitcoin to be used for small payments as well, that it will simply be done. Anyone who disagrees will form their own payment network.

The alternative scenario is that for some reason the dev team doesn't have the will to do this, and users eventually start to flock to other cryptocurrencies.

This problem can be solved with centralized services. I know this sounds ominous, but since these servers would only be used for transactions that were too small to be efficiently sent through the bitcoin network it really wouldnt be a big deal at all. I would probably only have a tiny fraction of a percent of my assets held in such a system at any given time.

So you feel like 7 transactions/second will always be enough? 

not at all. Im saying that small transactions will be handled off network and 7 transactions per second will be enough to transfer large amounts of bitcoin. (assuming 7 transactions per-second is the actual limit applied by 1mb blocks)

[hazek]

Does it matter what your point was? You spread manipulative framing, don't do it.

That's just silly. Of course it matters what the point was.

Notig was using Gavin's words to imply that Gavin had a certain intent.  The only way to point out that Gavin had a different intent was to point out what that different intent was.

Yes. Of course.

But instead of saying Gavin was responding to an argument that blocksize has to remain small forever for the sake of inefficient miners (as he framed it) you could have accurately said that he was responding to an argument that blocksize has to remain small forever for the sake of security and decentralization.

See the difference? It's subtle, but that's how manipulation usually is.

[hazek]

As I understand it, Satoshi DID intend to increase the block size, and he intended to do it without a fork.

I think its worth remembering that Satoshi's view ought to get a certain amount of respect just because, he is Satoshi.

Fallacy: Appeal to authority.


It's completely irrelevant what Satoshi or anyone else thought how Bitcoin ought to work if it isn't based in a sound argument.

[DannyHamilton]

Does it matter what your point was? You spread manipulative framing, don't do it.

That's just silly. Of course it matters what the point was.

Notig was using Gavin's words to imply that Gavin had a certain intent.  The only way to point out that Gavin had a different intent was to point out what that different intent was.

Yes. Of course.

But instead of saying Gavin was responding to an argument against a particular reasoning that blocksize has to remain small forever for the sake of inefficient miners (as he framed it) you could have accurately said that he was responding to an argument against a particular reasoning that blocksize has to remain small forever for the sake of security and decentralization.

See the difference? It's subtle, but that's how manipulation usually is.

Sure, but then Gavin would be in here accusing me of spreading retep's manipulative framing.  

It seems that either way I'm using someone's framing. That can't be avoided.  Since Notig was using Gavin's words to make his point, I was using Gavin's words to show that Notig misunderstood Gavin's point.

If Notig had used retep's words and misunderstood retep's point, I'd have used retep's words (along with whatever framing they included) to show that Notig misunderstood retep's point.

Sorry, I just don't see the issue here.  I wasn't arguing that Gavin was right (or wrong), only that Notig was basing his questions on a misunderstanding of what Gavin was saying.

[markm]

If there is still space in blocks reserved for free transactions will that go away first before bothering to actually increase the block size?

At how much fee per kilobyte will a megabyte per block cease to be "enough" to accommodate all transactions willing to pay that fee?

-MarkM-

[mintymark]

As I understand it, Satoshi DID intend to increase the block size, and he intended to do it without a fork.

I think its worth remembering that Satoshi's view ought to get a certain amount of respect just because, he is Satoshi.

Fallacy: Appeal to authority.


It's completely irrelevant what Satoshi or anyone else thought how Bitcoin ought to work if it isn't based in a sound argument.

I agree. But all I am saying is that in Satoshi's case it usually was, so we should be that much more certain if we think he was wrong.

prezbo: yes on futher reflection this is a fork, I was wrong.

[DannyHamilton]

prezbo: yes on futher reflection this is a fork, I was wrong.

Increasing from 250kB to 1MB is not a fork because 250kB is a self imposed limitation used by a subset of miners on the creation (not the acceptance or relay) of a block.

Increasing above 1MB and/or changing to a dynamic algorithm for choosing the maximum blocksize of any particular block would be a fork inducing change if 100% of the users and miners did not accept the change before it was triggered.

[Littleshop]

Yawn.

If the majority of developers feel it is important to change the protocol to keep it functioning properly I will change my miners or switch to a pool that supports it.  Changes have happened before and they will happen again.  Bitcoin is not a frozen protocol.  If you don't like the change, don't change though you may no longer be a part of the majority network.  These things resolve themselves quickly based on the TECHNICAL MERITS of the change.

[DannyHamilton]

Yawn.

If the majority of developers feel it is important to change the protocol to keep it functioning properly I will change my miners or switch to a pool that supports it.  Changes have happened before and they will happen again.  Bitcoin is not a frozen protocol.  If you don't like the change, don't change though you may no longer be a part of the majority network.  These things resolve themselves quickly based on the TECHNICAL MERITS of the change.

And if there's pretty much an even split among developers with equal numbers on each side of the issue, and the technical merits depend on a choice between a more decentralized bitcoin or a significantly faster growing blockchain that leads to centralization and a reduction in mining and full nodes?  Then which will you choose?

[Peter Todd]

Yawn.

If the majority of developers feel it is important to change the protocol to keep it functioning properly I will change my miners or switch to a pool that supports it.  Changes have happened before and they will happen again.  Bitcoin is not a frozen protocol.  If you don't like the change, don't change though you may no longer be a part of the majority network.  These things resolve themselves quickly based on the TECHNICAL MERITS of the change.

Bitcoin has changed before, but the last time a hard-fork change happened was way back in the summer of 2010 to fix the overflow bug. Back then Bitcoin's were nearly worthless, there wasn't really an economy built, and the userbase was tiny. There have been soft-forks like P2SH, where only mining power requires upgrading, but even those took months of planning and advocacy.

Changing the block size is a really big deal. Technically speaking the change is no different than changing the inflation schedule, and as we've seen, it's not a change without a lot of controversy. Everyone needs to change their software to accept the change; if Gavin pushed a blocksize change to the reference client tomorrow, I know I myself would stick with the existing system as would many others.

[Littleshop]

Yawn.

If the majority of developers feel it is important to change the protocol to keep it functioning properly I will change my miners or switch to a pool that supports it.  Changes have happened before and they will happen again.  Bitcoin is not a frozen protocol.  If you don't like the change, don't change though you may no longer be a part of the majority network.  These things resolve themselves quickly based on the TECHNICAL MERITS of the change.

Bitcoin has changed before, but the last time a hard-fork change happened was way back in the summer of 2010 to fix the overflow bug. Back then Bitcoin's were nearly worthless, there wasn't really an economy built, and the userbase was tiny. There have been soft-forks like P2SH, where only mining power requires upgrading, but even those took months of planning and advocacy.

Why would changing the blocksize be any different?  I see a lot of FUD in this thread. 

[DannyHamilton]

- snip -
if Gavin pushed a blocksize change to the reference client tomorrow, I know I myself would stick with the existing system as would many others.

retep,

I saw in that other thread that you gave quite a bit of thought to how increasing blocksize could lead to increased centralization of mining.

I'm curious if you've given much thought to the ways that increased transaction fees might also lead to increased centralization?  Perhaps I haven't given it enough thought yet, but my basic thinking is along the lines of:

• Increased fees create an incentive for a few large well funded mining operations to get involved
• The larger the total hashing power of the network, the more necessary it becomes for smaller operations to participate in a pool to receive a reasonable chance of being paid for their efforts in a timely manner.
• The more pools are used by smaller operations, the smaller the individual share of mining reward for each of those operations.
• High fees make spending/using that small acquired share of a mining reward cost prohibitive (fees use up the entire balance of each added input leaving nothing left for actual spending).
• The inability to spend/use any of the earned bitcoins discourages participation in mining by small operations, leading to an increase in centralization as the smaller operations are forced out of the market.

There may be other ways that increased fees drive centralization, this was just the first that came to mind (which was why I asked if you had given the possibility much thought).

[Peter Todd]

retep,

I saw in that other thread that you gave quite a bit of thought to how increasing blocksize could lead to increased centralization of mining.

I'm curious if you've given much thought to the ways that increased transaction fees might also lead to increased centralization?  Perhaps I haven't given it enough thought yet, but my basic thinking is along the lines of:

On the bitcoin-dev email list I responded to exactly that argument actually; my responses below are based on the response:

Increased fees create an incentive for a few large well funded mining operations to get involved

The cost of mining is in two parts: mining itself, and overhead. The mining equipment costs basically the same regardless of how many hashes/s you want to mine with; if anything I suspect small mining operations are cheaper than larger operations because cooling costs are non-existance for a small miners with a few rigs, and at a small scale power can often be either re-used for heating (cold climates) or is available at a flat rate. (I don't pay for power at my apartment) We're fortunate that the primary cost of ASICs is the mining chip itself, and they are cheapest when you make thousands of inexpensive chips. You'll always be able to buy relatively inexpensive rigs that only contain a few chips, just like BFL sells everything from $150 rigs, one chip, to $35,000 rigs, lots of chips.

The overhead, running a validating node to verify the blocks you are mining, is a fixed cost.

Thus I see no reason why large fees have anything to do with the size required to profitably run a mining operation.

The larger the total hashing power of the network, the more necessary it becomes for smaller operations to participate in a pool to receive a reasonable chance of being paid for their efforts in a timely manner.

Sure, but that's already true. Even the ASIC operations have been mining in pools to keep varience low. The important thing is that small blocks make it cheap for anyone to validate the blocks you are mining for the pool, keeping the pool honest. Equally they allow you to mine on P2Pool, which is totally distributed and not controlled by anyone.

Anyway, the argument you're really making is that we can't spend a lot of money ensuring that the network remains secure against a well funded 51% attacker, not that small blocks themselves are an issue. I dunno about you, but I think huge mining rewards are a good thing and keep us all safe from 51% attackers.

• High fees make spending/using that small acquired share of a mining reward cost prohibitive (fees use up the entire balance of each added input leaving nothing left for actual spending).
• The inability to spend/use any of the earned bitcoins discourages participation in mining by small operations, leading to an increase in centralization as the smaller operations are forced out of the market.

These are real issues, but they can be solved with the same micropayment systems people will use for small transactions. For instance, P2Pool makes payments directly from the coinbase, taking block space away from transactions that could earn money instead.

What would happen as blocks approach the limit is first P2Pool would take into account the cost of payout transactions in terms of lost fees. This would give miners an incentive to only get payouts when the payout amount was sufficiently high. The amount of hashing power required would be pretty large, so you'd naturally see sub-pools develop combining a whole bunch of hashing power together. (P2Pool already supports sub-pools BTW) Those sub-pools would publish contracts specifying how they would pay out, what micropayment system and so on, and miners using those sub-pools would either be payed correctly, or if the pool defrauded them, they'd be able to prove the pool defrauded them and make them lose their fidelity bonds they had to purchanse to be trusted in the first place.

Note how that's basically how most pools already work anyway - you trust the pool to pay what you are owed. The only change is in the mechanism by which you get paid.

[markm]

Is there a massive difference ultimately between doubling the size of blocks and doubling the number of blocks per period of time that makes doubling the size of blocks much better than doubling the frequency of blocks?

Maybe we would be better off decreasing the target time between blocks than increasing the size of the blocks?

-MarkM-

[DannyHamilton]

Is there a massive difference ultimately between doubling the size of blocks and doubling the number of blocks per period of time that makes doubling the size of blocks much better than doubling the frequency of blocks?

Maybe we would be better off decreasing the target time between blocks than increasing the size of the blocks?

-MarkM-

That's an interesting idea.

Would you propose cutting the block reward in half and changing the future halving to every 420,000 blocks when implementing that solution so that the inflation rate stays roughly the same?

Or would you leave it exactly as it is now so that the inflation rate doubles and we reach the point where all coins are mined in half the original time?

[markm]

To at least some extent I suspect that getting to the point where all the coins are mined faster is better.

Once all the coins are mined there will no longer be all those miners dumping new coins on the markets all the time, their income will be presumably somewhat proportional to the amount that the system is actually being used. There are plenty of younger chains that will still be bringing them freshly minted coins, and we already have seen, and are about to see again, extended periods when the average time between blocks was less than ten minutes due to rapid increases in hashing power.

In fact as ASICs come online we might see enough more blocks per day that we will already anyway be making more space for transactions by pumping out blocks faster.

-MarkM-

[johnyj]

IMO, fork=double spend

Programmers tends to be perfectionists

But, even the greatest art in human history is not flawless

Scarcity cause cherish, abundant cause abuse

If people really cherish the value of bitcoin, they will try all their best to protect it

[DannyHamilton]

To at least some extent I suspect that getting to the point where all the coins are mined faster is better.

Once all the coins are mined there will no longer be all those miners dumping new coins on the markets all the time
- snip -

The total number of coins dumped on the markets would be the same, they'd just get dumped twice as fast.  As for "all the coins are mined", we'd be talking about 72 years instead of 140, right?

[Anth0n]

But instead of saying Gavin was responding to an argument that blocksize has to remain small forever for the sake of inefficient miners (as he framed it) you could have accurately said that he was responding to an argument that blocksize has to remain small forever for the sake of security and decentralization.

See the difference? It's subtle, but that's how manipulation usually is.

If current block size limit means greater decentralization and therefore greater security, that means the smallest possible block size (enough to fit just one transaction) means maximum decentralization and therefore maximum security. So proponents of a block size limit must logically also be in favor of a one-transaction-per-block limit. Not to mention absurdly high transaction fees. Ad hominems against Gavin might be fun to use as arguments, but they are not effective.

[Zangelbert Bingledack]

What happens to Bitcoin if there is a hard fork and half go along while the other half refuse?

[Piper67]

What happens to Bitcoin if there is a hard fork and half go along while the other half refuse?

Actually, what happens to someone who holds bitcoins if there's a hard fork? Are they still valid on either one of the chains? On which one? Does the user get to decide?

[hazek]

What happens to Bitcoin if there is a hard fork and half go along while the other half refuse?

Actually, what happens to someone who holds bitcoins if there's a hard fork? Are they still valid on either one of the chains? On which one? Does the user get to decide?

All coins that ever existed prior to the fork can be spent on both forks. It's an economic disaster and would take a while before one or both forks recovered if at all.

[caveden]

Disaster or not, the more I read these discussions, the more I see an actual fork (as in different chains) as inevitable.

Some people seem determined to keep this handicapping 1Mb limit, and envision Bitcoin as nothing more than a SWIFT 2.0. Some people, me included, want Bitcoin to be much more than that eventually, what would require more than 7tps.

At a certain point, a fork will happen. Everybody who had coins before the fork, will have the same amount of coins on both chains, the old and the new one. People like me will sell part of their old coins in exchange for coins in the new chain (the one without the limit). Some other people will do the other way around. Lots of price turbulence will happen. I can't predict how major services will behave. Would MtGox support trading of both Bitcoins, old and new? Or would they pick one?

Eventually, one of the two chains may die. Or not.

I knew from the day I learned about this block size limit that it would be a problem in the future: https://bitcointalk.org/index.php?topic=1865.0
(OBS: I changed my mind about the "automatic adjustment" thing, I don't think it should be done that way anymore)

[Technomage]

I'm fairly certain that Gavin and his supporters would not go ahead with the fork unless major services such as Gox, Blockchain.info, Coinbase, major pools etc were actually behind him. After that it really doesn't matter jack shit what the niche of resistance does. That other fork would be a super minority and dead fairly quickly.

I could easily see Bitcoin Foundation starting a major lobby campaign for support of the changes in the fork. They would most likely win a large majority behind them. Personally I'm in the latter camp as well, I want Bitcoin to be cheap and usable for $1 transactions. Having to pay a $20 fee to include a transaction to the blockchain is ridiculous.

[hazek]

I'm fairly certain that Gavin and his supporters would not go ahead with the fork unless major services such as Gox, Blockchain.info, Coinbase, major pools etc were actually behind him. After that it really doesn't matter jack shit what the niche of resistance does. That other fork would be a super minority and dead fairly quickly.

I could easily see Bitcoin Foundation starting a major lobby campaign for support of the changes in the fork. They would most likely win a large majority behind them. Personally I'm in the latter camp as well, I want Bitcoin to be cheap and usable for $1 transactions. Having to pay a $20 fee to include a transaction to the blockchain is ridiculous.

Yeah and while we're at it we can change the block reward to 25 forever and get rid of fees entirely, then shorten the avg blocks per hour to 60, so no more long waiting times for confirmations...   If you don't like Bitcoin, fork the source code and start your own cryptocurrency.

[Zangelbert Bingledack]

I don't know much about this issue, but it seems that any sort of fees to miners should be allowed to float on the free market. The proper amounts and conventions would sort themselves out. We're all natural order free marketeers here, right?

[justusranvier]

What happens to Bitcoin if there is a hard fork and half go along while the other half refuse?

https://bitcointalk.org/index.php?topic=144895.msg1539977#msg1539977

[Technomage]

I don't know much about this issue, but it seems that any sort of fees to miners should be allowed to float on the free market. The proper amounts and conventions would sort themselves out. We're all natural order free marketeers here, right?

This is clear, to me at least. The issue is that there is a deliberate attempt at introducing artificial scarcity where it's actually not needed. Scarcity for the monetary base is quite understandable, everyone agrees with that. However many of us want Bitcoin to be usable for a larger amount of small transactions, and affordably. That requires eventually raising the block size limit. That in turn would increase the requirements to mine or run a full node, which some people think "increase centralization", which in my opinion is complete BS.

I don't, however, think that everyone will ever agree with this. Bitcoin has to evolve though, otherwise it will have nothing to do with day to day payments in the future. I think it's more of a naming issue. There will be "Bitcoin 2.0" and the old, soon to be dead, Bitcoin.

[DannyHamilton]

- snip -
If you don't like Bitcoin, fork the source code and start your own cryptocurrency.

Although at this point it seems that the discussion is devolving into a debate on whether the definition of "Bitcoin" includes the possibility of an increased maximum blocksize in the future or not.

Is it clear somewhere in the protocol or the white paper that define "Bitcoin" what the long term plan was for maximum blocksize?  If so, then I'd think that such a statement defines "Bitcoin", and refusing to support that written long term plan would constitute "starting your own cryptocurrency".

So, does the protocol or the white paper specify that the maximum blocksize should never be increased beyond 1MB?  Do either specify that the maximum blocksize could be increased in the future?

[DannyHamilton]

I think it's more of a naming issue. There will be "Bitcoin 2.0" and the old, soon to be dead, Bitcoin.

It's a lot more than a naming issue. As has been pointed out, it would be a fiscal disaster for both to attempt to coexist since coins from before the fork would immediately be spendable on both systems.

[Technomage]

It's a lot more than a naming issue. As has been pointed out, it would be a fiscal disaster for both to attempt to coexist since coins from before the fork would immediately be spendable on both systems.

True, but as I already said, a hard fork won't be done at all if there is not sufficient agreement. At least all the major services have to back it. It's not a disaster if a small minority refuse to upgrade.

If it can't be done, then Bitcoin will simply start getting more expensive in the future, until all day to day payments are done with competitive cryptocurrencies or centralized services.

[markm]

Doing a "hard fork" is hard, but maybe better than putting in some automatic adjustment that someone could end up "gaming".

If each time the limit is to be raised another megabyte, or each time it is to be doubled, the whole "hard fork" thing has to be gone through again that might provide some security at least until the developers get the hard fork techniques down to a point where it becomes pretty much just a "rubber stamp" that goes along with whatever change they decide to make next.

Clearly blocks are plenty big enough currently, maybe even too big, since we are clearly not losing per bitcoin price/value due to high transaction fees nor are we even managing to discourage "frivolous" transactions (like "sorry, you lost, please try again" type messages which probably belong in IM or some other kind of chat system not in the world's permanent global ledger of the world's most important, most highly secured value storage system).

If the fees are not high enough to discourage every penny-ante gambler from yelling to the world about each and every few-penny bet they lose then the fees are probably too low.

-MarkM-

[caveden]

I'm fairly certain that Gavin and his supporters would not go ahead with the fork unless major services such as Gox, Blockchain.info, Coinbase, major pools etc were actually behind him.

They could eventually support both chains.
But yeah, it would likely be easier for services to simply choose one. No modification on their side other than updating their bitcoind install.

[Technomage]

I agree with markm in that this is a future problem, not something that is a problem right now. Fees are currently almost nonexistent and even free transactions get in the blockchain fairly well. The block size is still adequate, for now.

[caveden]

Seeing how Bitcoin grows, it wouldn't surprise me if we start bumping on this 1Mb limit yet this year.

[Technomage]

Seeing how Bitcoin grows, it wouldn't surprise me if we start bumping on this 1Mb limit yet this year.

Bumping on it occasionally is okay, bumping it all the time is where we enter problem territory. It can happen quickly though, Bitcoin is growing fast.

[caveden]

I'd say "bumping all the time" is what should be avoided. Ideally the change should be done before that start happening.

[tvbcof]

Doing a "hard fork" is hard, but maybe better than putting in some automatic adjustment that someone could end up "gaming".

If each time the limit is to be raised another megabyte, or each time it is to be doubled, the whole "hard fork" thing has to be gone through again that might provide some security at least until the developers get the hard fork techniques down to a point where it becomes pretty much just a "rubber stamp" that goes along with whatever change they decide to make next.

Clearly blocks are plenty big enough currently, maybe even too big, since we are clearly not losing per bitcoin price/value due to high transaction fees nor are we even managing to discourage "frivolous" transactions (like "sorry, you lost, please try again" type messages which probably belong in IM or some other kind of chat system not in the world's permanent global ledger of the world's most important, most highly secured value storage system).

If the fees are not high enough to discourage every penny-ante gambler from yelling to the world about each and every few-penny bet they lose then the fees are probably too low.

-MarkM-

+1

Facilitating a dopey penny-ante gambling platform is hardly worth the cost of chasing people who might wish to operate transfer nodes (and thus be 'peers' in the supposedly p2p solution) to my way of thinking.

If it takes higher fees to discourage pointless dust, I'm for it...with some regret.  Other more theoretical forms of addressing scaling issues do not seem forthcoming.  A second best would be to chase small fry into other crypto-currency solutions and have Bitcoin proper evolve into a backing store platform for 'the elite.'

I just fired up my client after a year of down-time (thinking about digging into some of my deep storage loot to re-coup my initial outlay) and it has been catching up on the block chain for 4 days now.  Not only that, but it's sucking the life out of my 4G i5 main workstation like no other software I've run.  To be fair, it's a pretty old build of bitcoind however.  Once I confirm that my some of my deep storage value is able to be re-couped, I'll try to build bitcoind from head again and see if the new database scheme is more efficient.

[Zangelbert Bingledack]

My general impression on this issue is that it's socialists vs. libertarians, or central planners vs. people who believe in spontaneous order. Is there more to it? Because I get that familiar feeling of watching people who are generally bamboozled by the free market getting all worried about how stuff will pan out without some kind of hard control in place. This is just a cursory impression, though. Any statists or anti-statists care to comment on that angle?

This is kind of confusing, though, because I know for example hazek is probably a voluntarist, but he seems to take the opposition position from what I'd expect due to centralization concerns. Perhaps the debate is more about what really constitutes centralization, or a kind of centralization to be feared or that inhibits natural order. Generally centralization is "always bad," but we may need a clearer definition of centralization to get to the bottom of this.

[notig]

It's also important to note that there are many upgrades that can be done to Bitcoin if a hard fork is needed anyway. It's actually very beneficial. It will allow Bitcoin to stay competitive with smaller and more agile cryptocurrencies.

Can you list those upgrades out of curiosity?

[notig]

As I understand it, Satoshi DID intend to increase the block size, and he intended to do it without a fork.

I think its worth remembering that Satoshi's view ought to get a certain amount of respect just because, he is Satoshi.

Various complex ways of adjusting the blocksize dynamically have been discussed, but mostly these sound too raw to me, and need a much longer period of discussion. The blocksize will likely need to be increased THIS YEAR, or some of the properties of Bitcoin may start to be eroded. Thats the current situation.

I say a moderate hard coded increase should be planned for now (this is not a fork) and more complex proposals FULLY evaluated over the next year or so.

OOC if you can increase the blocksize limit without a fork what advantage does a hard fork bring? What would necessitate a hard fork?

EDIT: NM, DannyHamilton answered this  "increasing from 250kB to 1MB is not a fork because 250kB is a self imposed limitation used by a subset of miners on the creation (not the acceptance or relay) of a block.

Increasing above 1MB and/or changing to a dynamic algorithm for choosing the maximum blocksize of any particular block would be a fork inducing change if 100% of the users and miners did not accept the change before it was triggered."

[notig]

As I understand it, Satoshi DID intend to increase the block size, and he intended to do it without a fork.

I think its worth remembering that Satoshi's view ought to get a certain amount of respect just because, he is Satoshi.

Various complex ways of adjusting the blocksize dynamically have been discussed, but mostly these sound too raw to me, and need a much longer period of discussion. The blocksize will likely need to be increased THIS YEAR, or some of the properties of Bitcoin may start to be eroded. Thats the current situation.

I say a moderate hard coded increase should be planned for now (this is not a fork) and more complex proposals FULLY evaluated over the next year or so.

by properties of bitcoin being eroded you mean people will not be able to get their transactions included in a block with out paying a fee right? This is actually desirable because in the future transaction fees will have to replace block rewards.

I don't have a great understanding of mining yet........... but if you can include more transactions in a block then doesn't that mean you could just easily get as many if not more in transaction fees from there being more transactions?

[Zangelbert Bingledack]

As an example of the stereotypical statist concern, what retep was worried about in https://bitcointalk.org/index.php?topic=144895.0 sounds very similar to the statist belief that without the government we'd all be exploited by monopoly robber barons. Leftists worry about centralization just as much as libertarians, but the difference is that leftists believe the solution is to have government break up the monopolies or otherwise institute regulations that prevent monopolies from forming. Libertarians do not fear such natural monopolies, because they understand how these things take care of themselves (I don't intend to make the libertarian argument here; just pointing out the apparent similarities).

Is it just me or did the debate between retep and Gavin/Mike, et al. have this undercurrent running through it?

In this cursory view, and I emphasize again that I am not familiar with this issue in detail, the concern about centralization sounds more like the kinds of concerns a socialist would have rather than a libertarian. A libertarian would usually argue that central planning to prevent centralization is inherently self-defeating, and that as long as we don't deliberately support a centralized institution (the state) we won't have any problems with centralization, as the profit motive is not there.

The analog might be that it is inherently self-defeating to exert centralized control over the blocksize in an effort to keep a situation of centralized control from arising.

[hazek]

My general impression on this issue is that it's socialists vs. libertarians, or central planners vs. people who believe in spontaneous order. Is there more to it? Because I get that familiar feeling of watching people who are generally bamboozled by the free market getting all worried about how stuff will pan out without some kind of hard control in place. This is just a cursory impression, though. Any statists or anti-statists care to comment on that angle?

This is kind of confusing, though, because I know for example hazek is probably a voluntarist, but he seems to take the opposition position from what I'd expect due to centralization concerns. Perhaps the debate is more about what really constitutes centralization, or a kind of centralization to be feared or that inhibits natural order. Generally centralization is "always bad," but we may need a clearer definition of centralization to get to the bottom of this.

You don't understand. I use Bitcoin because it is built upon certain principles and built in such a way that those principles can't be "legislated" away with a rule change. If this isn't the case I have no use for Bitcoin.

[notig]

My general impression on this issue is that it's socialists vs. libertarians, or central planners vs. people who believe in spontaneous order. Is there more to it? Because I get that familiar feeling of watching people who are generally bamboozled by the free market getting all worried about how stuff will pan out without some kind of hard control in place. This is just a cursory impression, though. Any statists or anti-statists care to comment on that angle?

This is kind of confusing, though, because I know for example hazek is probably a voluntarist, but he seems to take the opposition position from what I'd expect due to centralization concerns. Perhaps the debate is more about what really constitutes centralization, or a kind of centralization to be feared or that inhibits natural order. Generally centralization is "always bad," but we may need a clearer definition of centralization to get to the bottom of this.

You don't understand. I use Bitcoin because it is built upon certain principles and built in such a way that those principles can't be "legislated" away with a rule change. If this isn't the case I have no use for Bitcoin.

a democracy is tyranny of the majority aha. But wouldn't the growth of bitcoin itself translate into a greater amount of miners. And with a greater amount of miners than what we have, wouldn't a fork be less likely if not impossible to achieve? Actually what I mean is a consensus. If bitcoin was to fork is it better to do it as early as possible before there are many users or no?

[Zangelbert Bingledack]

I'm kind of wondering if there isn't some word fetishism going on here.

"Bitcoin" can be defined as the original protocol. "Bitcoin" can also be defined as the system (all the nodes and people, exchanges, users, etc.) we hope will change the world. Right now those two things so close to the same that there is often little point in distinguishing them here. However, if a hard fork happened and the Bitcoin-the-system stopped using Bitcoin-the-original-protocol, we'd need to be more careful with our words or else we'd risk getting confused.

So when you say, "I like Bitcoin," do you mean - must you mean - the original protocol, or could you mean the entire system with all wills of all the people that constitute it? I feel like I'm for the latter.

Besides, Satoshi just created Bitcoin with the original "legislated" rules, and people adopted it because they liked the rules. People didn't adopt other systems that had different rules. I don't see why there is a reason to fear new "legislation" (not legislation, since it's voluntary) but not to fear the original Satoshi legislation.

[Anon136]

As I understand it, Satoshi DID intend to increase the block size, and he intended to do it without a fork.

I think its worth remembering that Satoshi's view ought to get a certain amount of respect just because, he is Satoshi.

Various complex ways of adjusting the blocksize dynamically have been discussed, but mostly these sound too raw to me, and need a much longer period of discussion. The blocksize will likely need to be increased THIS YEAR, or some of the properties of Bitcoin may start to be eroded. Thats the current situation.

I say a moderate hard coded increase should be planned for now (this is not a fork) and more complex proposals FULLY evaluated over the next year or so.

by properties of bitcoin being eroded you mean people will not be able to get their transactions included in a block with out paying a fee right? This is actually desirable because in the future transaction fees will have to replace block rewards.

I don't have a great understanding of mining yet........... but if you can include more transactions in a block then doesn't that mean you could just easily get as many if not more in transaction fees from there being more transactions?

yes that is why it is in the interest of the miner to make blocks very large but this isnt necessarily in the interest of the network as a whole. If blocks became too large miners with a slower internet connection would be at a serious disadvantage, the block chain would take up more room on peoples hard drives, and it would require more bandwith for nodes to operate. If the blocks became large enough it would become imposable for people with slower connections to operate nodes or mine.

[hazek]

I'm kind of wondering if there isn't some word fetishism going on here.

"Bitcoin" can be defined as the original protocol. "Bitcoin" can also be defined as the system (all the nodes and people, exchanges, users, etc.) we hope will change the world. Right now those two things so close to the same that there is often little point in distinguishing them here. However, if a hard fork happened and the Bitcoin-the-system stopped using Bitcoin-the-original-protocol, we'd need to be more careful with our words or else we'd risk getting confused.

So when you say, "I like Bitcoin," do you mean - must you mean - the original protocol, or could you mean the entire system with all wills of all the people that constitute it? I feel like I'm for the latter.

Besides, Satoshi just created Bitcoin with the original "legislated" rules, and people adopted it because they liked the rules. People didn't adopt other systems that had different rules. I don't see why there is a reason to feel new "legislation" (not legislation, since it's voluntary) but not to fear the original Satoshi legislation.

I look at the original rules as a contract I gave my consent to enter into and I don't want my contract to change without my consent nor was I lead to believe it could change and it can't. That's all there is too it.

I may consent to a change of the contract by downloading a new version of the client but it cannot be a change that would jeopardize one of the principles I have identified Bitcoin is built upon. But that's me. You do with your "contract" as you will.

[markm]

Basically it seems to me that no cap on block size simply creates a new avenue of attack, akin to the 51% hash-power attack.

It is a "X% bandwidth" attack maybe, which does not even require 51% hashing power to pull it off.

A few actors on the scale of Google, Microsoft, the NSA, CIA etc could bypass all our vaunted largest hashing power in the world defenses with just a fraction of the hashing power we have simply by pumping out maximum sized blocks themselves whenever they do happen to find a block, so if there is no max size that would mean unlimited size, which in turn might mean whatever size such actors can manage to transmit to each other inside of ten minutes, or heck maybe within five minutes since doubling their cartel-member to cartel-member direct transfer rate is probably easy for them. Look at how high frequency traders sped up their communications with stock exchanges for example. Move all your mining to the mining capital of the world, pump out multi-terrabyte blocks and anyone who cannot verify them inside of ten minutes cannot even tell whether they are valid so are irrelevant to "consensus" as they aren't even able to make an informed judgement of validity.

I see two extremes possible at least: one is a high value high fee currency for the elite, implemented at a grass roots level so the non-elite can earn by running the elite's network just as it can earn by mowing their lawns, washing their dishes and so on, or a low value aka micropayments system only the elite can afford to run, providing them with micropayment ability so they can nickel and dime every last nickel and dime from the masses by selling them stuff so worthless that it isn't even worth sending by UPS or FedEx, stuff which therefore is so darn cheap it could probably be paid for by displaying ads instead of charging the consumers anything for it at all. (Stuff cheap enough to use as "loss leaders" to get to show people stuff worth real money as in enough money to maybe be worth recording the sale in the blockchain.)

Those two extremes amount to "everyone can easily run a full node but fees are too high to allow trivial transactions" and "only massive players can run a full node but every peasant's every cup of chicken-feed can be recorded in the global public ledger".

-MarkM-

[tvbcof]

yes that is why it is in the interest of the miner to make blocks very large but this isnt necessarily in the interest of the network as a whole. If blocks became too large miners with a slower internet connection would be at a serious disadvantage, the block chain would take up more room on peoples hard drives, and it would require more bandwith for nodes to operate. If the blocks became large enough it would become imposable for people with slower connections to operate nodes or mine.

Although it is my nature to prefer 'tight' solutions and ones with a theoretical upper bound enforced by design, one of the biggest concerns I have vis-a-vis growth is that higher quality bandwidth and clustered hardware starts to constrain the system to operate in environments which are more easily attacked.  That is to say, if one basically needs datacenter facilities to run a viable node, the Bitcoin solution will be limited to operation in environments which are fairly easily identified and attacked through standard legal and financial means.

Bitcoin has, I believe, the potential to experience very rapid growth due to the demand side of the equation.  I would feel more comforted to be well ahead of such an event and have it be anticipated from an architectural point of view whether or not such an event comes to pass.  I do expect that any significant attacks would coincide with rapid growth.

[notig]

so from what I understand... and correct me if I am wrong... this is the situation: Miners run the bitcoin network basically. They essentially have the greatest voting power. A portion of the community wants to keep the entire bitcoin network slow to compensate for miners(voters) with slow internet connections. By keeping the block size low we can retain this portion of the voters and thereby have a more decentralized system because we can include more people who can "vote" rather than exclude them. There is fear that if bandwidth can exclude miners then bandwidth can eventually cause the bitcoin system to become more centralized, giving the most voting power to those who have the most bandwidth.

My question: Is that really true? Doesn't technological progress actually work the opposite way than this fear? Over time.... won't more people have faster internet connections inevitably?

Can we get an approximation of how many miners will be cut off if we raise the block size limit above 1 MB through a hard fork?
Can we get an approximation of how many potential future miners will be cut off if we account for technological progress(projected increase in internet connections)?
Is it really possible that if bitcoin was popular it would require such massive amounts of hardware and bandwidth that it would oust regular folk? If that is true then wouldn't the network have already failed due to it's own popularity from using a smaller block size?

[hazek]

They essentially have the greatest voting power.

You are wrong. There is no voting in Bitcoin. Miners validate.

[acoindr]

I think it's nearly time for a Bitcoin Clearing House (BCH).

I've long suggested a majority of Bitcoin transactions will not take place on the core network. There are many reasons. The core network, while ingeniously designed to allow Bitcoin to be viable, is not ideal for transacting coins. Close, but not ideal.

The first and most obvious problem with the core network is a delay in coin transfer, and the verification of this. Bitcoin is built upon technology, and modern technology allows near instantaneous transfer of information between most any points of the globe. Transferring coins instantly should be available too.

The second problem is fee dependency. Bitcoin depends, to some extent, on fees to operate smoothly and avoid low quality transactions. Again, modern technology makes worldwide instantaneous information transfer possible, but also free. It should be free to transfer coins too.

The third problem is scalability. Scalability was less obvious a problem because Bitcoin is still in its infancy, but lately it's becoming noticeable, e.g. long block chain syncs, and this thread topic on block size.

For these reasons, and other smaller ones, I concluded a majority of coin transactions might eventually happen off the core network, and it's entirely possible.

A Bitcoin Clearing House is a centralized server maintained by a trusted entity. For example, BitInstant, MtGox, the Bitcoin Foundation, or maybe Blockchain.info, etc. might be good candidates to establish such a server.

There is a public facing web site through which people can sign up for simple accounts to deposit or withdraw coins. Those transfers take place using the core network. However, because of the visibility of the BCH many other users and businesses could also maintain accounts there. Now if you want to send coins to Mt.Gox, or BTC-e, other exchanges, or maybe a service like pizzaforcoins.com to order pizza your coins would transfer instantly and for free.

This also works for person to person transfers. For example, because users sign up for accounts at the BCH with an email address you can send or request coins to/from them using only their email address, similar to PayPal, and eschewing ugly wallet addresses. If a person doesn't have a BCH account they receive an email saying they can retrieve the coins (with or without signing up).

Last, the BCH also provides an API which allows other services/eWallets, like Walletbit, Mt.Gox etc. to make API calls that transfer coins in or out. That means all coin users don't have to have a BCH account. Their existing eWallet service may already be linked which gives them the same access.

There is no real limit to the number and speed with which transactions could occur with this system, and core Bitcoin network transactions are drastically reduced to ones which for whatever reason require it, like SatoshiDice bets.

Anytime users suspected their coins or their value might be in jeapordy at the BCH they could withdraw them to their locally hosted wallet.

Many problems solved.

[markm]

I expect that to a lot of people bitcoin being a "person to person" (p2p) currency is a major part of the "contract" they feel they entered into when choosing it rather than, say, Paypal or Visa or whatever alternative type of system for transferring value online.

So maybe we need to move to a DIstributed Hash Table (DHT) based system or something of that kind, that lets these ordinary people running nodes of a p2p financial network connecting them directly with various friends and family and other participants in the network do it without needing the whole blockchain?

Maybe we could even move the work into buckets grouping transactions into hash-bucket groups to form one block per hash-bucket or something if one cannot actually divvy up all the blockchain DHT style or RAID style effectively?

Otherwise the basic plan seem to be to pull a bait-and-switch, selling people on a purportedly person to person grassroots currency then pulling the rug out from under them by migrating it to business-to-business then to megacorp-to-megacorp...

For it to be a p2p network, I think we need to do something like look at the median, mode or mean home computer on the median, mode or mean home internet connection and ensure our limits keep it reasonable for folks to run full nodes on such systems without sacrificing their ability to run their accounting software and their word processor and their browser at the same time...

(Notice I do not say also stream a movie or even also listen to internet radio; I am content that they use their television and/or radio for that stuff. Heck let them use a telephone for voice chat too.)

-MarkM-

[notig]

They essentially have the greatest voting power.

You are wrong. There is no voting in Bitcoin. Miners validate.

If mining is not voting essentially then what's to fear from the centralization of miners?

[hazek]

They essentially have the greatest voting power.

You are wrong. There is no voting in Bitcoin. Miners validate.

If mining is not voting essentially then what's to fear from the centralization of miners?

Regular users by downloading the blockcain validate what miners validated. I'm sure you can imagine how losing the ability to validating what miners validate could pose a problem..

[tvbcof]

I expect that to a lot of people bitcoin being a "person to person" (p2p) currency is a major part of the "contract" they feel they entered into when choosing it rather than, say, Paypal or Visa or whatever alternative type of system for transferring value online.

So maybe we need to move to a DIstirbuted Hash Table (DHT) based system or something of that kind, that lets these ordinary people running nodes of a p2p financial network connecting them directly with various friends and family and other participants in the network do it without needing the whole blockchain?

Maybe we could even move the work into buckets grouping transactions into hash-bucket groups to form one block per hash-bucket or something if one cannot actually divvy up all the blockchain DHT style or RAID style effectively?

Otherwise the basic plan seem to be to pull a bait-and-switch, selling people on a purportedly person to person grassroots currency then pulling the rug out from under them by migrating it to business-to-business then to megacorp-to-megacorp...

For it to be a p2p network, I think we need to do something like look at the median, mode or mean home computer on the median, mode or mean home internet connection and ensure our limits keep it reasonable for folks to run full nodes on such systems without sacrificing their ability to run their accounting software and their word processor and their browser at the same time...

(Notice I do not say also stream a movie or even also listen to internet radio; I am content that they use their television and/or radio for that stuff. Heck let them use a telephone for voice chat too.)

-MarkM-

Nailed it.  Again.

'Sharding' is a time honored way of dealing with scaling issues.  It probably would have mitigated the concerns about centralization without unduly impacting the usability of the solution if it were implemented as a core design point.  It was not, and it's probably not worth crying over spilled milk at this point.

[BradZimdack]

Otherwise the basic plan seem to be to pull a bait-and-switch, selling people on a purportedly person to person grassroots currency then pulling the rug out from under them by migrating it to business-to-business then to megacorp-to-megacorp...

Well put.  Bank of America, Wells Fargo, et al. already provide me with an expensive and restrictive form of money transfer.  Their services come with perks too, like insurance and customer service.

[markm]

Otherwise the basic plan seem to be to pull a bait-and-switch, selling people on a purportedly person to person grassroots currency then pulling the rug out from under them by migrating it to business-to-business then to megacorp-to-megacorp...

Well put.  Bank of America, Wells Fargo, et al. already provide me with an expensive and restrictive form of money transfer.  Their services come with perks too, like insurance and customer service.

Yes, but, the alternative might have to be an expensive but not restricted (by KYC, privacy invasion, AML, what you are allowed to buy, who you are allowed to buy it from, which nationalities, races or creeds you can or cannot do business with etc etc etc) form of value transfer (bitcoin with block limits that keep it reasonable to run a full node at home), and/or a whole bunch of such forms so that each individual form fits easily on home computers and maybe even some home computers can merged-mine many of the forms at once like I still do right now.

(
Imagine: Pay with: BTC (highest fee), NMC (lower fee, popular with domain speculators), IXC (lower fee, lower security)...
or
Imagine: Pay with <greyed out>BTC: not applicable (cart's total is too low for high-value network), NMC (highest fee network handling such low value transactions), IXC (lower fee, lower security)..
etc
Or even  BTC: pay whole coin, change tendered in NMC or IXC, etc...
)

-MarkM-

[Peter Todd]

Otherwise the basic plan seem to be to pull a bait-and-switch, selling people on a purportedly person to person grassroots currency then pulling the rug out from under them by migrating it to business-to-business then to megacorp-to-megacorp...

If the blocksize limit is lifted, and blocks continue to grow without bound, to me the plan seems to be a bait-and-switch, selling people a purportedly decentralized currency that anyone in the world can validate without having to rely on third parties, then pulling the rug out from under them by migrating it to a system where only big businesses able to invest the thousands of dollars required to purchase high-speed network connections and lots of harddrive space can validate blocks.

For it to be a p2p network, I think we need to do something like look at the median, mode or mean home computer on the median, mode or mean home internet connection and ensure our limits keep it reasonable for folks to run full nodes on such systems without sacrificing their ability to run their accounting software and their word processor and their browser at the same time...

...and a 1MiB blockchain limit does this. That's 55GiB/year, low enough that anyone will be able to afford the hard-drive space to store a full copy of the block chain for years to come. Anyone will be able to also afford an internet connection, nearly anywhere in the world, with the capacity needed to participate as a full, validating node.

Like it or not we can't have every transaction using Bitcoin on the block chain. We need to develop alternate solutions anyway for small-value transactions, and since we're doing that, why not use those solutions for day-to-day spending and keep the blocksize low enough to keep Bitcoin itself truly decentralized?

My biggest fear is these small-value transaction solutions won't be developed, and instead we'll see pressure to just keep raising the blocksize, losing decentralization each time until Bitcoin is just another PayPal.

[markm]

In before someone says p2p means peer to peer not person to person:

I suspect grassroots peer to peer networks' concept of a peer is more akin to peers as in "a jury of your peers" than to "peers as in members of the House of Lords". Pick any twelve people on the internet at random, and try to ensure the vast majority of any such picks will result in almost all of them being qualified as in having easily enough computer and network at home to run the thing.

-MarkM-

[acoindr]

Yes, but, the alternative might have to be an expensive but not restricted (by KYC, privacy invasion, AML, what you are allowed to buy, who you are allowed to buy it from, which nationalities, races or creeds you can or cannot do business with etc etc etc) form of value transfer (bitcoin with block limits that keep it reasonable to run a full node at home), and/or a whole bunch of such forms so that each individual form fits easily on home computers and maybe even some home computers can merged-mine many of the forms at once like I still do right now.

(
Imagine: Pay with: BTC (highest fee), NMC (lower fee, popular with domain speculators), IXC (lower fee, lower security)...
or
Imagine: Pay with <greyed out>BTC: not applicable (cart's total is too low for high-value network), NMC (highest fee network handling such low value transactions), IXC (lower fee, lower security)..
etc
Or even  BTC: pay whole coin, change tendered in NMC or IXC, etc...
)

-MarkM-

Yep.

You just suggested what I predicted 4 months ago in my post Solution to the Bitcoin Foundation.

...

What I think this means is cryptocurrencies should be used transactionally, rather than as primary stores of value. I see a cryptocurrency version of xe.com showing all alt-coins values relative to gold (or USD to start). Exchange rates would be updated and available to merchants in real time. They could quote product prices in one, two, three or more currencies. They might prompt users with CC (as in currency choice, meaning they accept gold, fiat, crypto etc.) or CCC (crypto-currency choice) pricing signs.

Average consumers would store the majority of their wealth in which ever form of money they deemed most stable (likely gold) and keep about 2% or so of their wealth in other (crypto) currencies. Traditionally, actual physical exchange and storage of money has made it impractical and costly to trade in and out of currencies frequently, but the Internet and cryptocurrencies reduce or remove such barriers.

...

[notig]

Otherwise the basic plan seem to be to pull a bait-and-switch, selling people on a purportedly person to person grassroots currency then pulling the rug out from under them by migrating it to business-to-business then to megacorp-to-megacorp...

If the blocksize limit is lifted, and blocks continue to grow without bound, to me the plan seems to be a bait-and-switch, selling people a purportedly decentralized currency that anyone in the world can validate without having to rely on third parties, then pulling the rug out from under them by migrating it to a system where only big businesses able to invest the thousands of dollars required to purchase high-speed network connections and lots of harddrive space can validate blocks.

For it to be a p2p network, I think we need to do something like look at the median, mode or mean home computer on the median, mode or mean home internet connection and ensure our limits keep it reasonable for folks to run full nodes on such systems without sacrificing their ability to run their accounting software and their word processor and their browser at the same time...

...and a 1MiB blockchain limit does this. That's 55GiB/year, low enough that anyone will be able to afford the hard-drive space to store a full copy of the block chain for years to come. Anyone will be able to also afford an internet connection, nearly anywhere in the world, with the capacity needed to participate as a full, validating node.

Like it or not we can't have every transaction using Bitcoin on the block chain. We need to develop alternate solutions anyway for small-value transactions, and since we're doing that, why not use those solutions for day-to-day spending and keep the blocksize low enough to keep Bitcoin itself truly decentralized?

My biggest fear is these small-value transaction solutions won't be developed, and instead we'll see pressure to just keep raising the blocksize, losing decentralization each time until Bitcoin is just another PayPal.

I can understand how needing greater bandwidth can cut off a minority of miners.. but how can it concentrate it into the hands off just the few? If you look at bandwidth usage statistics aren't a majority of the people that mine bitcoin currently considered high bandwidth already? Therefore this "centralization" simply means into the hands of what already is a majority which should theoretically get even more dispersed the more high bandwidth connections are available right? Or is some extremely powerful bandwidth connection able to eliminate "normal" high bandwidth users?  
So your biggest fear is that alternative solutions to the block size limit won't be made? In other words what the other guy mentioned bitcoin clearing houses? How does that help decentralization?

[markm]

I can understand how needing greater bandwidth can cut off a minority of miners.. but how can it concentrate it into the hands off just the few? If you look at bandwidth usage statistics aren't a majority of the people that mine bitcoin currently considered high bandwidth already? Therefore this "centralization" simply means into the hands of what already is a majority which should theoretically get even more dispersed the more high bandwidth connections are available right? Or is some extremely powerful bandwidth connection able to eliminate "normal" high bandwidth users?  
So your biggest fear is that alternative solutions to the block size limit won't be made? In other words what the other guy mentioned bitcoin clearing houses? How does that help decentralization?

Read up on "high frequency trading".

What you are thinking of as "high bandwidth" is godawfully slow compared to, say, a composite cable less than half a mile long of parallel optic fibres, or whatever the currently state of the art fastests fattest most-direct short-hop direct link is. Basically it could become infeasible to mine anywhere else than in the mining district of the mining colony in the arctic or in antarctica, with the final showdown being between those two (or actual best, since they might not have cheap power to go along with cheap cooling, so maybe Iceland as the "artic" one), with only one pole being able to win since the other is too far away to compete with it. Maybe a see-saw between them as each increases hashing-power to try to make its hemisphere the world's mining capital instead of the other hemisphere...

-MarkM-

[Peter Todd]

I can understand how needing greater bandwidth can cut off a minority of miners.. but how can it concentrate it into the hands off just the few? If you look at bandwidth usage statistics aren't a majority of the people that mine bitcoin currently considered high bandwidth already? Therefore this "centralization" simply means into the hands of what already is a majority which should theoretically get even more dispersed the more high bandwidth connections are available right? Or is some extremely powerful bandwidth connection able to eliminate "normal" high bandwidth users?  

What makes you think miners are "high bandwidth"? Pools tend to have reasonable amounts of bandwidth, if only to resist DDoS attacks, but the pools aren't the issue, validation is. P2Pool is currently the best example, because every miner participating in P2Pool runs their own fully validating node that ensures the blocks produced follow the Bitcoin rules. With the getblocktemplate and stratum mining protocols, again miners know what blocks they are actually mining and can fully validate them to ensure the rules of Bitcoin are followed.

Relay nodes matter too. Because running a fully validating node is very cheap, there are lots and lots of relays out there. A core principle behind Bitcoin's security is that information is easy to copy, and hard to censor, which means that the large number of relays protect you because it's very likely you'll connect to an honest relay and you'll get an honest, uncensored view of what is happening on the network.

So your biggest fear is that alternative solutions to the block size limit won't be made? In other words what the other guy mentioned bitcoin clearing houses? How does that help decentralization?

You don't need to trust clearing houses and other payment services built on top of Bitcoin if you can run a fully validating node. The protocols by which those payment services operate can be written in such a way that everything they do, every single transaction, is auditable, and critically, if they commit any fraud, you'll be able to prove that fraud. You publish your proof of fraud on a P2P network, it'll get broadcast to everyone on the network in seconds, and the payment services business will collapse immediately. I've written about these concepts multiple times; I'll post a big summary of the options later tonight.

On the other hand, if you can't run a fully validating node, you can't monitor the on-chain activities of those clearing houses to make sure they really are still holding the funds they claim they do. You have to take their word for it. At the same time, if you can't fully validate blocks, what's to stop miners and the few remaining validating nodes from getting together and creating blocks that collect fees from transactions that don't exist, thus inflating the money supply?

[acoindr]

In other words what the other guy mentioned bitcoin clearing houses? How does that help decentralization?

Note that Bitcoin Clearing Houses don't centralize Bitcoin.

Such clearing houses have no power to create coins or prevent their transfer (users could revert to the core network).

A rudimentary form of this already exists. See https://en.bitcoin.it/wiki/Green_address

Mt.Gox provides green addresses and a few merchants recognize them (see bottom of the above link). Mt.Gox also conducts an estimated 80% of all bitcoin currency exchange. It probably holds sizable coin storage for the community too.

Mt.Gox could already act as a Bitcoin Clearing House, in other words. That doesn't mean Bitcoin is centralized.

Note: I think it's unwise to store a majority of coins with one eWallet like Mt.Gox. A BCH, as I see it, only holds a small balance of user's coins, the amount they expect to usually transfer. Users should probably drain their balance periodically too by default.

[ldrgn]

I use Bitcoin because it is built upon certain principles and built in such a way that those principles can't be "legislated" away with a rule change. If this isn't the case I have no use for Bitcoin.

A hard fork has to happen before year 2036 in order to bump the timestamp from a 32 to a 64 bit integer.  Will you be ditching Bitcoin for that reason?  What's the difference between calling the 32-bit timestamp requiring a hard fork to change a fundamental principle and any other hard fork change?  If your answer is "a change tweaking the economic side of things" does that mean the Bitcoin contract only includes economic reasons and not technical?  Who defines what change is economic vs technical?  Why do you think this contract exists when nobody's bothered to spell it out?

[tvbcof]

I use Bitcoin because it is built upon certain principles and built in such a way that those principles can't be "legislated" away with a rule change. If this isn't the case I have no use for Bitcoin.

A hard fork has to happen before year 2036 in order to bump the timestamp from a 32 to a 64 bit integer.  Will you be ditching Bitcoin for that reason?  What's the difference between calling the 32-bit timestamp requiring a hard fork to change a fundamental principle and any other hard fork change?  If your answer is "a change tweaking the economic side of things" does that mean the Bitcoin contract only includes economic reasons and not technical?  Who defines what change is economic vs technical?  Why do you think this contract exists when nobody's bothered to spell it out?

It appears to me that what we have here is a situation where some people have dreams of being the next JP Morgan by forging Bitcoin into a solution whereby only a few can run it.  Namely themselves in their dream world I suspect.  The pesky block size limit is interfering.  The sad thing is that Bitcoin is already large enough that these folks would likely fall to the 'big fish, little fish' phenomenon...although they still might make some money off it.

A lot of people who were initially drawn to the Bitcoin solution will innately reject the centralization which would occur with unlimited growth.  Hopefully the core developers who most people put a some of faith in will as well.  Confident assurtions that Stratum is 'the future of Bitcoin' aside, a lot of us are going to think it sucks just on principle if nothing else.  Not to mention disgust at ham-handed OPs on the bitcointalk.org forum trying to put words in Gavin's mouth.


Edit: --- I should have read the corresponding tech thread first.  On that thread I strongly agree with the OP of this thread's stance, and disagree with the Gavin's and Mike's posture on the topic.  I believe that both Gavin and Mike underestimate the risk of Bitcoin needing to deal with an actively hostile block of governments and corporations in the days and years ahead.

[johnyj]

Long, long ago, there was a gold hard fork, it generated a green gold which is as light as feather, and there was a government rule: From now on we should use green gold to exchange, since it is much easier to carry and store

Conversion rule: Each one cattle worth of original gold can claim one cattle worth of green gold, and owner can keep that original gold, since it is not supported in the new government trading system anymore.

But, the original gold still can be used in old trading system which would become more like a black market after the government trading rule change

What happened then ...

The funny thing is, there is some similarity in this story and a currency reform performed by north korea not long ago:
https://bitcointalk.org/index.php?topic=144141.0

The similarity? Rule change impacted the monetary ecosystem in an unpredictable way

[Zangelbert Bingledack]

It looks like the natural order will take care of this.

If transactions fees rise and confirmation times prove an obstacle and there is no fork, Mt. Gox and others will be incentivized to set themselves up as clearinghouses, large and low-priority transactions will still happen on-chain, and to the extent that the centralized nature of those clearinghouses becomes problematic eventually Ripple or other spontaneous solutions will arise.

If on the other hand there is a hard fork split about half and half, we may end up with a sort of "gold and silver" bi-bitcoinism with each coin's value ending up halved (which would set the price back a whole month), confidence would be shaken because the 21 million coin limit would seem to some to be continually expandable, but then the problem would be solved and in a few years/months confidence would be regained. Not ideal, but if there is really a problem here there may have to be some slowing in adoption for it to be resolved.

[notig]

I suppose it's not technically a fork if the majority of miners chose something is it?  Here is a relevant quote from the development forum

Why don't we just let miners to decide the optimal block size?

If a miner is generating an 1-GB block and it is just too big for other miners, other miners may simply drop it. It will just stop anyone from generating 1-GB blocks because that will become orphans anyway. An equilibrium will be reached and the block space is still scarce.

I think this is exactly the right thing to do.

There is still the question of what the default behavior should be. Here is a proposal:

Ignore blocks that take your node longer than N seconds to verify.

I'd propose that N be:  60 seconds if you are catching up with the blockchain.  5 seconds if you are all caught-up.  But allow miners/merchants/users to easily change those defaults.

Rationale: we should use time-to-verify as the metric, because everything revolves around the 10-minutes-per-block constant.

Time-to-verify has the nice property of scaling as hardware gets more powerful. Miners will want to create blocks that take a reasonable amount of time to propagate through the network and verify, and will have to weigh "add more transactions to blocks" versus "if I add too many, my block will be ignored by more than half the network."

Time-to-verify also has the nice property of incentivizing miners to broadcast transactions instead of 'hoarding' them, because transactions that are broadcast before they are in a block make the block faster to verify (because of the signature cache). That is good for lots of reasons (early detection of potential double-spends and spreading out the verification work over time so there isn't a blizzard of CPU work that needs to be done every time a block is found, for example).

So the gist of it is......... if we don't raise the block size limit we will have to make bitcoin clearing houses or the network will become unusable except for moving large amounts of money. And transaction fees will be 20+ dollars for moving money.   Sounds like a bad idea to me.  Exchanges are already the weakest link of bitcoin because government intervention is the greatest potential problem and taking down an exchange is the easiest target. Clearing houses would make things easier to disrupt. Destroy? Maybe not. But it will certainly destroy peoples wealth if they store it in bitcoins. The whole idea that raising the limit will create centralization of miners seems bogus to me and not an actual real problem.

[markm]

DId you read that entire thread, though, and related threads?

Apparently the ideal, for a miner, is to ignore/be-ignored-by just under half of the hashing-power.

Make your blocks big enough that only 51% of the hashing power will have time to process it.

That way the top 51% of miners drive out all competitors, while the number of them that are still part of the top 51% after each round of ousting of the minority goes down and down, until it is down to just a few super-powers, among which 51% of the hashing power still might add up to less than all of those superpowers, resulting in even superpowers starting to be squeezed out, and so on...

-MarkM-

[caveden]

My general impression on this issue is that it's socialists vs. libertarians, or central planners vs. people who believe in spontaneous order. Is there more to it?

I can't avoid seeing it that way too.

You don't understand. I use Bitcoin because it is built upon certain principles and built in such a way that those principles can't be "legislated" away with a rule change. If this isn't the case I have no use for Bitcoin.

The main economical principles of Bitcoin are not being threatened. If they were, I would be among the "resistance" for sure.
What happens is that there's this damn constant limit Satoshi inserted in the code because he couldn't think of something better at the moment he was coding, and now this thing is haunting us.

Wanting to cripple Bitcoin scalability just because you fear that a super-cartel of pool operators would pop up without such handicapping limit? Seriously?
That looks very much too me like the argument for anti-trust laws. This talk that high-bandwidth pool operators would voluntarily pad their blocks with useless data in a desperate attempt to kick out low-bandwidth pools*, risking with that to increase their propagation time and thus also increase the chance of losing their reward... to me it sounds just like the argument that price dumping works. History and economical theory show us that price dumping doesn't work.

That summarizes it in economical jargon for me: the resistance against dropping the limit believes that "dumping techniques" can work, and fear that dropping the limit would be like dropping anti-trust laws. They are wrong.

* By the way, for totally different reasons, it's already not really possible to be a low-badwidth pool. The reason for this is not the Bitcoin protocol per se, but DDoS attacks from bot operators mining on different pools. Unfortunately most major pools were already DDoSed. Ultimately the only defense against such kind of attach is large bandwidth.

[markm]

So then we should just remove all limit on block size and see how many movies people decide to store in the primary blockchain using a minor modification of the "store movies in the namecoin blockchain" tool currently being ooh'd and aah'd over in the Alternative Cryptocurrencies forum and just see how farkin big the blockchain can get when fees are not justifiable anymore except possibly as anti-spam measures (and whats with calling movies spam, anyway, scared of needing a little bit of space or bandwidth or something?)

-MarkM-

[caveden]

So then we should just remove all limit on block size and see how many movies people decide to store in the primary blockchain using a minor modification of the "store movies in the namecoin blockchain" tool currntly being ooh'd and aah'd over in the Alternative Cryptocurrencies forum and just see how farkin big the blockchain can get when fees are not justifiable anymore except possibly as anti-spam measures (and whats with calling movies spam, anyway, scared of needing a little bit of space or bandwidth or something?)

-MarkM-

Yeah yeah right, and your block will propagate because pool operators are incapable of setting their own tolerance levels. Right.

[markm]

Pool operators might have another incentive to make blocks massive too: to make it infeasible for the users of pools to check the blocks the pool has them working on. History has already shown that pool owners can get away with some pretty questionable stuff wthout users caring one whit just so long as money still keeps coming in.

But maybe that doesn't matter either, since after blocks are completed people can point to whatever nasty underhanded things the pool operator did with the hashing power the users put at their disposal and it will be seen again that the pool-users just don't care.

How far does/can/will that go, I wonder?

"Oh crybabies, moaning that our high paying pool enabled a bunch of double-spend attacks, if you care about double spends pay more protection money uh I mean insurance..." ?

By the way thanks for digging deep for your best counter-arguments, excellent work.

I saw an entire documentary once on the destruction of an entire culture, way of life, and community by "dumping" of cheap flour from over the mountain pass that is only navigable for a brief period each year. Pretty soon that cheap flour left all the independent landowning families who had lived well there for centuries out their land and their independent way of life, reduced, those of them who could even kiss enough ass to land such a "wonderful", "civilised" job to bell-hops and such in the tourist hotels that took their ancestral land right out from under them.

Just dumping simple sacks of flour "cheaper" (hidden costs such as loss of ancestral lands and independent lifestyles remaining hidden until it was "too late" to save them) than one could get it from the neighboring family you and your ancestors had traded with for generations pretty much threw everyone out of their own ancestral homes and reduced a free, independent people into servitude to their foreign new "masters".

So the claim that "dumping" never works seems somewhat dubious to me...

-MarkM-

[Zangelbert Bingledack]

That remark about hidden costs seems disingenuous. The flour was in fact cheaper, and everyone who needed to eat bread was better off for it. Restricting that cheap flour would have been the same, at the marginal level, as starving people to death. Which are the real hidden costs?

A free market will centralize as much as is efficient, but no more. Each market actor has incentives that change with the level of centralization. I think things will take care of themselves if the miners are free to float their own limits.

[markm]

Hmm sounds like you agree with Cunicula then, that one corporation running the whole thing, providing transactions at the lowest visible fee, is not a problematic outcome.

So for the "dumping" case it does not matter that they are able to use massively deep pockets or massively long term forward-looking to justify to themselves, and to actually accomplish, "dumping" long enoguh to drive all competitors out of the market and to establish sufficient barriers to entry to keep any potential competitors from being able to raise a hand, invisible or not, against them?

Getting ownership of prime tourist hotel real-estate in a quaint and picturesque locale seems like plenty of justification for "dumping" plenty of stuff.

Do you know of any references pointing to these starving people the documentary glibly chose to overlook?

-MarkM-

[Zangelbert Bingledack]

Sure, in theory anything can happen. The only way to resolve these kinds of arguments with finality is to examine many cases (not hand-picked ones), and that will take too long. Suffice it to say that such large, amazingly outperforming oligolies are extremely difficult to form on completely unregulated markets. I can't comment on your specific example, but this just general economic reasoning.

Some relevant videos for this blocksize issue:

http://www.tomwoods.com/blog/the-problems-with-antitrust/

https://www.youtube.com/watch?v=IYO3tOqDISE

[Peter Todd]

Suffice it to say that such large, amazingly outperforming oligolies are extremely difficult to form on completely unregulated markets.

Bitcoin itself is an oligopoly. What are Bitcoins made of anyway? They're just bits, information, and by themselves information is incredibly, ridiculously cheap. Of course the incredibly low price of information is made possible by the free market itself, specifically the amazingly successful computer industry.

Bitcoin is a system by which every participant creates a shared oligopoly on a particular set of information, the blockchain. From day #1 Bitcoin was about taking information that, if subject to free market forces, would be so incredibly cheap that it'd be basically free and artificially making it expensive. This shared oligopoly, achieved through the rules set out by Satoshi, makes this information incredibly expensive, so much so that 32 bytes of information, a private key, can now be worth millions of dollars.

Basically the decision about how big our shared oligopoly should allow blocks to be is just a decision about what rules we'll follow to make our little bits of otherwise worthless information as valuable as possible. Myself, gmaxwell, and many others happen to think that if we limits blocks to 1MiB each, keeping the regulations as they are, our little oligopoly will maximize the value of that information. Gavin, Mike Hearn, and many others happens to think that if blocks are allowed to be bigger than 1MiB, thus changing the regulations, our little oligopoly will maximize the value of that information.

Don't for a second think any of this discussion is about free market forces. Bitcoin is about artificially subverting free market forces through regulation, for the benefit of everyone participating in the oligopoly that is Bitcoin. It just happens to be that the way to become part of this oligopoly isn't by, say, living in a certain part of the world that's mostly desert, it's by either buying entrance (buying some Bitcoins) or by doing a completely made up activity that has no purpose outside the oligopoly. (mining)

[hazek]

or by doing a completely made up activity that has no purpose outside the oligopoly. (mining)

Don't forget: (mining or by maintain a full node, even if not mining)

[Zangelbert Bingledack]

An oligopoly is a situation where there are very high barriers to entry.

With Bitcoin, anyone can participate. The only thing resembling a monopoly situation is the core dev team, but that resemblance is only superficial: it's a natural monopoly for the moment, but the barrier to entry is not prohibitive since other, possibly even more capable software engineers could form their own team or even their own Bitcoin fork and it's possible that the majority would eventually support their fork.

This is the free-est market in the history of the world, because there is no coercion in it at all. It is entirely voluntary.

So we are faced with the seemingly paradoxical situation wherein we have a completely free market yet there is a natural monopoly development team. This means that, in the short term, the dev team has a lot of power and can seemingly maintain a uniform set of rules by "fiat."

But I think it's a myth that this ability to quasi-legislate is what underpins the uniformity and solidity of the Bitcoin protocol. The existence of this debate shows that many will not automatically follow the core devs (even if they were unanimous). Rather, the source of the uniformity is the belief each node has in the core protocol rules, with the hard BTC limit being the most staunchly supported. Adherence to the original protocol in all aspects seems to be supported as well, but to a lesser extent, and may be amenable to persuasion.

In other words, Bitcoin as a system has always been underpinned by the beliefs and wills of its participants, including the belief that the original protocol should not be changed lightly. The only way to make changes, then, is by convincing people to go along with them, and although the dev team may be in the best position to do that, there is no monopoly on persuasion.

[Peter Todd]

An oligopoly is a situation where there are very high barriers to entry.

Exactly. For mining itself, 1MiB blocks ensure that the barriers to entry are very low, and thus an oligopoly of miners won't form.

Increasing the block size, and especially allowing miners themselves to determine by how much, increases the barriers to entry, allowing for an oligopoly to form.

Bitcoin itself may be an oligopoly, but we really, really do not want Bitcoin mining to become an oligopoly.

[Zangelbert Bingledack]

While I understand what you're getting at and it may be a concern if we are to have a single fork, in terms of economics you're talking about virtual oligopolies, not actual ones, because the "barriers to entry" you mention are not barriers to entry into the cryptocurrency market proper, but barriers to entry into mining in a certain implementation of Bitcoin. That is, there is still no barrier to creating a Bitcoin fork that has low/high barrier to entry for mining.

My point is that as long as there is no actual oligopoly - no actual barrier to entry into the market itself - natural order should sort everything out.

"Let a thousand forks bloom!"

...keeping in mind that forks will only arise when and if there is an insurmountable lack of unanimity in the system, which should only happen if there is a huge fundamental rift in terms of vision or application, such as it in fact turning out to be infeasible to have a single Bitcoin that is optimized as both as payment system and a store of value. This can only happen once or perhaps twice, I would think, and if it needs to happen I think it should. Take the bitter medicine if it's really needed; hopefully it isn't.

[Zangelbert Bingledack]

Increasing the block size, and especially allowing miners themselves to determine by how much, increases the barriers to entry...

Why wouldn't miners reject interactions with miners who set the block size too high, for instance?

[markm]

Increasing the block size, and especially allowing miners themselves to determine by how much, increases the barriers to entry...

Why wouldn't miners reject interactions with miners who set the block size too high, for instance?

Isn't part of this whole cool story the tale of the brave defenders of the original one true bitcoin who will do just that?

-MarkM-

[Peter Todd]

Increasing the block size, and especially allowing miners themselves to determine by how much, increases the barriers to entry...

Why wouldn't miners reject interactions with miners who set the block size too high, for instance?

Read my post on the subject.

[Peter Todd]

Isn't part of this whole cool story the tale of the brave defenders of the original one true bitcoin who will do just that?

The cool story isn't when the miners bravely reject the large blocks, it's when the users of Bitcoin bravely reject large blocks, by doing nothing more than not installing any version of Bitcoin that removes the current 1MiB block limit.

Bravery by doing nothing; kinda anti-climatic really.

[Gavin Andresen]

Why wouldn't miners reject interactions with miners who set the block size too high, for instance?

Yes, I believe they would. So far, most miners and pools are VERY conservative; I think the idea that they will create huge blocks that have a significant risk of being rejected, just so they MIGHT get an advantage over marginal miners that can't process them fast enough, is loony.

But I might be wrong.

So I'd like to wait a little while, think deeply some more, and see how miners and merchants and users react with the system we've got as transaction volume increases.

[markm]

Yes, I believe they would. So far, most miners and pools are VERY conservative; I think the idea that they will create huge blocks that have a significant risk of being rejected, just so they MIGHT get an advantage over marginal miners that can't process them fast enough, is loony.

Loonies aren't legal tender where you're from, eh?

-MarkM-

[Peter Todd]

Why wouldn't miners reject interactions with miners who set the block size too high, for instance?

Yes, I believe they would. So far, most miners and pools are VERY conservative; I think the idea that they will create huge blocks that have a significant risk of being rejected, just so they MIGHT get an advantage over marginal miners that can't process them fast enough, is loony.

Rejections are is not a significant risk for miners. That's the whole point of my original post on the issue. If your blocks are built upon by the majority of hashing power, you come out ahead in the long run. Your orphan rate does increase proportionally, but if, say, 5% of the hashing power never sees your blocks, the increase in varience is low, yet you get the very real benefit of 5% less competition. In the long run there is no "might" - it's simple statistics, and I haven't seen anyone offer a rebuttal based on analysis rather than hand-waving.

But I might be wrong.

So I'd like to wait a little while, think deeply some more, and see how miners and merchants and users react with the system we've got as transaction volume increases.

I agree with you there. But if large blocks turn out to not be an option, for whatever reason, we need alternatives, and creating those alternatives take time. We've probably got two or three years before the limit becomes a big issue, maybe less, and as you know raising the limit will take at least a few months for the consensus to be achieved among all users. Right now what I'm hearing from you and Mike Hearn is a defacto "yeah, we'll just keep upping the blocks size, I just don't know yet by how much or if it'll be one-time thing or a floating limit". This attitude leads to people not working on alternatives and if alternatives don't exist by the time the limits are reached, like it or not, raising the limit will be the only option regardless of the downsides.

You already know about the fidelity-bonded banking stuff I'm working on, but it really bothers me that I don't seem to have much competition. Frankly I'd be happy to see someone else come up with an even better idea that I haven't thought of, or just come up with a better implementation of bonded banks than me. That outcome is much more likely to happen if you make it clear that if off-chain value transfer systems are developed not raising the limit is an option.

[markm]

Doesn't Ripple basically make every normal user a fidelity-bonded bank, with the "gateways" as the fidelity-bond vaults?

I say this because it seems to me one can regard a "gateway" to be functionally equivalent to, or at least quite akin to, placing a fidelity bond sum of value somewhere. Any of the IOUs backed by that "bond" can be made good at the fidelity corp aka "gateway" instead of by the "bank" (the person who actually transfered to you such a "fidelitous" IOU instead of one of their person IOUs).

Or is the key distinction in your "fidelity bond" concept a kind of "fractional fidelity" system wherein the amount of IOU "insured" by the bond can exceed the amount of the bond itself?

-MarkM-

[tvbcof]

I use Bitcoin because it is built upon certain principles and built in such a way that those principles can't be "legislated" away with a rule change. If this isn't the case I have no use for Bitcoin.

A hard fork has to happen before year 2036 in order to bump the timestamp from a 32 to a 64 bit integer.  Will you be ditching Bitcoin for that reason?  What's the difference between calling the 32-bit timestamp requiring a hard fork to change a fundamental principle and any other hard fork change?  If your answer is "a change tweaking the economic side of things" does that mean the Bitcoin contract only includes economic reasons and not technical?  Who defines what change is economic vs technical?  Why do you think this contract exists when nobody's bothered to spell it out?

It appears to me that what we have here is a situation where some people have dreams of being the next JP Morgan by forging Bitcoin into a solution whereby only a few can run it.  Namely themselves in their dream world I suspect.  The pesky block size limit is interfering.  The sad thing is that Bitcoin is already large enough that these folks would likely fall to the 'big fish, little fish' phenomenon...although they still might make some money off it.

A lot of people who were initially drawn to the Bitcoin solution will innately reject the centralization which would occur with unlimited growth.  Hopefully the core developers who most people put a some of faith in will as well.  Confident assurtions that Stratum is 'the future of Bitcoin' aside, a lot of us are going to think it sucks just on principle if nothing else.  Not to mention disgust at ham-handed OPs on the bitcointalk.org forum trying to put words in Gavin's mouth.


Edit: --- I should have read the corresponding tech thread first.  On that thread I strongly agree with the OP of this thread's stance, and disagree with the Gavin's and Mike's posture on the topic.  I believe that both Gavin and Mike underestimate the risk of Bitcoin needing to deal with an actively hostile block of governments and corporations in the days and years ahead.

Edit 2:  Oops, it is ~retep who I think argues eloquently and to my way of thinking on this point.  Not necessarily the OP.

[Zangelbert Bingledack]

Why wouldn't miners reject interactions with miners who set the block size too high, for instance?

Yes, I believe they would. So far, most miners and pools are VERY conservative; I think the idea that they will create huge blocks that have a significant risk of being rejected, just so they MIGHT get an advantage over marginal miners that can't process them fast enough, is loony.

Rejections are is not a significant risk for miners. That's the whole point of my original post on the issue. If your blocks are built upon by the majority of hashing power, you come out ahead in the long run. Your orphan rate does increase proportionally, but if, say, 5% of the hashing power never sees your blocks, the increase in varience is low, yet you get the very real benefit of 5% less competition. In the long run there is no "might" - it's simple statistics, and I haven't seen anyone offer a rebuttal based on analysis rather than hand-waving.

I just don't see why widespread norms wouldn't emerge to have the blocksize be within a certain reasonable range at any given time (the norms would change dynamically/organically as the mining community sees fit), with the result that rogue miners would be more or less completely isolated.

Tragedies of the commons only happen if there is a forcible ban on anyone taking ownership or control of any part of the commons. Since each node is in control of itself, at least, I don't see how this situation can be subject to a tragedy of the commons. It seems that if any behavior was know to be harmful it would become taboo and miners would understand that to protect their long-term investment they had better reject rogue behavior.

Isn't the debate then a matter of how many people would reject? My sense based in economic reasoning suggests that norms like this could cover much more than 5%.

[markm]

The well heeled elite's "norm" is likely to be out of reach of some people somewhere, but being the entitled, the elite, with their natural disdain of anyone who cannot afford enough sufficiently weighty law firms or enough sufficiently advanced ASICs or enough well enough armed troops or whatever to defend themselves are natural prey, the commons belongs to whoever has the troops to seize it, and if having your and your peers', your similarly elite, similarly entitled buddies' troops actually come to blows cuts into profits well maybe it is better to simply co-operate in having them keep lesser beings out instead of raising your corporate health plan costs by wasting your troops on each others' troops.

Gosh when I think of it this way I start to think the middle east is a commons of oil, and remember hearing of various send in the marines type of stories... Get those ragheads out of the commons because the commons contains something we have the brute force / violence capability to seize regardless of what the ragheads want or do not want...

Heck the ragheads are maybe not even rapiing the planet's resources at max possible speed, a real outfit needs to get in there and get all that oil out and burn it quick to maximise profits because profit now is better than profit later...

-MarkM-

[tvbcof]

Tragedies of the commons only happen if there is a forcible ban on anyone taking ownership or control of any part of the commons.

WTF?!?

For one, if someone takes ownership or control of the commons, they are not the commons any more.

For two, it is very much the case that the 'tragedy' occurs absent a mechanism to prevent it.  'forcible ban' or otherwise.  You seem utterly backward on the whole 'tragedy of the commons' principle.  To me.

For three, a lot of us, and especially myself, are pretty leery about individuals 'taking ownership or control' over the certain aspects of Bitcoin's function.  Indeed, the difficulty of doing this is a major 'selling point' of the Bitcoin solution.  In part because of the ill effects of such control in other solutions.

[Zangelbert Bingledack]

For one, if someone takes ownership or control of the commons, they are not the commons any more.

Indeed, having a "commons" is the problem in the first place: no commons, no tragedy of the commons.

Bitcoin has no commons. Every node is owned by someone and they control it, therefore no commons, therefore no tragedy.

For two, it is very much the case that the 'tragedy' occurs absent a mechanism to prevent it.  'forcible ban' or otherwise.  You seem utterly backward on the whole 'tragedy of the commons' principle.  To me.

That's good, because most economic reasoning seems exactly backwards from common sense.

If land is not owned by anybody, although legal formalism may call it public property, it is utilized without any regard to the disadvantages resulting. Those who are in a position to appropriate to themselves the returns — lumber and game of the forests, fish of the water areas, and mineral deposits of the subsoil — do not bother about the later effects of their mode of exploitation. For them the erosion of the soil, the depletion of the exhaustible resources and other impairments of the future utilization are external costs not entering into their calculation of input and output. They cut down the trees without any regard for fresh shoots or reforestation. In hunting and fishing they do not shrink from methods preventing the repopulation of the hunting and fishing grounds.

This can only happen when there is a commons ("public property"), which can only happen when there is a ban on ownership. There is no ban on ownership of Bitcoin nodes; each node operator owns his or her node and has control over it. No commons for there to be a tragedy in.

For three, a lot of us, and especially myself, are pretty leery about individuals 'taking ownership or control' over the certain aspects of Bitcoin's function.  Indeed, the difficulty of doing this is a major 'selling point' of the Bitcoin solution.  In part because of the ill effects of such control in other solutions.

Only the nodes are owned, not "Bitcoin" (the system).

[tvbcof]

For one, if someone takes ownership or control of the commons, they are not the commons any more.

Indeed, having a "commons" is the problem in the first place: no commons, no tragedy of the commons.

Bitcoin has no commons. Every node is owned by someone and they control it, therefore no commons, therefore no tragedy.

I say you are missing the forest for the trees.  The entire Bitcoin economy and ecosystem forms a very viable and very real 'commons'.

For two, it is very much the case that the 'tragedy' occurs absent a mechanism to prevent it.  'forcible ban' or otherwise.  You seem utterly backward on the whole 'tragedy of the commons' principle.  To me.

That's good, because most economic reasoning seems exactly backwards from common sense.

If land is not owned by anybody, although legal formalism may call it public property, it is utilized without any regard to the disadvantages resulting. Those who are in a position to appropriate to themselves the returns — lumber and game of the forests, fish of the water areas, and mineral deposits of the subsoil — do not bother about the later effects of their mode of exploitation. For them the erosion of the soil, the depletion of the exhaustible resources and other impairments of the future utilization are external costs not entering into their calculation of input and output. They cut down the trees without any regard for fresh shoots or reforestation. In hunting and fishing they do not shrink from methods preventing the repopulation of the hunting and fishing grounds.

This can only happen when there is a commons ("public property"), which can only happen when there is a ban on ownership. There is no ban on ownership of Bitcoin nodes; each node operator owns his or her node and has control over it. No commons for there to be a tragedy in.

In Libertarian fantasy-land it sounds good, but in the real world there are countless examples of unmitigated disasters when the commons are divied up (or simply taken by those with the means to do so) and extracted out of existence.

One of the first which comes to mind is the salmon fishing in Bristol Bay which I participated in for many years.  You won't find a bigger set of right wingers and libertarians than commercial fishermen, but every one of the recognized the value of treating the resource in a sustainable and managed way.  Especially those who had been around in the bad old days.

For three, a lot of us, and especially myself, are pretty leery about individuals 'taking ownership or control' over the certain aspects of Bitcoin's function.  Indeed, the difficulty of doing this is a major 'selling point' of the Bitcoin solution.  In part because of the ill effects of such control in other solutions.

Only the nodes are owned, not "Bitcoin" (the system).

When only .0001 percent of the community has the realistic ability to operate a node (much less a mining setup) the system will be for all intents and purpose operated at the pleasure of a very small group of very probably like-minded people.

"People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices. It is impossible indeed to prevent such meetings, by any law which either could be executed, or would be consistent with liberty or justice. But though the law cannot hinder people of the same trade from sometimes assembling together, it ought to do nothing to facilitate such assemblies; much less to render them necessary."  - Adam Smith

I the open source world of Bitcoin, the protocol is the law.  And the users are those who enforce the law.  To the extent that it is practical at least.

[Zangelbert Bingledack]

Bristol Bay is a perfect example of a forcible ban on ownership, exactly opposite to the situation with Bitcoin: there are laws preventing anyone from owning or homesteading any part of the fishing waters. This is what causes the tragedy of the commons and artificially removes the incentive of each user to maintain the resource. Commons (in the economic sense) are always created by government fiat.

This is why Bitcoin has no commons. Each node is self-owned. Each can do whatever it wants. There is never anything forced on anyone, unlike in a commons. The organism will adapt in accord with its interests.