What is still driving the enthusiasm of bitcoins over other currencies?

[jetto]

There are many alternative virtual currencies to bitcoin, such as litecoin, novacoin, etc., that have significant advantages to bitcoin, and there are probably many more currencies that will be even better yet to come. Given that, I've felt for a while that bitcoins are valuable now, but they've got an expiration date, because in the end, even if it takes decades, people will choose the best, most advanced, and most effective currency. So it surprises me when I read things like "I expect the price to hit four-digit numbers by the end of 2013 or in 2014, with further exponential growth continuing in coming years." from notable people in this field. What is driving this enthusiasm for bitcoins in particular? I've always thought the ability to change the properties of a currency is very limited. Am I wrong in this assumption and am I missing something? Do people assume that bitcoin is going to be the one to go in the thousands simply because it's the first? It seems to me that people in the end will choose the best option, but maybe I'm wrong.

[indiekiduk]

According to http://en.bitcoin.it/wiki/Litecoin "Besides a faster first confirmation, Litecoin does not provide any other features over what Bitcoin provides".

[BitTrade]

It's certainly not price stability, I can tell you that much.

[PerfectAgent]

There's a lot to be said about first mover advantage. Also, I can't see any advantage or difference most altcoins can offer. The only things I can think of are the use of scrypt for Litecoin and the DNS registration for Namecoin. Which is why it doesn't surprise me that MtGox has stuff in the works for Litecoin and Namecoin.

[jetto]

According to http://en.bitcoin.it/wiki/Litecoin "Besides a faster first confirmation, Litecoin does not provide any other features over what Bitcoin provides".

A faster first confirmation is an enormous benefit if we want alternative currencies to be used in brick and mortar stores and restaurants. You can't have each person in line waiting 10 minutes or more.

[justusranvier]

A faster first confirmation is an enormous benefit if we want alternative currencies to be used in brick and mortar stores and restaurants. You can't have each person in line waiting 10 minutes or more.

Not really. Brick and mortar stores do most of their volume using 0-conf credit and debit card payments that take weeks or months to become irreversible.

Handling that situation is called "risk management", and there's a lot more to it than people who are hung up on block creation time realize.

There is effectively no difference at all between a 2 minute block time and a 10 minute block time for a brick and mortar merchant. Both of those times represent an unacceptable delay at the cash register so no POS cryptcoin payment system is going to wait for blockchain confirmations. They'll operate on a zero conf basis, using systems that make the risk of reversal predictable and therefore something they can accurately price.

[DeathAndTaxes]

According to http://en.bitcoin.it/wiki/Litecoin "Besides a faster first confirmation, Litecoin does not provide any other features over what Bitcoin provides".

A faster first confirmation is an enormous benefit if we want alternative currencies to be used in brick and mortar stores and restaurants. You can't have each person in line waiting 10 minutes or more.

You aren't going to have them wait 2.5 minutes (which may be up to 5x as long due to random nature block solutions) either.
So either payments will be prepaid, will be off blockchain. or the merchant will accept the low but non zero risk of double spend fraud.

When you consider the reduced security due to increased orphans and smaller overall network what exactly is the innovation.  Now you may be right something "significantly" superior to Bitcoin may replace it but that significantly superior solution isn't LTC and the horde of copy cat pump and dump scamcoins don't even have enough momentum to break out of a paper bag.

[acoindr]

When you consider the reduced security due to increased orphans and smaller overall network what exactly is the innovation. 

I addressed latency and orphans here:

Now multi-minute propagation is interesting, and something I hadn't considered for Bitcoin or Litecoin, so I can see your point. Invalid blocks do result currently with Bitcoin from latency of miners learning of found blocks elsewhere due to the network effect.

This problem should worsen as Bitcoin adoption grows and the network expands. So this could conceivably be a problem for Bitcoin, Litecoin, or any cryptocurrency with a block creation around 10 minutes or less on average. Mining invalid blocks is a waste of resources for miners, which would be a disincentive where there is supposed to be incentive. Frequently occurring invalid blocks also complicates trust in confirmations.

However, I think there is a simple solution. It's in everyone's best interest to know of a valid found block as soon as possible. This way work can start on the next block with minimal wasted resources for no reward. While it's not called for in the protocol I think there can be developed what I'd call mining block references or MBRs. This is simply one or more online resources (nodes or sites) where miners can report and check for found blocks. Since all miners (or a significant number anyway) would reference only a few nodes, polling say every few seconds, communication of found blocks could be near instantaneous regardless of network size.

The network effect exists now because Bitcoin is designed to be decentralized. However, smart centralization of some aspects, especially non-critical functions like this can be beneficial. Note this doesn't change the protocol. It's just a reference on top of how things already work. Satoshi's white paper says "When a node finds a proof-of-work, it broadcasts the block to all nodes." It doesn't say how to broadcast that information to all nodes. I think optimization of that is easily accomplished with MBRs.

Now you may be right something "significantly" superior to Bitcoin may replace it but that significantly superior solution isn't LTC

Litecoin was never meant to replace Bitcoin. It was meant to be the silver to Bitcoin's gold.

... and the horde of copy cat pump and dump scamcoins don't even have enough momentum to break out of a paper bag.

LOL now that I agree with (note I don't consider some coins like NVC pd/scam).

[stdset]

I've found out about Bitcoin in summer 2011. At once I undestood huge price growth potential of bitcoin. At the same time I was expecting something significantly better to emerge. I was even supporting some altcoins such as SC and LTC when they came out. But gradually I was learning more and more about how bitcoin works and what is difference between e.g. BTC and LTC. Several months after LTC release it was already clear for me, that all present alts offer nearly nothing new. And spread of their adoption can lead only to collapse of crypocurrencies in general.
One exception is PPC, they brought a new way of securing blockchain. So, for me it's the only credible altcoin.
Another new promising thing is zerocoin (it's even not an altcoin). IMO it incarnates what an alt should be. Although it doesn't look ready for widespread use, it shows the way. And makes today alts laughable.

[gogxmagog]

Bitcoin is Coke. All other cryptos are diet Faygo Cola.

Nothing wrong with that, I simply prefer The Real Thing!

[DeathAndTaxes]

I addressed latency and orphans here:

Yeah that isn't a solution.  So the attacker simply DDOS the centralized point (or few points) of failure.

Still you seem to gloss over the fact that validating a block takes a non zero time.  Most of the delay isn't actual propogation delay it is validation delay.


For example time zero your node is notified (either directly or through so easy to take down centralized MBR what has to happen before you validate the block and begin work on a new one.

1 ) You must receive the list of transactions in the block (this could be modified to a list of tx hashes to be more efficient)
1a) If protocol sends tx hashes you will need to query peers for missing txs.
2 ) You must validate that each tx is valid which means
a) the inputs are unspent outputs (lookup/locate the referenced prior tx output in the UXTO)
 b) the tx is properly formed. no invalid structure, parsing issues.
 c) pub key for each input matches the pubkey hash of the prior unspent output (i.e. hash the pubkey and match to prior output pubkey hash)
d) for each input compute the simplifed tx form, the simplified tx hash and validate the signature.  
 e) verify that the sum of inputs exceeds the sum of the outputs.  note the difference between sum of inputs and outputs.
 f) parse and verify the tx output script is valid.
3 ) compute the merkle tree and merkle root hash (which involves 2n-1 hashes)
4 ) validate the coinbase value is correct (coinbase should be <= computed subsidy based on blockheight + sum of all tx fees in 2a)
5 ) validate the timestamp is within 2 hours of mean network time.
6 ) validate the prior blockhash in header refers to a known block
6a) if prior blockhash is unknown query peers for the block in question (and perform all the steps in this process on that block)
7 ) validate that difficulty & version is correct
8 ) compute blockhash and ensure it meets difficulty target

Even given infinite bandwidth and all miners having all other miners as a peer, this process takes a non-zero amount of time.  The most time sensitive elements are indicated in bold.  The single largest by time is the validating of all input tx signatures due to the fact that it is 1 ECDSA sig validation (relatively slow process) per input in the block. 

Today with relatively low tx volume the time to validate a block is sub 1 second but as block sizes grow (think hundreds of MB and hundreds of thousands or millions of transactions) that time will rise.

Now there are some optimizations possible but propogation delays will cause increased orphan rates in the future if network volume rises even to PayPal levels (50 to 100 tps).  A smaller block interval is going to result in higher orphan rates and less security.    Why do you think Satoshi decided on 10 minutes, why not 1 minute, or 1 seconds.  It never occurred to him that smaller block intervals would be possible?  Alt-coin "designers" simply modified the code thinking shorter = better but it is compromise.   Now I am not saying Bitcoin is perfect but any block interval is a compromise between Latency and security.
 

[freedomno1]

http://www.google.ca/trends/explore#q=bitcoin&cmpt=q
Interest is coming back

[mgio]

There are many alternative virtual currencies to bitcoin, such as litecoin, novacoin, etc., that have significant advantages to bitcoin, and there are probably many more currencies that will be even better yet to come. Given that, I've felt for a while that bitcoins are valuable now, but they've got an expiration date, because in the end, even if it takes decades, people will choose the best, most advanced, and most effective currency. So it surprises me when I read things like "I expect the price to hit four-digit numbers by the end of 2013 or in 2014, with further exponential growth continuing in coming years." from notable people in this field. What is driving this enthusiasm for bitcoins in particular? I've always thought the ability to change the properties of a currency is very limited. Am I wrong in this assumption and am I missing something? Do people assume that bitcoin is going to be the one to go in the thousands simply because it's the first? It seems to me that people in the end will choose the best option, but maybe I'm wrong.

None of the alt coins have ANY advantages over bitcoin, and I'd say that most of them have serious disadvantages. An alt coin would only be worth using if it had a serious advantage over bitcoin and none do. Bitcoin was there first and that means a lot in this world.

Litecoin's faster confirmation time is actually a disadvantage as it doesn't do much aid in in-person store transaction and it results in a less secure blockchain.
Scrypt is only useful in that it isn't what bitcoin uses so there are no ASICs for it yet. If litecoin was actually useful we'd see ASICs designed for scrypt and on the market in months and litecoin mining would essentially be the same as bitcoin mining. There reason why there are no litecoin ASICs is because the market is far too small for any designers to give a damn.

Bitcoin does not need a "silver" to it's "gold". Bitcoin is divisible to 100 million pieces and doesn't "silver". I don't really get what people mean by that analogy anyways. To me it sounds like: here is Bitcoin, it is like gold. Or you have use Litecoin instead, which is like Bitcoins crippled step-brother that no one uses, isn't accepted anywhere, and isn't really as good. You can have that instead if you like. Why would anyone chose Litecoin over Bitcoin?

[acoindr]

D&T even when I'm arguing with you I can't help but admire the usually informative technical specifics you include in your posts which I appreciate. However, for the points I award you there I must dock you some for imagination.

Yeah that isn't a solution.  So the attacker simply DDOS the centralized point (or few points) of failure.

DDoS isn't a 100% effective or sustainable attack even with a motivated attacker and profitable target. While a target like MtGox might be profitable a site/node simply relaying mining data wouldn't seem so. But even if DDoS was employed it would be much easier to defeat than a traditional target, because you can know exactly which IPs are friendly and which to block. Remember honest miners wanting honest data have incentive to get it quickest. Problem solved.

For example time zero your node is notified (either directly or through so easy to take down centralized MBR what has to happen before you validate the block and begin work on a new one. ...

Today with relatively low tx volume the time to validate a block is sub 1 second but as block sizes grow (think hundreds of MB and hundreds of thousands or millions of transactions) that time will rise.

Here we see things differently. I've participated (with some stress) in many block size debate threads. I really have trouble seeing block sizes at hundreds of MB being actually implemented in the near future. I endorsed Gavin's proposed course of a simple infinite raise allowing the market to sort out the rest, but I'm less than confident we'll see that adopted soon. His recent public comments on the issue seem to reflect my thoughts.

I think we're more likely to see either no change and more reliance on off-chain txs and alt-coins to relieve scalability pressures and/or a modest increase (say to 5/10 MB once) or modest increases at future points.

[DeathAndTaxes]

But even if DDoS was employed it would be much easier to defeat than a traditional target, because you can know exactly which IPs are friendly and which to block.

Yeah I don't think you understand how modern DDOS work.  The attacker hits your upstream provider with hundreds of GB/s of traffic, the simply null route you to deal with the flood.  It is why DDOS are so hard to deal with.  The pipe to your server simply becomes saturated beyond your bandwidth capabilities.  You can't filter our the good nodes if they can't get to your server.

The idea that you know all miners so you can whitelist them is somewhat disconcerting as well.  You have essentially created the central mining agency.  The entity which all miners must work with to have any chance at efficient mining.  Not really sure that is the "solution" as opposed to simply using a more efficient (large) block interval.

I think we're more likely to see either no change and more reliance on off-chain txs and alt-coins to relieve scalability pressures and/or a modest increase (say to 5/10 MB once) or modest increases at future points.

Even at 10MB we are talking, a not so insignificant delay.  

Still lets assume for a second you overcome the philosophical and vulnerability issues of a centralized clearing house. This still means a 2 hop propogation delay.  

The critical window = (time to transmit to clearing house) + (time for clearing house to validate block) + (time to transmit to other miners) + (time for other miners to validate)

Today validating a 500 KB block can take upwards of 300 ms.  10MB would be more like 6000 ms.  Lets assume protocol efficiencies cut that in half say 3000 ms.  Remember there are two validations unless miners are just going to blindly (100% implicit trust) the data provided by the clearing house.  Say the clearing house has 100 Mbps synchronous lot latency connectivity.  The transmit time from miner to clearing house then becomes 5*8/100 = 0.4 seconds.  If there are (a guess) 50 miners using the clearing house the time to transmit to the miners is another 50*10*8/100 = 40 seconds.

Under this naively optimistic scenario we are talking 0.4 + 3+ 40 + 3 = 46.3 seconds for full validation and double hop propagation to 50 mining peers.  With Bitcoin's 600 second average block time this means an orphan rate of ~8%.  With LTC it is more like 26%.  With the idiotic 30 second block intervals used by some scamcoins it is something on the order of 80% orphans.

Now there are solutions to make block propagation more efficient.  One (not possible on Bitcoin but could be used on an altcoin) would be to use a simplified transaction structure.  I have done some modeling and see a roughly 60% reduction in block size is possible (i.e. 1.7x as many tx in the same sized block).  For Bitcoin/Litecoin a soft fork where block is separated into header and tx set would allow more efficient pre-propogation of transactions.  Still at the end of the day smaller block intervals are going to face scaling challenges much quicker and an increased loss of security due to orphans is inevitable.

[amincd]

A faster first confirmation is an enormous benefit if we want alternative currencies to be used in brick and mortar stores and restaurants. You can't have each person in line waiting 10 minutes or more.

Not really. Brick and mortar stores do most of their volume using 0-conf credit and debit card payments that take weeks or months to become irreversible.

Handling that situation is called "risk management", and there's a lot more to it than people who are hung up on block creation time realize.

There is effectively no difference at all between a 2 minute block time and a 10 minute block time for a brick and mortar merchant. Both of those times represent an unacceptable delay at the cash register so no POS cryptcoin payment system is going to wait for blockchain confirmations. They'll operate on a zero conf basis, using systems that make the risk of reversal predictable and therefore something they can accurately price.

+1

I still think Bitcoin would benefit from moving to a 1 minute block time. Some of the benefit would be in getting a confirmation sooner in those cases when a single confirmation is all you need, and the rest is in the advantage it would give to Bitcoin's marketing message over copycats.

Regardless, it's not a big deal, and 10 minute block times have no disadvantage (and even some advantages) for the vast majority of use-cases.

There are many alternative virtual currencies to bitcoin, such as litecoin, novacoin, etc., that have significant advantages to bitcoin,

There are no Bitcoin forks that offer significant advantages over Bitcoin. The innovation seen in the BTC-alt field has been quite minimal. Shortening the block time is in no way a "significant advantage", and Scrypt is arguably a disadvantage (can cause overheating in laptops).

What Bitcoin has is a significant advantage over every fork. A cryptocurrency network is more than just a protocol. It's also the size of the network and the amount of supporting businesses and services, and in this area, Bitcoin stands far above the imitators, making any interest in other networks based purely on speculation rather than a real world advantage.

This is very much unlike Bitcoin and fiat, where there are actual use-cases where Bitcoin is superior to fiat, despite the latter's much larger supporting economy.

[Ira H. Fuchs]

But even if DDoS was employed it would be much easier to defeat than a traditional target, because you can know exactly which IPs are friendly and which to block.

Yeah I don't think you understand how modern DDOS work.  The attacker hits your upstream provider with hundreds of GB/s of traffic, the simply null route you to deal with the flood.  It is why DDOS are so hard to deal with.  The pipe to your server simply becomes saturated beyond your bandwidth capabilities.  You can't filter our the good nodes if they can't get to your server.

The idea that you know all miners so you can whitelist them is somewhat disconcerting as well.  You have essentially created the central mining agency.  The entity which all miners must work with to have any chance at efficient mining.  Not really sure that is the "solution" as opposed to simply using a more efficient (large) block interval.

I think we're more likely to see either no change and more reliance on off-chain txs and alt-coins to relieve scalability pressures and/or a modest increase (say to 5/10 MB once) or modest increases at future points.

Even at 10MB we are talking, a not so insignificant delay.  

Still lets assume for a second you overcome the philosophical and vulnerability issues of a centralized clearing house. This still means a 2 hop propogation delay.  

The critical window = (time to transmit to clearing house) + (time for clearing house to validate block) + (time to transmit to other miners) + (time for other miners to validate)

Today validating a 500 KB block can take upwards of 300 ms.  10MB would be more like 6000 ms.  Lets assume protocol efficiencies cut that in half say 3000 ms.  Remember there are two validations unless miners are just going to blindly (100% implicit trust) the data provided by the clearing house.  Say the clearing house has 100 Mbps synchronous lot latency connectivity.  The transmit time from miner to clearing house then becomes 5*8/100 = 0.4 seconds.  If there are (a guess) 50 miners using the clearing house the time to transmit to the miners is another 50*10*8/100 = 40 seconds.

Under this naively optimistic scenario we are talking 0.4 + 3+ 40 + 3 = 46.3 seconds for full validation and double hop propagation to 50 mining peers.  With Bitcoin's 600 second average block time this means an orphan rate of ~8%.  With LTC it is more like 26%.  With the idiotic 30 second block intervals used by some scamcoins it is something on the order of 80% orphans.

Now there are solutions to make block propagation more efficient.  One (not possible on Bitcoin but could be used on an altcoin) would be to use a simplified transaction structure.  I have done some modeling and see a roughly 60% reduction in block size is possible (i.e. 1.7x as many tx in the same sized block).  For Bitcoin/Litecoin a soft fork where block is separated into header and tx set would allow more efficient pre-propogation of transactions.  Still at the end of the day smaller block intervals are going to face scaling challenges much quicker and an increased loss of security due to orphans is inevitable.

We have computers that will smoke anything you can throw at us the Chinese are just spinning their wheels on this one..Ira

[justusranvier]

I still think Bitcoin would benefit from moving to a 1 minute block time.

Look at D&T's math in the post above yours. Transaction verification can't happen at non-trivial transaction rates on general purpose CPUs with block times that short. If you want 1 minute blocks with PayPal-like transaction volumes and acceptable orphan rates you've made it so all full nodes require ASICs just for transaction verification, let alone mining.

I can see that being a requirement at some point, but not this early in the adoption curve. Maybe when we've got a "market cap" in the tens of trillions of dollars equivalent and the transaction rate is somewhere in the 100,000+/second range it would be reasonable to expect full nodes to run on specialized hardware, but by then the economy will be so well developed that there won't be any need to shorten the block time because any problems that a 600 second interval cause would have been long since solved.

[Kazu]

Alt coins not only have no advantage over Bitcoin, they actually deteriorate the chance of crytocurrencies in general being successful. More cryptocurrencies at an early stage lead to pseudo-inflation to an extent, destabalising the price, leading to further volatility, leading to merchants getting turned off. Its not the only cause of volatility but in an extreme scenario with multiple coins being actually accepted at the same time (currently bitcoin is the only one really accepted) then it has the potential to. At a later stage when bitcoin is established this isn't really much of a threat.

The only altcoin I really have respect for is namecoin, because it builds in 'intrinsic value' into the coin, something which Bitcoin actually lacks and could use. Otherwise all the other altcoins are seriously retarded.

[Ira H. Fuchs]

I still think Bitcoin would benefit from moving to a 1 minute block time.

Look at D&T's math in the post above yours. Transaction verification can't happen at non-trivial transaction rates on general purpose CPUs with block times that short. If you want 1 minute blocks with PayPal-like transaction volumes and acceptable orphan rates you've made it so all full nodes require ASICs just for transaction verification, let alone mining.

I can see that being a requirement at some point, but not this early in the adoption curve. Maybe when we've got a "market cap" in the tens of trillions of dollars equivalent and the transaction rate is somewhere in the 100,000+/second range it would be reasonable to expect full nodes to run on specialized hardware, but by then the economy will be so well developed that there won't be any need to shorten the block time because any problems that a 600 second interval cause would have been long since solved.

good evening sir I really enjoy reading the posts in this forum is like a circus! The real backers of bitcoin have more money and computer hardware to overcome any consumer based machine..Ira