Is the 21 million bitcoin limit unchangeable?

[maxmint]

So there's this magical limit of ~21 million bitcoins that can theoretically exist at max. Many assumptions about the future of bitcoin are based on this number.

How easy / hard would it be to change this limit? It seems, this function controls how many coins are given to miners for solving a block. If developers decided to change this function, the 21 million number would change too, right? Or is the 21 million number somehow coded deeper in the system?

[1714232385]

1714232385

[grau]

This is not the question of code but consensus that makes up Bitcoin.

A big portion, likely majority, of user would reject to upgrade to a version that changes this rule.

[markm]

Exactly, is just like if the government of a country decided to print more money, the people would throw them out of office and... oops...

...Well anyway, the moral of those stories seems to be that it wouldn't be elegant.

Bitcoin is mathematical, and mathematics is elegant, so obviously it cannot happen here.

-MarkM-

[maxmint]

This is not the question of code but consensus that makes up Bitcoin.

Ok, that means the limit is not hard-wired. So it could be changed - at least theoretically.

A big portion, likely majority, of user would reject to upgrade to a version that changes this rule.

I'm not saying that I don't trust the community, quite the contrary. But what if circumstances change and it appears to be wise to make a change to the limit? Who knows what could be 10 years from now.
I mean, the current money printing also came gradually over time and people just got used to it.

[markm]

I get the impression that not everyone got used to it.

To the contrary, some people seem to take the position that the Fed can print more bitcoins when they pry their full node from their great great great great grandchild, last of the line,'s dying hand...

-MarkM-

[prezbo]

I'm not saying that I don't trust the community, quite the contrary. But what if circumstances change and it appears to be wise to make a change to the limit? Who knows what could be 10 years from now.
I mean, the current money printing also came gradually over time and people just got used to it.

Why would anyone prefer a system where their money is losing value just by holding it to one where it doesn't? It makes no sense.

[mezzomix]

This is not the question of code but consensus that makes up Bitcoin.

Ok, that means the limit is not hard-wired. So it could be changed - at least theoretically.

What do you mean with hard-wired? It's an implemented protocol. You can change the implementation and everybody using this changed implementation will support the the changed rules.

I'm not saying that I don't trust the community, quite the contrary. But what if circumstances change and it appears to be wise to make a change to the limit? Who knows what could be 10 years from now.
I mean, the current money printing also came gradually over time and people just got used to it.

This is the reason I'm not absolutely happy about how the 0.7 database problem was handled. There is to much power in the hand of a small group of people right now. They make the rules - everybody follow.

[maxmint]

What do you mean with hard-wired? It's an implemented protocol. You can change the implementation and everybody using this changed implementation will support the the changed rules.

Yes, I understand that now. I was under the impression that the coin limit was somehow fixed forever and could not be altered (like a transaction deep in the blockchain can't be changed anymore). But that's obviously not the case.

[linuxnewbie]

The biggest holders and/or miners of BTC, or their heirs, may rule the world someday. If they go despotic, everyone can just switch to LTC or something else. And so on ad infinitum.

[Stephen Gornick]

But that's obviously not the case.

You might wish to read up on the concept with Bitcoin known as the Economic Majority:
 - http://en.bitcoin.it/wiki/Economic_majority

[markm]

You might wish to read up on the concept with Bitcoin known as the Economic Majority:
 - http://en.bitcoin.it/wiki/Economic_majority

Hmm a tiny possible-quibble there, as those who hold bitcoins are maybe somewhat out of luck/power if no one wants those bitcoins / is willing to trade things to them for those bitcoins.

So it kind of seems like really the economic power is in those who want to hold bitcoins, assuming such people even continue to exist for any particular fork, rather than in those who already hold them...

(Its in the economy, not the coins, maybe?)

Its in those who hold the economy, not those who only hold the coins?

-MarkM-

[Come-from-Beyond]

A big portion, likely majority, of user would reject to upgrade to a version that changes this rule.

When 100.000.000 ppl join the Bitcoin world, they can change the rules and they will be the majority.

[markm]

On their fork, sure.

The Fed and its peons are the majority on the fiat fork too, that didn't stop Bitcoin Classic from arising. Cold dead hands, man, cold dead hands!

(Full node, remember. Not zombie drone peon slavetablet!)

-MarkM-

[Come-from-Beyond]

On their fork, sure.

I'm afraid THEY will call YOUR Bitcoin "a fork". Anyway, regardless which Bitcoin will be the fork, the majority will use their Bitcoin and your Bitcoin will be just toy money.

[markm]

It already is toy money, it always has been toy money, it just happens that toy money is better than fiat money. Increasing the number of coins by fiat is just another fiat currency debasing itself the way fiat currencies do, the way that caused Classic Bitcoin to be so valuable in the first place.

-MarkM-

[MPOE-PR]

Exactly, is just like if the government of a country decided to print more money, the people would throw them out of office and... oops...

...Well anyway, the moral of those stories seems to be that it wouldn't be elegant.

Bitcoin is mathematical, and mathematics is elegant, so obviously it cannot happen here.

-MarkM-

Right. Related.

[MoonShadow]

So there's this magical limit of ~21 million bitcoins that can theoretically exist at max. Many assumptions about the future of bitcoin are based on this number.

How easy / hard would it be to change this limit? It seems, this function controls how many coins are given to miners for solving a block. If developers decided to change this function, the 21 million number would change too, right? Or is the 21 million number somehow coded deeper in the system?

It's theoretically possible, yes.  It's also theoretically possible for the quantum force we call gravity to reverse itself tommorrow, and we are all 'reborn' in the result, that some scientist calls "The big fart" in another 14 trillion years.

I'd give those two about even odds.

[Come-from-Beyond]

It's theoretically possible, yes.  It's also theoretically possible for the quantum force we call gravity to reverse itself tommorrow, and we are all 'reborn' in the result, that some scientist calls "The big fart" in another 14 trillion years.

I'd give those two about even odds.

Do u give those even odds or u wish those have even odds?
(Don't bother answering this question)

[batcoin]

Bitcoin is mathematical, and mathematics is elegant, so obviously it cannot happen here.

Man, those sound like famous last words...

From my understanding it could happen and easier than one might think. It all depends on the diligence of those who download the software and run nodes for the network from what I understand. If they are lazy and set their client to automatic update (which is something that I suspect would be implemented in future releases) or they just upgrade because there's a new release, a majority of the network could unwittingly accept the change.

I'm not saying that I don't trust the community, quite the contrary. But what if circumstances change and it appears to be wise to make a change to the limit? Who knows what could be 10 years from now.
I mean, the current money printing also came gradually over time and people just got used to it.

Why would anyone prefer a system where their money is losing value just by holding it to one where it doesn't? It makes no sense.

When people don't have the first clue on how their money actually works, how can they know enough to care? They just listen to the asshole on TV who says that inflation is BAD! Deflation is BAD! Stagflation is BAD! and they say HELL YEAH BIOTCH! and head off to work to flip burgurz.

Take what I have to say with a grain of salt, though. I am just an amateur with an asshole opinion.

Now I am off to spin pizza dough.

[markm]

Bitcoin is mathematical, and mathematics is elegant, so obviously it cannot happen here.

Man, those sound like famous last words...

Oh I'm sorry, was the sound turned down or did the sound effects department not adequately convey the sound of irony dripping copiously from said words?



-MarkM-

EDIT: Hint: "can't happen here" aka "it cannot happen here" is a proverbially famous famously proverbial "these are last words, epitaph writers please take note of them" indicator.

(As in "The proverbial 'it cannot happen here'" )

(Yet somehow, strangely, weirdly, mathematically, not to be confused with "hash collision"... Hmm, as in things that make one go hmmm..)

[markm]

It's theoretically possible, yes.  It's also theoretically possible for the quantum force we call gravity to reverse itself tommorrow, and we are all 'reborn' in the result, that some scientist calls "The big fart" in another 14 trillion years.

I'd give those two about even odds.

Do u give those even odds or u wish those have even odds?
(Don't bother answering this question)

It could, mayhap, be a rhetorical device intended to recall to mind some class of items that some demographics, whilst their hands remain warm, might upon occasion be found to have in their hands. Reminds me of a Bugs Bunny utterance along the lines of "Of course you realise, this means something."

-MarkM-

[Killdozer]

No need for arguing really, this has a really easy answer:
The actual number of bitcoins doesn't matter. They are practically infinitely indivisible, and their price varies according to adoption and the size of the available market. Why would you ever need to change their number? It could have been 1, 10, 1000, or 1e56, it's just a matter of scale and price calculation for merchants.

[batcoin]

Bitcoin is mathematical, and mathematics is elegant, so obviously it cannot happen here.

Man, those sound like famous last words...

Oh I'm sorry, was the sound turned down or did the sound effects department not adequately convey the sound of irony dripping copiously from said words?



-MarkM-

EDIT: Hint: "can't happen here" aka "it cannot happen here" is a proverbially famous famously proverbial "these are last words, epitaph writers please take note of them" indicator.

(As in "The proverbial 'it cannot happen here'" )

(Yet somehow, strangely, weirdly, mathematically, not to be confused with "hash collision"... Hmm, as in things that make one go hmmm..)

Yeah, sorry, I am deaf, so I didn't hear it. Text kinda comes across that way too for the most part. Oh well. lol

[MoonShadow]

If you don't think Bitcoin is safe, don't invest anything into it.  That limit is unchangable, though, not because of the code, but because of the principle.  If there were to ever be a hard code fork on this issue, one would be the true Bitcoin, the other could not be.  It's also more than a bit rediculous to assume that future users would be running a full node, and could be tricked into supporting such a change simply by turning on an auto update feature.  First off, the vast majority of future bitcoin users, if bitcoin is ever truely succesful, will be running light clients or depending upon wallet service accounts; the full client will be the realtively rare animal.  Probably as many or more full nodes as presently exist, but still realtively rare overall.  Second, a group of end users, both stupid enough to trust their internal security with their money to a remotely controlled automated system AND wealthy enough to ignore the ongoing costs of running a full node would still amount to little, IMHO simply because there are now, and shall be, more than just the main reference client.  So whatever percentage is deceived into supporting the change will still be opposed (by default) by those nodes that do not authorize or otherwise cannot participate in an auto update.  Furthermore, the break wouldn't go unnoticed for very long, and a great many of the decieved users can and will revert.  The 21M limit is part of what makes Bitcoin what it is, if you don't like it or don't think it's going to work out, you can either support one of the alt-coins that suits your needs or start your own.  Just don't call it Bitcoin.

[markm]

Man, those sound like famous last words...

[...SNIP...]

Yeah, sorry, I am deaf, so I didn't hear it. Text kinda comes across that way too for the most part. Oh well. lol

Oh don't be so modest, you clearly did hear what it sounded like, which was how it was meant to sound. Thanks for acting as a foil to increase the volume a little for the studio audience and/or the folks at home.

-MarkM-

[johnyj]

OP's question is a very natural response to the latest incident, I think many people would sooner or later start to worry about a few core devs and a few mining pools push a new version and create a fork and claim that fork is the right choice

But there are limitations:
https://en.bitcoin.it/wiki/Economic_majority

So far, the most popular word is "consensus"
"Those proposing changes should consider that ultimately consent may rest with the consensus of the Bitcoin users"
https://en.bitcoin.it/wiki/Bitcoin_Improvement_Proposals

And there are some prohibited changes
https://en.bitcoin.it/wiki/Prohibited_changes

Consensus is a very vague term, how many people can reach a consensus? 79% or 81%? It is always necessary to discuss the political (decision making) structure of bitcoin, but as it appeared this time, there is an internal decision making process by core devs and a couple of pool operators, works like FOMC meeting. Bitcoin users in this case do not have any choice but follow the core devs' directive, so "consensus" might be just some claim that do not have practical meaning

So follow the FED or follow the core devs, that's the question. Maybe FED is not better than core devs, but core devs must show some expertise when it comes to handling users trust. At least this time they acted professionaly and hold the consistency and integrity of bitcoin, thus gained some reputation, but anyway this showed some uncertainties of bitcoin which has never been revealed before, I think people need time to digest all these, time will tell

[markm]

Yeah maybe they did allow themselves to be stampeded by the ignorant masses into releasing too early?

Then again there seem to have also been rumours that "big business[es]" also are applying pressure.

-MarkM-

[johnyj]

Yeah maybe they did allow themselves to be stampeded by the ignorant masses into releasing too early?

Then again there seem to have also been runours that "big business[es]" also are applying pressure.

-MarkM-

I heard that gox are running 0.7?

Big businesses are just representations of bitcoin users, so they do listen to users

[Stephen Gornick]

So it kind of seems like really the economic power is in those who want to hold bitcoins, a[...] rather than in those who already hold them...

Glad I'm not the only one to think that theory needs revision.

I raised a question on StackExchange on that:

Is Bitcoin's Economic Majority those who already own coins or those who will buy or keep coins?
 - http://bitcoin.stackexchange.com/q/8285/153'

I also added that to the Wiki article's discussion page:
 - http://en.bitcoin.it/wiki/Talk:Economic_majority

[MoonShadow]

Yeah maybe they did allow themselves to be stampeded by the ignorant masses into releasing too early?

Then again there seem to have also been runours that "big business[es]" also are applying pressure.

-MarkM-

I heard that gox are running 0.7?

That's possible, but likely irrelevent.  MtGox doesn't mine, and if they refuse to forward an oversized block they alone are not significant enough to prevent the propagation of the block.  The only downside is to users of MtGox who might not be able to trade until they fix their stuff.

[Stephen Gornick]

Assume the 0.8 miners had 70% of the hashing power and most of the merchants wanted 0.8.  Also suppose 30% of the nodes are 0.8 and 70% are 0.7 or below because most people don't fully understand what is going on and didn't upgrade yet.  How would this play out?

In the short term (hours after fork begins) it plays out poorly.     Most larger merchants and exchanges would halt processing until there was a pretty good idea of which side already had support of the economic majority or which side was more favorable to the economic majority and let that determine which side to support.  Smaller merchants not using a payment processor would see the alert and hopefully halt processing as well, but if not it probably shouldn't be too bad as customers could still be able to spend -- their transactions get mined on chains on both sides.  Merchants taking payments who are on the "wrong" side will start getting confirmations for payments that didn't yet get a confirm on the other side.

So then once this economic majority concludes that they are sticking with 0.7, miners using the pools that are mining on the 0.8 side have to wonder how those pools are going to pay out if their revenues will no longer be spendable (as those merchants and exchanges won't acknowledge blocks from the v0.8 side), and thus miner proceeds have no value.

So as a result you have individual miners start defecting to pools that are on the v0.7 side.  And hours later this problem no longer exists, because the pools that thought they could force a switch to v0.8 no longer have the hashing power to do so, and their side eventually no longer remains the longest chain.  

In this instance, eventually the chains converge and any blocks generated on the v0.8 side get orphaned.  

And as a result the pools come to realize who wears the pants in this relationship.  It is the economic majority -- the people who will buy their production of coins.

[markm]

Of course that assumes that the economic majority do want to backtrack to and/or stay with 0.7. If they did not, then maybe the rumours that [users or entities that economically serve as proxies for users] were pressuring for larger block sizes (that is to say, for versions 0.8 and up) might have been exaggerated.

I seem to recall someone suggesting Gavin was under pressure from big businesses to get larger blocks into play, other than that maybe there just happen to be a whole bunch of what maybe amount in this issue to "forum trolls" (said with some affection and tongue in cheek) loudly pushing for something the actual economic majority does not actually consider more important than first ensuring we can even actually in real life use the max block size we already had specified in capital letters in the source code.



As it happened though, one thing we did accomplish was a real life test of whether the max block size already specified was in fact workable yet.

-MarkM-

EDIT: No paradox need be involved; users might have clamoured too loud for quick action that, upon seeing its results, they quickly decided they would prefer to roll back.

[Come-from-Beyond]

No need for arguing really, this has a really easy answer:
The actual number of bitcoins doesn't matter. They are practically infinitely indivisible, and their price varies according to adoption and the size of the available market. Why would you ever need to change their number? It could have been 1, 10, 1000, or 1e56, it's just a matter of scale and price calculation for merchants.

Because if u cut a pie into 2 pieces u still have one pie, not two.

[Come-from-Beyond]

But that's obviously not the case.

You might wish to read up on the concept with Bitcoin known as the Economic Majority:
 - http://en.bitcoin.it/wiki/Economic_majority

The article at http://en.bitcoin.it/wiki/Economic_majority is very arguable.

[Economic majority is] the theory that the power to control the bitcoin protocol is held by those who hold bitcoins.

Without axioms a theory is just a hypothesis. The author comes to a conclusion (theorem) but a theorem can't be proved nor disproved without axioms.

[Peter Todd]

Of course that assumes that the economic majority do want to backtrack to and/or stay with 0.7. If they did not, then maybe the rumours that [users or entities that economically serve as proxies for users] were pressuring for larger block sizes (that is to say, for versions 0.8 and up) might have been exaggerated.

I seem to recall someone suggesting Gavin was under pressure from big businesses to get larger blocks into play, other than that maybe there just happen to be a whole bunch of what maybe amount in this issue to "forum trolls" (said with some affection and tongue in cheek) loudly pushing for something the actual economic majority does not actually consider more important than first ensuring we can even actually in real life use the max block size we already had specified in capital letters in the source code.

Relevant IRC:

14:49   gavinandresen   Luke-Jr: argument for another day, but I can almost guarantee that the blocksize limit will be raised in less than 2 years, just based on pressure from the big businesses using the chain (and no, NOT satoshidice)
14:50   gmaxwell   gavinandresen: If pressure from startups with business plans come in conflict with the health of the system then thats an issue we'll have to resolve.
14:50   gavinandresen   gmaxwell: not startups with business plans, existing companies like BItPay and Coinbase that are seeing exponential growth

http://bitcoinstats.com/irc/bitcoin-dev/logs/2013/03/12#l6304349

[maxmint]

No need for arguing really, this has a really easy answer:
The actual number of bitcoins doesn't matter. They are practically infinitely indivisible, and their price varies according to adoption and the size of the available market. Why would you ever need to change their number? It could have been 1, 10, 1000, or 1e56, it's just a matter of scale and price calculation for merchants.

The number of bitcoins does in fact matter for some of the predictions currently floating around. Take this statement for example:
The target value for bitcoin is 100.000 to 1.000.000 (Source)

This is based on 2 assumptions:
1. Bitcoin someday will grab a 1% to 10% market share on the transactional currency market (600 billion to 6 trillion USD)
2. This market share will be fulfilled by 6 million bitcoins (around one in four bitcoins of the 21 million is actually used in transactions, the rest are in savings or investment plans)

Now if the 21 million limit changes, the outcome of the prediction changes too. Think of it this way: if you own 100,000 bitcoins and you know there won't ever be more than 21 million bitcoins, then you currently own 0.47% of the whole "bitcoin pie". Now if the upper limit changes to 210 million (thus the pie getting bigger), then your share of the pie suddenly shrinks to 0.047%.

It seems if the upper limit in fact is changeable, then the above prediction is not really useful.

[Come-from-Beyond]

Think of it this way: if you own 100,000 bitcoins and you know there won't ever be more than 21 million bitcoins, then you currently own 0.47% of the whole "bitcoin pie". Now if the upper limit changes to 210 million (thus the pie getting bigger), then your share of the pie suddenly shrinks to 0.047%.

If 21 million cap is multiplied by 10, then all savings are multiplied by 10 as well. So 100,000 bitcoins will become 1,000,000. It's still 0.47%.

[markm]

Ah so that is where you are tripping up.

The "over me and my army's cold dead bodies" change in total number of coins involves actually issuing moar coins, not merely moving the decimal point aka multiplying all existing values by a constant.

-MarkM-

[maxmint]

Think of it this way: if you own 100,000 bitcoins and you know there won't ever be more than 21 million bitcoins, then you currently own 0.47% of the whole "bitcoin pie". Now if the upper limit changes to 210 million (thus the pie getting bigger), then your share of the pie suddenly shrinks to 0.047%.

If 21 million cap is multiplied by 10, then all savings are multiplied by 10 as well. So 100,000 bitcoins will become 1,000,000. It's still 0.47%.

I disagree. As I understand this, the cap is the sum of a (geometric) series, adding up all the bitcoins generated per block over time.
So you can't change the upper limit directly, but you could change the number of bitcoins generated per block and / or the reduction rate (which currently is at a 50% reduction every 4 years).
When changing one of these two, the projected upper limit changes, but the number of bitcoins in my savings stay the same. I don't see any reason why the number of my bitcoins should be affected by this.

[Come-from-Beyond]

For me increasing 21m cap is the same as http://en.wikipedia.org/wiki/Stock_split. Sorry if u were talking about some other thing.

[MPOE-PR]

Of course that assumes that the economic majority do want to backtrack to and/or stay with 0.7. If they did not, then maybe the rumours that [users or entities that economically serve as proxies for users] were pressuring for larger block sizes (that is to say, for versions 0.8 and up) might have been exaggerated.

I seem to recall someone suggesting Gavin was under pressure from big businesses to get larger blocks into play, other than that maybe there just happen to be a whole bunch of what maybe amount in this issue to "forum trolls" (said with some affection and tongue in cheek) loudly pushing for something the actual economic majority does not actually consider more important than first ensuring we can even actually in real life use the max block size we already had specified in capital letters in the source code.

Relevant IRC:

14:49   gavinandresen   Luke-Jr: argument for another day, but I can almost guarantee that the blocksize limit will be raised in less than 2 years, just based on pressure from the big businesses using the chain (and no, NOT satoshidice)
14:50   gmaxwell   gavinandresen: If pressure from startups with business plans come in conflict with the health of the system then thats an issue we'll have to resolve.
14:50   gavinandresen   gmaxwell: not startups with business plans, existing companies like BItPay and Coinbase that are seeing exponential growth

http://bitcoinstats.com/irc/bitcoin-dev/logs/2013/03/12#l6304349

That quote will become extremely amusing way before two years have passed. Saving it for then.

[johnyj]

Yeah maybe they did allow themselves to be stampeded by the ignorant masses into releasing too early?

Then again there seem to have also been runours that "big business[es]" also are applying pressure.

-MarkM-

I heard that gox are running 0.7?

That's possible, but likely irrelevent.  MtGox doesn't mine, and if they refuse to forward an oversized block they alone are not significant enough to prevent the propagation of the block.  The only downside is to users of MtGox who might not be able to trade until they fix their stuff.

I still have some question: What kind of loss were generated by this fork and who is going to pay for it?  As stated by BTCGUILD, they lost about 250 coin during the fork, and I think there will be some merchants affected by the invalid confirmation of new chain, how much are they and who is going to compensate for them?

[johnyj]

Of course that assumes that the economic majority do want to backtrack to and/or stay with 0.7. If they did not, then maybe the rumours that [users or entities that economically serve as proxies for users] were pressuring for larger block sizes (that is to say, for versions 0.8 and up) might have been exaggerated.

I seem to recall someone suggesting Gavin was under pressure from big businesses to get larger blocks into play, other than that maybe there just happen to be a whole bunch of what maybe amount in this issue to "forum trolls" (said with some affection and tongue in cheek) loudly pushing for something the actual economic majority does not actually consider more important than first ensuring we can even actually in real life use the max block size we already had specified in capital letters in the source code.

Relevant IRC:

14:49   gavinandresen   Luke-Jr: argument for another day, but I can almost guarantee that the blocksize limit will be raised in less than 2 years, just based on pressure from the big businesses using the chain (and no, NOT satoshidice)
14:50   gmaxwell   gavinandresen: If pressure from startups with business plans come in conflict with the health of the system then thats an issue we'll have to resolve.
14:50   gavinandresen   gmaxwell: not startups with business plans, existing companies like BItPay and Coinbase that are seeing exponential growth

http://bitcoinstats.com/irc/bitcoin-dev/logs/2013/03/12#l6304349

Thanks for bring this up, I think this is inevitable when bitcoin gained enough business support, especially after the establishment of bitcoin foundation, now businesses have a clear target to give pressure on

If you compare with FED, it is independant of government, not even mention business

In today's software industry, the stake holder's opinion is always of high priority, and that is the reason software developers' reward can not justify their talent and amount of working. But the reason for this is that "trickle down" mechanism of today's monetary system

Now bitcoin is another monetary system, there could be totally new ways of organize things, developers could establish their own decision making mechanism, instead of following that "service minded" approach

[Peter Todd]

Gavin's quote is talking about "pressure" from the amount of transactions these businesses will put on the existing limits of the block chain. He's not talking about direct pressure from the businesses...

14:49   gavinandresen   Luke-Jr: argument for another day, but I can almost guarantee that the blocksize limit will be raised in less than 2 years, just based on pressure from the big businesses using the chain (and no, NOT satoshidice)
14:50   gmaxwell   gavinandresen: If pressure from startups with business plans come in conflict with the health of the system then thats an issue we'll have to resolve.
14:50   gavinandresen   gmaxwell: not startups with business plans, existing companies like BItPay and Coinbase that are seeing exponential growth

Using the chain != Petitioning the Bitcoin foundation

I believe in context "using the chain" refers to the act of using the chain for transactions directly rather than using an off-chain transaction system. Just following that quote was:

14:51   Luke-Jr   gavinandresen: are you overlooking the potential of other solutions than just growing the block size?
14:51   gmaxwell   Luke-Jr: probably a good discussion for another day.
14:51   gavinandresen   yes, time for me to take a shower and then process the 100 email messages that piled up while I was asleep
14:51   Luke-Jr   gmaxwell: well, if we're "certain" to increase the block size limit "within 2 years", I'd prefer to just discuss and schedule it now :/

If your business model relies on on-chain transactions and is threatened by high fees you have every reason to petition for change in a variety of ways, including to the foundation.

[johnyj]

Gavin's quote is talking about "pressure" from the amount of transactions these businesses will put on the existing limits of the block chain. He's not talking about direct pressure from the businesses...

Using the chain != Petitioning the Bitcoin foundation

I understand from technical point of view, the transaction function is very important, but there are other aspects more important than transaction function. Anykind of alt-coin can provide transaction function, litecoin even designed to process the transaction faster than bitcoin. Crypto currency's value is not only decided by its transaction function

Gold is not good at providing fast and large transaction, but that doesn't stop it from being the monetary base of world's bank for centuries, because it has superior consistency and stability, no one on the planet can change the character of gold, no matter how big power they have

[lleibowitz]

The 21m cap is part of the whole bitocoin idea. This should never be changed.

[batcoin]

That limit is unchangable, though, not because of the code, but because of the principle.  If there were to ever be a hard code fork on this issue, one would be the true Bitcoin, the other could not be.  

I agree in principle and in spirit. If the cap were raised then the spirit of Bitcoin would be dead.

It's also more than a bit rediculous to assume that future users would be running a full node, and could be tricked into supporting such a change simply by turning on an auto update feature.  First off, the vast majority of future bitcoin users, if bitcoin is ever truely succesful, will be running light clients or depending upon wallet service accounts; the full client will be the realtively rare animal.  Probably as many or more full nodes as presently exist, but still realtively rare overall.  Second, a group of end users, both stupid enough to trust their internal security with their money to a remotely controlled automated system AND wealthy enough to ignore the ongoing costs of running a full node would still amount to little, IMHO simply because there are now, and shall be, more than just the main reference client.  So whatever percentage is deceived into supporting the change will still be opposed (by default) by those nodes that do not authorize or otherwise cannot participate in an auto update.  Furthermore, the break wouldn't go unnoticed for very long, and a great many of the decieved users can and will revert.  

This is where our thoughts diverge. I don't think it's ridiculous to think that future users will be running full nodes. To an extent, I hope they do. Even with ASICs supposedly coming out to beef up hashing power 25-fold or whatever amount it's going to be - the total network is and still will be puny compared to the sum of computational hardware found in average homes where Bitcoin is currently seeing the most interest. It would be a matter of chump change to a certain number of governments or individuals to totally wreak havoc with Bitcoin as it now stands. I think we need the individual users to have a full client running on their computers at home, even if they are doing something as minor as CPU/GPU mining or whatever it might come to be. I suspect that people will be able to just pop a small ASIC into one of their computer expansion slots in the future just to do their little part for the network even at a slight loss if it means adding resilience to the network. They can have their light clients running on their Huckleberry Pi-pads to do day to day transactions.

The extent to which I hope all users will run full clients is reached when Bitcoin is so widespread that the average Joe will just accept any old update and not be bothered by it. I don't think it's unreasonable to expect the same amount of ignorance about BTC that we see all around us about regular old fiat. If Bitcoin should get to that level of acceptance and average users have full clients doing small (but cumulatively significant) hashes, then the time would be ripe to play on that ignorance and break Bitcoin. I would argue that the average user couldn't care less how or why Bitcoin works. They would only care that they can buy their Bud Lite with it. The USD (along with many other currencies) is a perfect example. How has that been working out?

The 21M limit is part of what makes Bitcoin what it is, if you don't like it or don't think it's going to work out, you can either support one of the alt-coins that suits your needs or start your own.  Just don't call it Bitcoin.

Where did I say I didn't like it or that I thought it wouldn't work out? I thought I was just discussing some points where Bitcoin could have some potential problems. Shouldn't we be discussing such things?

No need for arguing really, this has a really easy answer:
The actual number of bitcoins doesn't matter. They are practically infinitely indivisible, and their price varies according to adoption and the size of the available market. Why would you ever need to change their number? It could have been 1, 10, 1000, or 1e56, it's just a matter of scale and price calculation for merchants.

Because inflation is a tempting motherfucker to those that can get their hands on the money first.

Think of it this way: if you own 100,000 bitcoins and you know there won't ever be more than 21 million bitcoins, then you currently own 0.47% of the whole "bitcoin pie". Now if the upper limit changes to 210 million (thus the pie getting bigger), then your share of the pie suddenly shrinks to 0.047%.

If 21 million cap is multiplied by 10, then all savings are multiplied by 10 as well. So 100,000 bitcoins will become 1,000,000. It's still 0.47%.

Are you sure about that? As others mentioned here, raising the cap doesn't mean my savings get multiplied too. It's a trivial matter of changing a few lines of code or just like signing a magical paper document and then people's savings have instantly lost 90% of their value.

For me increasing 21m cap is the same as http://en.wikipedia.org/wiki/Stock_split. Sorry if u were talking about some other thing.

This would be increasing precision, wouldn't it? You are making the bitcoins that everyone holds more divisible for smaller transactions. That can be good for everyone.

The 21m cap is part of the whole bitocoin idea. This should never be changed.

Amen, brother! Peace be with you! I absolutely agree.

[batcoin]

I also wanted to add that this looks all fine, well, and good... https://en.bitcoin.it/wiki/Prohibited_changes

...but so did the constitution of the USA when first written and we all see how that is turning out with the majority making (non)decisions. It all depends on the majority being knowledgeable about the reasons for certain provisions. Haven't most of the scamcoins been lacking in one or more of the principles/features that make Bitcoin great?

[MoonShadow]

I also wanted to add that this looks all fine, well, and good... https://en.bitcoin.it/wiki/Prohibited_changes

...but so did the constitution of the USA when first written and we all see how that is turning out with the majority making (non)decisions. It all depends on the majority being knowledgeable about the reasons for certain provisions. Haven't most of the scamcoins been lacking in one or more of the principles/features that make Bitcoin great?

Yes.

[MoonShadow]

It's also more than a bit rediculous to assume that future users would be running a full node, and could be tricked into supporting such a change simply by turning on an auto update feature.  First off, the vast majority of future bitcoin users, if bitcoin is ever truely succesful, will be running light clients or depending upon wallet service accounts; the full client will be the realtively rare animal.  Probably as many or more full nodes as presently exist, but still realtively rare overall.  Second, a group of end users, both stupid enough to trust their internal security with their money to a remotely controlled automated system AND wealthy enough to ignore the ongoing costs of running a full node would still amount to little, IMHO simply because there are now, and shall be, more than just the main reference client.  So whatever percentage is deceived into supporting the change will still be opposed (by default) by those nodes that do not authorize or otherwise cannot participate in an auto update.  Furthermore, the break wouldn't go unnoticed for very long, and a great many of the decieved users can and will revert.  

This is where our thoughts diverge. I don't think it's ridiculous to think that future users will be running full nodes. To an extent, I hope they do. Even with ASICs supposedly coming out to beef up hashing power 25-fold or whatever amount it's going to be - the total network is and still will be puny compared to the sum of computational hardware found in average homes where Bitcoin is currently seeing the most interest. It would be a matter of chump change to a certain number of governments or individuals to totally wreak havoc with Bitcoin as it now stands.

Chump change?  Is that so?

The bitcoin network is currently running at 460.28 PetaFLOPS according to bitcoinwatch.com.  According to Wikipedia, the fastest supercomputer on Earth is Titan, A XK7 model by Cray and installed at the Oak Ridge National Laboratory in Tennessee.  It has a benchmarked sustainable rating of 17.59 PetaFLOPS and an as-installed cost of $97 million. http://en.wikipedia.org/wiki/TOP500#Top_10_ranking) http://en.wikipedia.org/wiki/Titan_(supercomputer)

So to match wits with the Bitcoin network right now would cost at least $2.5 Billion.  And that presumes that the network doesn't grow before that monster is built!

I think we need the individual users to have a full client running on their computers at home, even if they are doing something as minor as CPU/GPU mining or whatever it might come to be. I suspect that people will be able to just pop a small ASIC into one of their computer expansion slots in the future just to do their little part for the network even at a slight loss if it means adding resilience to the network. They can have their light clients running on their Huckleberry Pi-pads to do day to day transactions.

I don't doubt that this will be possible, but full clients won't be necessary for at-home reserve miners, they just need to join a mining pool.  Pool miners don't need full clients now.

The extent to which I hope all users will run full clients is reached when Bitcoin is so widespread that the average Joe will just accept any old update and not be bothered by it. I don't think it's unreasonable to expect the same amount of ignorance about BTC that we see all around us about regular old fiat. If Bitcoin should get to that level of acceptance and average users have full clients doing small (but cumulatively significant) hashes, then the time would be ripe to play on that ignorance and break Bitcoin. I would argue that the average user couldn't care less how or why Bitcoin works. They would only care that they can buy their Bud Lite with it. The USD (along with many other currencies) is a perfect example. How has that been working out?

A similar argument was had about the Internet before it came to be.  One side believed that everyone would need to have a supercomputer to abstract the details of the network from the users, the other side thought that all users would have to educate themselves about computers and networkds to participate.  Turns out that they were both right, and the just right mix has been here all the time.  Bitcoin is so flexible as to permit that just right mix, but is rigid in the important aspects of the system.  You worry too much.

The 21M limit is part of what makes Bitcoin what it is, if you don't like it or don't think it's going to work out, you can either support one of the alt-coins that suits your needs or start your own.  Just don't call it Bitcoin.

Where did I say I didn't like it or that I thought it wouldn't work out? I thought I was just discussing some points where Bitcoin could have some potential problems. Shouldn't we be discussing such things?

I don't think you have any idea how often I am sucked into these kinds of re-occuring newbie conversations.  Most of the old salts have long ago chosen to ignore such repetitive "problems".  The long and short of it is, it's not a problem, you're not the first to think it is a problem, so if you insist on resolving said problem there are numerous alt-coins that should fit your sensabilities better than Bitcoin.

No need for arguing really, this has a really easy answer:
The actual number of bitcoins doesn't matter. They are practically infinitely indivisible, and their price varies according to adoption and the size of the available market. Why would you ever need to change their number? It could have been 1, 10, 1000, or 1e56, it's just a matter of scale and price calculation for merchants.

Because inflation is a tempting motherfucker to those that can get their hands on the money first.

And the miners don't have the final say on such things, but only miners get first access to those coins.

[porcupine87]

So it kind of seems like really the economic power is in those who want to hold bitcoins, a[...] rather than in those who already hold them...

Glad I'm not the only one to think that theory needs revision.

I raised a question on StackExchange on that:

Is Bitcoin's Economic Majority those who already own coins or those who will buy or keep coins?
 - http://bitcoin.stackexchange.com/q/8285/153'

I also added that to the Wiki article's discussion page:
 - http://en.bitcoin.it/wiki/Talk:Economic_majority

Indeed. If only the people decide, who holds bitcoin, why wouldn't they abolish the coinbase tx completly, I mean now.

Now if the 21 million limit changes, the outcome of the prediction changes too. Think of it this way: if you own 100,000 bitcoins and you know there won't ever be more than 21 million bitcoins, then you currently own 0.47% of the whole "bitcoin pie". Now if the upper limit changes to 210 million (thus the pie getting bigger), then your share of the pie suddenly shrinks to 0.047%.

Yeah, and if one person ownes 0,47% of all gold (+ earns 0,47% of the new mined gold), he ownes 0,47% of all gold. But owning gold or bitcoins makes no one rich. Spending it does!

[johnyj]

I understand from technical point of view, the transaction function is very important, but there are other aspects more important than transaction function. Anykind of alt-coin can provide transaction function, litecoin even designed to process the transaction faster than bitcoin. Crypto currency's value is not only decided by its transaction function

Gold is not good at providing fast and large transaction, but that doesn't stop it from being the monetary base of world's bank for centuries, because it has superior consistency and stability, no one on the planet can change the character of gold, no matter how big power they have

With Bitcoin there is no reason we can't have both fast and easy transactions and a store of value at the same time.

Maybe that is possible, but don't be too greedy and reqire too much at a time

Currently you can not reach that goal without a hard fork, and a hard fork as you have seen in recent event, is a very dangerous thing if not planned and handled very well

[MoonShadow]

I understand from technical point of view, the transaction function is very important, but there are other aspects more important than transaction function. Anykind of alt-coin can provide transaction function, litecoin even designed to process the transaction faster than bitcoin. Crypto currency's value is not only decided by its transaction function

Gold is not good at providing fast and large transaction, but that doesn't stop it from being the monetary base of world's bank for centuries, because it has superior consistency and stability, no one on the planet can change the character of gold, no matter how big power they have

With Bitcoin there is no reason we can't have both fast and easy transactions and a store of value at the same time.

Maybe that is possible, but don't be too greedy and reqire too much at a time

Currently you can not reach that goal without a hard fork, and a hard fork as you have seen in recent event, is a very dangerous thing if not planned and handled very well

We already have reached that goal.  No fork required, because that was part of the original design. Seriously, newbs; read a bit before talking.  Should we increase the newbie surfing term before letting you guys out of the newbie section?

And aparerntly the post count into the thousands...

[gollum]

I deeply believe that a limit to the supply of a currency is bad in the long term.

We got roughly this scenarios for a money supply:
a) Deflation or zero inflation - Encourages hording and saving, discourages investing, risking and consuming.
b) low inflation - Encourages investing (risk taking), consuming. Saving (hording) is not encourages in this scenario as the inflation adjusted return usually are lower than investment (risk taking)
c) high inflation - its okey for an economy with real growth, such as the state of bitcoin right now with growing numbers of miners, consumers and shops.
d) hyper inflation: encourages flight from the currency of high inflation to anything that is not inflated, anything such as commodities, other currencies (with normal inflation), stocks, real estate and so on..

The optimal situation for bitcoin would be a normal inflation of 5% per year when we have reached 21 million coins so that the ecosystem of bitcoin can grow based on new coins reaching the market although. Normally 2-3% would be a good inflation target but since coins (wallets) can dissapear we need more inflation to compensate for lost coins.

So I hope the bitcoin community will reach the consensus that we need inflation!

[gollum]

I deeply believe that a limit to the supply of a currency is bad in the long term.

We got roughly this scenarios for a money supply:
a) Deflation or zero inflation - Encourages hording and saving, discourages investing, risking and consuming.
b) low inflation - Encourages investing (risk taking), consuming. Saving (hording) is not encourages in this scenario as the inflation adjusted return usually are lower than investment (risk taking)
c) high inflation - its okey for an economy with real growth, such as the state of bitcoin right now with growing numbers of miners, consumers and shops.
d) hyper inflation: encourages flight from the currency of high inflation to anything that is not inflated, anything such as commodities, other currencies (with normal inflation), stocks, real estate and so on..

The optimal situation for bitcoin would be a normal inflation of 5% per year when we have reached 21 million coins so that the ecosystem of bitcoin can grow based on new coins reaching the market although. Normally 2-3% would be a good inflation target but since coins (wallets) can dissapear we need more inflation to compensate for lost coins.

So I hope the bitcoin community will reach the consensus that we need inflation!

No. Why bother with Bitcoin, go enjoy some other inflationary currency. Bitcoin is one of the few non-inflationary currencies in existence. Can people who want a non-inflationary currency have a few options for a change?

Not all of us believe that constant consumption is the key to a prosperous future. What we don't need today can be saved for tomorrow.

Perpetually inflating crypto-currencies exist. Use those. OK?

Some people call bitcoin "digital gold" but the main difference is gold never dissappears, if you lose it someone else will eventually find it so the gold supply can never get lower. The gold supply actually grows about 2% per year today because of mining. So why should bitcoin grow less than gold or even deflate?

[Stephen Gornick]

Indeed. If only the people decide, who holds bitcoin, why wouldn't they abolish the coinbase tx completly, I mean now.

Well, no miner is forced to claim the block reward subsidy.   So anyone can start reducing the amount of bitcoins (and thus increasing the value of existing bitcoins) by mining (solo) but not claiming the subsidy.

Now if you are suggesting to change the protocol so that starting with the next block (or at some point in the future) there is no more block reward subsidy, you can try that right now.  You just change one line of code and release your hard-fork variant of the Bitcoin-Qt/bitcoind client and start a campaign to get the economic majority to switch to using it.

Users aren't stupid though -- they know that fees are insufficient currently to incent enough miners to protect the network.    So adopting your fork would be crypto-currency suicide.        So the limit stays at 25 BTC per block, until block 420,000 and then 12.5 BTC per block, until block 630,000 and then 6.25 per block, etc.  

Now let's say it is year 2024 and fees alone are seen as being way more than sufficient enough to support the level of hashing necessary to protect the network, so the fear of the loss of subsidy impacting hashing capacity is not a limiting factor.   However, people who hold bitcoins include people who have lent their coins out to those who have borrowed bitcoins and need to repay loans (denominated in bitcoins).    

Presumably anyone borrowing bitcoins would require a clause in the loan agreement that if the subsidy were to be reduced (change in the money supply were to occur) that their principal and/or interest would be adjusted appropriately.   If the subsidy is discontinued there would be little gain for those who have lent out their coins.  And who lends bitcoins?   The economic majority, that's who.  So it is not in the best interest of any of the economic majority to change the rules as far as the rate of Bitcoin issuance -- towards either direction up or down.

[Edited: for clarity and readability]

[markm]

Indeed. If only the people decide, who holds bitcoin, why wouldn't they abolish the coinbase tx completly, I mean now.

Well,

Haha nice usage of a rhetorical question as a springboard!

Presumably anyone borrowing bitcoins would require a clause in the loan agreement that if the subsidy were to be reduced (change in the money supply were to occur) that their principal and/or interest would be adjusted appropriately.   If the subsidy is discontinued there would be little gain for those who have lent out their coins.  And who lends bitcoins?   The economic majority, that's who.  So it is not in the best interest of any of the economic majority to change the rules as far as the rate of Bitcoin issuance -- in either direct direction.

Maybe a legal definition of bitcoin would be useful afterall then, so that reduction of originally specified subsidy is off the table, saving gosh knows how many paragraphs on each and every loan contract throughout the next 136 or 140 or whatever it is years?

(I doubt a scheduled per original schedule reduction would grant a debtor relief, would it?)

-MarkM-

[Timo Y]

I deeply believe that a limit to the supply of a currency is bad in the long term.

We got roughly this scenarios for a money supply:
a) Deflation or zero inflation - Encourages hording and saving, discourages investing, risking and consuming.
b) low inflation - Encourages investing (risk taking), consuming. Saving (hording) is not encourages in this scenario as the inflation adjusted return usually are lower than investment (risk taking)
c) high inflation - its okey for an economy with real growth, such as the state of bitcoin right now with growing numbers of miners, consumers and shops.
d) hyper inflation: encourages flight from the currency of high inflation to anything that is not inflated, anything such as commodities, other currencies (with normal inflation), stocks, real estate and so on..

The optimal situation for bitcoin would be a normal inflation of 5% per year when we have reached 21 million coins so that the ecosystem of bitcoin can grow based on new coins reaching the market although. Normally 2-3% would be a good inflation target but since coins (wallets) can dissapear we need more inflation to compensate for lost coins.

So I hope the bitcoin community will reach the consensus that we need inflation!

We don't want to encourage "investing,risking, and consuming" for their own sake.
We don't want to discourage "hording and saving" for their own sake.

We want to encourage productivity.

For optimum productivity you need a balance of BOTH saving and investing/consuming. Artificial inflation distorts that balance towards malinvestment, taking stupid risks, and wasteful consumption.

[markm]

Artificial inflation distorts that balance towards malinvestment, taking stupid risks, and wasteful consumption.

There are plenty of altcoins for doing those things with.

-MarkM-

[commonancestor]

How easy / hard would it be to change this limit? It seems, this function controls how many coins are given to miners for solving a block. If developers decided to change this function, the 21 million number would change too, right? Or is the 21 million number somehow coded deeper in the system?

If there is a block containing larger-than-standard reward, it is rejected by standard nodes. If there are some non-standard nodes who accept it, then they effectively create a blockchain fork, and onwards they are on their own.

Or a different point of view, it would take a hard fork with all it takes.

[porcupine87]

Users aren't stupid though -- they know that fees are insufficient currently to incent enough miners to protect the network.    So adopting your fork would be crypto-currency suicide.        So the limit stays at 25 BTC per block, until block 420,000 and then 12.5 BTC per block, until block 630,000 and then 6.25 per block, etc.  

Now let's say it is year 2024 and fees alone are seen as being way more than sufficient enough to support the level of hashing necessary to protect the network, so the fear of the loss of subsidy impacting hashing capacity is not a limiting factor.   However, people who hold bitcoins include people who have lent their coins out to those who have borrowed bitcoins and need to repay loans (denominated in bitcoins).    

Good point with the incentive for the miners. But imo there would be enough miners without the subsidy as well. The ration between the fees and the estimated transaction volume (not the output volume!) is roughly 0,005% to 0,01%. You can easily reach 0,1%, what would be 100$ as reward for a block. So one year ago the subsidy wasn't more in termes of USD and there were miners.

Presumably anyone borrowing bitcoins would require a clause in the loan agreement that if the subsidy were to be reduced (change in the money supply were to occur) that their principal and/or interest would be adjusted appropriately.   If the subsidy is discontinued there would be little gain for those who have lent out their coins.  And who lends bitcoins?   The economic majority, that's who.  So it is not in the best interest of any of the economic majority to change the rules as far as the rate of Bitcoin issuance -- towards either direction up or down.

I can't follow. Let's assume the price for one BTC compared to real goods is stable, if there is an subsidy. Now I lend you 100 BTC for 5% interest. If the subsidy would be abolished the purchasing power of my 100 BTC would gain 2.5% every year and the interest rate drops to 2.5%. If I lend you the money it would be the same for me but it arises a new attractive option. Hording! 2.5% with absolutly no risk. So it is good possible that many bitcoin owner refuse to lend what raises interest rates again.

I think this topic is highly complex because we can't ignore that bitcoin is not the only possible medium for borrowers. Even the supply of bitcoins determinable because the velocity can always change. And the number of bitcoins? It will never reach the 21Mio. because every year bitcoins vanish forever (got lost, forgotten password, sent to orphaned address etc. but we will never know).

Finally, I do not exactly know who decides for the Bitcoin rules. Highly complex.


On the other hand borrower would not like bitcoins. Price inflation is always good for borrowers and bad for savers. Price deflation is the opposite. But this is highly complex. With less lenders and borrowers bitcoins might lose on purchasing power

[Stephen Gornick]

If the subsidy would be abolished the purchasing power of my 100 BTC would gain 2.5% every year and the interest rate drops to 2.5%.

Well nobody knows what the change to purchasing power is if this hypothetical "economic majority forces an immediate end to the block reward subsidy" and thus that 2.5% of currency inflation that was expected in year 2024 goes away.

That's why the buyer should require that lending contracts include some language that addresses changes in the protocol that would affect the currency inflation rate.   

But it is really a moot point, I believe.  The lending from the economic majority also includes loans to miners, and miners made an investment in their capacity counting on the subsidy -- it was part of the deal.  The miners would default on their loans causing once again for the economic majority a wash between the two options.   And that's a relatively minor issue compared to the bad image it would give.  If there were any alternatives a black eye like that would be a great catalyst to move to another one which is even more resistant to that type of corruption.

[batcoin]

It's also more than a bit rediculous to assume that future users would be running a full node, and could be tricked into supporting such a change simply by turning on an auto update feature.  First off, the vast majority of future bitcoin users, if bitcoin is ever truely succesful, will be running light clients or depending upon wallet service accounts; the full client will be the realtively rare animal.  Probably as many or more full nodes as presently exist, but still realtively rare overall.  Second, a group of end users, both stupid enough to trust their internal security with their money to a remotely controlled automated system AND wealthy enough to ignore the ongoing costs of running a full node would still amount to little, IMHO simply because there are now, and shall be, more than just the main reference client.  So whatever percentage is deceived into supporting the change will still be opposed (by default) by those nodes that do not authorize or otherwise cannot participate in an auto update.  Furthermore, the break wouldn't go unnoticed for very long, and a great many of the decieved users can and will revert.  

This is where our thoughts diverge. I don't think it's ridiculous to think that future users will be running full nodes. To an extent, I hope they do. Even with ASICs supposedly coming out to beef up hashing power 25-fold or whatever amount it's going to be - the total network is and still will be puny compared to the sum of computational hardware found in average homes where Bitcoin is currently seeing the most interest. It would be a matter of chump change to a certain number of governments or individuals to totally wreak havoc with Bitcoin as it now stands.

Chump change?  Is that so?


The bitcoin network is currently running at 460.28 PetaFLOPS according to bitcoinwatch.com.  According to Wikipedia, the fastest supercomputer on Earth is Titan, A XK7 model by Cray and installed at the Oak Ridge National Laboratory in Tennessee.  It has a benchmarked sustainable rating of 17.59 PetaFLOPS and an as-installed cost of $97 million. http://en.wikipedia.org/wiki/TOP500#Top_10_ranking) http://en.wikipedia.org/wiki/Titan_(supercomputer)

So to match wits with the Bitcoin network right now would cost at least $2.5 Billion.  And that presumes that the network doesn't grow before that monster is built!

Yes, that is so - even if the network grows beforehand.

http://en.wikipedia.org/wiki/List_of_companies_by_revenue
http://www.forbes.com/billionaires/list/
http://www.usgovernmentspending.com/current_spending

You linked an impressive computer, but it would be pretty stupid to try to build more of them to overwhelm Bitcoin when you could just use a few thousand, let's say 50,000 ASICs at at 25GH/s at $2000 a piece. (I use a higher price here to be generous to MoonShadow and a lower than average hash rate because governments don't tend to give much of a shit about value.) So we have a price tag of 100 million dollars to bring the network to 1.25 Exahash/s, which is roughly 33 times the size of today's ~38Thash/s. The Bitcoin ASIC industry is tiny at present with a relative handful of people involved. Do you think that TPTB would even bat an eyelash at spending 100 million (full retail price) to destabilize the Bitcoin network if it suited them? (As a side note, I think a small group of wealthy individuals would/could get involved too, but they would probably do it in a more economically feasible way.) I think Google would be a perfect example of a company already set up for such a venture. They have the capital and R&D to go into something like Bitcoin mining ASICs. And I think they could do it extremely quickly.

Another thing - FLOPS are a rough translation for hashes/s. The Bitcoin network technically runs at 0 FLOPS.
https://bitcointalk.org/index.php?topic=50720.msg605583#msg605583
http://bitcoin.stackexchange.com/questions/2917/how-fast-is-the-bitcoin-mining-network
https://bitcointalk.org/index.php?topic=99743.msg1091176#msg1091176

I am not trying to spread FUD, but simply bring these points to others' attention for consideration in this thread.

I think we need the individual users to have a full client running on their computers at home, even if they are doing something as minor as CPU/GPU mining or whatever it might come to be. I suspect that people will be able to just pop a small ASIC into one of their computer expansion slots in the future just to do their little part for the network even at a slight loss if it means adding resilience to the network. They can have their light clients running on their Huckleberry Pi-pads to do day to day transactions.

I don't doubt that this will be possible, but full clients won't be necessary for at-home reserve miners, they just need to join a mining pool.  Pool miners don't need full clients now.

This still leaves a problem of centralization, does it not?

The 21M limit is part of what makes Bitcoin what it is, if you don't like it or don't think it's going to work out, you can either support one of the alt-coins that suits your needs or start your own.  Just don't call it Bitcoin.

Where did I say I didn't like it or that I thought it wouldn't work out? I thought I was just discussing some points where Bitcoin could have some potential problems. Shouldn't we be discussing such things?

I don't think you have any idea how often I am sucked into these kinds of re-occuring newbie conversations.  Most of the old salts have long ago chosen to ignore such repetitive "problems".  The long and short of it is, it's not a problem, you're not the first to think it is a problem, so if you insist on resolving said problem there are numerous alt-coins that should fit your sensabilities better than Bitcoin.

Actually, I don't really care how many newbie conversations you've had. I neither asked nor forced you to respond to what I had to say. It was your choice to respond. I also don't think I made the claim that I was the first to think of something as a potential problem. I was just responding to a thread I thought was interesting. Please don't ascribe comments to me that I never made.

Seriously, newbs; read a bit before talking.  Should we increase the newbie surfing term before letting you guys out of the newbie section?

And aparerntly the post count into the thousands...

Come now... Really? This kind of response towards newbies having legitimate questions about Bitcoin really isn't going to help encourage people to get more involved in the project. I have been around these forums for awhile despite my low post count and late registration date. There is a lot of shit I don't understand on this site because I am not an expert in the given field. Once I feel I understand an idea, then I try to help out by putting it in my own words in the hopes of helping someone else out around here who may not understand some of the concepts on such a technical level.

[markm]

100 million, like hey, that is puny, less than a single bill for gosh sake!

We already know ten bills is pocket money because we just saw them reach into other people's pockets over just such an amount!

A few billion here, a few billion there, pretty soon you're looking at real money; a few hundred million here, a few hundred million there, that's a rounding error, isn't it?

-MarkM-

[johnyj]

I still have some question: What kind of loss were generated by the latest fork accident and how is it solved in the end?  As stated by BTCGUILD, they lost about 250 coin during the fork, and I think there will be some merchants affected by the invalid blocks of  that short lived 0.8 chain, how much are they and who has compensated for them?

It is a good chance to look at how many merchants actually use bitcoin network to do the transaction.  I doubt that 90% of the transaction is just miner's payment bumping around 

[johnyj]

Currently you can not reach that goal without a hard fork, and a hard fork as you have seen in recent event, is a very dangerous thing if not planned and handled very well

We already have reached that goal.  No fork required, because that was part of the original design.

Where is this conclusion come from?

If I remember correct, Gavin said that there is a consensus to raise the block size limit, I tends to agree that it is technically necessary

Before, I was very afraid of a hard fork, I thought it will be the end of bitcoin. But as the latest event showed, the community leaders have the ability to maneuver in a storm, so a planned hard fork might not be that dangerous

[markm]

http://www.quickmeme.com/meme/3teqcd/

-MarkM-

[batcoin]

100 million, like hey, that is puny, less than a single bill for gosh sake!

We already know ten bills is pocket money because we just saw them reach into other people's pockets over just such an amount!

A few billion here, a few billion there, pretty soon you're looking at real money; a few hundred million here, a few hundred million there, that's a rounding error, isn't it?

-MarkM-

It all depends on you look at it I suppose. Just knock a few zeros off and you can see it. Take Bill Gates for example. He has $67.00B. Do you really think someone in his position wouldn't spend $0.10B if he could turn it into a shitload more?

I am just trying to put some of this into perspective.

[MoonShadow]

Currently you can not reach that goal without a hard fork, and a hard fork as you have seen in recent event, is a very dangerous thing if not planned and handled very well

We already have reached that goal.  No fork required, because that was part of the original design.

Where is this conclusion come from?

From the part that you edited out...

With Bitcoin there is no reason we can't have both fast and easy transactions and a store of value at the same time.

Maybe that is possible, but don't be too greedy and reqire too much at a time

Currently you can not reach that goal without a hard fork, and a hard fork as you have seen in recent event, is a very dangerous thing if not planned and handled very well

Store of value was part of the original design.

If I remember correct, Gavin said that there is a consensus to raise the block size limit, I tends to agree that it is technically necessary

Before, I was very afraid of a hard fork, I thought it will be the end of bitcoin. But as the latest event showed, the community leaders have the ability to maneuver in a storm, so a planned hard fork might not be that dangerous

Not relevant.  We are talking about Bitcoin as a transaction system and a store of value.  The blocksize limit is a different issue.

[johnyj]

Not relevant.  We are talking about Bitcoin as a transaction system and a store of value.  The blocksize limit is a different issue.

Although different, it is closely related. To raise the blocksize limit, you have to do a hard fork, and a hard fork might affect "store of value" property of bitcoin

A hard fork means there is a change in bitcoin protocol, that will shake people's belief on many claims of bitcoin, just like OP wondered,  technically speak, all of bitcoin's claims can be changed with a client upgrade, then who is going to guarantee the consistency? This "Hard Currency" start to feel soft

If a hard fork will never happen, then "store of value" property will be intact. But this transaction system will become slow and expensive over time due to the block size limit, it might not be very practical to use bitcoin, when you need to wait for days/weeks for a confirmation (if you don't want to pay very high fee)

What is your view on this?

[johnyj]

Yes, I understand that now. I was under the impression that the coin limit was somehow fixed forever and could not be altered (like a transaction deep in the blockchain can't be changed anymore). But that's obviously not the case.

Great idea

Some basic rule can be fixed into genesis block, and each new client version must follow these rules. Unfortunately Satoshi did not make this happen, or it's already hidden in the genesis block? Maybe a hash of some string there is just 21M

[MoonShadow]

Not relevant.  We are talking about Bitcoin as a transaction system and a store of value.  The blocksize limit is a different issue.

Although different, it is closely related. To raise the blocksize limit, you have to do a hard fork, and a hard fork might affect "store of value" property of bitcoin

A hard fork means there is a change in bitcoin protocol, that will shake people's belief on many claims of bitcoin, just like OP wondered,  technically speak, all of bitcoin's claims can be changed with a client upgrade, then who is going to guarantee the consistency? This "Hard Currency" start to feel soft

If a hard fork will never happen, then "store of value" property will be intact. But this transaction system will become slow and expensive over time due to the block size limit, it might not be very practical to use bitcoin, when you need to wait for days/weeks for a confirmation (if you don't want to pay very high fee)

What is your view on this?

My view is that the association is silly.  The max_blocksize rule was added by Satoshi after the system was already running, in order to remove an attack vector via spamming of the transaction queue, until such time as a more elegant solution could be found.  It was never even intended to be a permanent rule.  The only reason that a "hard fork" might be required to raise or remove that rule is if some people don't agree that we should raise the limit.  Complete consensus is required to avoid a hard fork, and a hard fork is the last argument of otherwise independent bitcoin users.  Forcing a hard fork in order to alter some aspect of the network doesn't even mean that you'll succeed in altering your desired aspect, but the resources required to fight the good hard fork fight are quite high, and completely unrecoverable.  Yet, if a minority of users and miners decide to make that fight, there will be a blockchain fork, and the majority of the losses will fall upon the minority group until they can either muster up the resources to dominate the network or quit the fight and take their balls and go home.  So, theoretically, all that is needed to change the 21 M BTC limit is to get everyone to agree to that change; but that isn't something that is up for debate here.  No matter who or why, there is no way that a consensus to change that metric in Bitcoin is going to happen without a blockchain fork; and it would be a harsh fight.  That number isn't so arbitrary, unlike the max_blocksize rule.

[dooglus]

Yes, I understand that now. I was under the impression that the coin limit was somehow fixed forever and could not be altered (like a transaction deep in the blockchain can't be changed anymore). But that's obviously not the case.

Well, it's kind of the same.  The developers could declare that all blocks since block 27000 are invalid, and that miners must start working on a new block 27001.  If they did, we'd probably try to find new developers...

Similarly they could declare that they're increasing the number of bitcoins from 21 million to 42 million.  Again, hopefully the majority of bitcoin users wouldn't go along with such a scheme.

[Peter Todd]

My view is that the association is silly.  The max_blocksize rule was added by Satoshi after the system was already running, in order to remove an attack vector via spamming of the transaction queue, until such time as a more elegant solution could be found.

That's not quite true. Version 1.0 didn't have a 1MB limit, but instead used the same 0x2000000 byte, or 32MiB limit, used for any serialized data. Satoshi later added MAX_BLOCK_SIZE so that miners wouldn't create blocks bigger than 1MB, but larger was still accepted.

Finally the hard limit was reduced by Satoshi to 1MB in commit 172f006020965ae8763a0610845c051ed1e3b522 The commit comment is deliberately misleading: "only accept transactions sent by IP address if -allowreceivebyip is specified"

[MoonShadow]

My view is that the association is silly.  The max_blocksize rule was added by Satoshi after the system was already running, in order to remove an attack vector via spamming of the transaction queue, until such time as a more elegant solution could be found.

That's not quite true. Version 1.0 didn't have a 1MB limit, but instead used the same 0x2000000 byte, or 32MiB limit, used for any serialized data. Satoshi later added MAX_BLOCK_SIZE so that miners wouldn't create blocks bigger than 1MB, but larger was still accepted.

Finally the hard limit was reduced by Satoshi to 1MB in commit 172f006020965ae8763a0610845c051ed1e3b522 The commit comment is deliberately misleading: "only accept transactions sent by IP address if -allowreceivebyip is specified"

How was I "not quite true"?  Because I didn't bother to specify details?  Was I wrong about the reasons for the change?  The comment wasn't deliberately misleading, either.  There was a change to prevent direct to IP connections, as that had become viewed as a potential security risk.  If the comment was wrong, that was likely accidental.

[Peter Todd]

How was I "not quite true"?  Because I didn't bother to specify details?  Was I wrong about the reasons for the change?  The comment wasn't deliberately misleading, either.  There was a change to prevent direct to IP connections, as that had become viewed as a potential security risk.  If the comment was wrong, that was likely accidental.

It's not quite true because you're implying there wasn't a limit. There was a blocksize limit all along, it's just that Satoshi decided it should be reduced from 32MiB to 1MB.

Look at the early commit history of Bitcoin sometime; Satoshi made really misleading comments all the time hiding major changes.

[theymos]

Look at the early commit history of Bitcoin sometime; Satoshi made really misleading comments all the time hiding major changes.

True. In fact, he once asked me not to talk publicly about a new hard network rule he was adding (max sigops per block).

[johnyj]

How was I "not quite true"?  Because I didn't bother to specify details?  Was I wrong about the reasons for the change?  The comment wasn't deliberately misleading, either.  There was a change to prevent direct to IP connections, as that had become viewed as a potential security risk.  If the comment was wrong, that was likely accidental.

It's not quite true because you're implying there wasn't a limit. There was a blocksize limit all along, it's just that Satoshi decided it should be reduced from 32MiB to 1MB.

Look at the early commit history of Bitcoin sometime; Satoshi made really misleading comments all the time hiding major changes.

Maybe because he usually made several changes at each commit, or he just want to avoid confusing and panic at early stage of the development

[johnyj]

Yes, I understand that now. I was under the impression that the coin limit was somehow fixed forever and could not be altered (like a transaction deep in the blockchain can't be changed anymore). But that's obviously not the case.

This text is recorded in the coinbase of genesis block
"The Times 03/Jan/2009 Chancellor on brink of second bailout for banks"

Related article
http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/4092926/Second-bank-bailout-plans-condemned.html

This event was from England, so I guess that Satoshi is an english scholar. England has always been famous about so many great economists. Such a genius design of bitcoin is surely based on some deeper thoughts in macro economy

So in a worst case scenario where people have large disagreement with bitcoin's future direction, at least they will have a consensus that bitcoin will never take the same route as today's debt driven monetary system, since that is recorded in the genesis block

In fact, even the coin generation rate are changed in future, the bitcoin is still FUNDAMENTALLY different than today's debt driven money issurace: Each coin is debt free

This is maybe the hard-wired fact that OP is looking for

[johnyj]

My view is that the association is silly.  The max_blocksize rule was added by Satoshi after the system was already running, in order to remove an attack vector via spamming of the transaction queue, until such time as a more elegant solution could be found.  It was never even intended to be a permanent rule.  The only reason that a "hard fork" might be required to raise or remove that rule is if some people don't agree that we should raise the limit.  Complete consensus is required to avoid a hard fork, and a hard fork is the last argument of otherwise independent bitcoin users. 

Ok, I understand what you mean, I should not use "hard fork", non-backward-compatible client upgrade is the better description. You can have such kind of upgrade without causing a hard fork, if majority of users agreed

Forcing a hard fork in order to alter some aspect of the network doesn't even mean that you'll succeed in altering your desired aspect, but the resources required to fight the good hard fork fight are quite high, and completely unrecoverable.  Yet, if a minority of users and miners decide to make that fight, there will be a blockchain fork, and the majority of the losses will fall upon the minority group until they can either muster up the resources to dominate the network or quit the fight and take their balls and go home. 

It's not necessary to be a fight, two forks can co-exist since they serve the different interest from different users, its just those pre-fork coin can be spent on both fork, and it benefit the early adopters again (Pre-fork coins will worth more, people will try to get as much coin as possible before a fork happened  )

So, theoretically, all that is needed to change the 21 M BTC limit is to get everyone to agree to that change; but that isn't something that is up for debate here.  No matter who or why, there is no way that a consensus to change that metric in Bitcoin is going to happen without a blockchain fork; and it would be a harsh fight.  That number isn't so arbitrary, unlike the max_blocksize rule.

It does not matter it is MAX_BLOCK_SIZE or nSubsidy, as long as they can be changed through a software upgrade, there is a POSSIBILITY that a future software upgrade will change some bitcoin characters. This possibility is the biggest risk and uncertainty of bitcoin

I remember that Gavin said he worried about a fork when block reward drops from 50 to 25 coins last winter, since there was someone coded a client with 50 coins reward forever. But it seems that fork had some technical problems and was not able to maintain the stable block generation, so it ended without many people knowing of it

[lleibowitz]

I remember that Gavin said he worried about a fork when block reward drops from 50 to 25 coins last winter, since there was someone coded a client with 50 coins reward forever. But it seems that fork had some technical problems and was not able to maintain the stable block generation, so it ended without many people knowing of it

Time is on our side here. The longer bitcoin is in existence (and the larger the userbase gets) the more unlikely it is for a fork to gain momentum.

[RodeoX]

I remember that Gavin said he worried about a fork when block reward drops from 50 to 25 coins last winter, since there was someone coded a client with 50 coins reward forever. But it seems that fork had some technical problems and was not able to maintain the stable block generation, so it ended without many people knowing of it

Time is on our side here. The longer bitcoin is in existence (and the larger the userbase gets) the more unlikely it is for a fork to gain momentum.

I'm glad this fell apart. I would certainly have traded my bitcoin for gold at that point. I would also consider the project dead.

[markm]

Basically they just wanted GRouPcoin but with all their bitcoins magically already on the GRouPcoin chain waiting for them. They can still go buy GRouPcoins if they still think 50 coins per block forever is doubleplus good.

-MarkM-

[MoonShadow]

Forcing a hard fork in order to alter some aspect of the network doesn't even mean that you'll succeed in altering your desired aspect, but the resources required to fight the good hard fork fight are quite high, and completely unrecoverable.  Yet, if a minority of users and miners decide to make that fight, there will be a blockchain fork, and the majority of the losses will fall upon the minority group until they can either muster up the resources to dominate the network or quit the fight and take their balls and go home.

It's not necessary to be a fight, two forks can co-exist since they serve the different interest from different users, its just those pre-fork coin can be spent on both fork, and it benefit the early adopters again (Pre-fork coins will worth more, people will try to get as much coin as possible before a fork happened  )

It's not necessary, but both chains can't coexist unless one changes certain network parameters, such as port number.

So, theoretically, all that is needed to change the 21 M BTC limit is to get everyone to agree to that change; but that isn't something that is up for debate here.  No matter who or why, there is no way that a consensus to change that metric in Bitcoin is going to happen without a blockchain fork; and it would be a harsh fight.  That number isn't so arbitrary, unlike the max_blocksize rule.

It does not matter it is MAX_BLOCK_SIZE or nSubsidy, as long as they can be changed through a software upgrade, there is a POSSIBILITY that a future software upgrade will change some bitcoin characters. This possibility is the biggest risk and uncertainty of bitcoin

I concede that the possibility exists.  That's different than claiming that it's a non-trivial risk.

[TierNolan]

That's not quite true. Version 1.0 didn't have a 1MB limit, but instead used the same 0x2000000 byte, or 32MiB limit, used for any serialized data. Satoshi later added MAX_BLOCK_SIZE so that miners wouldn't create blocks bigger than 1MB, but larger was still accepted.

That is interesting.  It sets a "harder" max block size, even if the 1MB limit is increased.

To increase the limit beyond 32MB, it would be necessary to change the message structure, or allow blocks to be split over multiple messages.

The commit comment is deliberately misleading: "only accept transactions sent by IP address if -allowreceivebyip is specified"

Any reason to make them misleading?  It would seem like a recipe to making alt-clients incompatible.

[johnyj]

It's not necessary, but both chains can't coexist unless one changes certain network parameters, such as port number.

Yes I remember that 50 coin's chain fork client somehow detected blocks from the bitcoin original chain and that made it stop to work

It does not matter it is MAX_BLOCK_SIZE or nSubsidy, as long as they can be changed through a software upgrade, there is a POSSIBILITY that a future software upgrade will change some bitcoin characters. This possibility is the biggest risk and uncertainty of bitcoin

I concede that the possibility exists.  That's different than claiming that it's a non-trivial risk.

If bitcoin has gained mainstream acceptance, and some powerful entity like CIA decided to change these rules, it will be much easier than when these rules were hard coded in the blockchain itself. They just need to ask a software company to bake the US government version of bitcoin client and push it into major exchanges

At least they will debate why these rules can not be changed, that will take lots of macro economic related discussion

[codro]

No. Why bother with Bitcoin, go enjoy some other inflationary currency. Bitcoin is one of the few non-inflationary currencies in existence. Can people who want a non-inflationary currency have a few options for a change?

Not all of us believe that constant consumption is the key to a prosperous future. What we don't need today can be saved for tomorrow.

Perpetually inflating crypto-currencies exist. Use those. OK?

Let's assume Bitcoin is the only currency in existance and your salary is paid in it.

As global population grows, your salary will get smaller and smaller from month to month. Your general purchasing power should stay the same because prices should also drop.

However, what is the logic supporting this? Hoarding is extremely encouraged, because you are assured to buy a lot more tomorrow than today with the same amount of money. Your savings never devalue, but they tremendously value.

Why should money that doesn't circulate and isn't used for anything at all (investments, development, etc) gain value simply by not being used?

Please explain this. The way I see it is that it simply promotes laziness and is detrimental to any future growth.

I hope people come to their senses and realize that at least the same inflation as gold (2%) is actually required in the long term. Luckily, we have until 2024 to get this changed, until then inflation in Bitcoin is going to be >2%. We want Bitcoin to succeed, not some other crypto-currency - it should be an easy enough flaw to fix.

Nothing is limited in our world or in nature, except perhaps atoms in the Universe. If we ever run out of valuable minerals on Earth, we will mine asteroids and other planets. Having a hard limit on one side (currency) and a variable on the other (population, economy, resources) doesn't make any sense. Ideally they should be in perfect synchronicity.

[justusranvier]

Why should money that doesn't circulate and isn't used for anything at all (investments, development, etc) gain value simply by not being used?

Please explain this. The way I see it is that it simply promotes laziness and is detrimental to any future growth

In order to accumulate savings, a person must consume less than he produces. The increase in future purchasing power is the reward for loaning his productivity into the economy, allowing other people to consume his surplus production in his place because they could generate further productivity with it.

That's the exact opposite of encouraging laziness. Hard work and deferred gratification are what is rewarded.

[maxmint]

Let's assume Bitcoin is the only currency in existance and your salary is paid in it.

As global population grows, your salary will get smaller and smaller from month to month. Your general purchasing power should stay the same because prices should also drop.

However, what is the logic supporting this? Hoarding is extremely encouraged, because you are assured to buy a lot more tomorrow than today with the same amount of money. Your savings never devalue, but they tremendously value.

Why should money that doesn't circulate and isn't used for anything at all (investments, development, etc) gain value simply by not being used?

Please explain this. The way I see it is that it simply promotes laziness and is detrimental to any future growth.

I hope people come to their senses and realize that at least the same inflation as gold (2%) is actually required in the long term. Luckily, we have until 2024 to get this changed, until then inflation in Bitcoin is going to be >2%. We want Bitcoin to succeed, not some other crypto-currency - it should be an easy enough flaw to fix.

Nothing is limited in our world or in nature, except perhaps atoms in the Universe. If we ever run out of valuable minerals on Earth, we will mine asteroids and other planets. Having a hard limit on one side (currency) and a variable on the other (population, economy, resources) doesn't make any sense. Ideally they should be in perfect synchronicity.

Here's another way of viewing this: If bitcoin was the only currency then your savings purchasing power could actually decline over time. Today we have 11 million coins and I have 100 btc in my savings, so I own x% of the all bitcoins. In a couple of years from now I will own less than x% of all bitcoins as there are new coins coming into existence.

[codro]

Purchasing power won't decline over time because prices drop at at least the same rate. If a chicken costs 100 btc today, or x% of all bitcoins, as more people are trading more chickens prices will drop from two reasons: 1) increased supply 2) deflation. So it will cost 1 BTC Z time from then, or .x% of all bitcoins.

[codro]

In order to accumulate savings, a person must consume less than he produces. The increase in future purchasing power is the reward for loaning his productivity into the economy, allowing other people to consume his surplus production in his place because they could generate further productivity with it.

That's the exact opposite of encouraging laziness. Hard work and deferred gratification are what is rewarded.

Unfortunately - while idealistic, that's not realistic. It's going to simply be a matter of age.

Someone just going into the workforce will be making a fraction of what their parents made when they were young. Money will not move and production will cease resulting in bankruptcies and unemployment.

And, constantly decreasing salaries and prices would also be a logistical nightmare.

[justusranvier]

Unfortunately - while idealistic, that's not realistic. It's going to simply be a matter of age.

Someone just going into the workforce will be making a fraction of what their parents made when they were young. Money will not move and production will cease resulting in bankruptcies and unemployment.

And, constantly decreasing salaries and prices would also be a logistical nightmare.

You're right - savings must constantly be devalued because central planners always know best how individuals should balance immediate vs deferred consumption.

I recommend you never buy any bitcoins.

[codro]

Unfortunately - while idealistic, that's not realistic. It's going to simply be a matter of age.

Someone just going into the workforce will be making a fraction of what their parents made when they were young. Money will not move and production will cease resulting in bankruptcies and unemployment.

And, constantly decreasing salaries and prices would also be a logistical nightmare.

You're right - savings must constantly be devalued because central planners always know best how individuals should balance immediate vs deferred consumption.

I recommend you never buy any bitcoins.

Seriously? Where did you read that I said that savings must be devalued? This is the problem with these forums, too many zealots with their fixed ideas.

[justusranvier]

Seriously? Where did you read that I said that savings must be devalued?

Here:

Why should money that doesn't circulate and isn't used for anything at all (investments, development, etc) gain value simply by not being used?

The only way to prevent savings from gaining value is to dilute, i.e. devalue, them with new currency units.

This is the problem with these forums, too many zealots with their fixed ideas.

Oh, so we're name-calling now? I can play that game too.

The problem with online liars is they act all surprised that people fail to forget what they said a few posts before.

[codro]

So in your opinion there are two options here:

A) ridiculously valuing savings for no reason
-or-
B) devaluing savings


C) maintaining constant value

How about C because it might make more sense? No? Okay. Online liars, good one.

[Peter Todd]

That's not quite true. Version 1.0 didn't have a 1MB limit, but instead used the same 0x2000000 byte, or 32MiB limit, used for any serialized data. Satoshi later added MAX_BLOCK_SIZE so that miners wouldn't create blocks bigger than 1MB, but larger was still accepted.

That is interesting.  It sets a "harder" max block size, even if the 1MB limit is increased.

To increase the limit beyond 32MB, it would be necessary to change the message structure, or allow blocks to be split over multiple messages.

Not really. The 32MiB limit on serialized messages is just an anti-DoS attack measure. There isn't anything inherent in the serialized messages themselves that limits them to 32MiB; to make >32MiB blocks just requires both numbers to be changed at once. That said you are correct in that allowing blocks to be split over multiple messages will happen, if only because sending a block can be faster because you can skip sending the transactions if the receiver already knows about them.

The commit comment is deliberately misleading: "only accept transactions sent by IP address if -allowreceivebyip is specified"

Any reason to make them misleading?  It would seem like a recipe to making alt-clients incompatible.

Satoshi was solidly against the development of alt-clients, even just to spend coins let alone mining. That said those were very early days and he probably wanted the flexibility to change things as Bitcoin's core evolved, and it did. There is some really kooky code from those days in the repository though; did you know Satoshi wrote the beginnings of an EBay like auction market and put it in the client itself?

[MoonShadow]

No. Why bother with Bitcoin, go enjoy some other inflationary currency. Bitcoin is one of the few non-inflationary currencies in existence. Can people who want a non-inflationary currency have a few options for a change?

Not all of us believe that constant consumption is the key to a prosperous future. What we don't need today can be saved for tomorrow.

Perpetually inflating crypto-currencies exist. Use those. OK?

Let's assume Bitcoin is the only currency in existance and your salary is paid in it.

I stopped reading right here.  This assumption makes any comparison to bitcoin invalid.  Bitcoin was not invented either within such an enviornment nor in order to create such an environment.  Your argument is invalid.

[Sunny King]

Satoshi was solidly against the development of alt-clients, even just to spend coins let alone mining. That said those were very early days and he probably wanted the flexibility to change things as Bitcoin's core evolved, and it did. There is some really kooky code from those days in the repository though; did you know Satoshi wrote the beginnings of an EBay like auction market and put it in the client itself?

Very interesting. What happened to these code for the beginnings of bitbay?

[archaeopteryx]

So there's this magical limit of ~21 million bitcoins that can theoretically exist at max. Many assumptions about the future of bitcoin are based on this number.

How easy / hard would it be to change this limit? It seems, this function controls how many coins are given to miners for solving a block. If developers decided to change this function, the 21 million number would change too, right? Or is the 21 million number somehow coded deeper in the system?

I'm still working through understanding the Bitcoin protocol, but there's also these lines

Code:

/** No amount larger than this (in satoshi) is valid */
static const int64 MAX_MONEY = 21000000 * COIN;
inline bool MoneyRange(int64 nValue) { return (nValue >= 0 && nValue <= MAX_MONEY); }

from the main.h file. I'm not sure what exactly this limits, (the amount of BTC in a single account, the amount of BTC in a transaction?) and would be curious if a more advanced programmer could explain it to me. This probably isn't considered to be coded any "deeper" in the system, as it's not something stored back in an early block, but it seems to be some other kind of constraint on the number of coins.

[Sunny King]

21000000 * COIN is the theoretical upperbound of bitcoin's entire money supply. Of course no one account or transaction can have more than that number, so it is used to check that a given money value is within the valid range.

To understand how this limit came about, you need to understand the function GetBlockValue() that give rise to the upperbound of 21M * COIN: MAX_MONEY = 2 * 210000 * 50 * COIN

Code:

int64 static GetBlockValue(int nHeight, int64 nFees)
{
    int64 nSubsidy = 50 * COIN;

    // Subsidy is cut in half every 210000 blocks, which will occur approximately every 4 years
    nSubsidy >>= (nHeight / 210000);

    return nSubsidy + nFees;
}

[🏰 TradeFortress 🏰]

My view is that the association is silly.  The max_blocksize rule was added by Satoshi after the system was already running, in order to remove an attack vector via spamming of the transaction queue, until such time as a more elegant solution could be found.

That's not quite true. Version 1.0 didn't have a 1MB limit, but instead used the same 0x2000000 byte, or 32MiB limit, used for any serialized data. Satoshi later added MAX_BLOCK_SIZE so that miners wouldn't create blocks bigger than 1MB, but larger was still accepted.

Finally the hard limit was reduced by Satoshi to 1MB in commit 172f006020965ae8763a0610845c051ed1e3b522 The commit comment is deliberately misleading: "only accept transactions sent by IP address if -allowreceivebyip is specified"

Deliberately?

[archaeopteryx]

21000000 * COIN is the theoretical upperbound of bitcoin's entire money supply. Of course no one account or transaction can have more than that number, so it is used to check that a given money value is within the valid range.

To understand how this limit came about, you need to understand the function GetBlockValue() that give rise to the upperbound of 21M * COIN: MAX_MONEY = 2 * 210000 * 50 * COIN

Code:

int64 static GetBlockValue(int nHeight, int64 nFees)
{
    int64 nSubsidy = 50 * COIN;

    // Subsidy is cut in half every 210000 blocks, which will occur approximately every 4 years
    nSubsidy >>= (nHeight / 210000);

    return nSubsidy + nFees;
}

I think I understand the GetBlockValue function (I spent most of my allotted time in the newbie pool digging through the Bitcoin source code and asking some questions). The math works out to be 20,999,999.9769 total Bitcoins mined at block #6,930,000 if I calculated it correctly. What I don't quite understand is the purpose for this line:

Code:

inline bool MoneyRange(int64 nValue) { return (nValue >= 0 && nValue <= MAX_MONEY); }

as a transaction will never even come close to that amount, and neither will any given Bitcoin address. Given the ~21 million COIN limit created by GetBlockValue, why is it necessary to check "nValue" to make sure it is within 0 - 21,000,000?

[kjj]

What I don't quite understand is the purpose for this line:

Code:

inline bool MoneyRange(int64 nValue) { return (nValue >= 0 && nValue <= MAX_MONEY); }

as a transaction will never even come close to that amount, and neither will any given Bitcoin address. Given the ~21 million COIN limit created by GetBlockValue, why is it necessary to check "nValue" to make sure it is within 0 - 21,000,000?

It is a quick check to allow rejecting a transaction without expensive processing.  Oh, and also, there was an overflow bug a long time ago.  I'd have to check the commit history to know if this was part of the fix for that or unrelated.

At any rate, a transaction outside that range is automatically invalid, so you can toss it out before relaying it or checking the signatures.

[gollum]

When 21 million is reached the bitcoin community might reach the conclusion that inflation is needed and invent InflationCoin.

Inflation is needed mainly because of these simple reasons:
1) a significant percentage of bitcoins will be lost because of crashed harddrives, lost passwords, lost wallets and so on... maybe 1-2% per year?
2) The human psychology likes growth - it is not a coincidence that central banks have a inflation target of 2%. That gives the population the illusion of a growing economy since your salary, your house and your stocks go up in price. People are happier in a low inflation economy than in a deflation economy. The small inflation will also inspire the population to invest their savings in an attempt to beat the inflation – that makes the economy grow.

So in conclusion bitcoin needs an inflation of 4% to adjust to a growing economy.

The main difference between InflationCoin and Federal Reserve fiat dollar is that InflationCoin cannot print more than 4% per year to bail-out banks, finance budget deficits, finance wars and so on...

[kjj]

When 21 million is reached the bitcoin community might reach the conclusion that inflation is needed and invent InflationCoin.

Inflation is needed mainly because of these simple reasons:
1) a significant percentage of bitcoins will be lost because of crashed harddrives, lost passwords, lost wallets and so on... maybe 1-2% per year?
2) The human psychology likes growth - it is not a coincidence that central banks have a inflation target of 2%. That gives the population the illusion of a growing economy since your salary, your house and your stocks go up in price. People are happier in a low inflation economy than in a deflation economy. The small inflation will also inspire the population to invest their savings in an attempt to beat the inflation – that makes the economy grow.

So in conclusion bitcoin needs an inflation of 4% to adjust to a growing economy.

The main difference between InflationCoin and Federal Reserve fiat dollar is that InflationCoin cannot print more than 4% per year to bail-out banks, finance budget deficits, finance wars and so on...

1) Assuming 2% loss per year, the number of bitcoins remaining at year x is BTC_remain(x)=0.98^x.  Note that this value never reaches zero.*
2) I've never seen any documentation of this.  The people that get that 2% per year before it becomes inflation certainly do like it.  I've had a $100 bill in my wallet for a couple of years now.  Do you really think that I like that it can't buy as much as it could when I bought it?  The bitcoins I picked up in 2011 can buy a lot more than than they did back then.  How do you think I feel about that?

You can hardly swing a cat on these forums without hitting people that share my view on the matter.

* You actually need a bit of calculus to think that it can.  The limit as x approaches infinity is indeed zero.  But since x is time, we'll have bigger problems long before it approaches infinity.

[uSploit]

I dont understand, how is it that it would stop at 21mill??
No one controlls bitcoins. Bitcoins works on its own behalf.

Mining blocks means bitcoins, trading bitcoins means blocks.
People wont stop trading nor stop mining?

strange to me.

Greetings uSploit

[gollum]

When 21 million is reached the bitcoin community might reach the conclusion that inflation is needed and invent InflationCoin.

Inflation is needed mainly because of these simple reasons:
1) a significant percentage of bitcoins will be lost because of crashed harddrives, lost passwords, lost wallets and so on... maybe 1-2% per year?
2) The human psychology likes growth - it is not a coincidence that central banks have a inflation target of 2%. That gives the population the illusion of a growing economy since your salary, your house and your stocks go up in price. People are happier in a low inflation economy than in a deflation economy. The small inflation will also inspire the population to invest their savings in an attempt to beat the inflation – that makes the economy grow.

So in conclusion bitcoin needs an inflation of 4% to adjust to a growing economy.

The main difference between InflationCoin and Federal Reserve fiat dollar is that InflationCoin cannot print more than 4% per year to bail-out banks, finance budget deficits, finance wars and so on...

1) Assuming 2% loss per year, the number of bitcoins remaining at year x is BTC_remain(x)=0.98^x.  Note that this value never reaches zero.*
2) I've never seen any documentation of this.  The people that get that 2% per year before it becomes inflation certainly do like it.  I've had a $100 bill in my wallet for a couple of years now.  Do you really think that I like that it can't buy as much as it could when I bought it?  The bitcoins I picked up in 2011 can buy a lot more than than they did back then.  How do you think I feel about that?

You can hardly swing a cat on these forums without hitting people that share my view on the matter.

* You actually need a bit of calculus to think that it can.  The limit as x approaches infinity is indeed zero.  But since x is time, we'll have bigger problems long before it approaches infinity.

You should take courses in Macro economy to understand more about inflation. Why do you think the central bank of Japan (BoJ) has fighted deflation for more than 2 decades?
Deflation is bad for the economy! If your 100$ bill would be worth more each year you would postpone your consumption and the economy would shrink each year (which is case in deflationary economies such as Japan).

[kjj]

I dont understand, how is it that it would stop at 21mill??
No one controlls bitcoins. Bitcoins works on its own behalf.

Mining blocks means bitcoins, trading bitcoins means blocks.
People wont stop trading nor stop mining?

strange to me.

When mining a new block, the miner gets a reward.  The reward includes fees (old bitcoins already in circulation) and a subsidy (new bitcoins created out of thin air).  The subsidy amount is specified as a function of the block number.  Blocks which claim a larger reward than the calculated fee + calculated subsidy will not be accepted as valid by other nodes.

The sum of the subsidies allowed by the network is a bit under 21 million BTC, to be generated over the next century or so.

[uSploit]

I dont understand, how is it that it would stop at 21mill??
No one controlls bitcoins. Bitcoins works on its own behalf.

Mining blocks means bitcoins, trading bitcoins means blocks.
People wont stop trading nor stop mining?

strange to me.

When mining a new block, the miner gets a reward.  The reward includes fees (old bitcoins already in circulation) and a subsidy (new bitcoins created out of thin air).  The subsidy amount is specified as a function of the block number.  Blocks which claim a larger reward than the calculated fee + calculated subsidy will not be accepted as valid by other nodes.

The sum of the subsidies allowed by the network is a bit under 21 million BTC, to be generated over the next century or so.

Thanks for making that clear to me.
But if bitcoins stop at 21mill no one wants to sell em.
Encreasing the price so huge people dont want em anymore btc would become useless?
Which means new crypto's will be more worth? not sure..

[kjj]

You should take courses in Macro economy to understand more about inflation. Why do you think the central bank of Japan (BoJ) has fighted deflation for more than 2 decades?
Deflation is bad for the economy! If your 100$ bill would be worth more each year you would postpone your consumption and the economy would shrink each year (which is case in deflationary economies such as Japan).

And maybe you should read some of the thousands of posts in hundreds of threads discussing this idea.  We aren't ignorant of the nonsense ideas to be found in books with "macroeconomics" printed on their covers, we actively reject them.

There really are hundreds of threads on inflation vs. deflation, and you've added nothing of substance to the discussion.

[kjj]

But if bitcoins stop at 21mill no one wants to sell em.
Encreasing the price so huge people dont want em anymore btc would become useless?
Which means new crypto's will be more worth? not sure..

Here is where you went wrong.  Think about it for a minute...

[uSploit]

But if bitcoins stop at 21mill no one wants to sell em.
Encreasing the price so huge people dont want em anymore btc would become useless?
Which means new crypto's will be more worth? not sure..

Here is where you went wrong.  Think about it for a minute...

Lol i really need an asic dont i

[gollum]

You should take courses in Macro economy to understand more about inflation. Why do you think the central bank of Japan (BoJ) has fighted deflation for more than 2 decades?
Deflation is bad for the economy! If your 100$ bill would be worth more each year you would postpone your consumption and the economy would shrink each year (which is case in deflationary economies such as Japan).

And maybe you should read some of the thousands of posts in hundreds of threads discussing this idea.  We aren't ignorant of the nonsense ideas to be found in books with "macroeconomics" printed on their covers, we actively reject them.

There really are hundreds of threads on inflation vs. deflation, and you've added nothing of substance to the discussion.

I know that some bitcoin enthusiasts prefer bitcoin over FIAT-currencies since it cannot be printed when 21 million is reached vs fiat currencies such as the Zimbabwe Dollar...

But you hate inflation on wrong reasons - the fiat inflation of fiat is bad because we cannot predict politicians or central bank behaviour. Bitcoin algorithm is the opposite, it is predictable and I dont see any problem with an built-in inflation of X % per annum for infinity, therefore inflation in cryptocurrencies is nothing bad. It prevents hording.
And it encourages spending bitcoin so that the bitcoin economy can grow!

[kjj]

I know that some bitcoin enthusiasts prefer bitcoin over FIAT-currencies since it cannot be printed when 21 million is reached vs fiat currencies such as the Zimbabwe Dollar...

But you hate inflation on wrong reasons - the fiat inflation of fiat is bad because we cannot predict politicians or central bank behaviour. Bitcoin algorithm is the opposite, it is predictable and I dont see any problem with an built-in inflation of X % per annum for infinity, therefore inflation in cryptocurrencies is nothing bad. It prevents hording.
And it encourages spending bitcoin so that the bitcoin economy can grow!

No, no, no.  It isn't unpredictability that we dislike, it is inflation.  Once again, you are making straw men and fighting with them.  To talk of saving (hoarding) as a vice and consumption (spending) as a virtue is totally backwards from the way that most of us view things.

I'll summarize, but you really should be searching and reading.  Once again, there are literally hundreds of threads on this topic.

Deflation is the natural result of improvement.  When someone builds a machine to make a task easier, that task should get cheaper.  That is, it should take less value, regardless of the form of value, to do.  At best, inflation is capable of obfuscating this truth from us, making it harder for us to make good decisions, and at worst, it transfers our saved value to others (also known as theft).

[dree12]

What people don't realize is that Bitcoin only deflates if the economy is growing. "Lost coins" produce a demurrage effect, which is cancelled out by deflation. If the economy is shrinking, Bitcoin will actually inflate—maybe not in price, but effectively so.

The 2% lost coins every year is equivalent to a 98% expected value of Bitcoins after one year. This is effectively demurrage; people will not hoard the coins unless the economy is growing and profits are decreasing.

[archaeopteryx]

You should take courses in Macro economy to understand more about inflation. Why do you think the central bank of Japan (BoJ) has fighted deflation for more than 2 decades?
Deflation is bad for the economy! If your 100$ bill would be worth more each year you would postpone your consumption and the economy would shrink each year (which is case in deflationary economies such as Japan).

And maybe you should read some of the thousands of posts in hundreds of threads discussing this idea.  We aren't ignorant of the nonsense ideas to be found in books with "macroeconomics" printed on their covers, we actively reject them.

There really are hundreds of threads on inflation vs. deflation, and you've added nothing of substance to the discussion.

I know that some bitcoin enthusiasts prefer bitcoin over FIAT-currencies since it cannot be printed when 21 million is reached vs fiat currencies such as the Zimbabwe Dollar...

But you hate inflation on wrong reasons - the fiat inflation of fiat is bad because we cannot predict politicians or central bank behaviour. Bitcoin algorithm is the opposite, it is predictable and I dont see any problem with an built-in inflation of X % per annum for infinity, therefore inflation in cryptocurrencies is nothing bad. It prevents hording.
And it encourages spending bitcoin so that the bitcoin economy can grow!

Bitcoin was designed the way it was quite deliberately. The intelligent fellow (or fellows) who dreamt up and implemented the brilliant idea that is Bitcoin didn't want it to be inflationary. You may be correct that an inflationary cryptocurrency would work better than Bitcoin, but that doesn't change the fact that Bitcoin is not an inflationary cryptocurrency. In other words, rally support to your idea and create your own cryptocurrency. Maybe call it "FriedmanCoin". Then we can see empirically which one does better. My bet is still on Bitcoin.

[Wouter Drucker]

When 21 million is reached the bitcoin community might reach the conclusion that inflation is needed and invent InflationCoin.

Inflation is needed mainly because of these simple reasons:
1) a significant percentage of bitcoins will be lost because of crashed harddrives, lost passwords, lost wallets and so on... maybe 1-2% per year?
2) The human psychology likes growth - it is not a coincidence that central banks have a inflation target of 2%. That gives the population the illusion of a growing economy since your salary, your house and your stocks go up in price. People are happier in a low inflation economy than in a deflation economy. The small inflation will also inspire the population to invest their savings in an attempt to beat the inflation – that makes the economy grow.

So in conclusion bitcoin needs an inflation of 4% to adjust to a growing economy.

The main difference between InflationCoin and Federal Reserve fiat dollar is that InflationCoin cannot print more than 4% per year to bail-out banks, finance budget deficits, finance wars and so on...

1) Assuming 2% loss per year, the number of bitcoins remaining at year x is BTC_remain(x)=0.98^x.  Note that this value never reaches zero.*
2) I've never seen any documentation of this.  The people that get that 2% per year before it becomes inflation certainly do like it.  I've had a $100 bill in my wallet for a couple of years now.  Do you really think that I like that it can't buy as much as it could when I bought it?  The bitcoins I picked up in 2011 can buy a lot more than than they did back then.  How do you think I feel about that?

You can hardly swing a cat on these forums without hitting people that share my view on the matter.

* You actually need a bit of calculus to think that it can.  The limit as x approaches infinity is indeed zero.  But since x is time, we'll have bigger problems long before it approaches infinity.

You should take courses in Macro economy to understand more about inflation. Why do you think the central bank of Japan (BoJ) has fighted deflation for more than 2 decades?
Deflation is bad for the economy! If your 100$ bill would be worth more each year you would postpone your consumption and the economy would shrink each year (which is case in deflationary economies such as Japan).

You can see the contradiction in this argument. The theory assumes the economy will only ever grow (this creates deflation), then it says because of deflation the economy will shrink (yet there is somehow still more deflation). If deflation is caused by a finite currency and a growing economy, wouldn't a shrinking economy create inflation?

But that's all pure theory. If I look at historic examples on wikipedia there is evidence deflation worked very well in the 19th century. There are examples of deflation being harmful, but to me they don't seem convincing (maybe you can convince me).