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Author Topic: My Response to Ben Laurie’s ‘Last Word’ on Bitcoin  (Read 6670 times)
BubbleBoy
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July 07, 2011, 11:45:22 AM
 #41

The 10 year timespan is reasonable because the the coins don't become worthless after 10 years (at 6.25BTC/block), just twice more prone to a theoretical attack that is still very hard to pull off. There's plenty of time to fix the system and change the block rules for example to impose a minimal fee, thus making the "mine for fee model" sustainable.

Maintaining that bitcoins will be worth still 15$ in 6 years time (when the bonus drops to 12.5) is not actually "keeping all other things equal". It implies a major source of liquidity on the market in order to displace those miners that are currently cashing out. So I think a revenue lower bound of 1500$/hour is highly probable for the mining revenue in the next 10 years. On the other hand most of the buyers are currently motivated by hype and speculative mania, and they will be long gone if the price stays rock solid for years. This is why extrapolation for the next decades are useless, the pyramid monetary scheme will long destroy it before double spend becomes a major threat.

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If Bitcoin would be well accepted and a solid economy would depend on it, frauding a few Bitcoins wouldn't stop that

Frauding a few bitcoins, once discovered, is irrefutable evidence that someone has gained ownership of the 50% hashrate underpinning the security of the system. Since that someone can launch a devastating attack at any moment, aimed not at double spending but at disruption, and the same someone can rewrite history to assign ownership of all coins to himself, informationally efficient markets will drive the price very low to counteract that possibility.

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I don't see the need to do so secretly, isn't Bitcoin supposed to be 'not backed by law or goverment'?

That does not mean your trades are not subject to the law of the country where they are performed. Since bitcoins have a fair market value they are taxable and fraud will attract criminal responsibility. People have been indicted for stealing WoW gold. If you barter for a house with bitcoins and fail to deliver them the contract is void, and if you do it with intent you are committing fraud. Intent can easily be proven with your ECDSA signature on two transactions with the same source.
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Stevie1024
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July 07, 2011, 01:20:21 PM
 #42

The 10 year timespan is reasonable because the the coins don't become worthless after 10 years (at 6.25BTC/block), just twice more prone to a theoretical attack that is still very hard to pull off. There's plenty of time to fix the system and change the block rules for example to impose a minimal fee, thus making the "mine for fee model" sustainable.

Maintaining that bitcoins will be worth still 15$ in 6 years time (when the bonus drops to 12.5) is not actually "keeping all other things equal". It implies a major source of liquidity on the market in order to displace those miners that are currently cashing out. So I think a revenue lower bound of 1500$/hour is highly probable for the mining revenue in the next 10 years. On the other hand most of the buyers are currently motivated by hype and speculative mania, and they will be long gone if the price stays rock solid for years. This is why extrapolation for the next decades are useless, the pyramid monetary scheme will long destroy it before double spend becomes a major threat.

Quote
If Bitcoin would be well accepted and a solid economy would depend on it, frauding a few Bitcoins wouldn't stop that

Frauding a few bitcoins, once discovered, is irrefutable evidence that someone has gained ownership of the 50% hashrate underpinning the security of the system. Since that someone can launch a devastating attack at any moment, aimed not at double spending but at disruption, and the same someone can rewrite history to assign ownership of all coins to himself, informationally efficient markets will drive the price very low to counteract that possibility.

Quote
I don't see the need to do so secretly, isn't Bitcoin supposed to be 'not backed by law or goverment'?

That does not mean your trades are not subject to the law of the country where they are performed. Since bitcoins have a fair market value they are taxable and fraud will attract criminal responsibility. People have been indicted for stealing WoW gold. If you barter for a house with bitcoins and fail to deliver them the contract is void, and if you do it with intent you are committing fraud. Intent can easily be proven with your ECDSA signature on two transactions with the same source.

Yup, you're right, I (or someone else) might have to do so secretly. I don't agree the 10 year timespan is reasonable, but I'm sure we'd never come to an agreement on that. I'm signing out (http://forum.bitcoin.org/index.php?topic=26738.0), this is my last post in this thread.

I'm out of here!
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July 17, 2011, 02:07:27 PM
 #43

wow! I found out about this paper quite late... It was forwarded to me by a friend...

This is basically my response to that friend to which I arrived rather hastily and independently i.e. before reading this thread or any comments on the article.

For whatever it worth.


"

Interesting, I had a quick read. He maybe a smart and credible guy,
but he does not get it, IMO.

His points on snapshots are rather irrelevant so I'll ignore it.

Than, first of all, he is trying to solve a non-problem and fails to
see that issue he is trying to solve is not a bug but a feature.

There is no problem with energy consumption, it is a very low price to
pay for getting rid of all the middlemen leaching a few percent from
every money transfer. Moreover, energy spent by miners on securing the
bloc chain is rather negligible in comparison to energy spent on other
ways to do money, when you consider, for example energy, required to
haul all the cash and gold in armoured trucks, smelting gold bullions,
coining coins, smelting metal for the bank vaults and so on...

Second of all, his "efficient solution" is very weak. Essentially, he
is proposing to replace voting weighted by pure computational power
(surely not very energy efficient way) to voting weighted by a number
of clients plugged into the network, without proposing any viable way
(since it is impossible) to ensure that this number of clients is not
faked. Therefore, he is effectively shifting proof-of-work concept
from doing lots of sha-256 calculations to opening lots of ports on
lots of IP's simultaneously. This could solve a problem of quick
propagations and wide distribution of information, but surely not a
problem of "double spending". Total epic fail!

He also has completely missed economic part of the system where
initial bitcoin inflation serves the purpose of subsidy to enable
quick growth of the network and making it secure from 50% attacks.

Busted... And bitcoin heavy hitters did not get to this yet, it is just me.


"

Did I get something badly wrong there?

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