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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?
1.  yes
2.  no

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Author Topic: Gold collapsing. Bitcoin UP.  (Read 1808604 times)
hdbuck
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January 24, 2015, 03:30:56 PM
 #20561

IMHO Gavin has been pressurized by (private) business' interests such as Bitpay, Coinbase et al to push this (NYSE, CIA, and USgov too?!), but i am glad there is still some space to argue and not despotically rush into it.

I hear this thrown around a lot, but never seen any evidence for it. How has Bitpay/Coinbase pressured Gavin?

It's not unlikely that Gavin actually thinks this is a good idea and that's why he's working on it.

Im not saying this is what is happening, nor would i find any evidence about what is going on in one's head.
Just extrapolating that they may be a lot of forces driving or attempting to highjack bitcoin's development.
Capitalistic and private interest are likely playing their card on top of that, considering all the VC cash that has been thrown at bitcoin over the last couple years.
Besides it is proven that Bitpay, Coinbase and other exchanges are favoring the forking.

Anyhow, it also seems Gavin is on the edge here with this whole thing, putting his legitimacy and authority as Bitcoin lead dev at risk if people in the end refuses to cope with the forked software.
Interesting times..

But you have to look at the totality of the situatio.

Imo,  Gavin is working from a much higher level of moral authority than gmax. He's employed  by a non profit. Sure, he may be in the coinbase advisory board or something like that but unlike gmax he isn't CEO of a for profit company funded by a bunch of late comers who previously shunned Bitcoin.

I've got $21M that says I'm right.

Ah i missed the point about gmax being involved in blockstream..  Undecided

What about Peter Todd?
Although affiliated to viacoin now, he seemed pretty foreseeing regarding that issue too: https://bitcointalk.org/index.php?topic=208200.0


https://twitter.com/petertoddbtc/status/557719826748440579
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cypherdoc
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January 24, 2015, 03:47:37 PM
 #20562

IMHO Gavin has been pressurized by (private) business' interests such as Bitpay, Coinbase et al to push this (NYSE, CIA, and USgov too?!), but i am glad there is still some space to argue and not despotically rush into it.

I hear this thrown around a lot, but never seen any evidence for it. How has Bitpay/Coinbase pressured Gavin?

It's not unlikely that Gavin actually thinks this is a good idea and that's why he's working on it.

Im not saying this is what is happening, nor would i find any evidence about what is going on in one's head.
Just extrapolating that they may be a lot of forces driving or attempting to highjack bitcoin's development.
Capitalistic and private interest are likely playing their card on top of that, considering all the VC cash that has been thrown at bitcoin over the last couple years.
Besides it is proven that Bitpay, Coinbase and other exchanges are favoring the forking.

Anyhow, it also seems Gavin is on the edge here with this whole thing, putting his legitimacy and authority as Bitcoin lead dev at risk if people in the end refuses to cope with the forked software.
Interesting times..

But you have to look at the totality of the situatio.

Imo,  Gavin is working from a much higher level of moral authority than gmax. He's employed  by a non profit. Sure, he may be in the coinbase advisory board or something like that but unlike gmax he isn't CEO of a for profit company funded by a bunch of late comers who previously shunned Bitcoin.

I've got $21M that says I'm right.

Ah i missed the point about gmax being involved in blockstream..  Undecided

What about Peter Todd?
Although affiliated to viacoin now, he seemed pretty foreseeing regarding that issue too: https://bitcointalk.org/index.php?topic=208200.0


https://twitter.com/petertoddbtc/status/557719826748440579


Peter's fairly neutral, altho radical & boisterous at times.  i used to be more concerned when Mastercoin seemed to be his main project but nowadays, especially since Mastercoin seems pretty dead, he appears to be affiliated to a bunch of diverse and different projects so i'm less concerned and hence value his opinion more.
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January 24, 2015, 03:57:06 PM
 #20563

really interesting post by srebin over on Reddit about what's going on in Bulgaria and surrounding regions:

[–]srebrin 5 points an hour ago

I've been a depositor at KTB pyramid, for which i got paid an interest of nearly 9%, paid out in installment of 4 months. The pyramid advertised itself as the bank of the rich which probably was true considering that many from the upper echelons of the ruling parasites had "special" interest arrangements nearing 10-11% interest! I realized that in an economic environment of depressed credit expansion, outflow capitals, collapsing real estate prices (nearly 40% from the top in 2008) there is no way on earth they could possibly sustain this kinds of interest payments and kept my ears and eyes open for the slightest of troubles with the rulers as to move my electronic debt based money promise out of them. That is what i did just 3 days before the pyramid was closed in June 2014 as news was spreading that the pyramid chief - Cvetan Vasilev, was in a row with one of the ruling parties (DPS) which is famous for staying in power ever since the collapse of the previous rulers regime - the red communists turned into newly baked crony-capitalists.

The total assets of the pyramid were over 3 billion euros, of which within the "guaranteed" electronic money was 2 billion. In the so called guarantee fund there were less than 2 billion after 17 years of collecting fees on the bank assets, for which the rulers took on a state debt to be payed by the tax slaves in the next couple of generations as to fulfill the "promise". Bulgaria is in a currency board to the euro since 1997, after the hyper inflationary collapse caused by 17 failed banks (orchestrated of course) that run away with 2.5billion dollars of value at the time, only 7 years after the change of the clothes of the previous rulers to a new kind with fancier ideas like "democracy for the masses". This is to show that in 2014 only one of the nearly 30 banking pyramids operating in the country, stole more than the previous 17 failed banks in 1997. As interest payments were MUCH higher in all banks because of the distorted market place by the bankrupt KTB pyramid, lots of hot money was flowing from depositors speculating by spreading their eggs in higher risk tax farms like bulgaria, ukraine, moldova, mongolia, turkey etc. Now, all this money flow has reversed and I expect that more pyramids are in trouble than most people realize and probably unless the rulers take a lot more debt, there will be a contagion in the months to come as things unravel. The latest big bank to come into the spotlight is FIB (or PIB, first investment bank) for which news is spreading with a huge credit exposure to very few companies and persons with total credits way above the 25% regulatory limit of all assets. FIB is the 3rd biggest bank and already received state liquidity last summer (600million euro) as there was a bank run affecting them and other bulgarian-owned banks, considering how fragile the confidence level is with any of those pyramids. What is funny the KTB owner is now in Serbia, as it is outside the EU empire and can not be extradited as easy as within it upon request. He has put a couple of a hundred million euros in companies in serbia, money stolen from depositors of course, and probably is under the protection of the serbian rulers as they seem to do everything possible to delay any extradition proceedings. Before the pyramid officially was closed, they boosted less than 2% default rate whereas in the other banks it is nearly 20% considering the real estate as collateral has gone down dramatically. Suddenly, after its closure the regulators at the central bank has published that it had over 50% default rate which was masked through new deposits coming in at the promise of high return and issuing new credits to the bad companies to repay bad loans and mask the whole think up! No normal wain person with leave his saved up toilet paper with any of the banks these days as there is in the air talks of overturning the currency board and hyper inflating the bad debt as they did in 1997.

tl.dr: whoever has any brains is getting his money out of any bank in bulgaria as the political uncertainty is too great of a risk

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[–]Byzantine-General 2 points 50 minutes ago

Agree with you that First Investment Bank will be the next to fall.

Several newspapers have been fined for reporting on FIBank's financial troubles based on a recent law

http://en.rsf.org/bulgaria-authorities-ramp-up-pressure-on-21-01-2015,47516.html

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http://www.reddit.com/r/Bitcoin/comments/2tia8f/at_the_same_time_bitstamp_was_robbed_of_6_million/cnzca6d
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January 24, 2015, 04:17:10 PM
 #20564

Banking Culture Encourages Dishonesty

The authors conclude that the prevailing business culture in the banking industry weakens and undermines honesty. Research in moral psychology and behavioral ethics, however, suggests that the dishonesty may be due something more basic: money and number crunching are an important part of the banking industry. When people are focused on money, research shows, they behave in self-interested ways. Even thinking about money leads people to be less helpful and fair in their dealings with others, to be less sensitive to social rejection, and to work harder toward personal goals. In fact, money can make us so focused on our selfish motives that it can even lead to unethical behavior. In my own research, for instance, I find that university students were more likely to cheat after seeing 7,000 dollar bills than after seeing 24. Similarly, study participants across a variety of studies were more likely to cheat when they were primed to think about money.


http://www.scientificamerican.com/article/banking-culture-encourages-dishonesty/
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January 24, 2015, 04:49:30 PM
 #20565

Does it make sense to replace all Honda windshields with Lear style ones because they are 'more secure'.  

It does make sense to do so if the Lear style windshield is not only more secure, but also less expensive than the Honda style. Better and cheaper. No brainer.

I'm sure nobody would be able to make a transaction solution which is cheaper than real time flooding of the entire network with every transaction and keeping every transaction on every autonomous node in perpetuity...and every 'coin' (aka UTXO) in the currency system in memory.


It sounds like you're trying to make the point that keeping LOTS AND LOTS of copies of an entry in a ledger (i.e, the blockchain) is expensive. Like, I buy a cup of coffee, and this single transaction gets recorded LIKE A ZILLION TIMES all over the globe.

Is that what you're trying to say? If so, my response:

The number of perfectly identical copies of a single transaction is much less of an issue than the number of distinct ledgers and distinct ledger entries for that transaction. Did you ever stop to think about how many different ledgers/ledger entries does it take to buy a single cup of coffee with a credit card? This one transaction involves a complex flow of money that involves the customer, the merchant, the credit card, the POS (like square or paypal or whoever), and maybe more. That's at least 4 entities and with double entry accounting, there are probably at least 8 different tables that record this one transaction. I bet it's actually a lot more than that. At some point in time, multiple people have to make sure that all of this record keeping is consistent among all these different databases that are built and maintained by different people with different levels of expertise, using different conventions, different computer languages, etc etc. Suppose there is a discrepancy; which table contains the error? It's this process of reconciliation where the expense comes in.

When you go through that exercise, suddenly having one transaction recorded in ONE ledger that everyone trusts and refers to, sounds pretty simple. Who cares that this one ledger is duplicated many times over the globe?

Of course, we're not there yet. It will be a long time before we abandon the legacy fiat system entirely. But it will happen, eventually. Until then, we have about a zillion different ledgers spread across the planet, and we gotta make sure they alway stay reconciled. God help us.


You are exactly right, and:

Most naysayers and trolls compare blockchain transactions to credit card transactions. That is false, bitcoin transactions are like moving fiat notes from hand to hand. Bitcoins can be compared to fiat notes. We can easily build card systems on top of bitcoins when needed, credit cards and debit cards and gift cards, with cooperating businesses as third parties.

It will probably never be viable to replace all fiat person to person transactions with blockchain transactions, but luckily, we have another option for that: exchanging bitcoin paper wallets with keys directly. Trust needed, but less trust than with fiat notes, because the paper wallet can be checked against the blockchain when desired, and the bitcoins can be moved from the paper wallet back to non physical form at any time.

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January 24, 2015, 05:13:38 PM
 #20566


But you have to look at the totality of the situatio.

Imo,  Gavin is working from a much higher level of moral authority than gmax. He's employed  by a non profit. Sure, he may be in the coinbase advisory board or something like that but unlike gmax he isn't CEO of a for profit company funded by a bunch of late comers who previously shunned Bitcoin.

I've got $21M that says I'm right.

Gavin gets up in front of a crowd of Silicon Valley VC types for the 'state of the union' thing and the first words out of his mouth are the standard 'need to innovate or die' tripe.

Gavin pulls in $200k/yr from a 'non-profit' that he and Vassenes (who seemed to have popped out of the ether to lead a lot of things) put together.  That group (the Bitcoin Foundation) counts as it's members a whole bunch of people who are almost certainly simple thieves and dopey criminals.  The attrition off it's board of directors from arrests and prosecutions is stunning.

Gavin seems to be the only guy who is paid specifically to do things to Bitcoin.  Garzik is paid by Bitpay, but as near as I can see the work he does on Bitcoin and his philosophies and judgements don't seem to have changed a lot and a lot of the don't seem to align with the interests of his employer.

Maxwell and ~sipa are among the most productive and skilled of the Bitcoin devs, and Back has a long history in the space which pre-dates Bitcoin.  Maxwell is publicly visible and I've never detected anything he's said which indicated that he was in any way non-genuine.  Since I've been watching the commits back in 2011, ~sipa has seemed to be the principle architect of Bitcoin.  Hired by Google long after he became a key part of Bitcoin, worked for them briefly then apparently quit maybe around the time a preponderance of the most important of the core developers formed some sort of a grouping as Blockstream.

I am fairly certain that if Blockstream passed themselves off as a 'non-profit' (which is pretty meaningless as a label these days) people who have some reason to be threatened by their goals for Bitcoin would rail on them for not being sufficiently free-market or some other nonsense.

I'll withhold judgement on Blockstream in operation until I see first hand how transparent they are in their operations and production of code and so forth.  I am as hopeful for them in these regards as I have been of any effort on the basis of who's involved.  It speaks well for the organization that the likes of Maxwell and Back take some time to interact with the community and in the same open and honest manner that they have done before Blockstream was formed.


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January 24, 2015, 05:53:34 PM
 #20567

Does it make sense to replace all Honda windshields with Lear style ones because they are 'more secure'.  

It does make sense to do so if the Lear style windshield is not only more secure, but also less expensive than the Honda style. Better and cheaper. No brainer.

I'm sure nobody would be able to make a transaction solution which is cheaper than real time flooding of the entire network with every transaction and keeping every transaction on every autonomous node in perpetuity...and every 'coin' (aka UTXO) in the currency system in memory.


It sounds like you're trying to make the point that keeping LOTS AND LOTS of copies of an entry in a ledger (i.e, the blockchain) is expensive. Like, I buy a cup of coffee, and this single transaction gets recorded LIKE A ZILLION TIMES all over the globe.

Is that what you're trying to say? If so, my response:

The number of perfectly identical copies of a single transaction is much less of an issue than the number of distinct ledgers and distinct ledger entries for that transaction. Did you ever stop to think about how many different ledgers/ledger entries does it take to buy a single cup of coffee with a credit card? This one transaction involves a complex flow of money that involves the customer, the merchant, the credit card, the POS (like square or paypal or whoever), and maybe more. That's at least 4 entities and with double entry accounting, there are probably at least 8 different tables that record this one transaction. I bet it's actually a lot more than that. At some point in time, multiple people have to make sure that all of this record keeping is consistent among all these different databases that are built and maintained by different people with different levels of expertise, using different conventions, different computer languages, etc etc. Suppose there is a discrepancy; which table contains the error? It's this process of reconciliation where the expense comes in.

When you go through that exercise, suddenly having one transaction recorded in ONE ledger that everyone trusts and refers to, sounds pretty simple. Who cares that this one ledger is duplicated many times over the globe?

Of course, we're not there yet. It will be a long time before we abandon the legacy fiat system entirely. But it will happen, eventually. Until then, we have about a zillion different ledgers spread across the planet, and we gotta make sure they alway stay reconciled. God help us.


You are exactly right, and:

Most naysayers and trolls compare blockchain transactions to credit card transactions. That is false, bitcoin transactions are like moving fiat notes from hand to hand. Bitcoins can be compared to fiat notes. We can easily build card systems on top of bitcoins when needed, credit cards and debit cards and gift cards, with cooperating businesses as third parties.

It will probably never be viable to replace all fiat person to person transactions with blockchain transactions, but luckily, we have another option for that: exchanging bitcoin paper wallets with keys directly. Trust needed, but less trust than with fiat notes, because the paper wallet can be checked against the blockchain when desired, and the bitcoins can be moved from the paper wallet back to non physical form at any time.


System-wise the mainstream financial system is hampered more by regulatory issues.  From a computer science and engineering point of view it's job is not that difficult.  It's still challenging enough that cash (an autonomous token-based system) comes to the rescue, but that won't be strictly speaking an insurmountable problem as system capabilities expand.

Bitcoin has a big technical crutch in that it is not a real-time system.  It only gains security in batch mode (as blocks are mined.)  In spite of the huge advantage (and the corresponding deficiency as a useful exchange currency) it still has had a fair degree of struggles even operating at a tiny tiny fraction of the mainstream systems.

There are two main points here.

1) To hope and expect that Bitcoin will enjoy it's advantage of not needing to comply with the same regulatory issues which mainstream systems do if it becomes more then a pin-point spot on the landscape is utterly pie-in-the-sky.  At that point it will have to bite off the challenges that mainstream systems do, or play a never-ending cat-n-mouse game with the legal system.  Both are going to degrade it's technical operational capabilities a lot and put it out of reach to almost anyone to operate unless they leverage certain services from specialists with a government charter.

2)  People always try to fall back on some argument about gross disk space.  It's generally more due to pure ignorance than malice.  In fact, the entire circulation needs to be indexed in order to work with some modicum of function which is done in RAM.  It works now, sorta, only because Bitcoin has thus far failed as an exchange currency and not blown through it's paltry 7 TPS...and is fairly young...like a disk (with a lame filesystem) which has not yet become fragmented.  Most operators of significance don't use the architecture of a typical PC.  They have effectively as much RAM as he normal use does diskspace and it is available to as many processing nodes as they choose to buy.  These operators will be able to maintain the circulation index even upon some significant growth.  Most others will not.


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January 25, 2015, 01:34:22 AM
 #20568

System-wise the mainstream financial system is hampered more by regulatory issues.  From a computer science and engineering point of view it's job is not that difficult.

From a CS and engineering point of view, the current financial system is like a massive sprawling database built by someone who doesn't know anything about database normalization. One of the principles of database normalization is that any given piece of data should be stored in only one location rather than duplicated as multiple entries in multiple tables. (Backups or multiple copies of the database, e.g. multiple copies of the blockchain, btw don't count as multiple locations.) The problem with multiple entries is that you end up with discrepancies that you have to fix. Discrepancies happen not just due to honest error, but also due to bad actors.

The problem with the current system is not that it's intractable. It's tractable; it's just takes lots of time and energy to run it, because it's a big sprawling mess. Bitcoin (or crypto in general) takes this big sprawling non-normalized mess of a database and normalizes it. The significance of database normalization should not be underestimated.

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January 25, 2015, 01:51:29 AM
 #20569

Bitcoin has a big technical crutch in that it is not a real-time system. 

In many ways though, bitcoin is a lot faster than the current system. How long does it take for a bitcoin transaction to be fully verified (prudent for large transactions)? If you pick 6-blocks-deep as the standard, it takes about an hour. How long does it take for large transactions to clear in the current system? It varies widely but it is not uncommon for large transactions to take one or more days to clear fully. So far large transactions, we're looking at ~ one hour max (bitcoin) versus a day or days max (legacy system): bitcoin wins.

You may be thinking that credit cards are pretty much instantaneous and therefore faster than bitcoin. Well, not really. Bitcoin transactions can be just as fast if you're willing to forego waiting for the chain to grow by 6 blocks. There is some risk to this, but it is small enough to be acceptable for small transactions. Compare this to using a credit card: there is a risk that my signature won't be valid, or that some other problem may crop up so that the merchant/CC company never get my money, but the merchant and CC company are willing to accept this risk without waiting to make sure my payment actually arrives (which could take months). So far small transactions, where the recipient is willing to accept the small risk of payment not being received: pretty much instantaneous (seconds, less than a minute) for bitcoin and for legacy systems; I call it a tie.

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January 25, 2015, 01:55:19 AM
 #20570

Anyhow, it also seems Gavin is on the edge here with this whole thing, putting his legitimacy and authority as Bitcoin lead dev at risk if people in the end refuses to cope with the forked software.
Interesting times..

..., there is evidence what Satoshi thought about the max block size limit. Can't quote this often enough, it seems:

The threshold can easily be changed in the future.  We can decide to increase it when the time comes.  It's a good idea to keep it lower as a circuit breaker and increase it as needed.  If we hit the threshold now, it would almost certainly be some kind of flood and not actual use.  Keeping the threshold lower would help limit the amount of wasted disk space in that event.

Conclusion: Whatever one's arguments for or against raising the limit are, leave Satoshi out of it. From what we can gather, he thought it's a total non-issue, a matter of spam reduction.

Doesn't mean he's automatically right of course, but arguing against a relaxation of the limit by appeal to the creator's authority just doesn't fly given the evidence.

There is no doubt that when Satoshi handed his role over to Gavin he demonstrated himself to be a very astute judge of character and ability. Gavin is continuing solidly with the vision that Satoshi had for his project.

I have admiration for Peter Todd's crypocurrency development skills, but was very disappointed when he published his naive, noobie-fooling video. Greg Maxwell takes a thoughtful, conservative and measured approach, but I really wish he would make it clear whether he thinks Bitcoin should at least scale in line with the general level of improvement in computing technology for high-end home users.

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January 25, 2015, 02:04:55 AM
 #20571

1) To hope and expect that Bitcoin will enjoy it's advantage of not needing to comply with the same regulatory issues which mainstream systems do if it becomes more then a pin-point spot on the landscape is utterly pie-in-the-sky.  At that point it will have to bite off the challenges that mainstream systems do, or play a never-ending cat-n-mouse game with the legal system.  Both are going to degrade it's technical operational capabilities a lot and put it out of reach to almost anyone to operate unless they leverage certain services from specialists with a government charter.

I think you are correct to point out that bitcoin is ultimately going to have to answer to the regulators. Bitcoin enthusiasts (me included) have a tendency to think (hope? dream about?) that bitcoin is just going to bypass the current regulatory framework because it can't be regulated. I think an interesting discussion could be made on this topic, but I will grant you that there is an element of pie-in-the-sky on the part of the enthusiasts.

So let's assume that bitcoin becomes fully regulated. I maintain that this is going to be less difficult for bitcoin system than it is for the mainstream financial system, for the reasons I've outlined in my past few posts: a "normalized database" system (ie crypto, where the blockchain acts as reference point for all transactions) is easier to police than a big messy "un-normalized database" system like we have in the status quo, where any given transaction is recorded in multiple different tables strewn out all over the financial world. The latter system is messier and sloppier and therefore harder and more expensive to police.

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January 25, 2015, 02:23:30 AM
 #20572

From a CS and engineering point of view, the current financial system is like a massive sprawling database built by someone who doesn't know anything about database normalization. One of the principles of database normalization is that any given piece of data should be stored in only one location rather than duplicated as multiple entries in multiple tables. (Backups or multiple copies of the database, e.g. multiple copies of the blockchain, btw don't count as multiple locations.) The problem with multiple entries is that you end up with discrepancies that you have to fix. Discrepancies happen not just due to honest error, but also due to bad actors.

On the other hand, robustness against design and programming errors requires truly redundant data representations, taht is, storing each piece of data in many locations with independent design, implementation, and management.  Backups and multiple copies of a database do not count towards that either.  Thus it is actually good that the same data is kept by different players and by the government.  

Quote
The problem with the current system is not that it's intractable. It's tractable; it's just takes lots of time and energy to run it, because it's a big sprawling mess. Bitcoin (or crypto in general) takes this big sprawling non-normalized mess of a database and normalizes it. The significance of database normalization should not be underestimated.

A single design failure could render all the account information in the blockchain useless.  A government could break all bitcoin-dependent businesses at once by blocking access to the bitcoin network (by network hacking or by legal threats on users).

And it is undeniable that, for the amount of traffic that it processes, the bitcoin network is terribly more wasteful of computing resources than the existing financial system, by orders of magnitude.

Academic interest in bitcoin only. Not owner, not trader, very skeptical of its longterm success.
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January 25, 2015, 02:37:41 AM
 #20573

Bitcoin has a big technical crutch in that it is not a real-time system. 

In many ways though, bitcoin is a lot faster than the current system. How long does it take for a bitcoin transaction to be fully verified (prudent for large transactions)? If you pick 6-blocks-deep as the standard, it takes about an hour. How long does it take for large transactions to clear in the current system? It varies widely but it is not uncommon for large transactions to take one or more days to clear fully. So far large transactions, we're looking at ~ one hour max (bitcoin) versus a day or days max (legacy system): bitcoin wins.

I'm cool with Bitcoin being used for such transactions.  That's kind of what I've been arguing all along.  I would much rather trust mathematics than the legal system which is increasingly under control of the corporate financial sector for such things.


You may be thinking that credit cards are pretty much instantaneous and therefore faster than bitcoin. Well, not really. Bitcoin transactions can be just as fast if you're willing to forego waiting for the chain to grow by 6 blocks. There is some risk to this, but it is small enough to be acceptable for small transactions. Compare this to using a credit card: there is a risk that my signature won't be valid, or that some other problem may crop up so that the merchant/CC company never get my money, but the merchant and CC company are willing to accept this risk without waiting to make sure my payment actually arrives (which could take months). So far small transactions, where the recipient is willing to accept the small risk of payment not being received: pretty much instantaneous (seconds, less than a minute) for bitcoin and for legacy systems; I call it a tie.

I'm fine with using my credit and cash for day-in/day-out stuff.  Works great for me and I expect it (almost) always will.  If I want to do something which I cannot do with these (such as support Wikileaks which is why I got interested in Bitcoin in the first place) then I would like Bitcoin to be available, but I have no problem paying what it is worth in transaction fees.  And it's a lot.

I'd rather use sidechains when I can since, to me, that is exactly the same thing as using Bitcoin.  I would anticipate (and verify) that the sidechain I am using is property supporting Bitcoin and would anticipate that my few transactions and thousands of others are bundled up into a single backing store transaction.  In this way I can pay a modest fee for penny-ante stuff but when it hits the native Bitcoin network the transaction fee realized by the infrastructure operators significant while their job remains manageable.


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January 25, 2015, 02:44:56 AM
 #20574

1) To hope and expect that Bitcoin will enjoy it's advantage of not needing to comply with the same regulatory issues which mainstream systems do if it becomes more then a pin-point spot on the landscape is utterly pie-in-the-sky.  At that point it will have to bite off the challenges that mainstream systems do, or play a never-ending cat-n-mouse game with the legal system.  Both are going to degrade it's technical operational capabilities a lot and put it out of reach to almost anyone to operate unless they leverage certain services from specialists with a government charter.

I think you are correct to point out that bitcoin is ultimately going to have to answer to the regulators. Bitcoin enthusiasts (me included) have a tendency to think (hope? dream about?) that bitcoin is just going to bypass the current regulatory framework because it can't be regulated. I think an interesting discussion could be made on this topic, but I will grant you that there is an element of pie-in-the-sky on the part of the enthusiasts.

So let's assume that bitcoin becomes fully regulated. I maintain that this is going to be less difficult for bitcoin system than it is for the mainstream financial system, for the reasons I've outlined in my past few posts: a "normalized database" system (ie crypto, where the blockchain acts as reference point for all transactions) is easier to police than a big messy "un-normalized database" system like we have in the status quo, where any given transaction is recorded in multiple different tables strewn out all over the financial world. The latter system is messier and sloppier and therefore harder and more expensive to police.

I'm inclined to simply plan on playing cat-n-mouse and retain as much of a potential of playing from a position of strength as possible.

It is faulty to hope that we could give a little and get those who Bitcoin threatens off our backs.  Won't happen.  Control of a monetery system is to important to to many people.  The only way Bitcoin will be accepted by TPTB will be if they own the system.  At that point it is worthless to me (though, as I always say, it could make me a rich guy.)

Back in 2011 there was some thread asking how the govt could neutralize Bitcoin.  My answer, 'embrace it.'  So it is no surprising that I would view TPTB being nice and accommodating with some skepticism.


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January 25, 2015, 02:47:58 AM
 #20575

From a CS and engineering point of view, the current financial system is like a massive sprawling database built by someone who doesn't know anything about database normalization. One of the principles of database normalization is that any given piece of data should be stored in only one location rather than duplicated as multiple entries in multiple tables. (Backups or multiple copies of the database, e.g. multiple copies of the blockchain, btw don't count as multiple locations.) The problem with multiple entries is that you end up with discrepancies that you have to fix. Discrepancies happen not just due to honest error, but also due to bad actors.

On the other hand, robustness against design and programming errors requires truly redundant data representations, taht is, storing each piece of data in many locations with independent design, implementation, and management.  Backups and multiple copies of a database do not count towards that either.  Thus it is actually good that the same data is kept by different players and by the government.  

Basically, you are stating that database normalization has a downside. I will grant that there is a time and a place for database normalization and denormalization. But there is a difference between selective denormalization, done on purpose because it conveys advantages when done properly (an option opened up with the advent of trustless decentralized ledger), versus being fully-denormalized, all the time, because you have no choice in the matter (because trustless ledgers do not exist). IOW, bitcoin provides a degree of database design flexibility that did not exist prior to the advent of blockchain technology.

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January 25, 2015, 03:10:07 AM
 #20576

Back in 2011 there was some thread asking how the govt could neutralize Bitcoin.  My answer, 'embrace it.'  So it is no surprising that I would view TPTB being nice and accommodating with some skepticism.

I agree that the governmental approach (at least in the west) will probably be to embrace bitcoin, regulate it, tax it. I don't think bitcoin is the existential threat to the legacy system that some people imagine it to be. Bitcoin will not cause the central banks to fail. So, for the foreseeable future, I think bitcoin (or crypto) will coexist peacefully with the legacy system. Indeed, bitcoin will probably even be nurtured by it, in its own way.

But .... if and when a central bank fails, like in Zimbabwe for instance ... not because bitcoin caused it, but because the system failed all by itself ....

That's when bitcoin will (I think) step in and take over the function of the central bank. This will make it harder to RE-establish the legacy banking system in an area where it has failed. But, bitcoin won't cause the downfall of the institutions that are already in existence.

If my analysis is correct, then everybody wins when the legacy banking system's current institutions adopt bitcoin, including the current powers that be. If/when there is a collapse of the currency/banking system in a given country or society, then (hopefully) the society's subsequent descent into chaos will be less traumatic since people will be able to use a ready-made, out of the box crypto-based financial infrastructure.  And a well fed, economically-empowered mob is less likely to take revenge on the ruling class than a hungry, economically-disempowered one. Wink

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January 25, 2015, 03:57:05 AM
 #20577

But .... if and when a central bank fails, like in Zimbabwe for instance ... not because bitcoin caused it, but because the system failed all by itself ....

It is entirely normal that disruptive technologies are most useful, initially, on the edge cases where the dominant system doesn't work well, and not at the core use case where dominant system is highly optimized, and large value chains are built around it. Indeed disruptive technologies often cause a dominant system to further specialize on a core market -- ceding fringe markets altogether instead of expending resources to serve them -- where it then becomes even more optimized and successful, for a while (often quite a while).

So yes if bitcoin is disruptive then you would expect to take hold in places like Zimbabwe, remittences to Somalia, online gambling, underground markets, etc.

If the threatened embrace of big banks and wall street goes anywhere beyond the toe-in-the-water stage then you can be sure it means bitcoin won't be disruptive after all (but as tvbcof points out may still be very profitable for early adopters).

We shall see.
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January 25, 2015, 04:01:35 AM
 #20578

A single design failure could render all the account information in the blockchain useless. 

This is one of the very good reasons why the world will not, and should not, convert from the legacy system into a crypto-centric one instantaneously. We are not going to jump from here to there all at once or overnight. We are going to do it cautiously, taking a million baby steps in the process. There are scenarios for catastrophic failure that you have thought of, some that I have thought of, and I am sure some that neither of us have thought of. What if some crazy obscure bug causes the chain to fork into a thousand directions all of a sudden? But the thing is, we can play what-if for any technology. What if every computer on the planet gets knocked out by a gigantic EMP or series of EMPs, man-made or otherwise? All of our financial information would be lost! OOMMMGGGG!!! So, what do we do? Just abandon technology, because it might fail us? No, we are going to have to have backup plans in cases of catastrophic technical failure of the blockchain, just like we do for any new technology. I suppose I have more faith in our ability to do so than you. (Or not. I do not want to be presumptuous.)

A government could break all bitcoin-dependent businesses at once by blocking access to the bitcoin network (by network hacking or by legal threats on users).
Yes, and the government could shut down the internet, and the government could turn off your cell phone and cut off your electricity. And the government could shoot you in the head. All of these being arguments that make crypto more appealing, not less.

And it is undeniable that, for the amount of traffic that it processes, the bitcoin network is terribly more wasteful of computing resources than the existing financial system, by orders of magnitude.

Are you talking about the way things stand now, or the way things are envisioned to be in 2, 5, 10 years? Right now a lot of money is spent per transaction [1]; but that is basically because the infrastructure is still being built and people are investing lots of money. If you were an airline and were spending a zillion dollars to build a fleet of new airplanes, and only one airplane was in service so far, would you calculate the cost per passenger as the number of passengers flying right now in the one airplane, divided by all the money being spent building the entire fleet? No, you would not, because it would be a disingenuous argument to make.

[1] https://blockchain.info/charts/cost-per-transaction?timespan=all&showDataPoints=false&daysAverageString=1&show_header=true&scale=0&address=

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January 25, 2015, 04:04:31 AM
 #20579

...
If the threatened embrace of big banks and wall street goes anywhere beyond the toe-in-the-water stage then you can be sure it means bitcoin won't be disruptive after all.
...


I think that's a touch overly definitive. Part of the prospect of bitcoin is that it might not matter *how* it's embraced. Once it's value is high enough and it's in enough hands, it starts to become a financial backbone, both in terms of plumbing and store-of-value asset.

It also depends on what you mean by "disruptive". Replacing the plumbing of the existing financial system, while creating a new asset class - but still using dollars on the consumer tier - would be disruptive. But perhaps you're limiting the term to the more extreme fiat-goes-away scenarios.

Bitcoin is the first monetary system to credibly offer perfect information to all economic participants.
But Bitcointalk & /r/bitcoin are heavily censored. bitco.in/forum, forum.bitcoin.com, and /r/btc are open.
Best info on Casascius coins: http://spotcoins.com/casascius
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January 25, 2015, 04:11:47 AM
 #20580

If the threatened embrace of big banks and wall street goes anywhere beyond the toe-in-the-water stage then you can be sure it means bitcoin won't be disruptive after all (but as tvbcof points out may still be very profitable for early adopters).

We shall see.

There's disruptive, and then there's disruptive. I make the claim often that blockchain technology will be disruptive. And I want it to be. But I want it to be disruptive in a good way, not in a bad way. That means gradual. Catastrophic USD hyperinflation, collapse of the Fed, etc all at the hands of crypto would be a very undesirable outcome, imho.

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