Peter R
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September 03, 2015, 07:27:38 AM |
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Did we ever consider what Satoshi insinuated by "cash"? ... It makes sense considering his design of the system that Bitcoin can not ever reach the ubiquity of cash in transactions worldwide. This would necessitate such as scale as to effectively centralize Bitcoin and therefore defeats the original attempt to remove trust….
Perhaps not as ubiquitous as cash transactions worldwide, but it is crystal clear from the 3rd sentence in the Introduction of the Bitcoin white paper that Satoshi expected Bitcoin to be more useful for small casual online transactions than Visa, PayPal, etc: ![](https://ip.bitcointalk.org/?u=https%3A%2F%2Fi.imgur.com%2FTY44x7Q.png&t=665&c=ILxvBnup7cMhkA)
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brg444
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September 03, 2015, 07:29:18 AM |
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We should absolutely avoid the danger of instilling into Bitcoin users some kind of belief that they have a right to free transactions. Nothing in life is free and the costs of security & decentralization cannot forever be externalized to nodes & miners.
In that sense it is perfectly reasonable to suggest we should strive to keep block size limit as close as possible to actual network demand. Flex cap proposals are interesting in this aspect.
Those transactions aren't free for the user even if the miners eat the cost. They STILL have to suffer exchange rate risk while using bitcoin. If they have to pay a fee higher than nominal WHILE BITCOIN IS STILL IN ALPHA, for the vast majority of people, that just isn't worth it. Miners have to subsidize transaction costs to bootstrap usage or this baby will die in its crib. That's why you're getting the goddamn block reward. I am the customer. I am the user who buys your fucking coins. What am I getting for my money if I have to take this monster risk and have to pay a fee anyway? VISA gives me cash back for chrissakes. They are your competition. If you can't beat them, you won't earn their customers. Don't you small block fuckers know how business works? ![Undecided](https://bitcointalk.org/Smileys/default/undecided.gif) This post is full of misguided assumptions. It should come as a rational observation considering the shortcomings you have pointed out that there exist absolutely no incentive to purchase bitcoins to make purchases. No amount of scaling is going to incentivize mainstream consumers to go through such hoops for a low-cost/free transactions as most of the time they don't pay for the transaction anyway, merchants eat them. You are correct that there is absolutely no way for Bitcoin to compete with VISA as a consumer payment processor and again, no amount of blocksize scale is going to change this. The reasonable thing to ask then is do we really want Bitcoin to compete with Visa or is there another, possibly more valuable, use case for Bitcoin? What about digital gold? That sounds like an area where Bitcoin could thoroughly outcompete other players in its current state, with little to no change necessary. Why are we targeting to replace payment processors when we could somehow attract the incomparable value that resides in precious metal markets, offshore saving accounts and general safe havens? That sounds like a much more interesting moonshot if you ask me.
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findftp
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September 03, 2015, 07:33:32 AM |
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It's important to consider those who forgo investing in utilizing the system because it is currently capped at 2.7 effective tps.
If you put the actual cost (without block reward) of processing a bitcoin transaction on the user, bitcoin would die tomorrow. Maybe not completely, but it would be like pokemon cards for the "old money" hodlers.
You may think that permissioned sidechains will deliver us from not having the throughput to survive on fees alone, but I think that's an even bigger gamble.
It sounds corny, I agree, but billyjoe's Scale or Die has some truth to it.
It is equally important to recognize the actual utility value of Bitcoin. I wouldn't blame anyone on foregoing transactional use of Bitcoin seeing its very real shortcomings as a payment system. Let us be honest with ourselves this system is absolutely not ready for mainstream consumer acceptance and we shouldn't be concerned about consumers looking the other way. Give it some time and the necessary infrastructure and tools to abstract the highly technical and generally confusing nature of Bitcoin will be built. We should also admit that these mainstream users looking for an efficient payment system do not care at all about the decentralization or security of the thing. Let's be real here regular joes just want something that works, centralized or not. The people pouring big money into Bitcoin (I'm talking about buying bitcoins) couldn't care about its transaction capacity at the moment. Most rational investors are in it for the long haul and a majority of the coins are kept in cold storage and paper wallets where they haven't and won't move for years. There shouldn't be any urgency to cater to a userbase which is inexistent as it stands. Technology will evolve over the next few years and will provide the necessary tools for proper, actual scaling of the system. No amount of block size increase will allow us to serve a mainstream consumer base doing hundreds of thousands of transactions per seconds. Bitcoin is not designed to handle this load while staying secure & decentralized. +1 And that's why I say this whole debate is one giant psyop fearfest. It's a message to the pigs they should sell. Hell, a few days ago I found out that I even owned bitcoin before the inventor(1) of hashcash(2) did.These guys (as an individual and as a group) know they have the power to move the markets. Just focus on the charts, there are two doji stars on the weekly for god's sake. 1. Adam Back 2. Mining algo used in bitcoin
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brg444
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September 03, 2015, 07:34:32 AM |
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Did we ever consider what Satoshi insinuated by "cash"? ... It makes sense considering his design of the system that Bitcoin can not ever reach the ubiquity of cash in transactions worldwide. This would necessitate such as scale as to effectively centralize Bitcoin and therefore defeats the original attempt to remove trust….
Perhaps not as ubiquitous as cash transactions worldwide, but it is crystal clear from the 3rd sentence in the Introduction of the Bitcoin white paper that Satoshi expected Bitcoin to be more useful for small casual online transactions than Visa, PayPal, etc: ![](https://ip.bitcointalk.org/?u=https%3A%2F%2Fi.imgur.com%2FTY44x7Q.png&t=665&c=ILxvBnup7cMhkA) Sure, does he necessarily imply that these should take place on the mainchain or did he not envision (and maybe couldn't at this stage) that Bitcoin would spawn an entire ecosystem that would serve all use cases he describes using Bitcoin as the settlement layer? It's been 5 years now since the paper was released. Maybe we ought to admit that there are intricacies about Bitcoin that Satoshi had no possible ways to know about when he laid the groundwork? I believe nullc was quick to point out a couple of these to you on reddit the other day. Consider for example the 21 million limit which was not specified (and actually not even enforced in the original code).
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billyjoeallen
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September 03, 2015, 07:38:10 AM |
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Why is that better than forcing the fee directly, and ensuring that the capacity is well above the demand? (I ca think of several reasons why it is much worse.)
It's not. In fact, Nicolas Houy shows in this paper that a block size limit is economically equivalent to a minimum fee: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2400519One criticism of the minimum-fee approach is that it would be possible (albeit awkward) for miners to refund fees out-of-band. I think this paper was quite helpful, however, one thing it did not consider is the fact that miners may have their blocks orphaned, thereby forfeiting the block reward. This orphaning risk serves as a production cost for our new economic commodity called block space. In this paper (which I know you've seen), I build from Nicolas Houy's work to show that if orphaning is included, that a healthy fee market would exist without a block size limit. I bought into Bitcoin because I thought I WAS buying block space by buying bitcoin. If I have to include fees, and am limited in my ability to use the block chain for title transfer and recording, timestamps and microtransactions, then it is analogous to buying raw land only to discover I am not allowed to build on or develop the land and also have to pay property taxes. Have I been duped? Are the haters right when they say this is a scam? Scarcity means nothing if their is no utility value also. There are only 21 million bitcoins, but a potentially infinite number of cryptocoins. What makes BTC better than the rest? Network effects did not save Myspace.
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brg444
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September 03, 2015, 07:46:14 AM |
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Why is that better than forcing the fee directly, and ensuring that the capacity is well above the demand? (I ca think of several reasons why it is much worse.)
It's not. In fact, Nicolas Houy shows in this paper that a block size limit is economically equivalent to a minimum fee: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2400519One criticism of the minimum-fee approach is that it would be possible (albeit awkward) for miners to refund fees out-of-band. I think this paper was quite helpful, however, one thing it did not consider is the fact that miners may have their blocks orphaned, thereby forfeiting the block reward. This orphaning risk serves as a production cost for our new economic commodity called block space. In this paper (which I know you've seen), I build from Nicolas Houy's work to show that if orphaning is included, that a healthy fee market would exist without a block size limit. I bought into Bitcoin because I thought I WAS buying block space by buying bitcoin. If I have to include fees, and am limited in my ability to use the block chain for title transfer and recording, timestamps and microtransactions, then it is analogous to buying raw land only to discover I am not allowed to build on or develop the land and also have to pay property taxes. Have I been duped? Are the haters right when they say this is a scam? Scarcity means nothing if their is no utility value also. There are only 21 million bitcoins, but a potentially infinite number of cryptocoins. What makes BTC better than the rest? Network effects did not save Myspace. What makes Bitcoin better is the trust that investors have put into it. Trust is a very organic process which takes an enormous amount of time and cannot possibly be replicated so easily. You will never be limited in your ability to use the blockchain but one day you might be lead to ask yourself: does this transaction necessarily require the full security and trustlessness of the Bitcoin blockchain or could I compromise some trust and use such a service which promises to be more efficient and will eventually settle on the blockchain anyway. Do you really care if some of your daily expenses are not all sanctified into the holy blockchain? What you've bought is digital gold that is outside of the reach of any authority or censor. You can use this digital gold for a variety of use cases that all present different security and trust pre-requisites. What you need to consider is that the ultimate security and decentralization of the Bitcoin base layer comes at great cost which must be paid for. It's a trade-off like most every decisions you make in life.
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Peter R
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September 03, 2015, 07:51:01 AM |
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Did we ever consider what Satoshi insinuated by "cash"? ... It makes sense considering his design of the system that Bitcoin can not ever reach the ubiquity of cash in transactions worldwide. This would necessitate such as scale as to effectively centralize Bitcoin and therefore defeats the original attempt to remove trust….
Perhaps not as ubiquitous as cash transactions worldwide, but it is crystal clear from the 3rd sentence in the Introduction of the Bitcoin white paper that Satoshi expected Bitcoin to be more useful for small casual online transactions than Visa, PayPal, etc: ![](https://ip.bitcointalk.org/?u=https%3A%2F%2Fi.imgur.com%2FTY44x7Q.png&t=665&c=ILxvBnup7cMhkA) Sure, does he necessarily imply that these should take place on the mainchain or did he not envision (and maybe couldn't at this stage) that Bitcoin would spawn an entire ecosystem that would serve all use cases he describes using Bitcoin as the settlement layer? The entire paper is about transactions occurring on the Blockchain. ...Maybe we ought to admit that there are intricacies about Bitcoin that Satoshi had no possible ways to know about when he laid the groundwork? I believe nullc was quick to point out a couple of these to you on reddit the other day. Consider for example the 21 million limit which was not specified (and actually not even enforced in the original code).
Satoshi does mention a limit to the number of coins: ![](https://ip.bitcointalk.org/?u=https%3A%2F%2Fi.imgur.com%2FNwRa52e.png&t=665&c=TV02HVVvxhF4bw) Satoshi does NOT mention a block size limit AT ALL, regardless of what nullc says.
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Peter R
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September 03, 2015, 07:53:22 AM |
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Why is that better than forcing the fee directly, and ensuring that the capacity is well above the demand? (I ca think of several reasons why it is much worse.)
It's not. In fact, Nicolas Houy shows in this paper that a block size limit is economically equivalent to a minimum fee: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2400519One criticism of the minimum-fee approach is that it would be possible (albeit awkward) for miners to refund fees out-of-band. I think this paper was quite helpful, however, one thing it did not consider is the fact that miners may have their blocks orphaned, thereby forfeiting the block reward. This orphaning risk serves as a production cost for our new economic commodity called block space. In this paper (which I know you've seen), I build from Nicolas Houy's work to show that if orphaning is included, that a healthy fee market would exist without a block size limit. I bought into Bitcoin because I thought I WAS buying block space by buying bitcoin…. I think you've misunderstood. By "block space" I mean bytes in the Blockchain to hold transaction entries. I don't mean the number of coins. You ARE buying a fixed % of the money supply when you buy bitcoins.
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brg444
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September 03, 2015, 07:54:40 AM |
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The entire paper is about transactions occurring on the Blockchain. ...Maybe we ought to admit that there are intricacies about Bitcoin that Satoshi had no possible ways to know about when he laid the groundwork? I believe nullc was quick to point out a couple of these to you on reddit the other day. Consider for example the 21 million limit which was not specified (and actually not even enforced in the original code).
Satoshi does mention a limit to the number of coins: ![](https://ip.bitcointalk.org/?u=https%3A%2F%2Fi.imgur.com%2FNwRa52e.png&t=665&c=TV02HVVvxhF4bw) Satoshi does NOT mention a block size limit AT ALL, regardless of what nullc says. I see you've replied to the post I was going to quote but I'm gonna post it here regardless since it pretty much address in a succinct way all that is wrong with your recurring tendency to point to the white paper as some sort of holy scripture. Bitcoin has evolved since the whitepaper was written. It gives a good introduction to the overall concepts, but the whitepaper gets many of the details wrong
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Peter R
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September 03, 2015, 07:56:01 AM |
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Bitcoin has evolved since the whitepaper was written. It gives a good introduction to the overall concepts, but the whitepaper gets many of the details wrong
Name one detail it got wrong (and I don't mean one detail that it omitted).
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brg444
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September 03, 2015, 07:59:24 AM |
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Bitcoin has evolved since the whitepaper was written. It gives a good introduction to the overall concepts, but the whitepaper gets many of the details wrong
Name one detail it got wrong (and I don't mean one detail that it omitted). Sure, easy: Satoshi makes no distinction between miners and nodes.
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Elwar
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September 03, 2015, 08:00:07 AM |
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Every thread seems to be a mixed topic thread recently
Yep, bitcointalk has become blocksizetalk.
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ChartBuddy
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1CBuddyxy4FerT3hzMmi1Jz48ESzRw1ZzZ
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September 03, 2015, 08:02:24 AM |
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Peter R
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September 03, 2015, 08:02:32 AM |
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Bitcoin has evolved since the whitepaper was written. It gives a good introduction to the overall concepts, but the whitepaper gets many of the details wrong
Name one detail it got wrong (and I don't mean one detail that it omitted). Sure, easy: Satoshi makes no distinction between miners and nodes. How is this an error? The network is composed of nodes. Some nodes mine, some don't. (I could also be pedantic and say all nodes mine but some have zero hash power.) I don't see how this can be interpreted as an error.
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Fatman3001
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Make Bitcoin glow with ENIAC
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September 03, 2015, 08:04:46 AM |
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brg444
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September 03, 2015, 08:04:54 AM |
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Bitcoin has evolved since the whitepaper was written. It gives a good introduction to the overall concepts, but the whitepaper gets many of the details wrong
Name one detail it got wrong (and I don't mean one detail that it omitted). Sure, easy: Satoshi makes no distinction between miners and nodes. How is this an error? The network is composed of nodes. Some nodes mine, some don't. (I could also be pedantic and say all nodes mine but some have zero hash power.) I don't see how this is an error. This is absolutely an error because it ignores significant game theoric scenarios such as the one we are experiencing now which is that not all miners validate themselves their transactions causing the SPV mining fiasco we've recently experienced. This is a perfect example of Bitcoin evolving in a way Satoshi did not think of.
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brg444
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September 03, 2015, 08:05:33 AM |
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![Huh](https://bitcointalk.org/Smileys/default/huh.gif) Did Fatman sell his account to Lambchop or something?
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Peter R
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September 03, 2015, 08:10:45 AM |
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Sure, easy: Satoshi makes no distinction between miners and nodes.
How is this an error? The network is composed of nodes. Some nodes mine, some don't. (I could also be pedantic and say all nodes mine but some have zero hash power.) I don't see how this is an error. This is absolutely an error because it ignores significant game theoric scenarios such as the one we are experiencing now which is that not all miners validate themselves their transactions causing the SPV mining fiasco we've recently experienced. Let's agree to disagree then. I don't consider Satoshi's omission of a predication of SPV mining an "error in the white paper." This is a perfect example of Bitcoin evolving in a way Satoshi did not think of.
I wasn't suggesting that Satoshi foresaw precisely how Bitcoin would evolve. I was just questioning your/(Danny's) claim that the white paper got "many details wrong." I'm not aware of a single detail the white paper "got wrong."
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DieJohnny
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September 03, 2015, 08:11:04 AM |
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We should absolutely avoid the danger of instilling into Bitcoin users some kind of belief that they have a right to free transactions. Nothing in life is free and the costs of security & decentralization cannot forever be externalized to nodes & miners.
In that sense it is perfectly reasonable to suggest we should strive to keep block size limit as close as possible to actual network demand. Flex cap proposals are interesting in this aspect.
Those transactions aren't free for the user even if the miners eat the cost. They STILL have to suffer exchange rate risk while using bitcoin. If they have to pay a fee higher than nominal WHILE BITCOIN IS STILL IN ALPHA, for the vast majority of people, that just isn't worth it. Miners have to subsidize transaction costs to bootstrap usage or this baby will die in its crib. That's why you're getting the goddamn block reward. I am the customer. I am the user who buys your fucking coins. What am I getting for my money if I have to take this monster risk and have to pay a fee anyway? VISA gives me cash back for chrissakes. They are your competition. If you can't beat them, you won't earn their customers. Don't you small block fuckers know how business works? ![Undecided](https://bitcointalk.org/Smileys/default/undecided.gif) This post is full of misguided assumptions. It should come as a rational observation considering the shortcomings you have pointed out that there exist absolutely no incentive to purchase bitcoins to make purchases. No amount of scaling is going to incentivize mainstream consumers to go through such hoops for a low-cost/free transactions as most of the time they don't pay for the transaction anyway, merchants eat them. You are correct that there is absolutely no way for Bitcoin to compete with VISA as a consumer payment processor and again, no amount of blocksize scale is going to change this. The reasonable thing to ask then is do we really want Bitcoin to compete with Visa or is there another, possibly more valuable, use case for Bitcoin? What about digital gold? That sounds like an area where Bitcoin could thoroughly outcompete other players in its current state, with little to no change necessary. Why are we targeting to replace payment processors when we could somehow attract the incomparable value that resides in precious metal markets, offshore saving accounts and general safe havens? That sounds like a much more interesting moonshot if you ask me. As is yours. Making the assumption that bitcoin was never intended to be a transaction system is probably the biggest assumption of them all. Why would I want to use Bitcoin for transactions? 1) I don't have to go to the bank to get a cashiers check or a deal with questions to withdraw cash for my son's college car. 2) As a business owner I loathed paying fees to credit card companies, so I help other businesses as much as possible by using cash, I use bitcoin when they support it because I know the business will take in more money. Bitcoin has ALWAYS been a system for transactions, that has never changed, suggesting otherwise is ignoring history and inventing a new future for Bitcoin. Frankly, I am not really caring where this blocksize debate lands, but being dishonest about Bitcoin and its history with transactions is absurd.
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Fatman3001
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September 03, 2015, 08:11:32 AM |
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![Huh](https://bitcointalk.org/Smileys/default/huh.gif) Did Fatman sell his account to Lambchop or something? I thought this pig-headed debate needed a chimer. When people starts arguing about what satoshi knew or said or foretold, it's really just running on fumes anyway. Most of what he said is readily available on that interweb-thingy if anyone really cares. "What would Jesus have done?"Jesus ain't here. Satoshi bailed.
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