Miner cartel, Bankster cartel, or an altcoin? Your choice?

[iamnotback]

Relating to my recent posts in this thread on the proposal of Ideal Money by Nash and Hayek (and readers must understand my prior comments because I am not going to repeat all the context again in this post), wherein there is a standard of honest money (or monies) which the free market information system can anneal (converge) to an optimal dynamic fitness, I have listened to an interview session with Nash where he alludes to gold and silver as prior attempts to have such idealized power money. And this example of precious metals exemplifies my thesis as to why I claim that Ideal Money is impossible, because for example the value of gold and silver is not based solely on supply but rather on collective human psychology (i.e. public CONFIDENCE) which is not an absolute metric but rather subject to externalities.

...

Sorry but if you have access to a lot of data such as Armstrong who has collected all the ancient coins (at enormous cost), you will come to learn that your understanding is factually incorrect.

Why did we build the largest coin collection in the world? Because coins are the documented history of the fiscal mismanagement of centuries of mankind. There is nothing that does not fluctuate even what is used for money.

...

The idea that money must be tangible also has no basis in fact. Money has been many things to many people. The entire basis of money is you will accept something as money as long as you have CONFIDENCE that in turn someone else will accept it from you.

This idea that somehow gold coin is not fiat has been so misleading. Here is a Roman tax collector gold bar because the government minted gold coins cheating in quality but refused to accept them in return for taxes. Thus, taxes were imposed based upon weight – not coins! Therefore, the gold coins of the day were not trusted and even government had no CONFIDENCE in them, which is why they were NOT legal tender (acceptable for taxes).

Even your example is another confirmation that it is indeed the confidence the public has in the authority which drives the use as currency, because the public innately understands that power vacuum of society which I had explained.

You misunderstand Gresham's Law. The hoarding is for the melt value, not for the currency value. In fact, the hoarding is removing the currency attribute.

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[traincarswreck]

Lemme slow you down a little.  "Ideal" means conceptual in nature.  Nash defines Ideal Money as money that doesn't degrade in value over time.  This is a limit, he argues, we will asymptotically approach-a ceiling of perfect. It's not quite addressing what he is saying, to say it can't be brought about.

First and foremost its a useful thought experiment as a conceptual METRIC for comparison.

Run with that...

[iamnotback]

Lemme slow you down a little.  "Ideal" means conceptual in nature.  Nash defines Ideal Money as money that doesn't degrade in value over time.  This is a limit, he argues, we will asymptotically approach-a ceiling of perfect. It's not quite addressing what he is saying, to say it can't be brought about.

First and foremost its a useful thought experiment as a conceptual METRIC for comparison.

Run with that...

Well then it makes me think that in the asymptotic case the many monies become so numerous as to be not fungible with each other, i.e. the actual perfect money which is individual the knowledge creation skill whose utility can't be transferred.

Fungible money is a middle-man rent seeking activity that free loads on knowledge creation due to Coasian barriers such as the Theory of the Firm which exists due to the tragedy-of-the-commons. This is why Eric Raymond's discovery of the Inverse Commons is so profound, because it is the first known positive scaling law of the commons (and of engineering for that matter, as opposed to the Mythical Man Month).

[traincarswreck]

There is some perfect, god only knows, metric in which all things can be compared in valuation.

[sidhujag]

Lemme slow you down a little.  "Ideal" means conceptual in nature.  Nash defines Ideal Money as money that doesn't degrade in value over time.  This is a limit, he argues, we will asymptotically approach-a ceiling of perfect. It's not quite addressing what he is saying, to say it can't be brought about.

First and foremost its a useful thought experiment as a conceptual METRIC for comparison.

Run with that...

There is no perfect because humans aren't perfect and their needs and desires are not perfect and as subject to confidence determined by those factors are not deterministic and thus no system will exist such that variables can be adjusted in the economic system to achieve perfect balance to provide real growth without inflating wages or at the expense of future work. Central rate targeting IS the best known system we have today that is in wide use by the first-world. It has evolved from the use of gold-based debt type of system. But asymptotically we will reach a better alternative over time, one which may or may not resemble central bank rate adjustments, may or may not be centralized at all. We think that bitcoin/crypto serves that role as a more asymptotically ideal form of money because it removes the central man away from the picture of adjusting economic variables to the betterment of the health of society(because there is incentive for corruption). What he argued was that supply of the monetary base should be based on directly or indirectly on an known public metric so that it removes any negative shocks to the system when it changes, to preserve health of the economy and thus increase real growth. I thought that perhaps miner efficiency was one metric that is based on efficiency of creating electricity for the purpose of mining bitcoins... since increasing efficiency is directly linked to helping society grow as well as linked to the growth of supply. The person(s) who figure it out will get the rewards until the system adjusts, and society benefits from technological growth. However perhaps another way would be to inflate based on a GDP type metric that is derived from the use of the crypto-currency ecosystem.

[iamnotback]

Odlyzko-Tilly-Raymond scaling

Back in the naive days of the dot-com boom people used to talk about Metcalfe’s Law: the value of a node of n networks scales as O(n**2). This heuristic drove a lot of the early excitement about Internet-related stocks.

But then the boom busted, and in 2006 along come Odlyzko and Tilly to explain that. What they said is: empirically, networks actually seem to top out at O(n log n) value, and this is superlinear but way lower than O(n**2), and thus dot-com boom fall down go bust.

After Odzylko/Tilly, complexity theorists looked at real-world networks and found that they frequently evolve towards a topology that is self-scaling or fractal – clusters of clusters at any scale you examine. Circulatory systems in the body, neural networks in the brain, road and rail networks in human cities, the Internet itself – over and over, we find self-scaling nets anywhere evolution is trying to solve optimal-routing problems.

So here is my small stone to add to the Odlyzko/Tilly edifice: their assumption in 2006 was stronger than it needed to be. You still get selective pressure towards an O(n log n) self-scaling network even if the cost of connections still varies but the value of all potential connections is equal, not variable. The only assumptions you need are much simpler ones: that the owner of each node has a finite budget for connection-building small in relation to the cost of providing links to all nodes, and that network hops have a nonzero cost.

To see why, we need to recognize a new concept of the “access cost” of a node. The value of a node is by hypothesis constant: the access cost is the sum over all other nodes of any cost metric over a path to each node – distance, hop count, whatever.

in this scenario, each node owner wants to find the best links to the network, but the valuation minimizes access costs . Under this assumption, everyone is still trying to solve an optimal routing problem, so you still get self-scaling topology and O(n log n) statistics.

That’s it. Same result as Odlyzko/Tilly but with weaker assumptions. Put their case and my case together and you have this:

The value of a network of n nodes will rise as O(n log n) under the following assumptions: (a) node hops have variable costs, and (b) each node owner has a small budget.

Is this in the literature anywhere?

So this explains power-law distributions more fundamentally? On what I think might be a related subject of a theory of money, it is time to let you know I am writing about your Inverse Commons in relationship to Nash’s Ideal Money. Ideal Money being the basis of the open source Bitcoin experiment. I’d suggest also reading at least this far back. Apologies in advance if I’ve wasted your time. I’d like to apply a more detailed thought process to this when I have more time.

[traincarswreck]

There is no perfect because humans aren't perfect and their needs and desires are not perfect and as subject to confidence determined by those factors are not deterministic and thus no system will exist such that variables can be adjusted in the economic system to achieve perfect balance to provide real growth without inflating wages or at the expense of future work.

When we see money that gains or loses value in regard to purchasing power over time especially that which is observably hyper inflated in this way then its an admission that there can be either a less or more perfect money in regard to perfect stability of value. 

So we can ask “HOW perfect might we eventually get our money?” 

And you can't really argue, “Not very perfect at all” can you?

The difficulty and complexity of doing so its not a complete rebuttal or one I think that defeats the notion that there is such a possibility or at the very least that we will approach ideal money as a civilization, over time.

Central rate targeting IS the best known system we have today that is in wide use by the first-world. It has evolved from the use of gold-based debt type of system. But asymptotically we will reach a better alternative over time, one which may or may not resemble central bank rate adjustments, may or may not be centralized at all.

It is the argument of Nash Szabo Hayek that central banking, especially as it stands today (or before bitcoin) cannot achieve this and that their (central banks) mechanism and method for doing so actually destroys the quality in the sense of stability of value.

The gold system including when Newton pegged the pound to gold in the 1700's are examples when money had a strong/stable value, but there are weakness to such a system (and the bretton woods system) in regard to their macro-economic implications and long term reliability.

It was good and “ideal” when it worked, but the pressures that affect the system showed that neither were strong enough. 

An evolved idea is therefore needed.

We think that bitcoin/crypto serves that role as a more asymptotically ideal form of money because it removes the central man away from the picture of adjusting economic variables to the betterment of the health of society(because there is incentive for corruption).

Nash would agree to an extent I am sure:

(Here I am thinking of a politically neutral form of a technological utility rather than of a money which might, for example, be used to exert pressures in a conflict situation comparable to “the cold war”.)

But he is thinking of an even stronger standard ultimately:

Here, evidently, politicians in control of the authority behind standards could corrupt the continuity of a good standard, but depending on how things were fundamentally arranged, the probabilities of serious damage through political corruption might becomes as small as the probabilities that the values of the standard meter and kilogram will be corrupted through the actions of politicians.

What he argued was that supply of the monetary base should be based on directly or indirectly on an known public metric so that it removes any negative shocks to the system when it changes, to preserve health of the economy and thus increase real growth.

Yes but all the metrics we use and have available are corruptible in some form, in regard to being a basis for value.  Even gold is not rare but has a cost of production limitations (and politically held limitations) which technology could change in a relative instant. 

Nash explains that an aggregate of our most stable commodity prices would limit towards ideal if properly chosen.  But its politically corruptible in reality isn't it?  Who chooses it?

Today I think most inflation targeting countries use different cost of living metrics, but again, who chooses them?

I thought that perhaps miner efficiency was one metric that is based on efficiency of creating electricity for the purpose of mining bitcoins... since increasing efficiency is directly linked to helping society grow as well as linked to the growth of supply. I thought that perhaps miner efficiency was one metric that is based on efficiency of creating electricity for the purpose of mining bitcoins... since increasing efficiency is directly linked to helping society grow as well as linked to the growth of supply.

Yes and even that would need adjustment because the cost of energy could change drastically in the future:

We can see  that times could change, especially if a “miracle energy source” were found, and thus if a good ICPI is constructed, it should not be expected to be valid as initially defined for all eternity.  It would instead be appropriate for it to be regularly readjusted depending on how the patterns of international trade would actually evolve.

The person(s) who figure it out will get the rewards until the system adjusts, and society benefits from technological growth. However perhaps another way would be to inflate based on a GDP type metric that is derived from the use of the crypto-currency ecosystem.

It's the one thing we must figure out together, it cannot be forward designed.  It can't be a planned money as the planner is a signal that the money is corrupt.  And it wouldn't be just them that benefits or in other words this is a technology that benefits us all (most out of any technology possible at this time).

[sidhujag]

There is no perfect because humans aren't perfect and their needs and desires are not perfect and as subject to confidence determined by those factors are not deterministic and thus no system will exist such that variables can be adjusted in the economic system to achieve perfect balance to provide real growth without inflating wages or at the expense of future work.

When we see money that gains or loses value in regard to purchasing power over time especially that which is observably hyper inflated in this way then its an admission that there can be either a less or more perfect money in regard to perfect stability of value. 

So we can ask “HOW perfect might we eventually get our money?” 

And you can't really argue, “Not very perfect at all” can you?

The difficulty and complexity of doing so its not a complete rebuttal or one I think that defeats the notion that there is such a possibility or at the very least that we will approach ideal money as a civilization, over time.

Central rate targeting IS the best known system we have today that is in wide use by the first-world. It has evolved from the use of gold-based debt type of system. But asymptotically we will reach a better alternative over time, one which may or may not resemble central bank rate adjustments, may or may not be centralized at all.

It is the argument of Nash Szabo Hayek that central banking, especially as it stands today (or before bitcoin) cannot achieve this and that their (central banks) mechanism and method for doing so actually destroys the quality in the sense of stability of value.

The gold system including when Newton pegged the pound to gold in the 1700's are examples when money had a strong/stable value, but there are weakness to such a system (and the bretton woods system) in regard to their macro-economic implications and long term reliability.

It was good and “ideal” when it worked, but the pressures that affect the system showed that neither were strong enough. 

An evolved idea is therefore needed.

We think that bitcoin/crypto serves that role as a more asymptotically ideal form of money because it removes the central man away from the picture of adjusting economic variables to the betterment of the health of society(because there is incentive for corruption).

Nash would agree to an extent I am sure:

(Here I am thinking of a politically neutral form of a technological utility rather than of a money which might, for example, be used to exert pressures in a conflict situation comparable to “the cold war”.)

But he is thinking of an even stronger standard ultimately:

Here, evidently, politicians in control of the authority behind standards could corrupt the continuity of a good standard, but depending on how things were fundamentally arranged, the probabilities of serious damage through political corruption might becomes as small as the probabilities that the values of the standard meter and kilogram will be corrupted through the actions of politicians.

What he argued was that supply of the monetary base should be based on directly or indirectly on an known public metric so that it removes any negative shocks to the system when it changes, to preserve health of the economy and thus increase real growth.

Yes but all the metrics we use and have available are corruptible in some form, in regard to being a basis for value.  Even gold is not rare but has a cost of production limitations (and politically held limitations) which technology could change in a relative instant. 

Nash explains that an aggregate of our most stable commodity prices would limit towards ideal if properly chosen.  But its politically corruptible in reality isn't it?  Who chooses it?

Today I think most inflation targeting countries use different cost of living metrics, but again, who chooses them?

I thought that perhaps miner efficiency was one metric that is based on efficiency of creating electricity for the purpose of mining bitcoins... since increasing efficiency is directly linked to helping society grow as well as linked to the growth of supply. I thought that perhaps miner efficiency was one metric that is based on efficiency of creating electricity for the purpose of mining bitcoins... since increasing efficiency is directly linked to helping society grow as well as linked to the growth of supply.

Yes and even that would need adjustment because the cost of energy could change drastically in the future:

We can see  that times could change, especially if a “miracle energy source” were found, and thus if a good ICPI is constructed, it should not be expected to be valid as initially defined for all eternity.  It would instead be appropriate for it to be regularly readjusted depending on how the patterns of international trade would actually evolve.

The person(s) who figure it out will get the rewards until the system adjusts, and society benefits from technological growth. However perhaps another way would be to inflate based on a GDP type metric that is derived from the use of the crypto-currency ecosystem.

It's the one thing we must figure out together, it cannot be forward designed.  It can't be a planned money as the planner is a signal that the money is corrupt.  And it wouldn't be just them that benefits or in other words this is a technology that benefits us all (most out of any technology possible at this time).

It's funny I haven't even read Nash's work to the extent you have yet I seem to be inline with his thoughts in many concepts just because I extrapolate based on some small amounts of work that I have read from him. Maybe it philosophically resonates with me. Yea energy is not corruptible and thus I was saying that maybe energy can be used somehow as our GDP output indicator linked to the supply side of thinks, similar to bitcoin (kind of).. and that it is auditible.

If a miracle energy source was found, then society in general would benefit as well as the early adopter of that source. There is incentive to do so and to improve quality of life at the same time. I think we will always strive for better money (higher transfer utility wins) as long as there is sufficient demand to switch to it. Currently there is demand because central bank rate targeting is seemingly not good enough in the face of crypto-economic type systems, however one day perhaps in a few hundred years we will have a different system altogether again that usurps what we come up with today. Kind of like HTTP, it sucks but it works, there's better protocols out there but it has network affect, there's no incentive to change (yet) until something so gamebreaking enters the market that justifies the business decisions to make such a move.

[traincarswreck]

One little side street Nash also redefined Einstein's works on relativity it is said: http://www.nydailynews.com/news/national/john-nash-tweaked-theory-relativity-death-article-1.2241346

It will be awhile I think be for someone with significant interest allows me to explain this: http://web.math.princeton.edu/jfnj/texts_and_graphics/Main.Content/An_Interesting_Equation_and_An_Interesting_Possibility/An_Interesting_Equation/Equation.general.vac/From.PennState/intereq.r.pdf

It's true society would all benefit from an energy breakthrough, and it would interesting wouldn't it, if such a breakthrough was predicated on our procurement of Ideal Money technology?

Yes, better than saying we will strive, we might say it is our natural evolution to bring about stable money, this is important because once enough of us realize this then we will grow a stable vision for the future of our society.

It gives us a very very long far ahead point of reference for where we WILL go.

It's just bitcoin's greatest value and utility is as an inflation hedge which means if banks printed better money then bitcoin won't be so valuable as if they printed bad money.  But this just means the silly notion of “hyperbitcoinization” and the hyperinflation of fiat, is a misunderstanding of central banking.

Banks can adjust and serve the people with quality money, they have just never been put on such a stage and forced to participate in such race.  As bitcoin becomes more relevant they will be put in a do or die spot.

Nash's argument begins with that premise.

[iamnotback]

Our goal is fundamentally about removing the Prisoner's Dilemma that forms around lack of meritocracy due to rent seekers:

ladixDev, your heart wants a meritocracy. So let's go make one. Being angry or upset is not a plan. We have a plan.

Understand how everything is changing because we are leaving the fixed capital industrial age. You are still fighting the last war. Let's go fight the current war and we have the power. Coding is power. Use your power now to create meritocracy.

In as much as pleasing friends is done to augment your own happiness, that's still nothing else but selfish behaviour !

And it is not incongruent with unselfish behavior when we remove the Prisoner's dilemma of fungible money, which I think is roughly what Nash was trying to say.

It will be awhile I think be for someone with significant interest allows me to explain this: http://web.math.princeton.edu/jfnj/texts_and_graphics/Main.Content/An_Interesting_Equation_and_An_Interesting_Possibility/An_Interesting_Equation/Equation.general.vac/From.PennState/intereq.r.pdf

I'm curious about his 4th order model of space-time, but I don't have enough bandwidth to bite on that diversion right now.

It's true society would all benefit from an energy breakthrough, and it would interesting wouldn't it, if such a breakthrough was predicated on our procurement of Ideal Money technology?

I believe the energy breakthrough may have already been discovered. It is informational in nature. By reducing friction, we increase potential energy. I am contemplating that the Inverse Commons is more profound than we have yet explained.

[jbreher]

Finally getting the chance to start into this thread. Interested to learn that I have already been quoted several times. Something downthread may obviate what I am about to state. We shall see.

So why is BU preaching equilibrium with unlimited blocks as the most prominent item in its FAQ.

Because they want to sustain the illusion of decentralization. Their supporting white paper is meaningless and doesn't model anything that can exist in reality (it models a perfectly uniform distribution of propagation and hashrate where all miners experience the same orphan rate, but if that were the case then no miner would make any profit because in that impossible scenario marginal cost = lowest cost).

Well, let's think about how progress is made in academia. Most research is started upon a simple model. The implications of this model are followed unto their logical conclusion. Later, same or another author will build a more sophisticated model, and apply the same techniques to it to their logical conclusion. And on and on. Truth is approached incrementally.

Peter R has freely stated that he has not modeled all of reality in his first supply/demand paper. It does not make the paper _false_, nor _useless_ -- just limited in applicability.

So with that said, I challenge you to justify the leap from 'the aggregate S/D curve is not identical to the sum of individual miners' S/D curves, because each miner's S/D curve varies from other miners' to 'BU's emergent consensus is unworkable and broken'. I don't mean to put words in your mouth, but I think that is your claim? Certainly, miners already need to deal with a panoply of nonuniform externalities (e.g., $/KJ, $/employee-hour, land costs...). Their orphaning probability curve is just one small contribution to their overall cost model, which all must be factored into the point where marginal-orphan-cost = marginal-transaction-fee.

I think you are fundamentally missing the expected dynamics of LN.  ...
Only big hubs can survive in the fee competition on the LN.

I just wanted to acknowledge that this is the most simple, cogent, and concise explanation of the 'LN centralization problem' that I have yet seen. Kudos.

No Bitcoin can't remain Satoshi's 1MB without SegWit because I already explained that "no change" is not an option.

Your linked post essentially stated a case that there are interests within Bitcoin whose will is irresistible. But you did not go on to make the implied inferior antecedent case that their will includes a change to Bitcoin.

Let alone the fact that I have serious doubts about MP's unverified self-claim of omnipotence - aren't he and his acolytes running a patched version of bitcoin-qt 0.63 or somesuch? Hardly seems like a demand for changing the protocol.

the existence of a mining cartel is a big deal, as it threatens the 21 million coin supply limit.

Firstly, any change brought on by a majority of miners -- all acting quite obviously in their individual self interest -- does not imply the collusion of a cartel. Some market behaviors develop without communication between the principals. Of course, this is not to say the existence of a cartel is an impossibility, but it is to say that the existence of a change beneficial to miners is insufficient evidence of cartelization.

Second, even if a cartel would develop, that cartel is not free to enact whatever change they so desire. The 21M limit is one of the very few parameters that are all-but-universally held to be sacrosanct. If the miners were to enact an inflationary change, I would expect Bitcoiners to abandon Bitcoin en masse, thereby leaving the miners destitute with exorbitant unrecoverable sunk costs in hardware - unfit for any purpose other than transmuting expensive electricity into a worthless Bitcoin.

I don't know whether the 1MB limit was SOLD as a spam measure but was conceived as something to guarantee the fees, or whether it was just "idiot leadership".  I don't know whether the slow difficulty readjustment was conceived to avoid people forking, or also just "idiot leadership".  But in any case, these measures shaped bitcoin in what it is in a far more important way than one would have naively thought when they were proposed.

Indeed, the 1MB limit has had a huge impact upon the users of the system.

I think you are relatively new here. At least having arrived after the 1MB production quota started having a real effect upon the system. But to at least a subset of the participants, it was a given that the abolition of this limitation would be enacted before it became significant. To many, this assumption was indeed part of our 'contract'.

I guess it is our own fault for not having believed 'what it said on the tin'. However, whether it was this particular change, or the widespread notion that Bitcoin could adopt any innovation cooke up in the lab of altcoins, pretty much nobody thought Bitcoin immutable. At the time. I guess we've all got egg on our faces.

And indeed, I used to be of the opinion that the long difficulty retargeting was a stupid hack only used to make the code implementation easier than a smoother curve. I now at least understand that it has important implications related to changing the system. If this be intentional, this has me even more in awe of Satoshi's prescience.

Uh, I stop you right there.  If you don't have the full block, you cannot verify the correctness of the block summary.  Building upon a non-verified block header is just as risky as waiting for the full block to arrive.  

You misunderstand XThin. In XThin, all transactions are individually validated by validating nodes before the block they are contained in is solved. Upon solution, the only thing requiring propagation is the list of transactions within the block (and the solution of course). If any validating node is missing a given transaction, it sends back a bloom filter including specifiers for the missing blocks. This drastically reduces propagation time for the block solution. See https://medium.com/@peter_r/towards-massive-on-chain-scaling-presenting-our-block-propagation-results-with-xthin-da54e55dc0e4 for a better explanation of the design, the theory, and experimental results.

And yes, this reduces the propagation impedance by a significant amount. But it does not reduce it to zero. Accordingly, while it shifts the point of intersection of the BTC/blocksize curve and orphan/blocksize curve, it does not eliminate the intersection thereof.

ANY pile of non-contradictory transactions is good enough, they don't need to be fully ordered, they only need not to be contradictory.

What mechanism other than agreed ordering is there to ensure the non-contradictory attribute? If differing nodes have different understandings of transaction ordering, then double spends are enabled.

/* I almost fat-fingered this post into oblivion. Hence, I am posting this interim missive before I catch up to the head of discussion*/

[jbreher]

Conjecture on what lies ahead:

I don't know what happens now. Perhaps fireworks. MPeX promised to wreck havoc if ever miners attempt to create 20 MB blocks. I don't know if he still thinks he can keep that threat.

If you have any evidence that MP is anything but a bloviating paper tiger, I'd be interested to see it.

MP tends to pop up from time to time, promising to annihilate anyone who does X. Then X occurs, and no ill effects are unleashed upon the perpetrator of X.

So which is the lie? Is the claim if heartlessness and irregard for 'lesser humans' a lie? Or is the claim of power a lie?

[iamnotback]

Note I added a quote from Nick Szabo's latest blog (on the anthropology of money before agriculture) as follows:

Btw, this blog post by MP on the reality of money, goes directly to the heart of my thesis. Knowledge (creation) is the real power money, i.e. the standard metric by which everything else is measured (that holy grail standard that the Nash and Hayek ideal money theories seek). But knowledge (creation) is not fungible, so we can't transfer it directly. The fungible bits we use to transfer utility are just a decentralized means for informationally determining who has the most knowledge.

Money doesn't need to physically leave your clawy grasp, it will just revalue itself so as to bring whatever volume you hold in line with its correct relative value. In this perspective, inflation in the US is not something that can be avoided, and not something that's done by politicians : it's just money reacting to the problem that a lot of it is held by comparatively very lame people. In general inflation is always the companion of societies that used to be cool but aren't anymore.

It doesn't really matter what those fungible bits of money information represent, as long as society decides they are a representation of the values of the society so that the information communication by the transfer of money promotes the values of the society (which if you think about it is a sad commentary on the state of our society now at peak socialism):

The ability to transfer wealth was crucial during many events critical to the Darwinian fitness of evolving humans, especially death (inheritance), dispute settlement, and marriage.  With the Yurok and their neighboring tribes, this wealth typically took the form of collectibles that lacked concrete use – either non-fungible treasure, which came in a variety of forms, or fungible money in the form of dentalia shells and strings of same.  The use of money and treasure in some transactions (e.g. for use mitigating violence) made it available and encouraged its use in others (e.g. trade).

[iamnotback]

I will not respond to all of @jbreher's post, because if he reads the entire thread, he will find we already discussed those issues he raised. And the thread is getting too long, noisy, redundant, and tedious. I think we're approaching the point of diminishing ROI in this discussion. Also I have other work to do and as usual I am sleep deprived and starting to get delirious. As tenacious as I am, I need to pick my spots and not try to do everything. Age 52 now.

the existence of a mining cartel is a big deal, as it threatens the 21 million coin supply limit.

Firstly, any change brought on by a majority of miners -- all acting quite obviously in their individual self interest -- does not imply the collusion of a cartel. Some market behaviors develop without communication between the principals. Of course, this is not to say the existence of a cartel is an impossibility, but it is to say that the existence of a change beneficial to miners is insufficient evidence of cartelization.

Second, even if a cartel would develop, that cartel is not free to enact whatever change they so desire. The 21M limit is one of the very few parameters that are all-but-universally held to be sacrosanct. If the miners were to enact an inflationary change, I would expect Bitcoiners to abandon Bitcoin en masse, thereby leaving the miners destitute with exorbitant unrecoverable sunk costs in hardware - unfit for any purpose other than transmuting expensive electricity into a worthless Bitcoin.

You'll never get the support for a BU hardfork (aka HF) of the miners for a fork without a proven cartel, because the miners risk loosing everything if they lose the fork war because the whales have issued a digitally signed threat (standing since 2014) to change the PoW hash and leave all those miners with ASICs which have no use case. And I showed that the whales absolutely can win without any doubt, unless the whales fight each other (which I showed they would not do without some externality because otherwise it means they have destroyed themselves in any case). You need to catch up on the entire thread for a holistic understanding, instead of responding from earlier posts.

I really don't want to rehash the game theory discussion from upthread. Maybe @dinofelis or someone else will want to engage in it.

Uh, I stop you right there.  If you don't have the full block, you cannot verify the correctness of the block summary.  Building upon a non-verified block header is just as risky as waiting for the full block to arrive.  

You misunderstand XThin. In XThin, all transactions are individually validated by validating nodes before the block they are contained in is solved.

No you are incorrect, because you misunderstood the context. We were referring to the case (which your Andrew was discussing in the YouTube section I linked to) wherein the network is saturated and not all of the transactions have arrived and the miner must request them or mine an empty below without validating them.

Conjecture on what lies ahead:

I don't know what happens now. Perhaps fireworks. MPeX promised to wreck havoc if ever miners attempt to create 20 MB blocks. I don't know if he still thinks he can keep that threat.

If you have any evidence that MP is anything but a bloviating paper tiger, I'd be interested to see it.

MP tends to pop up from time to time, promising to annihilate anyone who does X. Then X occurs, and no ill effects are unleashed upon the perpetrator of X.

So which is the lie? Is the claim if heartlessness and irregard for 'lesser humans' a lie? Or is the claim of power a lie?

He was the $150 million DAO hacker. He is the central public spokesman of the The Most Serene Republic (TMSR). He had or has a million+ bitcoins ($1+ billion) and he sold 250,000 of them after Aug 2016. He claims he ended Hillary Clinton's election on July 16, 2016 when a hack reveal she intended to attack the TMSR. These and more James Bond intrigue are documented upthread.

Is MP the foul-mouthed, sperm whale, Socrates version of 007?  

[iamnotback]

Btw, our discussion got onto MP's radar:

http://log.mkj.lt/trilema/20170328/#179

I will just quote an interesting portion of the discussion:

[13:11:58] · <mircea_popescu> (anyway, ftr i do not dispute the "So this exemplifies that MP makes mistakes, is reckless, duplicitous, and may be borderline lunatic/sociopath who could lose his mind at some point and totally REKT Bitcoin. We do not have decentralization with Satoshi's PoW." concept. examples are not needed ; mp is indeed all the above and more.)
[13:12:59] · <shinohai> Or, mp may outsmart all you top minds on tardstalk/reddit - but perhaps I am biased.
[13:13:22] · <mircea_popescu> i was born of a woman in the usual way ; perhaps fit for friendship but certainly not fit for public worship. it may work in private with my own sluts, but that is an insanely narrow and controlled environment.

[iamnotback]

For the legacy economy that Bitcoin is aiming form, the regional regimes apply to the private banking variants.

Honestly, last time I heard talking about the "legacy economy" was during the dot-com bubble years, and the "new economy".  While economic transformations are certainly a fact, when people start talking about the "old economy", I know a bubble is about to burst.

Things usually happen more gradually, less revolutionary and in more unexpected ways than one often presumes.

Do you think the Inverse Commons of open source and separately the two-way model of media (e.g. blogging with reader commenting versus watching TV) hasn't already been a fledgling viral phenomenon? Second order network effects on the way are for example app developers and their users as a two-way monetary economy (as opposed to Sarnoff’s Law), i.e. crowdfunding. My OpenShareBitNet blockchain will be about this economy.

[iamnotback]

It's just bitcoin's greatest value and utility is as an inflation hedge which means if banks printed better money then bitcoin won't be so valuable as if they printed bad money.  But this just means the silly notion of “hyperbitcoinization” and the hyperinflation of fiat, is a misunderstanding of central banking.

Banks can adjust and serve the people with quality money, they have just never been put on such a stage and forced to participate in such race.  As bitcoin becomes more relevant they will be put in a do or die spot.

Nash's argument begins with that premise.

I am going to agree with you that Bitcoin is an ultimatum that forces us all to compete. In that way, Nash's asymptotic ideal is underway...

I just happen to think the best for me to compete is to make a better decentralized consensus algorithm, with on chain scaling, and compete. For the reasons already stated in our discussion.

[freedomno1]

Btw, our discussion got onto MP's radar:

http://log.mkj.lt/trilema/20170328/#179

I will just quote an interesting portion of the discussion:

[13:11:58] · <mircea_popescu> (anyway, ftr i do not dispute the "So this exemplifies that MP makes mistakes, is reckless, duplicitous, and may be borderline lunatic/sociopath who could lose his mind at some point and totally REKT Bitcoin. We do not have decentralization with Satoshi's PoW." concept. examples are not needed ; mp is indeed all the above and more.)
[13:12:59] · <shinohai> Or, mp may outsmart all you top minds on tardstalk/reddit - but perhaps I am biased.
[13:13:22] · <mircea_popescu> i was born of a woman in the usual way ; perhaps fit for friendship but certainly not fit for public worship. it may work in private with my own sluts, but that is an insanely narrow and controlled environment.

Ponders should have taken Mirceas covered bet on Ethereum and watch as MP got smoked on that one ^^.
Would have been rolling in the bank in Bitcoin.

[jbreher]

if the mining cartel is determined that their fork will always honor the data format of the transactions of the Bitcoin whale's fork, then the only way to accomplish splitting is to spend the tokens first on the fork with the large blocks but send them with such a small transaction fee that they do not make it into any small block. Then after those are confirmed on the large block fork, respend the same tokens on the small block fork with a sufficient transaction fee. The Bitcoin whales will make sure the small blocks are always full so that this strategy is available.

So that was an essential insight. The reason Bitcoin whales need small blocks, is that is the only technical way they would be able to split tokens to kill off an attack by a determined mining cartel!

Well, no. On the vanishingly small chance that this assertion has not been corrected downthread (I'm still catching up), there are other ways of splitting coins. As but one obvious example, even one satoshi of newly generated (post-fork) coinbase value is sufficient to poison any amount of pre-fork coins from being valid on the other chain. And once that transaction is made, all the resultant output is available for poisoning more pre-fork value.

With the existence of this trivial mechanism, your postulated need vanishes.

Why don't the BU supporters understand that Core has been told by the majority of the wealth (i.e. the whales) that if they fuck with the block size using a HF, then MP will change the PoW hash (or some other method I haven't yet determined), and destroy their HF and bankrupt/punish miners who mine on it.

Most likely because we have not seen any evidence to support any link in the tenuous chain of assertions.

However, if we assume that 80% of the Bitcoins are held by whales (such as MP, Roger Ver, and @rpietila) who will make the decision^[1], then it seems they could adequately employ your method without relying on any exchange. So in that case, I wonder what the block size issue is really about?

Perhaps the whales ...

You appear to have a conclusion in hand that you have fallen in love with, and are trying desperately to reason backwards to justify it. Not necessarily a fruitless way to arrive at the truth, but likely to be fraught with multitudinous blind alleys.

Perhaps it is because Bitcoin whales want to minimize the level of top-down control that themselves have via their control over the protocol.

This is where the airborne simians exiting anal orifices principle should probably be surfaced.

^[1] ... I wasn't thinking of Bitcoin as entirely controlled by a couple dozen whales. But obviously it must be, due to the power-law distribution of wealth.

...ooorrrr.... maybe ... just maybe ... the whales are not of a single mind?

Whether the miners were happy with 1MB blocks or not, they are apparently not happy about the SegWit softfork.

And I think I may understand the reason now. The miners don't want any economic activity to occur off chain

Of course. But this is one area where Satoshi's design excels. On chain transactions fund the hashpower that secures the integrity of the blockchain. By naturally incentivizing beneficial mining. Any off chain activity dilutes this security.

Well we'll see if BU actually attempts a hard fork.

Wouldn't miners prefer larger block sizes so that Bitcoin's economic value can grow and all on chain

I certainly think the obvious answer is 'yes'.

if BU attempts a HF and the whales are united around small blocks, then the PoW hash will be changed and the miners will all be bankrupted.

There's a lot of turf between 'PoW fork' and 'miners bankrupted'. Miles and miles. And miles.

In a bizarre turn of events as I was browsing some browser tabs I had opened previously and hadn't yet read, appears that perhaps sperm whale MP supported a BU-like unlimited block size.

orly? whowoudlathunkit?

My idea is that sooner or later, bitcoin's growth has to stop.  A greater fool game always comes to an end, but of course, there is still a whole planet of greater fools to be taken.  However, bitcoin's on chain design doesn't allow for orders of magnitude upscaling in the near future.  It might very well 50 years from now, but nobody cares about "50 years from now" if you're serious - only greater fools think that.

Well, I guess that depends upon your preferred value of 'near'. Can Bitcoin accommodate displacing all economic activity today? Certainly not. But it could in some foreseeable tomorrow. Further, it could certainly accommodate well over the current demand, were it not for the stupid 1MB production quota. Lastly, it is poised to take advantage of the progress of technology -- which despite the claims of the malthusians among us, is on the cusp of another explosion in capacity.

Sure, when we hit the hockey-stick (or more properly the sigmoid inflection), Bitcoin will struggle to meet capacity demands. But that will be at a point where it has become much more a central part of the world's economic activity.

The issuing of IOU that are not entirely covered by originals, but are so by debt, is not cheating, and it the origin of fractional reserve banking.

Well, dependent upon your definition of 'cheating'. Every new FRN conjured up out of thin air by the nefarious anti-miracle of FRB derives its value by stealing purchasing power from every holder of FRN-valued stuff at t-minus-zero. That is a very real theft of value. To refer to this theft as 'non-cheating' requires some funny mental gymnastics.

So at a certain point, if there are secondary layers on top of bitcoin, fractional reserve banking WILL emerge,

True. Which is one of the reasons we fight against a system where LN, with its attendant hub and spoke system, is the only real alternative for mere users.

<<still catching up... another thread dump before I fat-finger the above into nothingness>>

[iamnotback]

if the mining cartel is determined that their fork will always honor the data format of the transactions of the Bitcoin whale's fork, then the only way to accomplish splitting is to spend the tokens first on the fork with the large blocks but send them with such a small transaction fee that they do not make it into any small block. Then after those are confirmed on the large block fork, respend the same tokens on the small block fork with a sufficient transaction fee. The Bitcoin whales will make sure the small blocks are always full so that this strategy is available.

So that was an essential insight. The reason Bitcoin whales need small blocks, is that is the only technical way they would be able to split tokens to kill off an attack by a determined mining cartel!

Well, no.

You coming in days late and responding to old arguments which were invalidated by later discussion is adding burden on me. Please if possible read the entire thread first. I really don't have time to be the thread secretary. But I'll try to respond to some such as this one...

The small blocks are required because of this.

Why don't the BU supporters understand that Core has been told by the majority of the wealth (i.e. the whales) that if they fuck with the block size using a HF, then MP will change the PoW hash (or some other method I haven't yet determined), and destroy their HF and bankrupt/punish miners who mine on it.

Most likely because we have not seen any evidence to support any link in the tenuous chain of assertions.

However, if we assume that 80% of the Bitcoins are held by whales (such as MP, Roger Ver, and @rpietila) who will make the decision^[1], then it seems they could adequately employ your method without relying on any exchange. So in that case, I wonder what the block size issue is really about?

Perhaps the whales ...

You appear to have a conclusion in hand that you have fallen in love with, and are trying desperately to reason backwards to justify it. Not necessarily a fruitless way to arrive at the truth, but likely to be fraught with multitudinous blind alleys.

Perhaps it is because Bitcoin whales want to minimize the level of top-down control that themselves have via their control over the protocol.

This is where the airborne simians exiting anal orifices principle should probably be surfaced.

^[1] ... I wasn't thinking of Bitcoin as entirely controlled by a couple dozen whales. But obviously it must be, due to the power-law distribution of wealth.

...ooorrrr.... maybe ... just maybe ... the whales are not of a single mind?

Or maybe you should RTFM on game theory of cooperative games before you reply:

Because there's no more fun than to get your co-whales dump on the wrong chain, buy up their stash at ridiculous prices, and when they are "empty", start pumping the chain they just tried to dump to oblivion, on which they released all of their stash !   You can dump slightly on the "expensive chain", which the whales will buy, giving you a huge amount of cash, with which you buy the "cheap chain".  Especially if it is the "good old bitcoin" : people will see a huge dip, and when you start buying up, the price will go up again, investors will hesitate following the "pumped fork", you start dumping the "whale fork" after a while, your co-whales have to buy in like crazy and make you rich.

Surely they can attempt that but they have the prisoner's dilemma that the miners can then debase them to hell, because they already proved to each other that they are duplicitous.

So the fools die in their own tarpit as always.

In other words, once some whales defect, they defect from ever (then or in the future) preventing a mining cartel from fucking them over. Thus they will have destroyed the perceived value of Bitcoin which is its immutability (remember Bitcoin is modeled on Nash's Ideal Money).

Satoshi deflected the request for larger blocks by saying that the limit could be raised in the future but then he purposefully never brought it up again and thus obviously knew it will be impossible to change it later. And it is impossible to increase the block size as you are now finding out. BU is getting their ass kicked.

But the power structure in bitcoin is different, and the *main propaganda for bitcoin*, the "longest chain, most protected by PoW" is going to be a very strong argument AGAINST such a PoW scheme, which cannot deliver a similar PoW security as the original bitcoin which will have ALL miners behind it (they have no choice !).

The price and marketcap of Bitcoin determines the level of mining security, not the PoW hash continuity.

One set of miners get replaced by another. The bankrupted miners get millions of ASIC pet rocks.

The surviving "old bitcoin" would have a more grassroots aspect than the new "big whales" coin with low PoW.  If ever the whales made a mistake, they would have their own coin amongst themselves to play with, and the "greater fools" would swarm to "cheap, true bitcoin": true bitcoin at $20, -, who wouldn't want to buy some !  With PoW like before, solid as a rock.  With the 1MB blocks largely sufficient to sustain the low traffic.  Bitcoin back in 2012, who wouldn't want to jump the train they missed the first time !

I call bluff.

Because only fools would enable a mining cartel that has every incentive to increase the number of tokens to 1 billion tokens, because neither the miners nor the fools own many tokens. The miners have sunk costs, ASICs, and debt.

So all those fools would debase each other into a tarpit as fools always do.

It is a huge inkblot to not remember that the whales have every incentive to protect the 21 million tokens limit, but the miners do not. That is why the whales are very likely to collude to prevent HFs by the miners. The miners must always remain slaves.

Although I am coming to the viewpoint that whales are locked into a threat of mutual self-destruction so they must and will defend Bitcoin's security and to the realization that any whale of even moderate size can act alone to defend Bitcoin for as long as the other whales don't defect (defection which would be mutual self-destruction), this does not resolve long-tail externalities which force whales to defect. Any top-down controllable system can't remain perpetually in Nash equilibrium for a Nash equilibrium says nothing about how the long-term system structure changes over time w.r.t. the external environment.