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

[AlexGR]

Exactly. Problem is i guess most here are not understanding or dismiss principal economics, and forget the one and only rule: the free market - if it is indeed free - always wins in the long run, and no politically driven central controlled engineering can go against the collective wisdom and need of the users. That is supposed to be the whole point of bitcoin.
...
I do not understand how "smallblockers" or elitist (read Hayek's Fatal Conceit) forget this simple fact:
the utility hence the value of the network is solely based on the judgement of the USER - who might have no clue about the technical part, bandwidth, storage space - but the system is for them. It can not exist for the will of developers/miners. Without millions of users, whom voluntary agree to hold, move, invest economic value in the network, mining and development is meaningless. If core can not find a solution for the needs, someone else will, for there is economic reward for it!
...
Without ever increasing adoption, and new utility, like colored coins for example, the price will stop growing, and mining becomes ever increasingly useless - because the coinbase reward diminishes, fees can not go up - no new users who would compete for blockspace -, and network value diminishes**.

You use the banks, paypal, credit cards etc, don't you?

As a user you want ZERO fees.

They don't give it to you. They charge you. Some times a lot.

Are these organizations dying from not meeting user demands? Did their network effect got negatively affected and thus never became widespread? If no, why?

The reason is because there was no alternative. So, your economic idealism about market demands by users etc etc hits the wall of economic realities.

Bitcoin is the first thing that comes close to challenging them on multiple fronts. Yet, it too, has some limitations due to technology. These may not be true in 5-10-20 years, but right now they are. So... with this as a given, you can still position bitcoin in the market segment where it is way more profitable to transact with it than the banks, paypal, credit cards etc.

For example paypal says if you receive money, I take 0.35$ and something between 1.5 and 3.5% in fees - or something to that effect. So if I lose 4$ in a 100$ payment, of course it would be better for me to choose BTC for that 100$ payment and keep like 3.5$.

The prices, fees and disadvantages of my competitors (reversible txs, having my own money or "freezing them") etc etc are what ensure that I go upwards in the free market that you mention because I'm better than them.

I do the transaction faster, cheaper and in a non-reversible manner (after 1conf). It's not whether I allow spam/dust txs or not. If your fees are like <0.5$, then you are already beating most banks, credit cards and online payment systems - which automatically means that you have the competitive advantage and you'll increase your marketshare. As you do that, you increase your tx capacity to accommodate, but not giving away space for free to abuse because that acts in a self-defeating way for the functionality of the network. P2P networks are inefficient. Hierarchical databases / centralized databases are orders of magnitude more efficient. So when you try to scale P2P networks the inefficiency kind of multiplies and you need to be careful, in the technical sense.

As for waste, spam, elitism etc, just read the quotes of satoshi in my post above. Was he an elitist or a realist - in terms of how the network operates?

[r0ach]

As for waste, spam, elitism etc, just read the quotes of satoshi in my post above. Was he an elitist or a realist - in terms of how the network operates?

You tried to derail the block size topic with an off-topic post bringing up random Satoshi quotes about micropayments.  Not a single person in the thread mentioned the word "micropayments", and:

Minimum transaction fee is the anti-spam mechanism of Bitcoin, not block size

https://bitcointalk.org/index.php?topic=1295293.0

[hdbuck]

Poor people debating their inabilities of letting go couple dollars fees for their groceries, hoping bitcoin and its technology cares about them. pathetic. ^^

[BlindMayorBitcorn]

Poor people debating their inabilities of letting go couple dollars fees for their groceries, hoping bitcoin and its technology cares about them. pathetic. ^^

I still think Gavin's paying you to be an asshole. This is all just an elaborate stress-test.

[ChartBuddy]

Coin



Explanation

[CuntChocula]

Poor people debating their inabilities of letting go couple dollars fees for their groceries, hoping bitcoin and its technology cares about them. pathetic. ^^

^^Poor cryptonerds debating their inabilities of letting go couple dollars fees for their groceries, hoping fiat and its superior banking technology cares about them. pathetic.

[bitebits]

Exactly. Problem is i guess most here are not understanding or dismiss [...]

Very well written post about Bitcoin and competitive open markets, economics, users and inevitable centralizing nodes. Thanks for sharing your thoughts!

[Andre#]

And please, don't even pull the "price doesn't matter" bullshit lol.  Bitcoin is a currency, if one of your main development goals isn't to increase it's network effect and value, then you're probably doing it wrong.  A currency is a consensus mechanism between individuals in lieu of barter.  In order to fulfill that goal, the largest number of people possible have to be holders or it's either harder for them to do business, or they can't do business at all.  This means sane Bitcoin development has to constantly be trying to expand capacity to fit more users.  Unless capacity is already high enough for world reserve currency, any stagnation of capacity increase while users are demanding more will be viewed negatively by the market.

There's also no such thing as "spam".  If you think spam exists, it means minimum transaction fee is not set high enough.  Zero fee transactions should not exist in the first place.

Satoshi said the system was not suitable for micropayments. He said it would probably not be suitable for <0.01 txs. He considered spam a problem and he said he is taking intentional measures to restrict very small transactions.

The value of the network will not increase if the blockchain is 100 terabytes full of junk, requiring gbps to move around junk. But it will increase if it is efficient in its hardware and network resources even if that means restricting dust - as it was intended to. Not by me, not by "blockstream", but by satoshi himself.

It's not clear if he meant < 0.01 USD or < 0.01 BTC, but given that in August 2010 1 BTC was worth less than 0.07 USD, lets assume 0.01 USD. How many transactions are currently less than 0.000,025 BTC ?

Bitcoin isn't currently practical for very small micropayments.  Not for things like pay per search or per page view without an aggregating mechanism, not things needing to pay less than 0.01.  The dust spam limit is a first try at intentionally trying to prevent overly small micropayments like that.

Bitcoin is practical for smaller transactions than are practical with existing payment methods.  Small enough to include what you might call the top of the micropayment range.  But it doesn't claim to be practical for arbitrarily small micropayments.

Forgot to add the good part about micropayments.  While I don't think Bitcoin is practical for smaller micropayments right now, it will eventually be as storage and bandwidth costs continue to fall.  If Bitcoin catches on on a big scale, it may already be the case by that time.  Another way they can become more practical is if I implement client-only mode and the number of network nodes consolidates into a smaller number of professional server farms.  Whatever size micropayments you need will eventually be practical.  I think in 5 or 10 years, the bandwidth and storage will seem trivial.

I am not claiming that the network is impervious to DoS attack.  I think most P2P networks can be DoS attacked in numerous ways.  (On a side note, I read that the record companies would like to DoS all the file sharing networks, but they don't want to break the anti-hacking/anti-abuse laws.)

If we started getting DoS attacked with loads of wasted transactions back and forth, you would need to start paying a 0.01 minimum transaction fee.  0.1.5 actually had an option to set that, but I took it out to reduce confusion.  Free transactions are nice and we can keep it that way if people don't abuse them.

I don't think many people have a problem with a tx fee of at least 0.01 USD. As far as I remember, I always pay a few cents.

It would be nice to keep the blk*.dat files small as long as we can.

The eventual solution will be to not care how big it gets.

But for now, while it's still small, it's nice to keep it small so new users can get going faster.  When I eventually implement client-only mode, that won't matter much anymore.

There's more work to do on transaction fees. In the event of a flood, you would still be able to jump the queue and get your transactions into the next block by paying a 0.01 transaction fee.

I few days ago I wanted to jump the queue. I paid 0.55 USD with my Mycelium wallet.

[Fatman3001]

And please, don't even pull the "price doesn't matter" bullshit lol.  Bitcoin is a currency, if one of your main development goals isn't to increase it's network effect and value, then you're probably doing it wrong.  A currency is a consensus mechanism between individuals in lieu of barter.  In order to fulfill that goal, the largest number of people possible have to be holders or it's either harder for them to do business, or they can't do business at all.  This means sane Bitcoin development has to constantly be trying to expand capacity to fit more users.  Unless capacity is already high enough for world reserve currency, any stagnation of capacity increase while users are demanding more will be viewed negatively by the market.

There's also no such thing as "spam".  If you think spam exists, it means minimum transaction fee is not set high enough.  Zero fee transactions should not exist in the first place.

Satoshi said the system was not suitable for micropayments. He said it would probably not be suitable for <0.01 txs. He considered spam a problem and he said he is taking intentional measures to restrict very small transactions.

The value of the network will not increase if the blockchain is 100 terabytes full of junk, requiring gbps to move around junk. But it will increase if it is efficient in its hardware and network resources even if that means restricting dust - as it was intended to. Not by me, not by "blockstream", but by satoshi himself.

Bitcoin isn't currently practical for very small micropayments.  Not for things like pay per search or per page view without an aggregating mechanism, not things needing to pay less than 0.01.  The dust spam limit is a first try at intentionally trying to prevent overly small micropayments like that.

Bitcoin is practical for smaller transactions than are practical with existing payment methods.  Small enough to include what you might call the top of the micropayment range.  But it doesn't claim to be practical for arbitrarily small micropayments.

Forgot to add the good part about micropayments.  While I don't think Bitcoin is practical for smaller micropayments right now, it will eventually be as storage and bandwidth costs continue to fall.  If Bitcoin catches on on a big scale, it may already be the case by that time.  Another way they can become more practical is if I implement client-only mode and the number of network nodes consolidates into a smaller number of professional server farms.  Whatever size micropayments you need will eventually be practical.  I think in 5 or 10 years, the bandwidth and storage will seem trivial.

I am not claiming that the network is impervious to DoS attack.  I think most P2P networks can be DoS attacked in numerous ways.  (On a side note, I read that the record companies would like to DoS all the file sharing networks, but they don't want to break the anti-hacking/anti-abuse laws.)

If we started getting DoS attacked with loads of wasted transactions back and forth, you would need to start paying a 0.01 minimum transaction fee.  0.1.5 actually had an option to set that, but I took it out to reduce confusion.  Free transactions are nice and we can keep it that way if people don't abuse them.

It would be nice to keep the blk*.dat files small as long as we can.

The eventual solution will be to not care how big it gets.

But for now, while it's still small, it's nice to keep it small so new users can get going faster. When I eventually implement client-only mode, that won't matter much anymore.

There's more work to do on transaction fees. In the event of a flood, you would still be able to jump the queue and get your transactions into the next block by paying a 0.01 transaction fee.

It´s interesting how we can read the same thing but not read the same thing.

[Andre#]

Just as r0ach and others tried to explain, and frankly, it gets frustrating after a while:
Economic reasons trump technical/engineering/ideological reasons in real life EVERY time, especially in an open, competitive market.

I once heard someone say, "It's the economy, stupid".

[peonminer]

[nioc]

As for waste, spam, elitism etc, just read the quotes of satoshi in my post above. Was he an elitist or a realist - in terms of how the network operates?

You tried to derail the block size topic with an off-topic post bringing up random Satoshi quotes about micropayments.  Not a single person in the thread mentioned the word "micropayments", and:

Minimum transaction fee is the anti-spam mechanism of Bitcoin, not block size

https://bitcointalk.org/index.php?topic=1295293.0

But that has not been able to be added to btc.

[AZwarel]

Exactly. Problem is i guess most here are not understanding or dismiss principal economics, and forget the one and only rule: the free market - if it is indeed free - always wins in the long run, and no politically driven central controlled engineering can go against the collective wisdom and need of the users. That is supposed to be the whole point of bitcoin.
...
I do not understand how "smallblockers" or elitist (read Hayek's Fatal Conceit) forget this simple fact:
the utility hence the value of the network is solely based on the judgement of the USER - who might have no clue about the technical part, bandwidth, storage space - but the system is for them. It can not exist for the will of developers/miners. Without millions of users, whom voluntary agree to hold, move, invest economic value in the network, mining and development is meaningless. If core can not find a solution for the needs, someone else will, for there is economic reward for it!
...
Without ever increasing adoption, and new utility, like colored coins for example, the price will stop growing, and mining becomes ever increasingly useless - because the coinbase reward diminishes, fees can not go up - no new users who would compete for blockspace -, and network value diminishes**.

You use the banks, paypal, credit cards etc, don't you?

As a user you want ZERO fees.

They don't give it to you. They charge you. Some times a lot.

Are these organizations dying from not meeting user demands? Did their network effect got negatively affected and thus never became widespread? If no, why?

The reason is because there was no alternative. So, your economic idealism about market demands by users etc etc hits the wall of economic realities.

Bitcoin is the first thing that comes close to challenging them on multiple fronts. Yet, it too, has some limitations due to technology. These may not be true in 5-10-20 years, but right now they are. So... with this as a given, you can still position bitcoin in the market segment where it is way more profitable to transact with it than the banks, paypal, credit cards etc.

None said we want zero fees. You can not want to have mutually exclusive things like no fees and security at the same time. Any reasonable person knows this. So this argument is flawed.

I use banks because i HAVE to. Am legally forced, i can not get my salary in cash, or travel with cash, or buy a house. Legal tender is the logical opposite of free market currency.

IF bitcoin gets mainstream, integrated into world commerce you seriously think multinationals/tech companies/universities etc. won't run databases, mining centers, with their own copy of the blockchain, and can not organize or pay gladly for the upkeep of the network in change to the reduced overhead and increased (global) market reach thanks to bitcoin?

You guys a bit naive, if you want to go mainstream (read, billion users, total industries), and keep the scoutboy level system structure at the same time. One is not going to happen.

[AZwarel]

Exactly. Problem is i guess most here are not understanding or dismiss [...]

Very well written post about Bitcoin and competitive open markets, economics, users and inevitable centralizing nodes. Thanks for sharing your thoughts!

Thanks for reading it :-)

[AlexGR]

As for waste, spam, elitism etc, just read the quotes of satoshi in my post above. Was he an elitist or a realist - in terms of how the network operates?

You tried to derail the block size topic with an off-topic post bringing up random Satoshi quotes about micropayments

It's not the micropayment word that I put the quotes up. And they are not random.

Poster above wrote:

"I do not understand how "smallblockers" or elitist..."

"There are no all knowing wise guys, who tell the peasants what is good for them (and that his tx is "spam". Such arrogant elitism!)..."

Satoshi wrote:

"The dust spam limit is a first try at intentionally trying to prevent overly small micropayments like that."
"If we started getting DoS attacked with loads of wasted transactions back and forth"

...people have problem when I say "dust", "spam", "waste" and they are like "who are you to determine what is spam, dust and waste". Some others say "arrogance, elitism" etc. Yet satoshi was using similar words in dealing with the real life problem of network abuse. Why would he intentionally prevent small transactions if he thought they weren't a problem - at least for now?

As for your argument regarding fees and block size, I've said multiple times that I wouldn't object much larger blocks if there were much higher fees involved. In absence of serious antispam fees, the block size is the last line of defense. Additionally, oversupply of space will not give much motivation for those transacting to pay fees. So block size and fees paid by a spammer are related (again, in absence of serious anti-spam fees).

On the other hand, this could be "solved" if miners went on a "strike" and didn't process transactions if they were paid some serious tx fees - which would lead to a user revolt or some kind of "intervention" by devs who would then try to "force" the mining of transactions. At least for the next 4 or 8 years when block subsidy will probably be much bigger than the fee market.

[AZwarel]

Poor people debating their inabilities of letting go couple dollars fees for their groceries, hoping bitcoin and its technology cares about them. pathetic. ^^

You mean the 3rd world brown poor people with financially and politically oppressive regimes like the other 6 billion who lives from <10 dollars a day, and so will never can use btc and earn financial freedom with "only a couple dollars tx fee, which costs more than the actual grocery".

Or only the western white type of poor people?

[mOgliE]

None said we want zero fees. You can not want to have mutually exclusive things like no fees and security at the same time. Any reasonable person knows this. So this argument is flawed.

I use banks because i HAVE to. Am legally forced, i can not get my salary in cash, or travel with cash, or buy a house. Legal tender is the logical opposite of free market currency.

IF bitcoin gets mainstream, integrated into world commerce you seriously think multinationals/tech companies/universities etc. won't run databases, mining centers, with their own copy of the blockchain, and can not organize or pay gladly for the upkeep of the network in change to the reduced overhead and increased (global) market reach thanks to bitcoin?

You guys a bit naive, if you want to go mainstream (read, billion users, total industries), and keep the scoutboy level system structure at the same time. One is not going to happen.

I totally agree. It seems some bitcoiners forget we have some duties outside here. We can't live with just btc.

I'm paid through a bank, I pay my taxes through banks... There is no other way.

Even the people saying "you can use a debit card working with btc" well yeah maybe but whatever. I won't put my salary on it without going through a bank first. And I'll not be able to pay my taxe in cash!

[AlexGR]

It's not clear if he meant < 0.01 USD or < 0.01 BTC, but given that in August 2010 1 BTC was worth less than 0.07 USD, lets assume 0.01 USD.

If you click the link, you'll see the discussion was from a question of a member about what does the 0.01 btc fee solve in terms of antispamming and how this would prevent microtransactions etc, and satoshi explains that it is intentionally limiting them.

=>

What exactly is this 'dust spam' that this 0.01BTC transaction fee "solving"?
It seems to do more harm than good because it prevents micropayment implementations such as the one bytemaster is suggesting.

In any case, I wouldn't take it as a fixed value. I mean if BTC goes to 10.000 dollars, 0.01 BTC is meaningless as a limit (it's 100$).

I few days ago I wanted to jump the queue. I paid 0.55 USD with my Mycelium wallet.

See? It works as Satoshi said

[AlexGR]

None said we want zero fees. You can not want to have mutually exclusive things like no fees and security at the same time. Any reasonable person knows this. So this argument is flawed.

There is no flaw in the argument. As a consumer you want to pay the least possible money, and that is zero. A cash tx is zero. My post office, for example, says for credit card you'll be charged +0.35 euro. So cash it is then. Why pay extra 0.35? Fuck them.

But even if we are talking non-zero you always want to pay the least possible. So why is it such a problem if paypal, banks, cc's ask you a ton of money and miners ask you a fraction of it for processing your tx? They are still the cheapest option available and doing it while dealing with the inefficiency of a p2p system. Why are you proclaiming that the system violates user demands etc etc? It doesn't make any sense for me. I mean, if we can live with banks, ccs, paypals etc and bitcoin has a fractional cost of them, why are we so hypocritical and vent against bitcoin fees - when everyone else is sucking us dry?

IF bitcoin gets mainstream, integrated into world commerce you seriously think multinationals/tech companies/universities etc. won't run databases, mining centers, with their own copy of the blockchain, and can not organize or pay gladly for the upkeep of the network in change to the reduced overhead and increased (global) market reach thanks to bitcoin?

Why would I take on the cost of maintaining a large data center when others can do it? Does it make economic sense for me?

In any case, if Bitcoin reaches the point where it will be hosted in 30-50-100 data centers worldwide, a few co-ordinated government raids and a DDOS on the rest, will shut it down. If we want such a vulnerable system that can be shut down like the piratebays etc, then we are idiots - we have no clue what the system was in the first place and how it should be operated. Some think centralization and decentralization as totally abstract concepts, but they are not. They have very real life consequences in how BTC can be shut down. If the average guy can host a node in his bedroom with his vdsl or fiber (adsl will probably be obsolete due to problematic upstream), that's helping A LOT because shutting down multiple thousand nodes is more difficult, although it is doable with other methods like filtering the traffic by controlling the ISPs and global backbones. But that's a card that they will burn only if they need to.

You guys a bit naive, if you want to go mainstream (read, billion users, total industries), and keep the scoutboy level system structure at the same time. One is not going to happen.

Nobody says it has to be stagnant - on the contrary. The system has to expand to meet capacity demands, but you have to be realistic on what demands you will serve due to technological constraints. The desire to have everything right now is normal, but to be realistic some time must pass in terms of technological progression - or software hacks.

[AlexGR]

I totally agree. It seems some bitcoiners forget we have some duties outside here. We can't live with just btc.

I'm paid through a bank, I pay my taxes through banks... There is no other way.

This could be a nice meme though... split screen shows a guy with a happy face and has a caption like "Doesn't complain for paying XXX in bank fees per month", the other side shows him using btc and yelling at the screen with a caption like "Gets furious at 'smallblockers' due to paying 0.16$ fee for a BTC tx".

Something like that...

The hypocrisy, some times, is mind-blowing. And I'm not talking about specific users, you, or someone else - I mean generally.