beeblebrox (OP)
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March 01, 2013, 02:03:48 PM Last edit: March 01, 2013, 02:33:10 PM by beeblebrox |
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Hello, I'm a new member here, although I've been following bitcoin and this forum for a while. Something has been bothering me for quite some time and I've finally joined to ask you guys about it. Specifically: it fascinates me that people don't seem to discuss what appears to me to be a most obvious fatal flaw in bitcoin.
ie: The transaction fee model will not support the cost of block creation. Bitcoin will lose hashing power in the future when block reward coin generation drops off faster than the increase in bitcoin price.
The transaction fee model will not work because you can potentially exchange bitcoins outside the system which doesn't generate any fees for the miners. For example, you can do this at the moment by physically printing out the public and private keys to a wallet and physically passing these around in a tamper proof way instead of transferring the coins by way of a transaction within the system-- this is how Casascius coin works. At the moment these off-chain transfers cannot be done electronically and require that you trust the person that creates the item that is exchanged. However, soon transferring coins outside the system will be very easy to do since we are currently entering a new era of secure computing where everyday desktop computers and phones will allow you to exchange these key pairs in a secure, non-exploitable way. This technology is the same that the media companies are demanding that all computers must have to prevent illegal copying of content. Once someone creates the software to exchange coins this way it will become the most popular way to exchange coins since it is totally free and instant-- at this point, hardly any coins will be exchanged on the network and hence no transactions fees will be collected by the miners and hence no-one will mine anymore and ultimately bitcoin FAILS. There are various solutions to this problem, but most require hard forks: listed below are just some 1) Infinite coin supply-- don't 1/2 the block reward every 4 years- instead at some point (say 12 years in the future stop the block halvings). Note: If you have a constant reward eventually the coin supply will more or less balance out the rate of coin loss so you won't actually end up with an inifinite number of coins. 2) Satoshi Dice and similar services which use the block chain, requiring people to make transactions in the chain (eg: introduce namecoin domain name service, voting services, registration services, proof-that-something-has-happened services) 3) Demurrage where the miners get a fixed amount of the total supply every year, like freicoin. 4) Other schemes similar to demurrage where the miners get rewarded directly from people's wallets without them having to make transactions--eg: long term non-active wallets trigger an expiry date that allows miners to collect its contents.
Please explain to be why this is not considered the major problem with bitcoin and why it is not discussed on this forum.
(PS: I personally like the idea of expiry-dates for non-active wallets since it froces people to make a transaction before the expiry or they lose the money (or maybe just a percentage of it)- so the miners can make money by transaction fees and reclaiming dead coin. Am thinking of creating a new coin system based on it-- does one like this already exist though?)
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greyhawk
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March 01, 2013, 02:15:39 PM |
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Great. So instead of sending transactions you want to exchange wallets off the grid.
One question though. How are you gonna fill that wallet with the needed amount of btc?
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MoonShadow
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March 01, 2013, 02:22:04 PM |
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Please explain to be why this is not considered the major problem with bitcoin and why it is not discussed on this forum.
No. Do some more research on this topic first. I assure you, that you are not some economic genius that has found the 'great Bitcoin flaw' (tm) and no one before you has had the same thoughts. (PS: I personally like the idea of expiry-dates for non-active wallets since it froces people to make a transaction before the expiry or they lose the money (or maybe just a percentage of it)- so the miners can make money by transaction fees and reclaiming dead coin. Am thinking of creating a new coin system based on it-- does one like this already exist though?)
Yes. Now use the search function and don't ask crazy questions before you are out of newbie hell, or the next time I'll nuke your little account out of spite.
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"The powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent meetings and conferences. The apex of the systems was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world's central banks which were themselves private corporations. Each central bank...sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world."
- Carroll Quigley, CFR member, mentor to Bill Clinton, from 'Tragedy And Hope'
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beeblebrox (OP)
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March 01, 2013, 02:26:16 PM |
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You only need fill the wallet *once* for it to be exchanged an infinite number of times. eg: look at a casasius coin-- once it is bought by somone there it no stopping how many times it can be physically exchanged between different people before someone puts it back into a different wallet with new transaction on the network.
Also, you only need of regular totals of the wallets to be transferred off-chain to make any amount you wish to exchanged: eg- you can have .... 0.001, 0.002, 0.005 0.1, 0.2 0.5, 1, 2, 5, 10, 20, 50, 100BTC,.... totals in the wallets and you exchange the key-pairs of the required numbers of wallets to make up the any amount you wish (ie: similar to how regular denomination coins/notes work in real like currency)
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beeblebrox (OP)
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March 01, 2013, 02:40:41 PM |
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You only need fill the wallet *once* for it to be exchanged an infinite number of times. eg: look at a casasius coin-- once it is bought by somone there it no stopping how many times it can be physically exchanged between different people before someone puts it back into a different wallet with new transaction on the network.
Also, you only need of regular totals of the wallets to be transferred off-chain to make any amount you wish to exchanged: eg- you can have .... 0.001, 0.002, 0.005 0.1, 0.2 0.5, 1, 2, 5, 10, 20, 50, 100BTC,.... totals in the wallets and you exchange the key-pairs of the required numbers of wallets to make up the any amount you wish (ie: similar to how regular denomination coins/notes work in real like currency)
Oops, sorry, this was meant to be a reply to greyhawk. I'm new here and didn't see the quote function.
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MoonShadow
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March 01, 2013, 02:43:58 PM |
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You only need fill the wallet *once* though for it to be exchanged an infinite number of times. eg: look at a casasius coin-- once it is bought by somone there it no stopping how many times it can be physically exchanged between different people before someone put it back into a different wallet a new transaction on the network.
Also, you only need of regular totals of off-chain wallets to make any amount you wish to exchanged: eg- you can have .... 0.001, 0.002, 0.005 0.1, 0.2 0.5, 1, 2, 5, 10, 20, 50, 100BTC,.... totals in the wallets and you exchange the key-pairs of the required numbers of wallets to make up the any amount you wish (ie: similar to how regular denomination coins/notes work in real like currency)
You could also create a paper note with a private key inside. Like printing a QR code on the outside of a sealed envelope. So how do you get someone else to trust it? You would have to get the vendor to 1) trust you, which would likely require identifcation; 2) trust that the currency is legitimate, i.e. not counterfit; and 3) trust that the mint that created it was trustworthy. Casasius is a well trusted community member, but even his coins are not universally well regarded. If he can make one, someone else can fake it. Eventually this is going to happen. Furthermore, loading your wallet to exchange still requires on-network transactions. It's impossible to always avoid that, no matter how many off-network trades you can do.
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"The powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent meetings and conferences. The apex of the systems was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world's central banks which were themselves private corporations. Each central bank...sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world."
- Carroll Quigley, CFR member, mentor to Bill Clinton, from 'Tragedy And Hope'
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beeblebrox (OP)
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March 01, 2013, 02:45:41 PM |
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Please explain to be why this is not considered the major problem with bitcoin and why it is not discussed on this forum.
No. Do some more research on this topic first. I assure you, that you are not some economic genius that has found the 'great Bitcoin flaw' (tm) and no one before you has had the same thoughts. I see how what I've written may be taken as demanding. Sorry, I should have put a "could" in there--ie: "Could you please explain..."
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greyhawk
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March 01, 2013, 02:46:00 PM |
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Also, you only need of regular totals of the wallets to be transferred off-chain to make any amount you wish to exchanged: eg- you can have .... 0.001, 0.002, 0.005 0.1, 0.2 0.5, 1, 2, 5, 10, 20, 50, 100BTC,.... totals in the wallets and you exchange the key-pairs of the required numbers of wallets to make up the any amount you wish (ie: similar to how regular denomination coins/notes work in real like currency)
So you want to establish denominations again? In a digital currency where we finally have a chance to get rid of this absurd kludge? Why? Why add all that completely unneccessary complexity just to get out of a miniscule tax dedicated to keeping the system running?
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Beepbop
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March 01, 2013, 02:50:37 PM |
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beeblebrox, your idea rests on two fatal flaws itself: - One would have to trust the new system, either as a central authority or as a whole new meta-crypto currency that contains Bitcoins. - That Bitcoin ever would progress so far that somebody would find value in such a service (i.e. that it would survive in any meaningful way after bottom falls out of the mining rush).
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beeblebrox (OP)
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March 01, 2013, 02:53:47 PM Last edit: March 01, 2013, 03:07:31 PM by beeblebrox |
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You only need fill the wallet *once* though for it to be exchanged an infinite number of times. eg: look at a casasius coin-- once it is bought by somone there it no stopping how many times it can be physically exchanged between different people before someone put it back into a different wallet a new transaction on the network.
Also, you only need of regular totals of off-chain wallets to make any amount you wish to exchanged: eg- you can have .... 0.001, 0.002, 0.005 0.1, 0.2 0.5, 1, 2, 5, 10, 20, 50, 100BTC,.... totals in the wallets and you exchange the key-pairs of the required numbers of wallets to make up the any amount you wish (ie: similar to how regular denomination coins/notes work in real like currency)
You could also create a paper note with a private key inside. Like printing a QR code on the outside of a sealed envelope. So how do you get someone else to trust it? You would have to get the vendor to 1) trust you, which would likely require identifcation; 2) trust that the currency is legitimate, i.e. not counterfit; and 3) trust that the mint that created it was trustworthy. Casasius is a well trusted community member, but even his coins are not universally well regarded. If he can make one, someone else can fake it. Eventually this is going to happen. Furthermore, loading your wallet to exchange still requires on-network transactions. It's impossible to always avoid that, no matter how many off-network trades you can do. Yes, you need to trust someone when you exchange *physically*, but when you exchange electronically you only need to trust a computer (and of course whoever wrote the program-- but with open source with is not such an issue). Such electronic transfers in the real world already exist, but currently require special hardware-- eg: smart transport cards for public transport where you load money onto the card. This technology is becoming available on desktop computers-- it is being installed on the desktop to prevent piracy: eg, remote attestation, secure booting, etc.. As regards the fact that it still needs an on-network transaction to load the wallet-- it only needs to be done *once*. Once it is off-network, it can stay off-network forever and still be exchanged.
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MoonShadow
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March 01, 2013, 02:54:08 PM |
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- That Bitcoin ever would progress so far that somebody would find value in such a service (i.e. that it would survive in any meaningful way after bottom falls out of the mining rush).
It also presumes that, even with world changing success for Bitcoin, another greater cryptocurrency doesn't come along and eat Bitcoin's lunch before the block subsidy is gone. Since that won't be until 2130 or so, I think that it's not a pressing problem. I think that I'll continue to use it in the meantime.
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"The powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent meetings and conferences. The apex of the systems was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world's central banks which were themselves private corporations. Each central bank...sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world."
- Carroll Quigley, CFR member, mentor to Bill Clinton, from 'Tragedy And Hope'
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MoonShadow
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March 01, 2013, 02:59:56 PM |
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You only need fill the wallet *once* though for it to be exchanged an infinite number of times. eg: look at a casasius coin-- once it is bought by somone there it no stopping how many times it can be physically exchanged between different people before someone put it back into a different wallet a new transaction on the network.
Also, you only need of regular totals of off-chain wallets to make any amount you wish to exchanged: eg- you can have .... 0.001, 0.002, 0.005 0.1, 0.2 0.5, 1, 2, 5, 10, 20, 50, 100BTC,.... totals in the wallets and you exchange the key-pairs of the required numbers of wallets to make up the any amount you wish (ie: similar to how regular denomination coins/notes work in real like currency)
You could also create a paper note with a private key inside. Like printing a QR code on the outside of a sealed envelope. So how do you get someone else to trust it? You would have to get the vendor to 1) trust you, which would likely require identifcation; 2) trust that the currency is legitimate, i.e. not counterfit; and 3) trust that the mint that created it was trustworthy. Casasius is a well trusted community member, but even his coins are not universally well regarded. If he can make one, someone else can fake it. Eventually this is going to happen. Furthermore, loading your wallet to exchange still requires on-network transactions. It's impossible to always avoid that, no matter how many off-network trades you can do. Yes, you need to trust someone when you exchange *physically*, but when you exchange electronically you only need to trust a computer (and of course who wrote the program-- but with open source with is not such an issue). Such electronic transfers in the real world already exist, but currently require special hardware-- eg: smart transport cards for public transport where you load money onto the card. This technology is becoming avaiable on desktop computers-- it is being installed on desktop to prevent piracy: eg, remote attestation, secure booting, etc.. As regards the fact that it still needs an on-network transaction to load the wallet-- it only needs to be done *once*. Once it off-network, it can stay off-network forever and still be exchanged. Not forever. No rational vendor is going to continue to accumulate bitcoin private keys without flushing those values on occasion, because no matter what technology that is used, there is no way (outside of the blockchain) to be certain that those private keys have not been copied by some talented hacker somewhere along the way. The blockchain is the very novel use of technology that makes digital currencies work without a centralized authority. Any use of off network transactions (and I have no doubt that such transactions will become commonplace, but never universal) would require some degree of trust, most likely in the institution that created the off-blockchain processing network. We call such institutions "banks", and sometimes they fail.
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"The powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent meetings and conferences. The apex of the systems was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world's central banks which were themselves private corporations. Each central bank...sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world."
- Carroll Quigley, CFR member, mentor to Bill Clinton, from 'Tragedy And Hope'
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beeblebrox (OP)
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March 01, 2013, 03:01:47 PM |
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- That Bitcoin ever would progress so far that somebody would find value in such a service (i.e. that it would survive in any meaningful way after bottom falls out of the mining rush).
It also presumes that, even with world changing success for Bitcoin, another greater cryptocurrency doesn't come along and eat Bitcoin's lunch before the block subsidy is gone. Since that won't be until 2130 or so, I think that it's not a pressing problem. I think that I'll continue to use it in the meantime. If off-network exchange become the most common way to exchange coins, it doesn't take till 2130 (when the block subsidy reduces to zero) for it to negatively affect the hash rate. Think about it and you'll see why. (think about especially why miners mine-- ie: to make a profit).
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MoonShadow
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March 01, 2013, 03:06:59 PM |
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- That Bitcoin ever would progress so far that somebody would find value in such a service (i.e. that it would survive in any meaningful way after bottom falls out of the mining rush).
It also presumes that, even with world changing success for Bitcoin, another greater cryptocurrency doesn't come along and eat Bitcoin's lunch before the block subsidy is gone. Since that won't be until 2130 or so, I think that it's not a pressing problem. I think that I'll continue to use it in the meantime. If off-network exchange become the most common way to exchange coins, it doesn't take till 2130 (when the block subsidy reduces to zero) for it to negatively affect the hash rate. Think about it and you'll see why. (think about especially why miners mine-- ie: to make a profit). Negatively, sure. But catastrophicly so? Tell me this, why would anyone bother to develop and off-network method of transacting in Bitcoin unless the transaction fees for the main blockchain were high enough to justify that? How does the fee get high enough to justify such an off-network transaction method, unless there are fee paying transactions? The fee for inclusion into a block is market based, when the space is tight the fee to get included will increase. When the blocks are regularlly full, an off network transaction method will be economicly justifiable. Not until. This also, has been long considered.
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"The powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent meetings and conferences. The apex of the systems was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world's central banks which were themselves private corporations. Each central bank...sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world."
- Carroll Quigley, CFR member, mentor to Bill Clinton, from 'Tragedy And Hope'
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beeblebrox (OP)
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March 01, 2013, 03:13:36 PM |
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.... Negatively, sure. But catastrophicly so? Tell me this, why would anyone bother to develop and off-network method of transacting in Bitcoin unless the transaction fees for the main blockchain were high enough to justify that? How does the fee get high enough to justify such an off-network transaction method, unless there are fee paying transactions? The fee for inclusion into a block is market based, when the space is tight the fee to get included will increase. When the blocks are regularlly full, an off network transaction method will be economicly justifiable. Not until.
This also, has been long considered.
The reason why someone whould do it is because: 1) instead of being cheap, transactions are now totally free 2) instead of taking 10min-1hr to verify, transactions are now instant 3) hackers personally enjoy coding stuff like this 4) a bitcoin business can use it as a selling point and if I spent a bit more time thinking about it could probably find more reasons... Also, where has it been long considered. I've been reading this forum (lightly, and not all boards/topic streams) for over a year and have never seen it mentioned.
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beeblebrox (OP)
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March 01, 2013, 03:31:12 PM |
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.... Negatively, sure. But catastrophicly so? Tell me this, why would anyone bother to develop and off-network method of transacting in Bitcoin unless the transaction fees for the main blockchain were high enough to justify that? How does the fee get high enough to justify such an off-network transaction method, unless there are fee paying transactions? The fee for inclusion into a block is market based, when the space is tight the fee to get included will increase. When the blocks are regularlly full, an off network transaction method will be economicly justifiable. Not until.
This also, has been long considered.
The reason why someone whould do it is because: 1) instead of being cheap, transactions are now totally free 2) instead of taking 10min-1hr to verify, transactions are now instant 3) hackers personally enjoy coding stuff like this 4) a bitcoin business can use it as a selling point and if I spent a bit more time thinking about it could probably find more reasons... Ok, I just spend a minute thinking about it and here are some more 5) transaction can now be totally anonymous 6) it prevents block chain data growing wildly since less transaction processed on net (someone might implement with this good intention without thinking about its long term consequence) 7) storing a wallet such that is interlinks with a computer's TPM is more secure then storing it on normally on the harddrive 8.) someone might actually do this off-network exchange using a smart cards (there have been various proposals already about bitcoin on smart cards) making it easier to carry the wallets around on your person (a lot easier that carrying around your computer)
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Beepbop
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March 01, 2013, 03:35:53 PM |
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Why would anyone make a new cryptocurrency backed by Bitcoin?
If they get highly desireable, and somehow the developers fail to gain acceptance for a fork with more divisibility, or if transaction costs become too high, that might happen some time in the future. This has already been considered, and it's more likely that a fork will be made, IMO.
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beeblebrox (OP)
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March 01, 2013, 03:38:52 PM |
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.... Negatively, sure. But catastrophicly so? Tell me this, why would anyone bother to develop and off-network method of transacting in Bitcoin unless the transaction fees for the main blockchain were high enough to justify that? How does the fee get high enough to justify such an off-network transaction method, unless there are fee paying transactions? The fee for inclusion into a block is market based, when the space is tight the fee to get included will increase. When the blocks are regularlly full, an off network transaction method will be economicly justifiable. Not until.
This also, has been long considered.
The reason why someone whould do it is because: 1) instead of being cheap, transactions are now totally free 2) instead of taking 10min-1hr to verify, transactions are now instant 3) hackers personally enjoy coding stuff like this 4) a bitcoin business can use it as a selling point and if I spent a bit more time thinking about it could probably find more reasons... Ok, I just spend a minute thinking about it and here are some more 5) transaction can now be totally anonymous 6) it prevents block chain data growing wildly since less transaction processed on net (someone might implement with this good intention without thinking about its long term consequence) 7) storing a wallet such that is interlinks with a computer's TPM is more secure then storing it on normally on the harddrive 8.) someone might actually do this off-network exchange using a smart cards (there have been various proposals already about bitcoin on smart cards) making it easier to carry the wallets around on your person (a lot easier that carrying around your computer) Oh yeah, I just spent a few more minutes thinking and here are some more.. 9) smartcard storages make it easier to store the wallet in a physically secure place (such as a bank vault) 10) electronic off-net exhange means people without internet but local connectivity (eg: blue-tooth/NFC) can transact 11) phsyical off-network exchange, like casasius coin, allows people without even a computer 12) it could be overall easier for people new to bitcoin to learn to use-- since technology like smartcards and there useage are quite common (such as bus-passes) and the fact that smart card bitcoin would be very similar is use.
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Beepbop
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March 01, 2013, 03:52:54 PM |
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Can you please stop quoting your whole posts?
Also many of the ideas and points you've made have already been discussed many times before, and you're correct about many of them in terms of ease of use etc. but wrong about others.
1: No, it won't be free. The new service will need to get paid somehow. But if doing transactions on the main blockchain is too expensive, then the service will indeed present itself as probably many vendors of intermediate transactions - Bitcoin banks if you will - who will compete on fees, reliability and speed.
2: True. But just like for a bank processing credit card payments, though the payments appear instantly as a reservation in your account, the actual moving of money between the banks will happen on a slower time scale, like over night. Again, just like in banking.
3: Yes, but somebody actually has to run it, maintain it, deal with customer service, legal issues, security vulnerabilites, etc.
4: What you're talking about here is more like gift cards. Sure, my Bitcoin-taking tatami mat store could offer transfers between users, but if my gift cards are being used for de facto banking, I want to charge some fees for that.
5: Total anonymity? I don't think so. Maybe more anonymous than the blockchain until you're raided, broken into, or compelled to give away transaction logs.
6: It would indeed offload some load on the main blockchain. Again, this has been discussed before.
7: Maybe, but that only deals with keeping the private key safe. That is only part of the system.
8: Offline smart card transactions with Bitcoin are just as difficult as to do them with USD or other currency. Not a trivial thing, and if you solve it you're better served selling your solution to Visa or something than to bitcoiners.
9: A paper wallet is just as good, IMO. Or regular memory card. If you trust the safe deposit box anyway..
10: Sure, but see point 8.
11: Sure.
12: Definitely. Bringing Bitcoins from the mining nerd to the cash register is something that many entrepeneurs are working hard at right now, and not being terribly successful.
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beeblebrox (OP)
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March 01, 2013, 03:55:06 PM |
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Why would anyone make a new cryptocurrency backed by Bitcoin?
I don't quite understand why you are talking about new currency backed by Bitcoin-- I've never mentioned this.
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