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

[btccashacc]

I'll buy LTC or some other shitcoin because it's so worthless the CIA will leave it alone   

[billyjoeallen]

Oh yeah. Economies of scale. Surely he hasn't heard that one before. Good on you to point this out.

I'd say you clearly don't understand english maybe? Did you somehow miss this paragraph ?

Adam Back: The worry with extremely large blocks is that they can be used to exacerbate a selfish mining attack. If you’ve got a large miner or a couple of large miners, they can create very large blocks and other people won’t be able to receive them or process them in time. So, they will gain an advantage in mining.

Bitcoin chose its parameters to make the advantage minimal so that it’s a level playing field between small miners and large miners. Right now, the interval between Bitcoin blocks is ten minutes. And the approximate time it takes to propagate, or send a block after it’s found, across the peer-to-peer network is about 10 or 15 seconds. You want the ratio between the propagation time and the block interval to be high enough, because, as a miner, while you’re waiting to receive a block, or while you’re processing a block to check it’s valid, you’re unable to mine. So, you lose money.

By having larger blocks, it’s going to take a longer time to process them. So, it’s going to favor miners with higher bandwidth or who are more centrally connected via high speed links to other miners. It gives them an advantage.

If you increase the block size rapidly, the level playing field is eroded. If it gets eroded too much, once miners are able to create blocks that only they and a couple of other big miners can mine, they can exclude everybody else because [other miners] can’t keep up.

The block size is there to put a check on these economies of scale and level the playing field.

You don't need that check and it causes more problems than it solves.  There's no such thing as a level playing field. Some miners get their electricity cheaper. Some live closer to a main internet trunk. Some are born with higher IQ. Some have more access to investment capital. Life isn't fair.  

It will take longer to process larger blocks, but bandwidth and processing speed increase all the time. The advantage is only temporary like any advantage in a highly competitive industry. If only big miners can compete, then become a big miner or sell out to one and become their employee. Effectively the only real barrier to entry is capital, BUT THIS IS CAPITALISM, BABY.  The only way to remove that barrier is to exit the free market.  That causes more problems than it solves.

I heard a whole lot of griping about mining pools, but now a larger block size will allow an individual large mine to compete with an entire pool, and you're not happy with that either!! 

Scale or die.

[Cconvert2G36]

Adam Back: The worry with extremely large blocks is that they can be used to exacerbate a selfish mining attack. If you’ve got a large miner or a couple of large miners, they can create very large blocks and other people won’t be able to receive them or process them in time. So, they will gain an advantage in mining.

Bitcoin chose its parameters to make the advantage minimal so that it’s a level playing field between small miners and large miners. Right now, the interval between Bitcoin blocks is ten minutes. And the approximate time it takes to propagate, or send a block after it’s found, across the peer-to-peer network is about 10 or 15 seconds. You want the ratio between the propagation time and the block interval to be high enough, because, as a miner, while you’re waiting to receive a block, or while you’re processing a block to check it’s valid, you’re unable to mine. So, you lose money.

By having larger blocks, it’s going to take a longer time to process them. So, it’s going to favor miners with higher bandwidth or who are more centrally connected via high speed links to other miners. It gives them an advantage.

How about access to heavily state subsidized electricity rates? Miners more centrally located to hydroelectric plants? Are these not advantages to be gained in the mining market? Why do the reticent devs arrogate themselves the power to centrally plan advantage, or disadvantage, as it relates to bandwidth speeds? (And would they have a conceivable side interest in desiring such control?)

If you increase the block size rapidly, the level playing field is eroded. If it gets eroded too much, once miners are able to create blocks that only they and a couple of other big miners can mine, they can exclude everybody else because [other miners] can’t keep up.

Let's be honest, there are well less than 20 individual pools/nodes that really comprise the vast majority mining power, are these pools not already incentivized and funded enough to secure the absolute best possible connectivity in their locale? Again, why play favorites here? 

The block size is there to put a check on these economies of scale and level the playing field.

The economies of scale generally relate to power rates, and housing. Why not quality of network connectivity? Well, because of full node distribution, which may very well fall in the case of a precipitous blocksize increase. Seems like he's barking up the wrong tree in focusing on mining vs full node decentralization?

I said, weeks ago, before this strange schism erupted in the community that I would be perfectly happy even with Jeff's BIP 102. The timing is not absolutely critical yet, and if it suddenly was, we would have 100% more headroom. Sad to see everything sort of devolve into a shitstorm, but I really am hopeful that a more conservative increase (even one time) option emerges from core. Followed by a mass exodus from XT when they see that there is another more equitable and certainly less contentious outcome.

I think the core team is technically brilliant, yes even gmaxwell. But some of these questions are more than technical, they're somewhat political, and people's disparate interests get all wrapped up in it.

[ChartBuddy]

Coin
Explanation

[Jdj1727]

BTC gonna jump up to $315?

[billyjoeallen]

The economies of scale generally relate to power rates, and housing. Why not quality of network connectivity? Well, because of full node distribution, which may very well fall in the case of a precipitous blocksize increase. Seems like he's barking up the wrong tree in focusing on mining vs full node decentralization?

You can run a node for next to nothing!!  Hell I could do it myself on a $400 desktop PC and an extra $20/month in to increase my bandwidth. This extra cost is trivial. Yes, some will shut down at the margins, but many more will start up as adoption increases.  How low does the node/wallet ratio have to drop before it becomes a problem? a factor of ten or greater. A worry about a marginal decrease is simple fearmongering.

You're again making the perfect the enemy of the good. Grow the fuck up. It's like doctors at at operating table arguing about what pattern of sutures they're going to stitch the patient up with. Meanwhile, the patient is losing blood.

Scale or die.

[AlexGR]

Back clearly does not understand economics. Mining gets more centralized because of economies of scale. this is unavoidable unless you intentionally want to keep mining and our whole project as a hobby. Look at gold mining. At the beginning of the California Gold Rush, anybody with a shovel and a pan could make a buck. After the low hanging fruit all got picked,you had to invest more and more capital and have more knowledge and specialized knowledge.

Speaking of gold: Gold has been demonetized (ie, there are no gold coins in circulation as national currencies), so it's not like millions of gold transactions are happening every day. In terms of transactions per second, it's not very unlike Bitcoin. Yet, the ~5.8bn ounces / ~180 kilotons of gold have a marketcap of 6.5 trillion USD.

BTC is digital gold. It doesn't need to scale its transactions to billions per day for fear of death. You are only looking at the transaction aspect / epayment system aspect, and you are overlooking the store-of-value aspect.

The store-of-value aspect of Bitcoin benefits massively from the ability of any individual to run a full wallet, with the entire blockchain, and the individual being able to be their own banker and have their own bitcoins under their control, while these BTCs appreciate even from their ...non-use and scarcity, relative to the fiat money supply which is inflating and devaluing itself.

Every single barrier can be overcome if the price of bitcoin gets enough. The same thing happened a few years ago when gold prices jumped so high that placer mining became profitable again. Smart rich people from lower margin industries come in and compete--But that WON'T happen if most bitcoin transactions go off blockchain because of economics.

Bitcoin, aside from being a coin and payment system, is also code that can be cloned/duplicated in altcoins... so it can scale if you make multiple bitcoin-like coins, use them for fast and cheap transactions and then discard them in the long run when their blockchain is bloated (if they can't be pruned). It's like using silver, copper and nickel for other coins that are traded daily, while you leave your gold coin under the mattress.

Right now we are using our gold for dust transactions of a few thousand satoshis and pretend that we need larger block sizes. This is ridiculous waste of blockchain space - which represents a barrier to entry as it increases in size (not to mention what happens when it increases dramatically, in terms of mining, centralization etc). Let the fees take care of this kind of waste and not multiply this wasteful behavior.

Off blockchain transactions increase the velocity of money which has the same effect of increasing supply. You're not trading with bitcoin. You're trading with bitcoin IOUs.

MV=PQ   money supply times velocity equals price of goods time quantity of goods. How long before Coinbase starts operating as a fractional reserve or gets out-competed by someone else who does?

Supply and demand. Effectively increasing bitcoin supply drives the price down.  

Scale or die.

Dogecoin, IIRC has 1mb blocks per minute, so, in that sense, it scales 10x compared to BTC - which is even larger than XT. But it's not like people are saying "hey the dog can scale like crazy, let's all buy the dog and go to the moon"...

I mean why hasn't anyone brought it up as a major selling point for altcoins like LTC (4x), DASH / DRK (4x), DOGE (10x) that they can scale much more than BTC due to their more frequent blocks (of similar size) if that's all it takes to overtake bitcoin, that will supposedly die from not scaling, while these coins have already "solved" that and thus they will scale much better?

If it was such an issue, the money would have already decided in favor of altcoins that are "better" than the "flawed" Bitcoin - which is also "flawed" with its very slow confirmations compared to most alts that are lightening fast when, say, you deposit into an exchange. But the reality is that the parameters of Bitcoin are known for years. People know that btc is more expensive in its tx's, that it's slower, etc etc, yet it is still dominating the crypto-market due to the store-of-value aspect which seems to be (to the market) more important than the transaction aspect.

So why all that "urgency" with the XT crap and the stress tests that were in line with a problem-reaction-solution modus operandi? Who, really believes that bitcoin will ...die, if several dust and faucet transactions which are now conducted for peanuts, are replaced by more valuable transactions?

As for the IOU argument, that's partly correct and that's why, personally, I'm less in favor of such fractional tactics, as I am in favor of altcoins or some embedded system on BTC that does something similar, instead of a third party running a fractional reserve scheme.

[aztecminer]

helping with the fud:


Bitcoin can't be owned, says Japanese court, as Karpeles sweats in cell
http://www.theregister.co.uk/2015/08/07/bitcoin_cant_be_owned_says_japanese_court_as_karpeles_cackles_away/

[Cconvert2G36]

The economies of scale generally relate to power rates, and housing. Why not quality of network connectivity? Well, because of full node distribution, which may very well fall in the case of a precipitous blocksize increase. Seems like he's barking up the wrong tree in focusing on mining vs full node decentralization?

You can run a node for next to nothing!!  Hell I could do it myself on a $400 desktop PC and an extra $20/month in to increase my bandwidth. This extra cost is trivial. Yes, some will shut down at the margins, but many more will start up as adoption increases.  How low does the node/wallet ratio have to drop before it becomes a problem? a factor of ten or greater. A worry about a marginal decrease is simple fearmongering.

You're again making the perfect the enemy of the good. Grow the fuck up. It's like doctors at at operating table arguing about what pattern of sutures they're going to stitch the patient up with. Meanwhile, the patient is losing blood.

Scale or die.

You missed the part where I am firmly for increasing the max block size? Making the perfect the enemy of the good is the most apt metaphor out at the moment.

I also think that Hearn was correct that the threat of a fork had become necessary to move forward in the debate. (Adding some of his other pet projects with the release was a mistake.)

"Grow the fuck up?" uh? We have enough hyperbole flying around at the moment. What we really need to do is come together and sort this shit out with a compromise. A small increase that gives us all kinds of interesting data to plan for the next, possibly permanent solution.

[marcus_of_augustus]

The economies of scale generally relate to power rates, and housing. Why not quality of network connectivity? Well, because of full node distribution, which may very well fall in the case of a precipitous blocksize increase. Seems like he's barking up the wrong tree in focusing on mining vs full node decentralization?

You can run a node for next to nothing!!  Hell I could do it myself on a $400 desktop PC and an extra $20/month in to increase my bandwidth. This extra cost is trivial. Yes, some will shut down at the margins, but many more will start up as adoption increases.  How low does the node/wallet ratio have to drop before it becomes a problem? a factor of ten or greater. A worry about a marginal decrease is simple fearmongering.

You're again making the perfect the enemy of the good. Grow the fuck up. It's like doctors at at operating table arguing about what pattern of sutures they're going to stitch the patient up with. Meanwhile, the patient is losing blood.

Scale or die.

stop with the FUD and sloganeering ... bitcoin can scale just fine without the induced faux panic and manufactured fork missile crises circus (as much fun as the drama is).

[Jammalan the Prophet]

Crap , I missed another bitpocalypse!

When is the next one scheduled?

[JorgeStolfi]

So why all that "urgency" with the XT crap

Because the bitcoin traffic, if it keeps growing as it has over the last 12 months, will hit the effective capacity of the mining network by mid 2016.  Then traffic jams will be frequent, and the average time to 1-confirmation will jump from ~10 minutes to hours depending on the time and day.  Bitcoin adoption will stop growing and bitcoin's image will suffer.

and the stress tests

The stress tests were not directly related to the blocksize issue.  The company that claimed responsibility for them (Coinwallet.eu) has some wallet software that, they claim, will compute the correct fees to get over traffic jams like the ones that they did.

[Cconvert2G36]

Speaking of gold: Gold has been demonetized (ie, there are no gold coins in circulation as national currencies), so it's not like millions of gold transactions are happening every day. In terms of transactions per second, it's not very unlike Bitcoin. Yet, the ~5.8bn ounces / ~180 kilotons of gold have a marketcap of 6.5 trillion USD.

You make the case about as well as it can be made. But there's a few problems. The raw amount of transactions in gold is necessarily small. After all, to really transact in metals at a distance you have to pack a lump of metal in some packaging and mail it. Bitcoin is greatly advantaged in this respect. But it is not advantaged with the blessing of the periodic table, people laugh at altcoins, but they really are the competition. They do what bitcoin does, just with less liquidity. To just wave your hands and say "Network Effect" is not sufficient to equate it with a rare, dense, non-corrosive, and shiny when polished metal.

[ChartBuddy]

Coin
Explanation

[billyjoeallen]

Speaking of gold: Gold has been demonetized (ie, there are no gold coins in circulation as national currencies), so it's not like millions of gold transactions are happening every day. In terms of transactions per second, it's not very unlike Bitcoin. Yet, the ~5.8bn ounces / ~180 kilotons of gold have a marketcap of 6.5 trillion USD.

BTC is digital gold. It doesn't need to scale its transactions to billions per day for fear of death. You are only looking at the transaction aspect / epayment system aspect, and you are overlooking the store-of-value aspect.

The store-of-value aspect of Bitcoin benefits massively from the ability of any individual to run a full wallet, with the entire blockchain, and the individual being able to be their own banker and have their own bitcoins under their control, while these BTCs appreciate even from their ...non-use and scarcity, relative to the fiat money supply which is inflating and devaluing itself.

So which is it? You want smaller block size so we only use bitcoin for settlements or you want people to be their own banks? You can't have both.

Bitcoin, aside from being a coin and payment system, is also code that can be cloned/duplicated in altcoins... so it can scale if you make multiple bitcoin-like coins, use them for fast and cheap transactions and then discard them in the long run when their blockchain is bloated (if they can't be pruned). It's like using silver, copper and nickel for other coins that are traded daily, while you leave your gold coin under the mattress.

Right now we are using our gold for dust transactions of a few thousand satoshis and pretend that we need larger block sizes. This is ridiculous waste of blockchain space - which represents a barrier to entry as it increases in size (not to mention what happens when it increases dramatically, in terms of mining, centralization etc). Let the fees take care of this kind of waste and not multiply this wasteful behavior.

This is like the people who worried that browsers would clog up internet traffic back in the early nineties. or  worries about picture files. or sound files. or video.  1TB hard drives are cheaper than a carton of cigarettes. Next year 10 TB drives will be.  It's a bullshit argument.

Dogecoin, IIRC has 1mb blocks per minute, so, in that sense, it scales 10x compared to BTC - which is even larger than XT. But it's not like people are saying "hey the dog can scale like crazy, let's all buy the dog and go to the moon"...

I mean why hasn't anyone brought it up as a major selling point for altcoins like LTC (4x), DASH / DRK (4x), DOGE (10x) that they can scale much more than BTC due to their more frequent blocks (of similar size) if that's all it takes to overtake bitcoin, that will supposedly die from not scaling, while these coins have already "solved" that and thus they will scale much better?

If it was such an issue, the money would have already decided in favor of altcoins that are "better" than the "flawed" Bitcoin - which is also "flawed" with its very slow confirmations compared to most alts that are lightening fast when, say, you deposit into an exchange. But the reality is that the parameters of Bitcoin are known for years. People know that btc is more expensive in its tx's, that it's slower, etc etc, yet it is still dominating the crypto-market due to the store-of-value aspect which seems to be (to the market) more important than the transaction aspect.
 

The urgency isn't even in block size or scalability. The urgency is in fixing the goddamn decision-making process among the core devs.  You think Hearn was wrong about that?

[Dump3er]

Crap , I missed another bitpocalypse!

When is the next one scheduled?

Soon.

[shmadz]

stop with the FUD and sloganeering ... bitcoin can scale just fine without the induced faux panic and manufactured fork missile crises circus (as much fun as the drama is).

No kidding.

Garzik's original proposal http://gtf.org/garzik/bitcoin/BIP100-blocksizechangeproposal.pdf  is a far superior solution compared to XT. These kind of proposals are the way bitcoin is supposed to evolve. You make proposal, everyone checks it out and makes suggestions and changes, you iterate this process several times until you've got something everyone agrees on.

But no, instead people want to push through an ill-conceived idea that involves 8GB blocks in twenty years along with whatever else is packaged into the XT client because Hearn says the sky is falling.

We've had sustained spam attacks for extended periods and as long as you're not an idiot and attach an appropriate fee, they don't affect you.

Bitcoin doesn't need to be dumbed down or compromised to achieve its primary goal; money that is outside the control of governments and central banks.

[BlackSpidy]

stop with the FUD and sloganeering ... bitcoin can scale just fine without the induced faux panic and manufactured fork missile crises circus (as much fun as the drama is).

Personally, I'm hoping the bargain price remains until about next month, September 26th. Until then, I'm very happy to see low prices. I'm saving money to place an order, soon. I'll be adding another 0.4 BTC to my wallet, maybe. Yes, I am that poor  but I'm doing fine, putting a little into bitcoin at a time.

[billyjoeallen]

stop with the FUD and sloganeering ... bitcoin can scale just fine without the induced faux panic and manufactured fork missile crises circus (as much fun as the drama is).

No kidding.

Garzik's original proposal http://gtf.org/garzik/bitcoin/BIP100-blocksizechangeproposal.pdf  is a far superior solution compared to XT. These kind of proposals are the way bitcoin is supposed to evolve. You make proposal, everyone checks it out and makes suggestions and changes, you iterate this process several times until you've got something everyone agrees on.

But no, instead people want to push through an ill-conceived idea that involves 8GB blocks in twenty years along with whatever else is packaged into the XT client because Hearn says the sky is falling.

We've had sustained spam attacks for extended periods and as long as you're not an idiot and attach an appropriate fee, they don't affect you.

Bitcoin doesn't need to be dumbed down or compromised to achieve its primary goal; money that is outside the control of governments and central banks.

You're missing the point. It's not that bitcoin will die, it's that the devs who can't make a decision and the miners who oppose increasing block size ever will become irrelevant and effectively dead to the project.

[shmadz]

The urgency isn't even in block size or scalability. The urgency is in fixing the goddamn decision-making process among the core devs.  You think Hearn was wrong about that?

From an objective standpoint, looking at Hearn's contributions as a whole (the database change that caused the first fork, the redlisting coins proposal, and XT in particular) I think one could come to the logical conclusion that Hearn has been compromised by the NSA or some other three letter agency, likely recruited while he was still with Google.