Wall Observer BTC/USD - Bitcoin price movement tracking & discussion

[Wary]

Once the hardware is sold, the new owners of said hardware can mine whatever blocks they want. They can include or exclude any transactions as they see fit.

Why the current owners can't do it? What's the difference?

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[gentlemand]

If miners start messing with a worldwide financial ledger, it's like poisoning the water purification plants. It'll have negative consequences for them. But like I mention before, I rather see bitcoin become resilient enough so this won't be necessary.

There's no way anyone would trust a worldwide ledger if it was that easy to upend it. Anything that requires the goodwill of those sustaining it wouldn't be fit for purpose.

[shmadz]

Once the hardware is sold, the new owners of said hardware can mine whatever blocks they want. They can include or exclude any transactions as they see fit.

Why the current owners can't do it? What's the difference?

Sorry, I should have defined the difference between "new owners" and "current owners"...

- what I mean is that the "current owners" are incentivized by profit, hence their incentive to sell.

The "new owners" in this scenario, would be individuals or state-level actors that are not incentivized by profit. (Indeed, who would run unprofitable hardware except some "otherwise-incentivized" participant?)

These "new owners" would have no profit margin, no scenario in which they could turn a profit, thus their only motive now is to attack the network. Their only incentive for running this specialized hardware at a loss would be to harm the network.

Makes sense?

[brg444]

Laws can be enforced if there is enough will to do so. (not always....but in this case the bigger mining plants have physical address and people, so it would be fairly easy to shutdown)

If miners start messing with a worldwide financial ledger, it's like poisoning the water purification plants. It'll have negative consequences for them. But like I mention before, I rather see bitcoin become resilient enough so this won't be necessary.

//I'm talking 20+ years from now when bitcoin is BIG.

I can't believe what I'm reading  

You realise an ever important aspect of Bitcoin is that miners should remain anonymous if they wish to.

[Fatman3001]

Bitmain released another world crushing product. This will cause a rally. We will become filthy rich.

[ChartBuddy]

Coin
Explanation

[Fatman3001]

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Explanation

That's right ChartBuddy, filthy rich.

[billyjoeallen]

The miner's primary incentive to protect the network is the block reward. Fees will not eclipse the block reward as compensation UNLESS mass adoption is achieved, and that will NEVER happen if the network doesn't scale efficiently.  

How does $228 suit you assholes? Wanna try for $225? Do what I want I want or I don't buy your coins. it's pretty damn simple. It wouldn't mean shit if I was alone, but it should be getting clearer that I'm not. How clear it's gonna get depends on how long it takes you to figure out THE USERS ARE IN CONTROL, NOT THE MINERS.

[oda.krell]

How do you propose that the miners are incentivized to protect the security of the blockchain if there is no scarcity enforced on the size of the Blockchain?

(A) you're oversimplifying an economic problem that is far from trivial to model through to the end, and (B) you're conflating two issues that are, for now at least, orthogonal to each other. Let's get back to the issue of how miners will be incentivized after emission ends when we're slightly closer to the year 2140. As for the other question, two of the most obvious counters to the scarcity position, presented by others long before me, are:

(1) By the logic of a pure scarcity argument, blocksize should tend to the absolute minimum. 1 tx per block, sounds good? That would maximize the incentive to secure the network, surely.

There is obviously a trade off at play, between maximizing the overall impact, and value of the network, while at the same time not giving away access to it for free. You can't expect any pure strategy to work here, so it makes little sense to argue for or against some optimization suggestion in terms of a pure strategy.

(2) Max blocksize is nothing but a hardcoded upper limit. If miners really have an interest in creating artificial scarcity then they can already do so, collectively, by changing the default fee settings. No need for a vote to set a hard upper limit when they could have adhered to any arbitrary limit all by themselves before. The entire scarcity through max blocksize debate reminds me of an alcoholic who, on one of his good days asks someone else to locks away his booze, to be protected from himself on one of his bad days.

[coins101]

Are we nearly there yet?

[JorgeStolfi]

They can include or exclude any transactions as they see fit.

Then this is the culprit that needs to be fixed in a future update.  Miners should have no say whatsoever in which transactions to in or exclude.

Unfortunately, Satoshi's breakthrough, that made bitcoin possible, was to give all the power to the miners -- with the proof-of-work trick to keep them from cheating.  That would have worked if mining had remained well-distributed, so that it would be practically impossible to convince a majority of them to sabotage the system. 

But it did not happen that way, basically because the price shoot up to 100 or 1000 times what it should have been, given its usage.   With that hyperinflated price, and the fixed block reward, mining become a very profitable activity, that was worth carrying out in an industrial scale, by entities distinct from the users.  Then the mining industry got concentrated in a few companies because of economies of scale.

Bitcoin was created to be a peer-to-peer payent system that did not require trusted third parties, including central authorities.  Strictly speaking, bitcoin is broken right now; because the top 5-6 miners are third parties that must be trusted not to abuse their power.  With the BIP100 discussion, bitcoiners seem to be gradually becoming aware of that fact: it will be the miners that will decide whether, when, and how to change the block size limit

Bitcoin may still get "cured" if mining becomes again distributed among the users.  However, I do not see how that could happen, unless the price crashes to such a low level that no one will want to mine for profit, and mining becomes again a client activity -- say, a convenient alternative to buying bitcoins, that an ordinary person could use  to get some bitcoins to pay for coffee or whatever.

Taking away the power from the miners -- in particular, forcing them to process all transactions issued by clients -- would require reforming bitcoin to the core.  It seems that another Satoshi-level ingenious idea would be needed do that without introducing some trusted central authority.
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[coinableS]

Are we nearly there yet?

Yup, bitstamp and bitfinex are moving upward with great rocket forces. If this pattern continues we will reach Titan any day now.   

[JorgeStolfi]

The miner's primary incentive to protect the network is the block reward. Fees will not eclipse the block reward as compensation UNLESS mass adoption is achieved 

... or unless the price crashes to pennies ...

[ mass adoption ] will NEVER happen if the network doesn't scale efficiently.

One must wonder whether mass adoption will ever happen.  The block size limit has not been an obstacle so far, yet adoption does not seem to be exactly exploding.  (The block size limit might be an obstacle within a year, if the traffic keeps growing at the recent rate.)

It would be very important to have reliable information on the size and growth of the user base, and on the actual volume of payments for various uses.  Unfortunately, the few companies that have such data are hiding it, and giving only a few statistics (like "number of wallets") that may be intentionally misleading.  Statistics derived from the blockchain are mostly useless because they do not distinguish payments (coins changing hands) from non-payment uses (such as betting and tumbling) and from housekeeping overhead, (such as hotwallet/coldwallet flow). 

The 2014 numbers released by BitPay recently were a notable exception to that pattern of corporate secrecy, but were still too limited and did not tell about growth.  Some indirect evidence suggests that adoption and usage did not grow at all in the last 12 months...

[ChartBuddy]

Coin
Explanation

[fonsie]

They can include or exclude any transactions as they see fit.

Then this is the culprit that needs to be fixed in a future update.  Miners should have no say whatsoever in which transactions to in or exclude.

Unfortunately, Satoshi's breakthrough, that made bitcoin possible, was to give all the power to the miners -- with the proof-of-work trick to keep them from cheating.  That would have worked if mining had remained well-distributed, so that it would be practically impossible to convince a majority of them to sabotage the system.  

But it did not happen that way, basically because the price shoot up to 100 or 1000 times what it should have been, given its usage.   With that hyperinflated price, and the fixed block reward, mining become a very profitable activity, that was worth carrying out in an industrial scale, by entities distinct from the users.  Then the mining industry got concentrated in a few companies because of economies of scale.

Bitcoin was created to be a peer-to-peer payent system that did not require trusted third parties, including central authorities.  Strictly speaking, bitcoin is broken right now; because the top 5-6 miners are third parties that must be trusted not to abuse their power.  With the BIP100 discussion, bitcoiners seem to be gradually becoming aware of that fact: it will be the miners that will decide whether, when, and how to change the block size limit

Bitcoin may still get "cured" if mining becomes again distributed among the users.  However, I do not see how that could happen, unless the price crashes to such a low level that no one will want to mine for profit, and mining becomes again a client activity -- say, a convenient alternative to buying bitcoins, that an ordinary person could use  to get some bitcoins to pay for coffee or whatever.

Taking away the power from the miners -- in particular, forcing them to process all transactions issued by clients -- would require reforming bitcoin to the core.  It seems that another Satoshi-level ingenious idea would be needed do that without introducing some trusted central authority.

If the miners do something that the bitcoin hodlers don't like, they will be mining worthless tokens. Care to explain why they would abuse their power?

Invest -> Destroy Investment

Doesn't seem logical.


But since you are quite good at research and all... I would really like you to research what would happen if every bitcoin hodler, in the event of the miners going rogue, turns on GPU miners and their ASIC units that are now collecting dust.

[aztecminer]

you guys don't get it.. both solutions are going to fail.. the choice is "Cripplecoiners" FAIL or "Blockchain Blacklists" FAIL .. it seems as though you all are being herded by "cripplecoiners" into accepting "Blockchain Blacklists" or pay high fees.. and the "blockchain blacklists" are going to FAIL due to the gun industry is not going to find something acceptable that will be used to intimidate gun owners. it was a good play except that it's BUSTED.

[cbeast]

They can include or exclude any transactions as they see fit.

Then this is the culprit that needs to be fixed in a future update.  Miners should have no say whatsoever in which transactions to in or exclude.

Unfortunately, Satoshi's breakthrough, that made bitcoin possible, was to give all the power to the miners -- with the proof-of-work trick to keep them from cheating.  That would have worked if mining had remained well-distributed, so that it would be practically impossible to convince a majority of them to sabotage the system. 

But it did not happen that way, basically because the price shoot up to 100 or 1000 times what it should have been, given its usage.   With that hyperinflated price, and the fixed block reward, mining become a very profitable activity, that was worth carrying out in an industrial scale, by entities distinct from the users.  Then the mining industry got concentrated in a few companies because of economies of scale.

Mining profitability does not make mining less distributed because gold rush. If economies of scale concentrates industry then why is all industry not concentrated? Greed is global. Population concentrates industry because competition.

Bitcoin was created to be a peer-to-peer payent system that did not require trusted third parties, including central authorities.  Strictly speaking, bitcoin is broken right now; because the top 5-6 miners are third parties that must be trusted not to abuse their power.  With the BIP100 discussion, bitcoiners seem to be gradually becoming aware of that fact: it will be the miners that will decide whether, when, and how to change the block size limit

Bitcoin is beta. Miners don't want to throw the baby out with the bathwater because they realize this is still low valuation. By the time it will be even possible to be worth cheating the system, it will be to strong to do so. They are better off just looking for other means to cheat the system, like politicking the politboro of governance.

Bitcoin may still get "cured" if mining becomes again distributed among the users.  However, I do not see how that could happen, unless the price crashes to such a low level that no one will want to mine for profit, and mining becomes again a client activity -- say, a convenient alternative to buying bitcoins, that an ordinary person could use  to get some bitcoins to pay for coffee or whatever.

Taking away the power from the miners -- in particular, forcing them to process all transactions issued by clients -- would require reforming bitcoin to the core.  It seems that another Satoshi-level ingenious idea would be needed do that without introducing some trusted central authority.

Not following. Mining isn't broken. It is gamed by the supply/demand of energy, technology, and politics.

[fonsie]

The 2014 numbers released by BitPay recently were a notable exception to that pattern of corporate secrecy, but were still too limited and did not tell about growth.  Some indirect evidence suggests that adoption and usage did not grow at all in the last 12 months...

Strange, I saw quite a few articles about great Bitcoin adoption in Brazil. Not that that is anything great, it would be better if another country was named, instead of that shithole that's going down the drain.

[nioc]

Are we nearly there yet?

As always we are here.

I used btc today.  Anybody else?

[brg444]

(2) Max blocksize is nothing but a hardcoded upper limit. If miners really have an interest in creating artificial scarcity then they can already do so, collectively, by changing the default fee settings. No need for a vote to set a hard upper limit when they could have adhered to any arbitrary limit all by themselves before. The entire scarcity through max blocksize debate reminds me of an alcoholic who, on one of his good days asks someone else to locks away his booze, to be protected from himself on one of his bad days.

you're oversimplifying an economic problem

The obvious oversimplification in your case is really not a surprise to read as it is indeed so common: the "miners".

Understand that "the miners" is kind of like "the people" and "the community". It really doesn't exist.

As such, their "interest" cannot be projected "collectively". We can assess their individual actions in the present but not predict

The reason this is important is some not all miners have an interest in creating artificial scarcity. In the case of a couple they simply couldn't operate above a certain limit. Others could not particularly care.

As technology improves, bigger actors get into the game and the inherent economies of scale take place, orphan risk from including too many transactions will necessarily diminish and large miners will necessarily have an advantage and an ability to drive smaller ones out of business in a precipitated way. This is concerning because while mining consolidation into enormous corporations is by all account an obvious outcome, we cannot afford for the same for nodes.

It helps to think of it as a tragedy of the commons: absent of a blocksize it will eventually become in the miner's best interest to include as many transactions as possible in their blocks and consequently restricting access to governance of the network by way of bloating the blockchain.