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Author Topic: Why the economical part isn't mentioned on the whitepaper?  (Read 461 times)
pereira4
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July 23, 2019, 07:45:48 PM
Merited by ETFbitcoin (1)
 #1

If you control + f keywords such as "emission", "supply", etc, you can't find anything on the whitepaper. No mention of the total supply, of the emission curve, let alone block sizes and whatnot.

My take is that he just focused on the technicals strictly and in theory everything was up to consensus, even tho it was clear that protocol solidification and incentive mechanism would make those basically hard coded variables thus no longer practically variables which you could say are part of the technical design, but again nothing is mentioned there.




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Khaos77
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July 23, 2019, 08:41:49 PM
Merited by Halab (2)
 #2

No Mention in Whitepaper ,

However here:
https://www.metzdowd.com/pipermail/cryptography/2009-January/014994.html
Quote
Total circulation will be 21,000,000 coins.  It'll be distributed
to network nodes when they make blocks, with the amount cut in half
every 4 years.

first 4 years: 10,500,000 coins
next 4 years: 5,250,000 coins
next 4 years: 2,625,000 coins
next 4 years: 1,312,500 coins
etc...

When that runs out, the system can support transaction fees if
needed.  It's based on open market competition, and there will
probably always be nodes willing to process transactions for free.

Satoshi Nakamoto


In the White Paper , Satoshi assumed the mining market would stay open.
Error 1: ASICS closed the mining market to the rich elite only.

Error 2: Nodes processing transactions for free are in short supply, if any.
Of course this is due to the energy waste, making free transactions impracticable.

Error 3: Transaction fees alone will not be able to maintain Bitcoin insane energy waste.
http://randomwalker.info/publications/mining_CCS.pdf

Quote
On the Instability of Bitcoin Without the Block Reward

Bitcoin  provides  two  incentives  for  miners:  block  rewards and transaction fees.
The former accounts for the vast majority of miner revenues at the beginning of the system, but it is expected to transition to the latter as the block rewards dwindle.   There  has  been  an  implicit  belief  that  whether miners  are  paid  by  block  rewards  or  transaction  fees  does not affect the security of the block chain. We show that this is not the case.  Our key insight is that with only transaction fees, the variance of the block reward is very high due to the exponentially distributed block arrival time,  and  it  becomes  attractive  to  fork  a “wealthy” block to “steal” the  rewards  therein.   We  show  that  this  results in an equilibrium with undesirable properties for Bitcoin’s security and performance, and even non-equilibria in some circumstances.  We also revisit selfish mining and show that it can be made profitable for a miner with an arbitrarily low hash power share, and who is arbitrarily poorly connected within the network.  Our results are derived from theoretical analysis and confirmed by a new Bitcoin mining simulator that may be of independent interest.
We discuss  the  troubling  implications  of  our  results  for Bitcoin’s future security and draw lessons for the design of new cryptocurrencies.


FYI:
In Satoshi's defense , his original design ,
was anyone with a PC could mine and the variable transaction fees verses a  fixed fee system was added after he was gone.

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July 24, 2019, 03:45:15 AM
 #3

it is probably because "whitepaper" is meant as some sort of summary or abstract of the idea that is introducing the protocol in as short a text as possible. it wasn't meant to explain every small details that the implementation of the idea contains, that would make the paper 50+ pages long instead of 8-9. for example bitcoin isn't working because it has 21 million cap, or the paper doesn't explain difficulty, scripts,....
also part "6. Incentive" has some explanations about supply and new coins, constant cap,... so it is not there isn't any mention at all!

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July 24, 2019, 10:52:28 AM
Merited by dbshck (4), bones261 (2), aliashraf (2), cr1776 (1), ETFbitcoin (1), Coding Enthusiast (1), darosior (1)
 #4

If you control + f keywords such as "emission", "supply", etc, you can't find anything on the whitepaper. No mention of the total supply, of the emission curve, let alone block sizes and whatnot.

Satoshi's whitepaper had a different target audience than the crypto projects you have nowadays.

Today most whitepapers try to garner investors so they focus mostly on supply and questionable technical terms. They are trying to sell an investment vehicle pretty much like banks do when they give you fancy prospects of their latest mutual funds.

Satoshi's whitepaper was about suggesting a concrete technical solution to a previously unsolved problem. To that extend the emission rate and overall supply were irrelevant, especially since there were no investors to speak of with the main audience being academics and cryptography enthusiasts.

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July 24, 2019, 12:10:20 PM
Merited by Foxpup (4), dbshck (4), bones261 (2), cr1776 (1), ETFbitcoin (1)
 #5

In the White Paper , Satoshi assumed the mining market would stay open.
Error 1: ASICS closed the mining market to the rich elite only.

No he didn't.
He already knew that at some point there will be 'larger' server farms who are mining. And that a single individual won't mine in the future.

And neither is the market accessible to the 'rich elite' only.
Anyone can start mining with a relatively low budget.

Low budget -> low income.
High budget -> high income.


Just because you can't mine with a CPU or CPU anymore, it doesn't mean that you have to belong to the 'rich elite' to start mining.



Error 2: Nodes processing transactions for free are in short supply, if any.
Of course this is due to the energy waste, making free transactions impracticable.

No, they aren't. There are currently ~9100 nodes online.

These nodes also don't waste energy. They don't need much energy at all. A few $ per year isn't really a lot..


But you were probably refering to the miner 'wasting' energy, right ?
Well.. this energy isn't wasted either. It is absolutely necessary to guarantee the integrity and security of the bitcoin network.



Error 3: Transaction fees alone will not be able to maintain Bitcoin insane energy waste.

They will.

As pointed out, the energy is not wasted. I don't know what kind of shitpost you were creating. And with what kind of purpose.
Maybe you are just not informed at all, or are following your own agenda. I don't know. And i honestly also don't care.

Please inform yourself before composing such shitposts.
It hurts my eyes (and mind) to read that bullshit.





Today most whitepapers try to garner investors so they focus mostly on supply and questionable technical terms. They are trying to sell an investment vehicle pretty much like banks do when they give you fancy prospects of their latest mutual funds.

Satoshi's whitepaper was about suggesting a concrete technical solution to a previously unsolved problem. To that extend the emission rate and overall supply were irrelevant, especially since there were no investors to speak of with the main audience being academics and cryptography enthusiasts.

Exactly this.

HeRetiK boilded it down to an essence.


Satoshi didn't want to attract investors. He didn't want to get rich. It was a proposal for a peer-2-peer digital currency. The first one.
Noone cared about the economic aspects.

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July 24, 2019, 03:22:32 PM
 #6



Exactly this.

HeRetiK boilded it down to an essence.


Satoshi didn't want to attract investors. He didn't want to get rich. It was a proposal for a peer-2-peer digital currency. The first one.
Noone cared about the economic aspects.

My point is that you cannot separate the economic aspects from the proposed way of solving double spending with the whole PoW system as if you lived in a vacuum. In order for the project to be functional in the real world it would need to grow from the economic pov otherwise all the code would be useless, thus why both are interrelated and why I find it interesting that there are 0 mentions of it on the whitepaper.




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July 24, 2019, 05:11:54 PM
 #7

My point is that you cannot separate the economic aspects from the proposed way of solving double spending with the whole PoW system as if you lived in a vacuum. In order for the project to be functional in the real world it would need to grow from the economic pov otherwise all the code would be useless, thus why both are interrelated and why I find it interesting that there are 0 mentions of it on the whitepaper.

Of course you can. I mean, that's precisely what satoshi did, isn't it?

To be more precise, the specifics -- ie. currency rate and final supply -- of how currency issuance takes place is largely irrelevant. Arbitrary. An accidental property. Otherwise we wouldn't see so many diverse approaches at currency issuance rates which all achieve more or less the same.

The only important bits are (a) that currency is decentrally issued and (b) that securing the network is incentivized. That's all that was needed to be mentioned at that point in time, so that's all there is:

By convention, the first transaction in a block is a special transaction that starts a new coin owned
by the creator of the block. This adds an incentive for nodes to support the network, and provides
a way to initially distribute coins into circulation, since there is no central authority to issue them.

[...]

The incentive may help encourage nodes to stay honest. If a greedy attacker is able to
assemble more CPU power than all the honest nodes, he would have to choose between using it
to defraud people by stealing back his payments, or using it to generate new coins. He ought to
find it more profitable to play by the rules, such rules that favour him with more new coins than
everyone else combined, than to undermine the system and the validity of his own wealth.

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July 24, 2019, 06:35:07 PM
Merited by dbshck (4), tiptopgemdotcom (2), HeRetiK (1)
 #8

My point is that you cannot separate the economic aspects from the proposed way of solving double spending with the whole PoW system as if you lived in a vacuum. In order for the project to be functional in the real world it would need to grow from the economic pov otherwise all the code would be useless, thus why both are interrelated and why I find it interesting that there are 0 mentions of it on the whitepaper.

Of course you can. I mean, that's precisely what satoshi did, isn't it?

To be more precise, the specifics -- ie. currency rate and final supply -- of how currency issuance takes place is largely irrelevant. Arbitrary. An accidental property. Otherwise we wouldn't see so many diverse approaches at currency issuance rates which all achieve more or less the same.

The only important bits are (a) that currency is decentrally issued and (b) that securing the network is incentivized. That's all that was needed to be mentioned at that point in time, so that's all there is:

By convention, the first transaction in a block is a special transaction that starts a new coin owned
by the creator of the block. This adds an incentive for nodes to support the network, and provides
a way to initially distribute coins into circulation, since there is no central authority to issue them.

[...]

The incentive may help encourage nodes to stay honest. If a greedy attacker is able to
assemble more CPU power than all the honest nodes, he would have to choose between using it
to defraud people by stealing back his payments, or using it to generate new coins. He ought to
find it more profitable to play by the rules, such rules that favour him with more new coins than
everyone else combined, than to undermine the system and the validity of his own wealth.


That's what he did, what I argue is that you cannot leave it to completely arbitrary numbers and expect the project to be a success. I doubt satoshi punched the keyboard and whatever numbers were typed that's what he used for total supply, block rewards and whatnot.

If for instance he decided to set the thing similar to Freicoin, which was inflationary and introduced the idea of "digital demurring", Bitcoin would have never caught up as a store of value, which coupled with the blocksize limitation, it would have been a failure. In fact, I suspect satoshi knew 1MB blocksize was set in stone years before it even was brought up by anyone else. The way I see it is that those things are "hard coded" in practice, but not mentioned in a explicit way. He was aware on the game theory that would unfold.




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July 24, 2019, 10:26:10 PM
Last edit: July 24, 2019, 11:19:09 PM by odolvlobo
 #9

In the White Paper , Satoshi assumed the mining market would stay open.
Error 1: ASICS closed the mining market to the rich elite only.

You don't have to be a "rich elite" to mine. You just need access to cheap electricity. Also, though it was not addressed in the whitepaper, Satoshi had predicted miner consolidation.

Error 2: Nodes processing transactions for free are in short supply, if any.
Of course this is due to the energy waste, making free transactions impracticable.

It was never assumed that transactions would be free. The whitepaper mentions fees as an integral part of the system.

Error 3: Transaction fees alone will not be able to maintain Bitcoin insane energy waste.

You are assuming that an "insane" level of energy consumption is required for security. It is not.

Quote
On the Instability of Bitcoin Without the Block Reward

I have read that paper. It makes some interesting points, but it is far from conclusive.

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July 25, 2019, 12:08:07 AM
Merited by pereira4 (1)
 #10

That's what he did, what I argue is that you cannot leave it to completely arbitrary numbers and expect the project to be a success. I doubt satoshi punched the keyboard and whatever numbers were typed that's what he used for total supply, block rewards and whatnot.

If for instance he decided to set the thing similar to Freicoin, which was inflationary and introduced the idea of "digital demurring", Bitcoin would have never caught up as a store of value, which coupled with the blocksize limitation, it would have been a failure. In fact, I suspect satoshi knew 1MB blocksize was set in stone years before it even was brought up by anyone else. The way I see it is that those things are "hard coded" in practice, but not mentioned in a explicit way. He was aware on the game theory that would unfold.

Fair enough.

However I'm not sure whether satoshi expected the project to be a success to begin with Smiley Arguably the jury is still out whether Bitcoin is a success. Sure it got nice purchasing power, but in the grand scheme of things Bitcoin is still little more than an experiment and cryptocurrencies have yet to grow up. For all we know deflationary digital currencies may be a dead end in the long term and inflation is the way to go after all.

That being said, I absolutely agree with you that the first cryptocurrency to enter the stage had to be of limited supply. Otherwise it would have never appealed to the speculators and remained an obscure little toy for nerds and anarcho-capitalists.

I'd even argue that the abrupt supply drops (ie. halvenings) as opposed to a steady decline in issuance played a major role in generating a hype cycle; with the duration of 4 years between each supply drop hitting a sweet spot of reminding people that Bitcoin is still alive and kicking just when they had forgotten about it (ie. the perfect recipe for FOMO).

How much of it was luck or calculation is anyone's guess, but I think it's safe to say that satoshi had at least some intuition about which values to choose. Intuition is hard to put on paper though. To that extend Bitcoin might merely be an experiment to empirically verify the issuance parameters Wink I do believe that opting for limited supply was mostly a matter of principle though. After all Bitcoin was at least in part a response to the questionable monetary policies of the world's central banks and governments.

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July 25, 2019, 03:32:59 AM
Merited by aliashraf (1)
 #11

That's what he did, what I argue is that you cannot leave it to completely arbitrary numbers and expect the project to be a success. I doubt satoshi punched the keyboard and whatever numbers were typed that's what he used for total supply, block rewards and whatnot.

If for instance he decided to set the thing similar to Freicoin, which was inflationary and introduced the idea of "digital demurring", Bitcoin would have never caught up as a store of value, which coupled with the blocksize limitation, it would have been a failure. In fact, I suspect satoshi knew 1MB blocksize was set in stone years before it even was brought up by anyone else. The way I see it is that those things are "hard coded" in practice, but not mentioned in a explicit way. He was aware on the game theory that would unfold.

you have to remember that bitcoin has always been an experiment and practically the first of its kind. so you can't expect everything in it to be absolutely perfect. Satoshi considered a lot of things including the supply and i'd say 21 million was a good decision.

as for block size i don't think he had any plans from the beginning. the initial limitation had nothing to do with block size but it was with the database (implementation limitation) and then the actual limit was placed in 2010 to prevent spam

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July 25, 2019, 02:46:34 PM
 #12



Fair enough.

However I'm not sure whether satoshi expected the project to be a success to begin with Smiley Arguably the jury is still out whether Bitcoin is a success. Sure it got nice purchasing power, but in the grand scheme of things Bitcoin is still little more than an experiment and cryptocurrencies have yet to grow up. For all we know deflationary digital currencies may be a dead end in the long term and inflation is the way to go after all.

Well, Hal Finney and satoshi did at least consider the possibility of total success as early as 2009:

Quote from: Hal Finney
As an amusing thought experiment, imagine that Bitcoin is successful and
becomes the dominant payment system in use throughout the world.  Then the
total value of the currency should be equal to the total value of all
the wealth in the world. Current estimates of total worldwide household
wealth that I have found range from $100 trillion to $300 trillion. With
20 million coins, that gives each coin a value of about $10 million.

So the possibility of generating coins today with a few cents of compute
time may be quite a good bet, with a payoff of something like 100 million
to 1! Even if the odds of Bitcoin succeeding to this degree are slim,
are they really 100 million to one against? Something to think about...

Hal




That being said, I absolutely agree with you that the first cryptocurrency to enter the stage had to be of limited supply. Otherwise it would have never appealed to the speculators and remained an obscure little toy for nerds and anarcho-capitalists.

I'd even argue that the abrupt supply drops (ie. halvenings) as opposed to a steady decline in issuance played a major role in generating a hype cycle; with the duration of 4 years between each supply drop hitting a sweet spot of reminding people that Bitcoin is still alive and kicking just when they had forgotten about it (ie. the perfect recipe for FOMO).

I believe that it's impossible to create a decentralized cryptocurrency without the deflationary model because it doesn't allow for price discovery, so you would need central planning. This was also considered in Hal and satoshi 2009 exchanges:

Quote from: Hal Finney
It's interesting that the system can be configured to only allow a
certain maximum number of coins ever to be generated. I guess the
idea is that the amount of work needed to generate a new coin will
become more difficult as time goes on.

One immediate problem with any new currency is how to value it. Even
ignoring the practical problem that virtually no one will accept it
at first, there is still a difficulty in coming up with a reasonable
argument in favor of a particular non-zero value for the coins.


How much of it was luck or calculation is anyone's guess, but I think it's safe to say that satoshi had at least some intuition about which values to choose. Intuition is hard to put on paper though. To that extend Bitcoin might merely be an experiment to empirically verify the issuance parameters Wink I do believe that opting for limited supply was mostly a matter of principle though. After all Bitcoin was at least in part a response to the questionable monetary policies of the world's central banks and governments.


I think he tried to model an emission curve similar to gold. We will never know how much luck was involved on things turning out this way (at this state, it's fair to claim Bitcoin a success already IMO). I tend to believe that satoshi considered every possible scenario unfolding given the initial total supply and block reward values, long term, also including blocksize. He decided to left when it was clear that the system was indeed set in stone and he wasn't needed anymore. That, coupled with the fact that Gavin started dicking around with the CIA around that time, must have caused his departure.

That's what he did, what I argue is that you cannot leave it to completely arbitrary numbers and expect the project to be a success. I doubt satoshi punched the keyboard and whatever numbers were typed that's what he used for total supply, block rewards and whatnot.

If for instance he decided to set the thing similar to Freicoin, which was inflationary and introduced the idea of "digital demurring", Bitcoin would have never caught up as a store of value, which coupled with the blocksize limitation, it would have been a failure. In fact, I suspect satoshi knew 1MB blocksize was set in stone years before it even was brought up by anyone else. The way I see it is that those things are "hard coded" in practice, but not mentioned in a explicit way. He was aware on the game theory that would unfold.

you have to remember that bitcoin has always been an experiment and practically the first of its kind. so you can't expect everything in it to be absolutely perfect. Satoshi considered a lot of things including the supply and i'd say 21 million was a good decision.

as for block size i don't think he had any plans from the beginning. the initial limitation had nothing to do with block size but it was with the database (implementation limitation) and then the actual limit was placed in 2010 to prevent spam

My point is that he may have realized that what was initially a temporal protection measure against spam, would become a variable that would vary as much as the total supply, in other words, never.




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July 25, 2019, 03:09:23 PM
Last edit: July 25, 2019, 03:59:05 PM by Khaos77
Merited by LeGaulois (1)
 #13

In the White Paper , Satoshi assumed the mining market would stay open.
Error 1: ASICS closed the mining market to the rich elite only.

No he didn't.
He already knew that at some point there will be 'larger' server farms who are mining. And that a single individual won't mine in the future.

And neither is the market accessible to the 'rich elite' only.
Anyone can start mining with a relatively low budget.

Low budget -> low income.
High budget -> high income.


FTFY
Low budget -> Basically No Income if not in the Loss category
Your confusion is only outpaced by your Stupidity.   Kiss

Feel free to start a topic helping others mine bitcoin for $1000 or less.
Odds are you lose them money, but it will be fun to watch them chew your ass out when your bullshit lands on your face.


Error 2: Nodes processing transactions for free are in short supply, if any.
Of course this is due to the energy waste, making free transactions impracticable.

No, they aren't. There are currently ~9100 nodes online.

And how many of those 9100 process transactions for FREE all of the Time?
Because there are some people that would like that, bob.


But you were probably refering to the miner 'wasting' energy, right ?
Well.. this energy isn't wasted either. It is absolutely necessary to guarantee the integrity and security of the bitcoin network.

Another reason, you're clueless , you actually believe that nonsense.
~4 pool operators guarantee the integrity and security of the bitcoin network , energy expend is irrelevant in their power.

Error 3: Transaction fees alone will not be able to maintain Bitcoin insane energy waste.

They will.

As pointed out, the energy is not wasted. I don't know what kind of shitpost you were creating. And with what kind of purpose.
Maybe you are just not informed at all, or are following your own agenda. I don't know. And i honestly also don't care.

Please inform yourself before composing such shitposts.
It hurts my eyes (and mind) to read that bullshit.

I guess the kind of shitpost that make a shithead like you go full retard.  Cheesy

You think Bitcoin will survive on transaction fees alone
when Bitcoin Devs want the majority of transaction in LN offchain network
Don't want to increase onchain scaling of bitcoin
Are of the mind totally devoid of economic reasoning that expects people to pay insane transaction fees ,
when cheaper network just as secure are available.

The only thing we agree on is you are too much of a numb nuts to read or understand my posts.
Feel free to hit the ignore button, if it hurts your teeny tiny brain too much bob.   Cheesy




In the White Paper , Satoshi assumed the mining market would stay open.
Error 1: ASICS closed the mining market to the rich elite only.

You don't have to be a "rich elite" to mine. You just need access to cheap electricity. Also, though it was not addressed in the whitepaper, Satoshi had predicted miner consolidation.


Also need a warehouse full of ASICS, if you going to make any real money.
Small miners can't afford to keep up with the difficulty increases, their expensive ASICS becomes a giant paperweight.
https://www.buybitcoinworldwide.com/mining/profitability/

Even if you are lucky enough to earn a small profit, odds are it won't be enough to purchase that new asics every year or two.
So you're always in debt until you go bankrupt. It is a hampster wheel that ends with a dead hamster.
https://www.coindesk.com/bitcoin-mining-firm-giga-watt-declares-bankruptcy-owing-millions

* The reason, that some of the largest PoW miners have not went bankrupt
is that they can raise massive amounts of Venture Capital funding and they survive off of that. *
https://cointelegraph.com/news/mining-giant-bitfury-raises-80-million-in-closed-funding-round-as-mining-market-matures
https://news.bitcoin.com/uk-crypto-ventures-raised-over-255-million-vc-funding-in-2018/
Small time miners don't get many visits from VCs.   Tongue

Ask yourself this,
if ASICS were so profitable, why do the companies keep selling them instead of just using them to make money.
Answer because ASICS lose more money than they make, so selling them is more profitable.
https://www.theverge.com/2014/9/23/6833047/bitcoin-conspiracy-theorists-vindicated-as-ftc-shuts-down-butterfly-labs

Error 2: Nodes processing transactions for free are in short supply, if any.
Of course this is due to the energy waste, making free transactions impracticable.

It was never assumed that transactions would be free. The whitepaper mentions fees as an integral part of the system.

Satoshi Assumed their would still be some free.
https://www.metzdowd.com/pipermail/cryptography/2009-January/014994.html
Quote
When that runs out, the system can support transaction fees if
needed.  It's based on open market competition,
and there will probably always be nodes willing to process transactions for free.

Satoshi Nakamoto

You can infer from the above, that Satoshi Never dreamed that bitcoin mining would be so expensive in the future, that there is no wiggle room for some free transactions, in the miner's profit margins. Or you could say he underestimated the miners greed.

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July 25, 2019, 06:43:53 PM
Merited by cr1776 (1)
 #14



You can infer from the above, that Satoshi Never dreamed that bitcoin mining would be so expensive in the future, that there is no wiggle room for some free transactions, in the miner's profit margins. Or you could say he underestimated the miners greed.

Quote from: satoshi
“At first, most users would run network nodes, but as the network grows beyond a certain point, it would be left more and more to specialists with server farms of specialized hardware.”

https://satoshi.nakamotoinstitute.org/emails/cryptography/2/

Satoshi had in mind ASICS since 2008. He also had considered how people would be against further block size increases in order to be able to audit the blockchain on their own (own the entire blockchain locally) so you aren't basically using a webwallet:

Piling every proof-of-work quorum system in the world into one dataset doesn't scale.

Bitcoin and BitDNS can be used separately.  Users shouldn't have to download all of both to use one or the other.  BitDNS users may not want to download everything the next several unrelated networks decide to pile in either.

The networks need to have separate fates.  BitDNS users might be completely liberal about adding any large data features since relatively few domain registrars are needed, while Bitcoin users might get increasingly tyrannical about limiting the size of the chain so it's easy for lots of users and small devices.



This post is of December 10th 2010, he left forever in December 12th 2010. Which is why my thesis is that he realized on his lasts days here how there wouldn't be a consensus to increase the block size, it was too late. The project was too big for such a consensus to happen, which at the same time proved the success of decentralization, something that people like you can't grasp by still insisting that this is a problem of "Bitcoin devs not wanting to raise the blocksize". Thus Bitcoin became digital gold as a result.




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July 25, 2019, 08:45:13 PM
 #15

{...}
Error 3: Transaction fees alone will not be able to maintain Bitcoin insane energy waste.

They will.

As pointed out, the energy is not wasted. I don't know what kind of shitpost you were creating. And with what kind of purpose.
Maybe you are just not informed at all, or are following your own agenda. I don't know. And i honestly also don't care.
No they won't. Although this user, @khaos77 mostly, has little knowledge about what he says as a PoS biased poster, it doesn't mean that he is always wrong  Cheesy

The core idea of putting a cap on the volume and stopping block rewards, is false. At this time, transaction fees cover like 5% of the income which doesn't cover mining costs and without such a resource consumption a cryptocurrency system should not be considered  safe. This scene can't change in the future because bitcoin tx fees can not grow drastically. You just can't expect people to pay $100 USD for a single transaction.
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July 25, 2019, 09:06:35 PM
 #16

{...}
Error 3: Transaction fees alone will not be able to maintain Bitcoin insane energy waste.

They will.

As pointed out, the energy is not wasted. I don't know what kind of shitpost you were creating. And with what kind of purpose.
Maybe you are just not informed at all, or are following your own agenda. I don't know. And i honestly also don't care.
No they won't. Although this user, @khaos77 mostly, has little knowledge about what he says as a PoS biased poster, it doesn't mean that he is always wrong  Cheesy

The core idea of putting a cap on the volume and stopping block rewards, is false. At this time, transaction fees cover like 5% of the income which doesn't cover mining costs and without such a resource consumption a cryptocurrency system should not be considered  safe. This scene can't change in the future because bitcoin tx fees can not grow drastically. You just can't expect people to pay $100 USD for a single transaction.

Funny how many times , that clock is striking 12 lately.  Cheesy

It's nice to see agreement on some issues anyway.  Smiley

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July 25, 2019, 10:06:16 PM
 #17

Error 3: Transaction fees alone will not be able to maintain Bitcoin insane energy waste.
http://randomwalker.info/publications/mining_CCS.pdf

Quote
On the Instability of Bitcoin Without the Block Reward

Bitcoin  provides  two  incentives  for  miners:  block  rewards and transaction fees.
The former accounts for the vast majority of miner revenues at the beginning of the system, but it is expected to transition to the latter as the block rewards dwindle.   There  has  been  an  implicit  belief  that  whether miners  are  paid  by  block  rewards  or  transaction  fees  does not affect the security of the block chain. We show that this is not the case.  Our key insight is that with only transaction fees, the variance of the block reward is very high due to the exponentially distributed block arrival time,  and  it  becomes  attractive  to  fork  a “wealthy” block to “steal” the  rewards  therein.   We  show  that  this  results in an equilibrium with undesirable properties for Bitcoin’s security and performance, and even non-equilibria in some circumstances.

This sort of speculation about block reward variance is premature. It seems like the authors are drastically overstating the effect of block times on block rewards. They don't account for the fact that the Poisson distribution evens out over time, just like the average 10 minute target block time. They are cherry picking to suggest that empty blocks over the short run aren't mitigated by full blocks with high fees on the other side of the spectrum. I also question their assumptions about the success of forks that are incompatible with full nodes. I think history has shown that miners are far less powerful vis-a-vis consensus change than people once assumed.

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July 25, 2019, 11:24:39 PM
 #18

Quote from: satoshi
Total circulation will be 21,000,000 coins. It'll be distributed
to network nodes when they make blocks, with the amount cut in half
every 4 years.

first 4 years: 10,500,000 coins
next 4 years: 5,250,000 coins
next 4 years: 2,625,000 coins
next 4 years: 1,312,500 coins
etc...

When that runs out, the system can support transaction fees if
needed. It's based on open market competition
, and there will
probably always be nodes willing to process transactions for free.


It didn't take year 2140 for the fees to arrive, obviously. In any case, he did consider all those scenarios playing out outside of the whitepaper:

https://satoshi.nakamotoinstitute.org/emails/cryptography/16/#selection-123.0-147.66

After having read pretty much everything I could find, I believe that he intended Bitcoin to be massively scaled (which is why Faketoshi is pushing this narrative) however he DID realize before leaving the forums that there was no realistic way to reach consensus past hitting critical mass.

Judging by his penultimate post, he was fearing that Bitcoin was about to, or already did hit said critical mass:

It would have been nice to get this attention in any other context.  WikiLeaks has kicked the hornet's nest, and the swarm is headed towards us.


And right below this:

Piling every proof-of-work quorum system in the world into one dataset doesn't scale.

Bitcoin and BitDNS can be used separately.  Users shouldn't have to download all of both to use one or the other.  BitDNS users may not want to download everything the next several unrelated networks decide to pile in either.

The networks need to have separate fates.  BitDNS users might be completely liberal about adding any large data features since relatively few domain registrars are needed, while Bitcoin users might get increasingly tyrannical about limiting the size of the chain so it's easy for lots of users and small devices.


The timing feels right to me. Which is why I believe when he realized the fact that the protocol was already set in stone, he left. The rest is history.




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aliashraf
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July 26, 2019, 02:17:24 AM
 #19

Error 3: Transaction fees alone will not be able to maintain Bitcoin insane energy waste.
http://randomwalker.info/publications/mining_CCS.pdf

Quote
On the Instability of Bitcoin Without the Block Reward

Bitcoin  provides  two  incentives  for  miners:  block  rewards and transaction fees.
The former accounts for the vast majority of miner revenues at the beginning of the system, but it is expected to transition to the latter as the block rewards dwindle.   There  has  been  an  implicit  belief  that  whether miners  are  paid  by  block  rewards  or  transaction  fees  does not affect the security of the block chain. We show that this is not the case.  Our key insight is that with only transaction fees, the variance of the block reward is very high due to the exponentially distributed block arrival time,  and  it  becomes  attractive  to  fork  a “wealthy” block to “steal” the  rewards  therein.   We  show  that  this  results in an equilibrium with undesirable properties for Bitcoin’s security and performance, and even non-equilibria in some circumstances.

This sort of speculation about block reward variance is premature. It seems like the authors are drastically overstating the effect of block times on block rewards. They don't account for the fact that the Poisson distribution evens out over time, just like the average 10 minute target block time. They are cherry picking to suggest that empty blocks over the short run aren't mitigated by full blocks with high fees on the other side of the spectrum. I also question their assumptions about the success of forks that are incompatible with full nodes. I think history has shown that miners are far less powerful vis-a-vis consensus change than people once assumed.
Miners can't change consensus but they can easily run a chain rewrite attack if there is some incentive. Bitcoin wouldn't survive with a high enough incentive system and its subsequent resource consumptions in mining, as we need to keep block size low lowering the block reward should/may be compensated by price surge but removing it puts all the burden on tx fees which ends in high fees or low security situation.
bob123
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July 26, 2019, 08:21:26 AM
Merited by cr1776 (1)
 #20

In the White Paper , Satoshi assumed the mining market would stay open.
Error 1: ASICS closed the mining market to the rich elite only.

No he didn't.
He already knew that at some point there will be 'larger' server farms who are mining. And that a single individual won't mine in the future.

And neither is the market accessible to the 'rich elite' only.
Anyone can start mining with a relatively low budget.

Low budget -> low income.
High budget -> high income.


FTFY
Low budget -> Basically No Income if not in the Loss category
Your confusion is only outpaced by your Stupidity.   Kiss


What you are saying doesn't make sense.

Either it is profitable or it is not.

That you won't earn much with almost no investment, should be obvious.



Error 2: Nodes processing transactions for free are in short supply, if any.
Of course this is due to the energy waste, making free transactions impracticable.

No, they aren't. There are currently ~9100 nodes online.

And how many of those 9100 process transactions for FREE all of the Time?
Because there are some people that would like that, bob.


Each node does process and relay them for free.
You don't need to pay nodes for processing / relaying transactions.

What kind of question is that  Grin



But you were probably refering to the miner 'wasting' energy, right ?
Well.. this energy isn't wasted either. It is absolutely necessary to guarantee the integrity and security of the bitcoin network.

Another reason, you're clueless , you actually believe that nonsense.
~4 pool operators guarantee the integrity and security of the bitcoin network , energy expend is irrelevant in their power.

No. Not 4 pool operator.

You seems to have a big lack of knowledge regarding this topic.

The miner secure the network.. not the pool.

If a pool shuts down, the miner will switch to another one.
Miners are securing the network. Not the pools.



You think Bitcoin will survive on transaction fees alone
when Bitcoin Devs want the majority of transaction in LN offchain network
Don't want to increase onchain scaling of bitcoin

There are proposals to scale on-chain.
But off-chain is necessary too.

Segwit, schnorr, .. all contribute to better scaling - on chain.

If you are refering to the dumbest possible way to 'scale' - increasing blocksize - then you are wrong because increasing the block size is not scaling, it is postponing the problem.

Off-chain scaling is the most elegant way of allowing a big userbase to enter BTC.



Are of the mind totally devoid of economic reasoning that expects people to pay insane transaction fees ,
when cheaper network just as secure are available.

There is not a single crypto currency which is even close to being as secure as bitcoin.
This statement shows how delusional you are.

But please.. name 1 currency which is close to being as secure as bitcoin.


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