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Question: Will you support Gavin's new block size limit hard fork of 8MB by January 1, 2016 then doubling every 2 years?
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Author Topic: Gold collapsing. Bitcoin UP.  (Read 1958020 times)
JorgeStolfi
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January 04, 2015, 12:48:32 PM
 #19541

he points out flaws in some arguments that are commonly used to dismiss the risk of a 51% attack, e.g. that with cloud mining one could rent 51% of the power for 1 hour at much smaller cost than actually buying that much mining equipment.

Well there are three answers to that: a) cloud mining at scale on short contract is a bad idea; b) the cloud miner shouldnt rent out mining power to attack the chain any more than a country would rent out nukes to mentally unstable or psychopathic individuals; c) mining can be separated from voting, and some of the artificial centralisation reduced.

For (a), do you mean that short-time contracts are a bad idea for the client, or for the company that offers cloud mining?  In the first case it does not matter, the attacker will spend only ~75 BTC/h while running the attack.  In the second case, the attacker could rent for the minimum period allowed by the company, mine honestly for most of that time (thus presumably recovering most or more of the rent paid),  and launch the attack during one hour.

For (b), how could the cloud mining companies tell that some entity that already controls X% of the network's hashpower is now renting 51-X% from them? This entity could pretend to be N diferent clients.  And I bet that no company requires miners to undergo psychological fitness tests.  Cheesy

(By the way, I like to think of Dr. Strangelove as a rather bland documentary.  Countries already put their nukes in control of mentally unstable or psychopathic individuals.  Grin Tongue)

I suppose that (c) would require a substantial change in the bitcoin protocol, correct?

Academic interest in bitcoin only. Not owner, not trader, very skeptical of its longterm success.
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adam3us
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January 04, 2015, 12:58:57 PM
 #19542

For a thing to be a sidechain I guess it would need to first be a chain. Can you point me to Bitstamp's blockchain?
They have a ledger but it isn't a block chain.
so why does the WP, Odalv, and Adam refer to these federated server models as an implementation of SC's?  which by my definition means involving a blockchain?

Because the federated peg is a protocol adaptor - it translates the hash majority decision of the sidechain into something bitcoin can understand.  It's not obvious, but it is the case that issued assets on the sidechain will already have full node security (up to the MM hashrate, and immune from any take-all coins attacks).  For the purposes of issued asset trading, the sidechain works fine in this model, if we assume trade is issued - issued crosses; for that use pegged bitcoin is just transaction fees.

Adam

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jonny1000
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January 04, 2015, 01:32:11 PM
 #19543

About cypherdoc particularly he said this:
Quote from: cypherdoc link=https://bitcointalk.org/index.php?topic=68655.msg9989162#msg9989162
Quote from: adam3us
I am not sure if you are aware sidechains are nearly possible with zero changes to bitcoin.  Its already programable via the script language.  It may even be doable with zero changes with some chained contorted big script to validate compact SPV proofs.
great, then do it if it doesn't involve a source code change.  i have no problem with that.
So that seems a little inconsistent to me.  ie if this is really a bad idea why would cypherdoc not have a problem with it regardless of whether it required changes or not.  I mean if its a principle you'd be arguing to please not do it even though its possible.  Or to remove something from the language to prevent it, or put a technical defense preventing it if such a thing existed (seems unlikely but I havent explored it much).  Not saying "I have no problem with that."


This is an interesting point, Sidechains appear to represent a form of competition with Bitcoin as a distributed consensus mechanism or transaction system.  The question is should Bitcoin try to defend against this competition or recognize that competition is a good thing and try to encourage it by making changes which could make Sidechains possible, as this type of competition is unlikely to be prevented in the long run anyway and if Bitcoin is to succeed it should do so because it is the best system.  I am genuinely undecided as to what the best or most logical response from Bitcoin is.  Bitcoin already has a lot of competition and I have tried to analyze the competitive landscape below:

Analysis of Bitcoin's Competitive Landscape - (For Financial Transactions)

SystemExamplesbitcoin unitChances of successIf Bitcoin losses in the long term
Traditional SystemsPaypal, Credit Cards, SWIFT, CHAPSNoThese systems are already dominantNo significant impact, Bitcoin could continue as a niche system
Off Chain transactionsCoinbase, Changetip, MT Gox, CircleYesUnlikely to offer significant advantages over Traditional Systems in the long runPotentially catastrophic for both Bitcoin and Off Chain Transaction companies.  Security on Bitcoin could fall as mining incentives could be low, whilst the incentive to attack could increase.  At the same time off chain credit expansion could occur, undermining the monetary policy of Bitcoin.
Alt Coins - Bitcoin clonesLitecoin, DogecoinNoUnlikely to offer significant advantages over Bitcoin in the long runNo significant impact, Bitcoin could continue as a niche system
Alternative consensus mechanismsPeercoin (Proof of Stake), BitShares (Delegated Proof of Stake), TendermintNoCompetition is interesting and these type of alternatives could eventually succeedNo significant impact, Bitcoin could continue as a niche system
SidechainsBlockstreamYesUnlikely to offer significant advantages over alternative consensus mechanisms in the long run, except the use of bitcoin the currency could be an advantage in obtaining users and providing an early incentive to hack/test the systemPotentially catastrophic for both Bitcoin and Sidechains.  Security on Bitcoin could fall as mining incentives could be low, whilst the incentive to attack Bitcoin could increase.  The inherent value of bitcoin could be under threat, as one could do trust-less financial transactions in bitcoin without needing to spend bitcoin in fees
Layers on top of BitcoinCounterparty, Colored Coins, MastercoinNoSuccess likely to depend on Bitcoin's successBitcoin the system and bitcoin the currency cannot lose in this scenario.  The success of these systems imply high transaction volume and high demand for bitcoin to be used as transaction fees.  Bitcoin wins in this scenario


CP = CounterParty.  That doesnt bring anything to the chain, other than bloat, its a layered consensus system with its own alt-coin.  If you valued the price of bitcoin, probably you'd be better pushing for sidechains than CP because its bitcoin denominated and increases demand and features for bitcoin.

Counterparty transactions are just as valid or invalid as any other transactions.  Proof of existence transactions, drug deal transactions, gambling transactions, Counterparty transactions, transactions containing a Times Newspaper headline from 2009, "genuine" online shopping transactions or "fake" transactions created to increase transaction volume and dishonestly attract Venture Capital funding for a project are all just transactions.  Once people start to evaluate the merit of the data and say they are just bloat, the validity of the system begins to break down.  This is analogous to the Net Neutrality debate.   Counterparty pay the fee just like anyone else.  The success of Counterparty will create demand for bitcoin, which is required for every single action in Counterparty to pay transaction fees for miners.  Systems like Counterparty therefore add value to the Bitcoin ecosystem and bitcoin the currency.
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January 04, 2015, 01:53:57 PM
 #19544

he points out flaws in some arguments that are commonly used to dismiss the risk of a 51% attack, e.g. that with cloud mining one could rent 51% of the power for 1 hour at much smaller cost than actually buying that much mining equipment.

Well there are three answers to that: a) cloud mining at scale on short contract is a bad idea; b) the cloud miner shouldnt rent out mining power to attack the chain any more than a country would rent out nukes to mentally unstable or psychopathic individuals; c) mining can be separated from voting, and some of the artificial centralisation reduced.

For (a), [...] the attacker could rent for the minimum period allowed by the company, mine honestly for most of that time (thus presumably recovering most or more of the rent paid),  and launch the attack during one hour.

This is why it is dangerous for the mining company: they are sitting on $100m worth of equipment, on-demand renting it is dangerous to the network and to the hope of making a profit on their $100m investment.

Quote
For (b), how could the cloud mining companies tell that some entity that already controls X% of the network's hashpower is now renting 51-X% from them? This entity could pretend to be N diferent clients.  And I bet that no company requires miners to undergo psychological fitness tests.  Cheesy

Again a reason they should not do it.

Whichever way you look at it renting out cloud mining is a bad idea because the reason to care about the meta-incentives (of bitcoins security, reputation, functionality etc) is lost - the $100m investment.

The solution is to sell mining contracts so that the user actually owns the equipment, and often has also prepaid for the electricity as well.  Its flash on-demand renting that is bad as then there is no investment incentive.

This is actually part of the meta-incentive: a cloud miner should be able to forsee the problems of flash renting and realise as the equipment owner his capital is at risk.

Quote
I suppose that (c) would require a substantial change in the bitcoin protocol, correct?

No its possible today.  Luke-jr is working on it.  Thats for the reverse problem that when you do buy a (long term) mining contract, you should control the vote.  Otherwise we get articificial centralisation where the location of the physical mining data center artificially controls other peoples votes.

Adam

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tvbcof
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January 04, 2015, 02:15:23 PM
 #19545


Just for the record, I did not produce the ascribed text (though I agree with it.)  Also, kudos for taking the time to use tables to make a point more clearly.


jonny1000
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January 04, 2015, 02:23:56 PM
 #19546


Just for the record, I did not produce the ascribed text (though I agree with it.)  Also, kudos for taking the time to use tables to make a point more clearly.



Sorry, I have changed this.
justusranvier
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January 04, 2015, 02:57:53 PM
 #19547

Justusranvier says that it is 'econ 101' that mining reward will fall to zero (and I say it's likely to dip below semi-regularly.)
I can't stop you from spreading misinformation, but I can point out when you're misquoting me.

I said the profitability of mining will approach zero over time, just like the profitability of every productive enterprise in a free market approaches zero over time.
TonyT
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January 04, 2015, 03:00:15 PM
 #19548

I'm new to this thread.  Without reading all 989 pages of posts, can somebody summarize the prevailing Zeitgeist of this thread?

Shouldn't it read, "Bitcoin collapsing, Gold is steady"?

It reminds me, as a gold bug, of the 'collapse' in gold the last few years.  Since my average price is well below $1000 an ounce, I don't really care if it falls from its all time high, as I'm still above water.

Is it the same with most of you BTC holders?  Or did you buy at the peak?

TonyT

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January 04, 2015, 03:01:02 PM
 #19549

You could probably afford to lose the price of a cup of coffee.
Bitcoin can not afford to have a billion people using a different currency/money substitutes to pay for their coffee.
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January 04, 2015, 03:03:12 PM
 #19550

I'm new to this thread.  Without reading all 989 pages of posts, can somebody summarize the prevailing Zeitgeist of this thread?

Shouldn't it read, "Bitcoin collapsing, Gold is steady"?

It reminds me, as a gold bug, of the 'collapse' in gold the last few years.  Since my average price is well below $1000 an ounce, I don't really care if it falls from its all time high, as I'm still above water.

Is it the same with most of you BTC holders?  Or did you buy at the peak?

TonyT

Check the original post date for context.
My average cost per bitcoin is about 7 dollars and cypher's is probably even lower, so no many of us here are comfortably in the black.

Bro, do you even blockchain?
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January 04, 2015, 03:33:37 PM
 #19551


Justusranvier says that it is 'econ 101' that mining reward will fall to zero (and I say it's likely to dip below semi-regularly.)

I can't stop you from spreading misinformation, but I can point out when you're misquoting me.

I said the profitability of mining will approach zero over time, just like the profitability of every productive enterprise in a free market approaches zero over time.

All I'm asking for is for you to bless us with a dab of your immense wisdom and expend a sentence of two explaining what provides support to Bitcoin when the profitability of mining falls to near zero.  Good will?  Hopium?  Magical crypto-flakes?

It's surprising to see an such an economic guru as yourself struggle so much here.  Or perhaps 'free markets' are overrated and not applicable as a support foundation for Bitcoin.  Certainly I could understand you preferring to remain mute about it if that's your thinking.


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January 04, 2015, 03:38:15 PM
 #19552

You could probably afford to lose the price of a cup of coffee.
Bitcoin can not afford to have a billion people using a different currency/money substitutes to pay for their coffee.

No but it could afford to have one or two eg pettycoin connected over a 2wp, freeing up bitcoin main from sub $10 transactions.

It has sharded validation, its not an alt its a micropayment network bitcoin auxiliary chain.  He thinks he can get to 100k TPS.  I really dont think you want that on the main chain because its weaker, and he cut down a lot of bitcoin features to get it.  But its useful.

He has a video up about pettycoin chain sharding https://www.youtube.com/watch?v=yzst_gChOr8.

Adam

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cypherdoc
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January 04, 2015, 03:45:52 PM
 #19553

Adam,

If mtgox had had you design a SC for them, would you have structured a single specific SPVmtgox SC to which everyone would have sent their BTC (one address), then waited 2d for confirmation, before allowing those individuals to be assigned their own specific  scBTC to be traded p2p , all the while securing this SC with 100% MM?
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January 04, 2015, 04:07:55 PM
 #19554

If mtgox had had you design a SC for them, would you have structured a single specific SPVmtgox SC to which everyone would have sent their BTC (one address), then waited 2d for confirmation, before allowing those individuals to be assigned their own specific  scBTC to be traded p2p , all the while securing this SC with 100% MM?

The point of moving transactions on-chain is that the user can then own their own coins, rather than delegating ownership to a third party like mtgox.

Adam

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cypherdoc
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January 04, 2015, 04:24:31 PM
 #19555

If mtgox had had you design a SC for them, would you have structured a single specific SPVmtgox SC to which everyone would have sent their BTC (one address), then waited 2d for confirmation, before allowing those individuals to be assigned their own specific  scBTC to be traded p2p , all the while securing this SC with 100% MM?

The point of moving transactions on-chain is that the user can then own their own coins, rather than delegating ownership to a third party like mtgox.

Adam


But each SC has its own spvp (single address)  that everyone has to move through to the SC? In other words,  everyone has to send their BTC to that address and then are somehow going to receive individually assigned scBTC on the other side? 
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January 04, 2015, 04:28:19 PM
 #19556

cypherdoc: it seems you are against side-chains on an economic principle rather than a specific technical implementation

Does this principle then extend to all other provably-backed (cryptographically-linked) bitcoin substitute tokens? And would you like to specify/define exactly what that principle is so that future technical improvements can be evaluated equally?

There are many new innovations to come that will achieve the same or similar results in principle to the side-chain conversion SPV 2wp, using multi-sig and time-locks, ZKP, etc ... are you going to be opposed to all these innovations also? (Hint: they will allow fast, off-chain, private settlement, or ttx bundling, with near zero-trust, i.e. blockchain level security and low costs).

I think that the economic principle of operation you seem to be vehemently opposed to is inevitable in some form or another. There will be token money substitutes that really will be cryptographically "as good as bitcoin", in a way that paper money substitutes were never "as good as gold".

Seems to me you got the last word in there Smiley  Nicely put.

The time-locks is a great example because that actually exists already: micropayment channels, which provide micropayments with normal security, but the incremental payments are offchain.  There is another concept called a micropayment channel hub, which extends that idea.  Its also very simple Peter Todd explains it here:

http://www.mail-archive.com/bitcoin-development@lists.sourceforge.net/msg06576.html

one reason I think its an interesting example is it also has a time-preference in normal operation (though in that case any party can cash-in the balance at any time on the chain, though they have to start again for future tx, and setup a new time-lock).

Adam

hashcash, committed transactions, homomorphic values, blind kdf; researching decentralization, scalability and fungibility/anonymity
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January 04, 2015, 04:31:34 PM
 #19557

The point of moving transactions on-chain is that the user can then own their own coins, rather than delegating ownership to a third party like mtgox.

But each SC has its own spvp (single address)  that everyone has to move through to the SC? In other words,  everyone has to send their BTC to that address and then are somehow going to receive individually assigned scBTC on the other side?  

So the spv peg transactions (which anyone can create at any time) includes a list of addresses and amounts to emerge on the sidechain, so that could be one user, or a group of users each contributing inputs a bit like CoinJoin.  However its going to be more efficient to use an arbitrageur or cross-chain atomic swap for all but large liquidity calls if the trade gets imbalanced.

Adam

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brg444
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January 04, 2015, 04:49:29 PM
 #19558

what is this bizarro world where any ledger of ownership qualifies as a blockchain  Huh

"I believe this will be the ultimate fate of Bitcoin, to be the "high-powered money" that serves as a reserve currency for banks that issue their own digital cash." Hal Finney, Dec. 2010
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January 04, 2015, 05:03:28 PM
 #19559

what is this bizarro world where any ledger of ownership qualifies as a blockchain  Huh
*ahem*

Academic interest in bitcoin only. Not owner, not trader, very skeptical of its longterm success.
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January 04, 2015, 05:09:59 PM
 #19560

what is this bizarro world where any ledger of ownership qualifies as a blockchain  Huh
*ahem*


if he's confused, we're all in trouble.
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