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

[BitUsher]

All you do by limiting transaction capacity is limit transaction capacity.  You have no way of knowing if you've restricted cost-externalizing xactions more than legit xactions.  It's possible that a higher percentage of xactions will be cost-externalizing on a near capacity network, because those are the only transactions that may make economic sense in a high fee environment. I'm not saying I know. I'm saying I don't know. can't know. and neither can you.

Again , I'm not making a distinction between legit and illegitimate tx's. I want a robust network with dynamic tx fees where I really don't care if someone is attacking or spamming it. 

We don't have to know of the perfect ratio or balance to know we already started to have problems with node and mining centralization. More specifically, historical data suggests that over 0.5MB there are increasing centralization pressures and node drop off rate increased.

Thus I have no problem with 100 or 100 MB sized blocks in principle .(In fact we will need extremely large blocks for the LN to be completely successful) My concern is rather than focus on problems which are of least concern , we should first at least reverse the trend of mining and node centralization or at minimum if we absolutely have to increase capacity now we should include aspects that allow us to scale better in the future like Segwit accomplishes.

[adamstgBit]

So why aren't developers supporting classic, XT , or BU ?

because all (legitimate) devs are core devs?

You are suggesting it is a popularity thing that developers are trying to pad their resume with the "principally important" implementation?

This seems highly unlikely because ...

1) When Developers aren't being paid, they are principally concerned with working on items they are technically interested in or that make sense(are feasible). Bitcoin Core doesn't pay any salaries , and all other sources have no restrictions on what implication to work on , in fact the only implementation to bribe developers to work on it is Classic and perhaps Bitpay's Bitcore(not to be confused with Bitcoin core).

2) Developers aren't idiots , if they really believed in Classics roadmap than they would simply move over , miner would instantly agree as they aren't against classic per say, and than Classic would become the reference implementation with their resume padded on the right one.
 

i cant tell if you're confirming or denying my statement

Your statement was a bit ambiguous , so I answered it with the assumption that you suggested developers stayed with core because that was the only legitimate implementation to pad their resume.

If you are insinuated that Gavin and Garzik aren't Experienced or "legitimate" developers , than I would have to disagree with you. The reason they appear to both work on core and classic is principally because their concerns and values aren't aligned with a majority of other developers. I.E... Gavin's own tests reflects that Classic can have a worst case scenario 60% node drop off rate, and he is fine assuming this risk where most other developers don't like this escalated form of centralization where we already have multiple centralization problems that we need to dig out of.

I agree that there are "legitimate" devs working on Classic or BU, but is Gavin and Garzik the only "legitimate" devs taking part in these projects?

[adamstgBit]

... Gavin's own tests reflects that Classic can have a worst case scenario 60% node drop off rate, and he is fine assuming this risk where most other developers don't like this escalated form of centralization where we already have multiple centralization problems that we need to dig out of.

assuming worst case happens.

what are the consequences of 60% node drop off rate?

i'm going to get off like now ( its getting late )

but i'd also like to hear your thought on ~ what % of nodes would drop off due to 2MB Effective block size.

we can chat about this tomorrow

good night bitcoiners, hope you dont all go MAD from seemingly going in circles endlessly.

[r0ach]

Segwit soon + 2mb fork being scheduled by core = around 4mb blocks during 2017, there's nothing to discuss about block size unless you demand 8mb now.

[BitUsher]

... Gavin's own tests reflects that Classic can have a worst case scenario 60% node drop off rate, and he is fine assuming this risk where most other developers don't like this escalated form of centralization where we already have multiple centralization problems that we need to dig out of.

assuming worst case happens.

what are the consequences of 60% node drop off rate?

Bitcoin becomes more insecure.

I agree that there are "legitimate" devs working on Classic or BU, but is Gavin and Garzik the only "legitimate" devs taking part in these projects?

Sergio Lerner is talented but only does a bit of peer review on the side.
The other ones lack experience with Bitcoin Development and/or Cryptography.  

[JimboToronto]

Wow. I miss a couple of days due to a nasty lung infection (requiring antibiotics) and what do I see?

The Easter Bunny crawled back in his hole and we're right back where we've been for the last few weeks. Hovering around $416.

Yawn. If it was the morning I'd be making coffee. It's a few hours before my usual bedtime so I probably won't be able to get to sleep.

Boozing, toking and partying are definitely not on the agenda, so I should sentence myself to a night of bed rest and let the Clarithromycin do its work.

Thank gawd I live in a country with "socialized" healthcare. Imagine that. Taxpayers stealing profits from insurance corporations.

[BitUsher]

but i'd also like to hear your thought on ~ what % of nodes would drop off due to 2MB Effective block size.

You should expect more nodes dropping off but not as much as classic.

The 1.8 MB to 2MB Effective capacity increase from segwit places similar but less pressure as raising maxBlockSize limit. The reasons it places less pressure than a 2MB maxBlockSize limit is principally because these 2 reasons in the short term.

1) Average capacity limit  is 1.8MB -2MB , not 2 MB, so less impact.
2) Reducing UTXO growth by making tx cost more that burden the UTXO set . This means that the attack on the network now that has clogged blocks with low txs could cost up to 4x more to accomplish. Too big of a UTXO set is directly what is crashing nodes due to lack of ram and RAM isn't cheap with VPS's.
3) Separating out signatures into a separate merkle tree allows older sigs to be pruned therefore these nodes have less bandwidth and storage needs.
4) Segwit separates out the signing of the input value which allows hardware wallets or embedded devices to function better
5) Removing the quadratic scaling of hashed data for verifying signatures makes scaling linear instead of quadratic on signature tree


Longterm benefits for nodes -

1) Fraud proofs allow more pruned nodes to exist with higher level of security than SPV nodes
2) Fixing Tx malleability is critical to payment channels rolling out

There are other benefits to segwit but these are the benefits to address your concern about nodes. I understand that one criticism for Segwit is that it increases the adversarial attack surface by up to 4x on the 2nd tree which is a valid criticism in it of itself but is out of context with items 2 and 5 above which are far more of a benefit than the risk of the increased attack surface.

[adamstgBit]

but i'd also like to hear your thought on ~ what % of nodes would drop off due to 2MB Effective block size.

You should expect more nodes dropping off but not as much as classic.

The 1.8 MB to 2MB Effective capacity increase from segwit places similar but less pressure as raising maxBlockSize limit. The reasons it places less pressure than a 2MB maxBlockSize limit is principally because these 2 reasons in the short term.

1) Average capacity limit  is 1.8MB -2MB , not 2 MB, so less impact.
2) Reducing UTXO growth by making tx cost more that burden the UTXO set . This means that the attack on the network now that has clogged blocks with low txs could cost up to 4x more to accomplish. Too big of a UTXO set is directly what is crashing nodes due to lack of ram and RAM isn't cheap with VPS's.
3) Separating out signatures into a separate merkle tree allows older sigs to be pruned therefore these nodes have less bandwidth and storage needs.
4) Segwit separates out the signing of the input value which allows hardware wallets or embedded devices to function better
5) Removing the quadratic scaling of hashed data for verifying signatures makes scaling linear instead of quadratic on signature tree


Longterm benefits for nodes -

1) Fraud proofs allow more pruned nodes to exist with higher level of security than SPV nodes
2) Fixing Tx malleability is critical to payment channels rolling out

There are other benefits to segwit but these are the benefits to address your concern about nodes. I understand that one criticism for Segwit is that it increases the adversarial attack surface by up to 4x on the 2nd tree which is a valid criticism in it of itself but is out of concept with items 2 and 5 above which are far more of a benefit than the risk of the increased attack surface.

thanks!
this is very well laid out
there's no doubt segwit has much promise.
and i like how you agree there will be more or less the same amount of node dropping out due to more or less the same incress in bandwidth usage.

here another possible downside to segwit ( i made it up   ) not sure if it makes any sense probably not hard to handle...

Introduces a new type of DOS attack (go-fish-wit-ddos)
An attacker mines a segwit-block with 1000 transactions the network has not yet seen (The attacker creates these TX herself )The attacker has the witness data readily available. When other miners try to validate this block they will go through every single one of these TX and say "I don't have the witness data for this TX_ID, I have to call TCP::GetWitnessData( TX_ID ) aw yes this is valid" 1000 times

[adamstgBit]

Segwit soon + 2mb fork being scheduled by core = around 4mb blocks during 2017, there's nothing to discuss about block size unless you demand 8mb now.

its not about the short term implications
short term everyone should be fine with either segwit or 2MB
its the longer term I dont like the sound of. I think LN is a drastic change and may prove to be non user friendly and impractical... ( not to mention not at all "free" its going to cost 2 BTC TX fees to open and close payment channels )

I need to be able to SELL the idea to poeple.
if bitcoin is >1$ to TX on its hard to SELL poeple on the idea... digital money that is expensive to TX feels like broken digital money ( especially when every other alternative, crypto or otherwise, can offer lower fees/TX )


on the other hand, if we go with classic all we get is a theoretical drop in security ( less full nodes ) ( let's not kid ourselves my paper wallets are not less secure due to hobbyist nodes getting forced out of a GROWING ecosystem  )

and i can continue to SELL the idea of truly frictionless money + we also get segwit!!!

thats why we continue to discuss


frictionless money thats the thing we are losing goign with core


we lose the frictionless  part AND we lose the money part

i like these parts and i dont want to give them up so easily

frictionless money


https://www.youtube.com/watch?v=rYEDA3JcQqw

[Elwar]

Wow. I miss a couple of days due to a nasty lung infection (requiring antibiotics) and what do I see?

The Easter Bunny crawled back in his hole and we're right back where we've been for the last few weeks. Hovering around $416.

Yawn. If it was the morning I'd be making coffee. It's a few hours before my usual bedtime so I probably won't be able to get to sleep.

Boozing, toking and partying are definitely not on the agenda, so I should sentence myself to a night of bed rest and let the Clarithromycin do its work.

Thank gawd I live in a country with "socialized" healthcare. Imagine that. Taxpayers stealing profits from insurance corporations.

In the US, to pay for healthcare the government steals from every citizen.

A tax on just being alive.

[adamstgBit]

Wow. I miss a couple of days due to a nasty lung infection (requiring antibiotics) and what do I see?

The Easter Bunny crawled back in his hole and we're right back where we've been for the last few weeks. Hovering around $416.

Yawn. If it was the morning I'd be making coffee. It's a few hours before my usual bedtime so I probably won't be able to get to sleep.

Boozing, toking and partying are definitely not on the agenda, so I should sentence myself to a night of bed rest and let the Clarithromycin do its work.

Thank gawd I live in a country with "socialized" healthcare. Imagine that. Taxpayers stealing profits from insurance corporations.

In the US, to pay for healthcare the government steals from every citizen.

A tax on just being alive.

you know what i do?

i smoke and drink, to make sure i get my monies worth.  

[edgar]

Bitcoin Undervalued By Over $200, Investment Bank Report Finds

http://www.coindesk.com/bitcoin-undervalued-200-needham-report/

Is abercrombie dead?

[Gyrsur]

 

matt == diva

[BitUsher]

Introduces a new type of DOS attack (go-fish-wit-ddos)
An attacker mines a segwit-block with 1000 transactions the network has not yet seen (The attacker creates these TX herself )The attacker has the witness data readily available. When other miners try to validate this block they will go through every single one of these TX and say "I don't have the witness data for this TX_ID, I have to call TCP::GetWitnessData( TX_ID ) aw yes this is valid" 1000 times

This attack isn't possible with the way segwit is constructed and comes from a lack of understanding . If the witness root hash doesn't match what is in the coinbase the block will be rejected by the node. At no point will each individual tx be requesting witness data .

Additionally , If we are going to speak more broadly about pros and cons segwit remove all malleability attacks which is huge.

Segnet 4 rolled out (getting closer to segwit final RC), spin up a node and test away--

https://lists.linuxfoundation.org/pipermail/bitcoin-dev/2016-March/012595.html

The exciting thing is it now supports LN app deployment and testing .

[JorgeStolfi]

3. In terms of manipulation, owning Bitcoins is actually a hedge against the ongoing PM manipulation as the mechanisms existing in the gold manipulation 'industry' are not found in bitcoin.

Based on historical prices, I would guess that the floor price of gold (due to demand for jewelry, decoration, and industrial uses) is less than 400 USD/oz.  If that is correct, gold's current market price of ~1200 USD/oz is at least 3-4 times its floor price, due to demand for speculative trading (people buying it expecting to make money when its price rises) and for hedging or value storage (people buying it because they think that other investment options are more likely to lose their value).    

Demand for speculative trading and hedging is dependent on people's feelings and beliefs about the future of the economy, and therefore very fragile -- as shown by the crash of the gold price from the peak of ~1800 to ~1000 USD/oz in 2013--2015.  The overpricing is sustained by intensive marketing by the likes of Max Kaiser, Peter Schiff, ZeroHedge, etc.

Bitcoin's floor price would be due to demand for use as a currency.  The number unknown, but very low; most estimates put it below 10 USD/BTC, and there is no reason to expect it to grow very quickly. (Indeed, if the network's capacity is not lifted, it is unlikely to rise at all.)  So bitcoin is far more overpriced than gold.  As in the case of gold, the overpricing is due to demand for speculative trading and (to a much lesser extent) hedging and value storage; and is sustained by marketing by Antonopoulos, Ver, Andreessen, Silbert, etc..

4. Bitcoins are far more scarce than gold and silver. There are ~6 billion ounces of above ground gold and only 15.4 million bitcoins. That's one bitcoin for every 390 ounces. That's now. The future is actually in favor of bitcoin:gold ratio.

Scarcity by itself does not make an item valuable; for this one also needs demand that is large compared to the supply.  Tickets for last year's lottery, Soviet Trabant cars, and the hairs on my head are all very scarce, and have a hard cap on future supply; yet are not very valuable.

Moreover, an item is not effectively "scarce" if there is an abundance of adequate substitutes.  Gold has no adequate substitutes for jewelry, and its possible substitutes for certain industrial applications are even more scarce.  In contrast, one can create an infinite number of cryptocurrencies that are equivalent to bitcoin, or even better than it.  

The only advantage of bitcoin over litecoin and other altcoins is its popularity, its "brand recognition".  (It has more hashpower than the altcoins, but that is because it is more profitable to mine, which is because its coins sell for a higher price; which is again because of its popularity.)  Popularity that is not rooted in an fudamental quality is very fragile; it  could be quickly destroyed by bad news, bad management, or by good marketing of the alternatives.

6. Even if above ground gold doubles or triples in the mid-term future, it will still preserve its value due to fiat inflating at a much faster pace. However bitcoin will be inflating at a much lower pace than both, hence being an adequate store of value, which also has good upside potential (gold's marketcap can't go 10x to 70+ trillion range with ease, unlike bitcoin which can hit 4k usd and do a 10x).

Only fools and criminals will "invest" by hoarding a currency, whether it is dollars or bitcoins.  Thus, comparing gold to dollars as store of value is a red herring -- a misleading argument that sleazy gold peddlers use all he time.  Good investments are things that will have real value due to expected real demand, not conventional value or value inflated by speculative demand; and, even better, that create real wealth.  Stocks, real estate, tools, shops are examples of such wealth-creating things that are automatically protected against inflation.  In many countries there are also bonds, issued by banks or the government, that pay back a value adjusted for inflation plus a small interest.

The term "inflation" can mean two things.  Popularly, it is any drop in the purchasing value of a currency.  Technically, it is a drop that is caused by an increase in the amount of currency in circulation, following the printing of new cash or the creation of more virtual money through easing of bank credits etc..  Bitcoin has a controlled and ultimately finite amount of the latter, so technically its inflation will decrease and eventually end.  In the popular sense, however, bitcoin's inflation  neither bounded nor temporary. The drop from ~1200 USD/BTC on 2013-11-28 to ~220 in Jan/2015 (a loss of 80% of purchasing power) was not due to the issuance of new coins.

[Fatman3001]

So... how's that scaling-solution-that-is-not-supposed-to-be-a-scaling-solution-so-do-not-criticize-it-for-being-a-bad-scaling-solution going?

[bargainbin]

^^Speak of the Devil, and He'll appear

You know who hasn't been around?


...

[bargainbin]

... Gavin's own tests reflects that Classic can have a worst case scenario 60% node drop off rate, and he is fine assuming this risk where most other developers don't like this escalated form of centralization where we already have multiple centralization problems that we need to dig out of.

assuming worst case happens.

what are the consequences of 60% node drop off rate?

Bitcoin becomes more insecure.
...

All these allusions to "insecurity" without any mentioning any specifics.
Can't we just hug it  occasionally & tell it "Darn it, you're good enough! God don't make no junk & people like you"?

[Fatman3001]

^^Speak of the Devil, and He'll appear

You know who hasn't been around?


...

That's a nice picture.

SAVED

Regarding milk crates. We don't have milk in bottles, so I had to buy a flimsy plastic crate and reinforce it with a chopped up curtain rod.

[TooDumbForBitcoin]

on the other hand, if we go with classic all we get is a theoretical drop in security ( less full nodes ) ( let's not kid ourselves my paper wallets are not less secure due to hobbyist nodes getting forced out of a GROWING ecosystem  )

If you go with Classic what you get is jstolfi as Chief Philosopher, HashFastDefendantDoc as Public Relations manager, PeterR as Artist in Residence,  and jl777 as Head Developer.

Are there spots on that team for Bernie Madoff, Mark Karpeles, Trendon Shavers, Evan Duffield, and Josh Zerlan?  Don't go into the future with half a team.