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Author Topic: [EUROBIT] Sergey Kurtsev - Decentralizing Bitcoin  (Read 2166 times)
molecular
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December 07, 2011, 07:09:04 PM
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http://www.youtube.com/watch?v=YC13ttV8SfM

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December 07, 2011, 08:46:33 PM
 #2

Good, we desperately need that.

Finally.  Cool

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December 08, 2011, 12:58:51 AM
 #3

Minig is not decentralized enough.
Exchange is not decentralized enough.
Scale problem will make decentralization harder.

All these problems.

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December 08, 2011, 01:16:56 AM
 #4

Minig is not decentralized enough.
Exchange is not decentralized enough.
Scale problem will make decentralization harder.

All these problems.

Decreasing trust
Money supply controlled by oligarchy
Systemic certainty to fail

I think other currencies have even bigger problems.

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December 08, 2011, 03:02:40 AM
 #5

Minig is not decentralized enough.
Exchange is not decentralized enough.
Scale problem will make decentralization harder.

All these problems.

Decreasing trust
Money supply controlled by oligarchy
Systemic certainty to fail

I think other currencies have even bigger problems.


For a second there I thought you were talking about bitcoin...

https://www.bitcoin.org/bitcoin.pdf
While no idea is perfect, some ideas are useful.
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December 08, 2011, 04:11:44 AM
 #6

You peoples need to understand the difference between "forced centralization by design" and "voluntary centralization by the market"

A national fiat currency system is the former.
Paypal is the former.
Visa is the former.
e-gold is the former.

Bitcoin is the latter.
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December 08, 2011, 04:36:34 AM
 #7

You peoples need to understand the difference between "forced centralization by design" and "voluntary centralization by the market"

A national fiat currency system is the former.
Paypal is the former.
Visa is the former.
e-gold is the former.

Bitcoin is the latter.

Thank you.  It's about time someone explained this properly.

Maybe I should post blog entries on other blogs.  Wouldn't want my blog to become too centralized.  Tongue

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December 08, 2011, 09:57:25 PM
 #8

You peoples need to understand the difference between "forced centralization by design" and "voluntary centralization by the market"

A national fiat currency system is the former.
Paypal is the former.
Visa is the former.
e-gold is the former.

Bitcoin is the latter.

thanks indeed.

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December 09, 2011, 08:12:49 AM
 #9

"voluntary centralization by the market"

Not everything can be explained by a market, and FOSS is usually developed without a charge.
Saying that no one bothered because there wasn't demand doesn't work out, no one bothered because no one bothered.

Innovation is not created by the market but innovation creates the circumstances so that markets can emerge. (I know you would probably disagree)

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December 09, 2011, 09:25:06 AM
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"voluntary centralization by the market"

Not everything can be explained by a market, and FOSS is usually developed without a charge.
Saying that no one bothered because there wasn't demand doesn't work out, no one bothered because no one bothered.

Innovation is not created by the market but innovation creates the circumstances so that markets can emerge. (I know you would probably disagree)

You are playing with words.

A system of free exchange by people (a free market) creates the right incentives to produce innovation. In turn, specific innovation can change particular markets or even create new particular ones. Note the difference between the idea of a system of free exchange in general (a free market) and the idea of a particular type of production (a particular market).

Therefore a free market produces innovation and innovation changes or creates particular markets.

And answerign to the first part of your post:

Quote
Not everything can be explained by a market, and FOSS is usually developed without a charge.
Saying that no one bothered because there wasn't demand doesn't work out, no one bothered because no one bothered.

Its clear that not all incentives to produce a product are strictly monetary. That does not mean they are not part of the incentives present in a free exchange system between people. A lot of people (a big majority) that develop FOSS do it for monetary reasons. But there are other motivations as well. So?
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December 09, 2011, 11:47:04 AM
 #11

"voluntary centralization by the market"

well centralization of the Bitcoin infrastructure is not that voluntary, it's rather an effect from circumstances caused by its technology (mining pools) or by outer world restrictions (exchanges). Not that we know of any better solutions for all that for now ofc...

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December 09, 2011, 02:51:23 PM
 #12

Decentralization in bitcoin means equal rights, not equal power.

Equal power for all users is  not even desirable; it would give too much power to parties that have little stake in bitcoin and it would make it less secure.

There is an optimum amount of centralization. Both too much and too little are bad.
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December 09, 2011, 03:02:15 PM
 #13

Decentralization in bitcoin means equal rights, not equal power.

Equal power for all users is  not even desirable; it would give too much power to parties that have little stake in bitcoin and it would make it less secure.

There is an optimum amount of centralization. Both too much and too little are bad.
Either this is a hypocritical statement or I can't follow where you are going with this.

But we are discussing OT here, what matters is if there is a forex-market like standardized exchange developed this is a good thing.
Maybe you are stating that regular users shouldn't have equal access to the system as exchanges do? I personally do not see where the harm would be. But that depends upon the technical implementation.

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December 09, 2011, 03:04:52 PM
 #14

I think Warren Zevon had it nailed. It's about Lawyers, Guns, and Money. Bitcoin is the first form of money that is elevated to the level of Constitutional government and Nuclear devices. Bitcoin transcends archaic notions of power and whom it controls. I'm not sure that decentralization will be an issue when Constitutional and Nuclear nations see the wisdom of joining the Bitcoin club.

Any significantly advanced cryptocurrency is indistinguishable from Ponzi Tulips.
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December 09, 2011, 03:28:32 PM
 #15

Decentralization in bitcoin means equal rights, not equal power.

Equal power for all users is  not even desirable; it would give too much power to parties that have little stake in bitcoin and it would make it less secure.

There is an optimum amount of centralization. Both too much and too little are bad.
Either this is a hypocritical statement or I can't follow where you are going with this.

But we are discussing OT here, what matters is if there is a forex-market like standardized exchange developed this is a good thing.
Maybe you are stating that regular users shouldn't have equal access to the system as exchanges do? I personally do not see where the harm would be. But that depends upon the technical implementation.

If I understand correctly the core of the discussion is some people are worried about the "spontaneous centralization" of some Bitcoin related systems, while others are saying that since its not a violently imposed centralization but a result of the technical and sociological circumstances of Bitcoin it is ok.

In my view, both groups are correct. The level of centralization that we are seeing will never be as bad and worrying as a violently imposed centralized system (like fiat currencies, etc...). But keeping in mind that it will never be as bad, it would not hurt to look for technical solutions to have more descentralization that can bring some benefits in the future.
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December 09, 2011, 03:34:04 PM
 #16

Maybe you are stating that regular users shouldn't have equal access to the system as exchanges do? I personally do not see where the harm would be. But that depends upon the technical implementation.

equal access falls under "equal rights", so no, that's not what I am stating.

What I mean that there is a trade-off between having fewer single points of failure and having too much of the network critically dependent on vulnerable nodes.

The casual user is more vulnerable to scams and other attacks than a power user.

For example: If all peers were miners and had an equal chance of solving a block, it would be relatively easy for an attacker to do a double spending attack by setting up a fake download site for a corrupted client and promote it heavily.  

That's why it's actually a good thing that professional miners have more power than casual miners.

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December 09, 2011, 03:44:11 PM
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Maybe you are stating that regular users shouldn't have equal access to the system as exchanges do? I personally do not see where the harm would be. But that depends upon the technical implementation.

equal access falls under "equal rights", so no, that's not what I am stating.

What I mean that there is a trade-off between having fewer single points of failure and having too much of the network critically dependent on vulnerable nodes.

The casual user is more vulnerable to scams and other attacks than a power user.

For example: If all peers were miners and had an equal chance of solving a block, it would be relatively easy for an attacker to do a double spending attack by setting up a fake download site for a corrupted client and promote it heavily.  

That's why it's actually a good thing that professional miners have more power than casual miners.



I agree on that, however I think if the system were to include a WOT I don't think it should be desirable to automatically assess more credibility to more exchange volume.

This part of the system should be fully democratic and every verified persona should have the same power over to grant karma.

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December 13, 2011, 01:20:10 AM
 #18

Thanks to Gabriel who has made a transcript of the talk:

My point of view on how I and my partners see Bitcoin's position in the world right now, and the second one - I'll tell my ideas about what we can do about it.

So as you know, decentralization is the main point of Bitcoin. This is what makes Bitcoin to run and to run smoothly despite all the events that happen. And as we know, decentralization is also used in P2P-networks, and they proved themselves very well. So, this is a really good theory that was proven in real life.

As any coin, Bitcoin has two sides, and I would call them a light side and a dark side. So the light side is that the community believes in Bitcoin. And that's really great. People invest their resources, they invest their money, they invest their trust. They create services, they are trying to do new things. And that's really wonderful and very good. And we're all here today. That's also the light side. The light part.
And then, there is, as usually, there's also a dark side. Like someone in the background, in black clothes, and so on. And those guys are political forces, financial institutions and regular people, they're not enemies of Bitcoin, but they just don't know about it. So this is also an issue we'll have to deal with.

And the problem I see here is the problem of trust. And I would say that it has several levels. And I can call it the stack of trust. The topmost level is the trust of politicians. As you I think understand, political guys - they don't know about Bitcoin; those guys that know about it, don't trust it and probably there's a variety they do because Bitcoin can destroy political institutions. So the same about the financial institutions. Like, banks and bitcoins, this is something I don't see fit together. And enterpreneurs, they're probably one of the next adopters of Bitcoin. But it's not enough for entrepreneurs just to accept Bitcoin. We need the regular people who will pay with it. And this is the point where I think we should start.

So, talking about regular people, what do they need? They need simplicity. They need, like, simple window, they need simple button "Pay", and they need to click on it and pay. And they don't have to worry about how do they live by bitcoins, where to change them and whatever.

And one of the solutions for this is to create as much exchange points, exchange services and whatever, as much as we can. And what I propose is to spread the idea of decentralization to any bitcoin service or to anyone who is willing to deal with it. Right now, bitcoin is not that really decentralized because most of the units are exchanged at a few exchanges, as you all know. And there's also some services that collect bitcoins and that keep them all together. And that's the real problem, because initially, by design, Bitcoin was supposed to distribute the different wallets all across the world. And right now, they are accumulated in different services and this happens because I think sometimes it is more profitable to pay with service than with your own wallet. And so what we need I think is more exchange spots.

And besides that, I think that decentralization in itself is not enough for success. If we look back to two to thirty months ago, we can see a lot of different events happening: services come, they do some things, they collect people's bitcoins and then they disappear. And this is where I think that anonimity is misunderstood. Anonimity of Bitcoin is a really good thing, but this is not exactly needed by regular people. As I said, they need simplicity, they need usability. And also, right now, Bitcoin is somewhere between the ground and the sky, if we talk about the legislation. It's, like, stuck in the middle. And that's I think is also a real problem, because right now, governments don't really care about Bitcoin, since it's small. But as soon as it grows up, they definitely will pay attention and I don't think that it will do any good to Bitcoin. And besides, there are no mechanisms of trust inside the Bitcoin network. As I said about anonimity, services appear, they do go
 od things, they collect money, but then they disappear, and we don't know if we can trust a new service or if we can't. That's what we've actually met with when opening the IMCEX.com. People asked, can we trust you? And all I could say was "You should try". We're not hiding; we're not as very open as we would like to be, but we're not hiding. People always talk to us and ask us any things. But that brought me to the idea that of a network of trust, that I will talk about later.
So if we look at all these points, do they look scary? I think they do, for regular people. So, do we need someone from outside to regulate it, like government? I don't think so. That's not good. Regulation doesn't really bring anything good to anyone. But I think that the Bitcoin community could have used some preparation and self-regulation.

I'll stop on cooperation. Initially, when I was preparing this presentation, like, a month ago, I was going to address this issue to other bitcoin exchanges, because I thought that it was a really good idea. But yesterday, after talking with some people, I understood that actual businesses were trying to deal with bitcoins. This might be useful to them, too. So I'll try to explain this in brief. If you accept bitcoins IRL, sometimes you need to exchange them quickly to money. Sometimes you need to exchange them to currencies that we don't use IRL, like paying to other service providers abroad, and so on. And I think that those different spots of the Bitcoin community could make some conversation, like, a web. And they could deal with each other. And when they connect with each other, we'll get that decentralized exchange that right now, Bitcoin is lacking.

So, the use cases. Exchange services could try to use this communication network or interexchange protocol to serve customer requests that they can't handle themselves. Like, we're a small exchange. We have very low volumes right now. And if a customer comes and he says, I'd like to buy, like, 10.000 BTCs, we can't handle this. We don't have that much to offer. So we either need to go to another big exchange or we have to search for someone else who can sell that amount for us. And that's not really good. What I would like to have, is then opportunity to quickly make a request to, like, 10 or 15 other services, like, saying that I need 10.000 BTCs given to me. And they could give me quota for how much time, what price, what conditions, that they could have done this.
And speaking of the businesses, this is probably a good use case when you urgently need to convert bitcoins to other currencies and so on. It's not always that useful to do that at the exchange, because sometimes it takes time, sometimes it takes fees, and so on.

So, to look at this step by step quickly, this is how it could possibly work. The customer places an order that we're not comfortable with. As I said, like, 10.000 BTCs that we need to exchange, or something. So we poll other parties, can you exchange?, can you exchange?, can you exchange? And they respond and we choose the offer and so we set up the payment process later.
And this is a win-win-win situation for everyone; for the customer, for me, for another exchange, because we're exchanging the liquidity that we won't do in another situation. And new players can join such network.

The last thing I would like to talk about is [Huh] I'm short on time.
So, I would like to say on the web of trust: such network requires some stability. And stability can only be provided if you have, like, when you have a track and record of everyone. There is no need to keep a track and record, but you can have some kind of trustrank for every other member of such network. And if every member of the network has got a set of trustranks for every other network member. So we've also built a decentralized trust network, trust rank. And depending on how fast, how comfortable it is to work with another party, you can correct your own evaluation of anyone else.
And such big number of ranks will actually result in something very stable. Something very close to life. This is how it works in real life.
Like torrent networks, businesses and people communities. We know something about each person and this is how we relate him and so on. So each network member maintains his own list of trust ranks, interexchange communication and such web of trust will provide faster feedback, better community and generally better liquidity of money and operations. And it is also open to new members, because new members can earn their own trust from others.

So this is what I wanted to talk about, and we will try to prepare some simple open-source software to try. I think it will be rated by [Huh]. So if you're interested, please subscribe at our page and we'll definitely send you an email. Thank you!

European Bitcoin Conference Prague 2011
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