Gold collapsing. Bitcoin UP.

[smooth]

from gmax:

"So far the mining ecosystem has become incredibly centralized over time."

i totally disagree.

I guess it is in the eye of the beholder. I still see 3 pools (assuming "unknown is a mostly some big pool, if not that changes things") with >50%. The other tiny little slices don't matter at all as long as the top 3 agree and if even two of them agree, the tiny slices still hardly matter at all.

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[kodtycoon]

from gmax:

"So far the mining ecosystem has become incredibly centralized over time."

i totally disagree.

I guess it is in the eye of the beholder. I still see 3 pools with >50%. The other tiny little slices don't matter at all as long as the top 3 agree and if even two of them agree, the tiny slices still hardly matter at all.

all it takes is for the owners of the 3 pools to be corrupt and btc is screwed. that isnt decentralization... thats asking for trouble.

[rocks]

These guys have worked themselves to the point of mental exhaustion in some cases to keep this thing scaling up to handle the transaction growth rate thus far and have made huge advances. They would all simply agree (ya know, a consensus) to raise the limit if it was such an obvious 'fix', it is not and there are no obvious fixes, that is just wishful thinking by the unthinking majority. Raising the limit is the last ditch 'suck it and see' hail mary pass when everything else has been optimised as much as possible ...

If the limit gets raised substantially above the technological improvements growth rate I'll be pulling the vast majority of my investment out because it is not going to be operating like we thought it would, i.e. it won't be a clearing and settlement digital gold network but a paypal2.0, fun internet googlesque reversable, traceable payments network

You are doing the same thing you are accusing others of doing. There is no consensus or even an easy answer, whether Bitcoin should be a "clearing and settlement digital gold network" or a "payments network" (I don't think too many want it to be reversible and traceable but you are injecting that as a form of commentary). If there were an easy answer, it would already be accepted as consensus, but there isn't and it isn't.

Implicitly,

decentralised => clearing and settlement digital gold network

centralised => reversable, traceable payments network

(without thinking that is not well-known by now).

The only thing that needs to remain decentralized is the mining process. As long as mining remains decentralized bitcoin will continue as a "clearing and settlement digital gold network". The P2P network can become a more centralized pool of services that run in AWS, but it is the miners that determine the longest chain and the official record.

Since most mining is done through pools already, miners are not exposed to the blocksize. It could be 1MB or 1TB, the work presented to a miner is the same and the security model is the same as what we have today. This is all that matters.

Additionally, most users today already use SPV wallets. These rely on trusting the P2P network peers and not on your own verification. This seems to be OK with most people. In SPV mode whether the P2P network has 100K nodes or 1000 nodes, the security model is the same.

I fail to see how the security model changes as the blocksize scales up and P2P nodes become more like professional services. The mining security model and the SPV usage model are the same.

[justusranvier]

from gmax:

"So far the mining ecosystem has become incredibly centralized over time."

i totally disagree.

I guess it is in the eye of the beholder. I still see 3 pools with >50%. The other tiny little slices don't matter at all as long as the top 3 agree and if even two of them agree, the tiny slices still hardly matter at all.

Is it better, worse, or about the same as in the past?

Maybe some people are complaining about centralization when they actually mean they are disgruntled about competition making mining at home less lucrative than it was in the good old days.

[cypherdoc]

BTC intrinsic value IS its ease of worldwide cheap txns and large network.

Wrong, you could get that with Ripple. The utility value of bitcoin is decentralised, irreversible, permissionless settlement and clearing, (trust no-one consensus) ... like SWIFT but better. Bitcoin will get more valuable the less people can use it but want to, like any desirable scarce resource commodity. The demand already exists and the miner's are providing the secure commodity.

The days of people writing graffitti and spam into the blockchain ending will be the evidence that it is finally useful only as a monetary network, not some kind of toy ... who would use SWIFT to message banal profanities?

marcus, for Bitcoin to act as digital gold it is not enough to simply have scarcity.  it's too early.  it needs to become known, disseminated to all corners of the Earth, be used on a reliable basis and w/o problems, and over many years.  we are not there yet altho all those are achievable goals.  b/c Bitcoin is virtual, the only way billions of ppl will learn to trust it is to be able to access it, use it reliably, and do things with it that they can't do with gold currently.  for that, the only possible way to achieve this is for Bitcoin to become a reliable, more expansive payment network so that it can disseminate itself far and wide so that it can prove itself to humanity that it is indeed a superior form of digital gold:

i see that alot of the 1MB proponents are attempting to use the excuse of "digital gold as a reserve currency" or as a "settlement currency" to argue for their cap.

as one of the first, if not the first, to have made the conceptual switch from physical gold to what i consider digital gold (Bitcoin), AND act on it, i think i am qualified to comment on this excuse:

https://bitcointalk.org/index.php?topic=35956.msg443129#msg443129

my argument against leaving the limit at 1MB to guide Bitcoin's future towards being a reserve or settlement currency is that it is too early to claim Bitcoin as a gold substitute.  Bitcoin is unknown by probably greater than 60-70% of the world's population.  those African kids digging gold out of mine shafts 3ft wide and down 100 yds have no idea that something like Bitcoin even exists.  otoh, they obviously know about the value of gold.  i'd argue they even understand why; that it can't be debased by their gvts by legalized counterfeiting.  they also understand that they can hold the metal in their hands.  it's hard, it's physical, they can break it up, it doesn't seem to lose it's value, and they can instantly transact with it with their local peers.  this is possible b/c gold has been around for thousands of years and has had the benefit of time and usage to spread itself along with it's sound money properties to all corners of the Earth.  the hivemind around gold is set, it's mature, it's universal, it's accepted by gvts and central banks; it's a given.

contrast that with Bitcoin that has maybe a couple of hundred thousand dedicated users.  that is not enough.  there are very few of us, mostly those of this in this thread, that understand that Bitcoin is actually a superior form of gold, ie, digital gold.  it can be transmitted across the internet in fractions of a second.  it's supply is harder and more fixed than gold ever can be by the laws of mathematics.  it isn't under threat of further debasement by asteroid mining or ocean gold.  it's more easily transportable and crosses guarded borders seamlessly and effortlessly.  it certainly can replace gold.  but it is too early to make the claim.

b/c Bitcoin is digital, there exists a burden of proof that is higher than just proving mathematically that the supply is fixed.  that involves proving it's worth as a payment network. this is not only b/c Bitcoin has the unique ability to be the best payment network the world has ever seen but also b/c it is necessary to prove it's worth as a gold substitute.  it will do so by proving to be a reliable payment network which will allow BTC units to be disseminated widely to places like Africa.  b/c those kids in Africa can't touch Bitcoin, admire it's color, wear it, transact with it (no smartphones), they will never accept Bitcoin until these things happen:  

1. they first have to be able to access it:  this first challenge is easily foreseeable as long as we let the Bitcoin expand; smartphone penetration is coming.  all data analyses point to this.  as we speak, thousands of miles of fiber optic cable is being laid across Africa.  Benedict Evans of a16z regularly talks about this.  this eventually will solve the problem of these ppl accessing the internet which will make transacting in Bitcoin possible.  actually, as an aside, i was the first i know to have talked publicly about M-Pesa being a great foreseeable example of how Bitcoin could take over Africa.  here is where i first talked about it.  someone correct me if they know of someone else who talked about it earlier than this:

https://bitcoin-forums.net/index.php?topic=6322.20

2. since those kids can't touch or feel Bitcoin, these kids have to be able to use it reliably; no payment delays, no double spending, no loss of tx's in a queue, no loss in value. this is necessary to develop confidence in Bitcoin as a gold substitute.  this is a few years off even with a block size increase.  but Bitcoin won't even get to them with the 1MB cap as this will prevent the worldwide dissemination necessary for this level of confidence to occur.

capping at 1MB will cause unacceptable confirmation delays, lost tx's, loss of revenues, loss of user base, loss of confidence, loss of exchange value, and generalized degradation of Bitcoin.  it will then never reach the status of digital gold we all aspire to.

[rocks]

from gmax:

"So far the mining ecosystem has become incredibly centralized over time."

i totally disagree.  the trend has been back towards decentralization since ghash and ghash has been punished accordingly by the market down to a measly 3.6%.  what i see in this graph is a normal, expected distribution gradient from large to small share.  btw, gmax has been complaining about mining centralization since at least 2012 but yet here we are.  why do we accept his arguments on this when there hasn't been one major incident of a 51% attack?:

What people seem to keep missing in this "mining is centralized" claim, is that pools are not miners. They are services with ZERO barriers to entry and exit from the mining community.

As long as there is ONE honest P2P node who would publicly flag that a pool was behaving badly (an assumption I believe will always be true), then the pools can not abuse their position.

If any corrupt pool, or collection of corrupt pools, tried to falsify the record, it would immediately become public and that pool would lose most of it's miners in a matter of hours. Miners could simply switch to another honest pool, and there will always be an honest pool to switch to.

This would completely destroy the future profit stream for an established pool. Why the heck would anyone try this, especially given that it would be a futile effort?

[smooth]

from gmax:

"So far the mining ecosystem has become incredibly centralized over time."

i totally disagree.

I guess it is in the eye of the beholder. I still see 3 pools with >50%. The other tiny little slices don't matter at all as long as the top 3 agree and if even two of them agree, the tiny slices still hardly matter at all.

Is it better, worse, or about the same as in the past?

If by in "in the past" you mean over a period of time, my opinion is "about the same."

Obviously when ghash/deepbit was at about 50% themselves that was worse but in the past four years or so there has been a high concentration of big pools with a bit of short term variation and churn.

[rocks]

from gmax:

"So far the mining ecosystem has become incredibly centralized over time."

i totally disagree.

I guess it is in the eye of the beholder. I still see 3 pools with >50%. The other tiny little slices don't matter at all as long as the top 3 agree and if even two of them agree, the tiny slices still hardly matter at all.

Is it better, worse, or about the same as in the past?

Maybe some people are complaining about centralization when they actually mean they are disgruntled about competition making mining at home less lucrative than it was in the good old days.

This

[cypherdoc]

from gmax:

"So far the mining ecosystem has become incredibly centralized over time."

i totally disagree.

I guess it is in the eye of the beholder. I still see 3 pools (assuming "unknown is a mostly some big pool, if not that changes things") with >50%. The other tiny little slices don't matter at all as long as the top 3 agree and if even two of them agree, the tiny slices still hardly matter at all.

well, i don't see them EVER agreeing to perform an attack.  they would destroy confidence in the network and all their equipment value goes poof.  cashing out in USD after an attack is problematic as well as the exchanges are watching for any funny business and Bitstamp is an example of how account funds can be frozen (Jed McCaleb).

this graph is probably never going to change much even with huge Bitcoin success.  there will always be bigger pools than others.

furthermore, pools consist mainly of individual participants who will defect if their pool operator is abusing their hashing power.  ghash has been decimated by defection.

[cypherdoc]

from gmax:

"So far the mining ecosystem has become incredibly centralized over time."

i totally disagree.

I guess it is in the eye of the beholder. I still see 3 pools with >50%. The other tiny little slices don't matter at all as long as the top 3 agree and if even two of them agree, the tiny slices still hardly matter at all.

all it takes is for the owners of the 3 pools to be corrupt and btc is screwed. that isnt decentralization... thats asking for trouble.

then tell me, why hasn't it happened already?  there are supposedly billions to be made doing this.

[smooth]

from gmax:

"So far the mining ecosystem has become incredibly centralized over time."

i totally disagree.

I guess it is in the eye of the beholder. I still see 3 pools (assuming "unknown is a mostly some big pool, if not that changes things") with >50%. The other tiny little slices don't matter at all as long as the top 3 agree and if even two of them agree, the tiny slices still hardly matter at all.

well, i don't see them EVER agreeing to perform an attack.  they would destroy confidence in the network and all their equipment value goes poof.  cashing out in USD after an attack is problematic as well as the exchanges are watching for any funny business and Bitstamp is an example of how account funds can be frozen (Jed McCaleb).

this graph is probably never going to change much even with huge Bitcoin success.  there will always be bigger pools than others.

furthermore, pools consist mainly of individual participants who will defect if their pool operator is abusing their hashing power.  ghash has been decimated by defection.

The discussion is not necessarily about performing an attack, it is about incentives and concentration of voting power. If the big pools want lower fees and/or a higher soft limit, because they are at a competitive advantage in providing the infrastructure required for it, then they get it, regardless of what the rest want. Likewise it has always been the prerogative of pools which transactions to include, so if they want to block some (as eligius does, I understand) then they will do that too. Neither of these rise to the level of an attack that causes the pool to be viewed as hostile and shunned by the community, but it gives disproportionate influence to a few actors.

[smooth]

from gmax:

"So far the mining ecosystem has become incredibly centralized over time."

i totally disagree.

I guess it is in the eye of the beholder. I still see 3 pools with >50%. The other tiny little slices don't matter at all as long as the top 3 agree and if even two of them agree, the tiny slices still hardly matter at all.

all it takes is for the owners of the 3 pools to be corrupt and btc is screwed. that isnt decentralization... thats asking for trouble.

then tell me, why hasn't it happened already?  there are supposedly billions to be made doing this.

Maybe the reason is that Bitcoin only grows to the point where its network state provides adequate confidence and security. So you are looking at causality in the wrong direction. Maybe it would be much, much bigger if it were actually decentralized and it were in fact not possible for "the big three" to attack it and users/investors didn't have to rely on "why aren't they doing it".

[rocks]

C'mon that's totally unfair to the majority of developers (again). It is not simply a 'sacred cow' and that totally over-simplifies the problem while casting negative aspersions against most of the developers.

These guys have worked themselves to the point of mental exhaustion in some cases to keep this thing scaling up to handle the transaction growth rate thus far and have made huge advances. They would all simply agree (ya know, a consensus) to raise the limit if it was such an obvious 'fix', it is not and there are no obvious fixes, that is just wishful thinking by the unthinking majority. Raising the limit is the last ditch 'suck it and see' hail mary pass when everything else has been optimised as much as possible ...

If the limit gets raised substantially above the technological improvements growth rate I'll be pulling the vast majority of my investment out because it is not going to be operating like we thought it would, i.e. it won't be a clearing and settlement digital gold network but a paypal2.0, fun internet googlesque reversable, traceable payments network

If the limit is raised to 20MB tonight, nothing would break.

The reason is because the average blocksize would not magically jump to the max. It would stay exactly where it is today (~400kB/block).

What would happen is the average blocksize would slowly continue to scale up over a matter of years, and as the average blocksize slowly scaled up, development on the core would continue to improve bit by bit to enable continued scaling. This is how SW development works.

If you keep the 1MB blocksize limit, then there never is any pressure on the code to encourage scaling improvements. Scaling improvements are done in real time as issues are discovered or anticipated, but this only happens if the blocksize continues to increase.

Google is a good example here. In the 2000s they completely rewrote their search engine from scratch something like 5 times in 7 years. Not revisions, but rewrites. You might say that was bad planning, but the reality is scaling problems and their solutions can only be discovered by scaling up usage and discovering them along the way.

Bitcoin is about market based solutions to problems. Unlock the barriers and let the market find a way.

[cypherdoc]

These guys have worked themselves to the point of mental exhaustion in some cases to keep this thing scaling up to handle the transaction growth rate thus far and have made huge advances. They would all simply agree (ya know, a consensus) to raise the limit if it was such an obvious 'fix', it is not and there are no obvious fixes, that is just wishful thinking by the unthinking majority. Raising the limit is the last ditch 'suck it and see' hail mary pass when everything else has been optimised as much as possible ...

If the limit gets raised substantially above the technological improvements growth rate I'll be pulling the vast majority of my investment out because it is not going to be operating like we thought it would, i.e. it won't be a clearing and settlement digital gold network but a paypal2.0, fun internet googlesque reversable, traceable payments network

You are doing the same thing you are accusing others of doing. There is no consensus or even an easy answer, whether Bitcoin should be a "clearing and settlement digital gold network" or a "payments network" (I don't think too many want it to be reversible and traceable but you are injecting that as a form of commentary). If there were an easy answer, it would already be accepted as consensus, but there isn't and it isn't.

Implicitly,

decentralised => clearing and settlement digital gold network

centralised => reversable, traceable payments network

(without thinking that is not well-known by now).

b/c an African kid can't currently touch, admire, coddle, weigh, polish, covet, put it in his pocket, or sell a Bitcoin, he will never value it as gold. with a 1MB cap, he won't even ever get a chance to know about Bitcoin, let alone what it can do.  and even if he does get the chance, since he can't do all those physical things i just described with Bitcoin, what will confirmation delays, insufficient fees, double spending losses, waiting times at the store all do for his confidence in Bitcoin acting as a gold substitute as a result of the 1MB cap?

[cypherdoc]

from gmax:

"So far the mining ecosystem has become incredibly centralized over time."

i totally disagree.

I guess it is in the eye of the beholder. I still see 3 pools (assuming "unknown is a mostly some big pool, if not that changes things") with >50%. The other tiny little slices don't matter at all as long as the top 3 agree and if even two of them agree, the tiny slices still hardly matter at all.

well, i don't see them EVER agreeing to perform an attack.  they would destroy confidence in the network and all their equipment value goes poof.  cashing out in USD after an attack is problematic as well as the exchanges are watching for any funny business and Bitstamp is an example of how account funds can be frozen (Jed McCaleb).

this graph is probably never going to change much even with huge Bitcoin success.  there will always be bigger pools than others.

furthermore, pools consist mainly of individual participants who will defect if their pool operator is abusing their hashing power.  ghash has been decimated by defection.

The discussion is not necessarily about performing an attack, it is about incentives and concentration of voting power. If the big pools want lower fees and/or a higher soft limit, because they are at a competitive advantage in providing the infrastructure required for it, then they get it, regardless of what the rest want. Likewise it has always been the prerogative of pools which transactions to include, so if they want to block some (as eligius does, I understand) then they will do that too. Neither of these rise to the level of an attack that causes the pool to be viewed as hostile and shunned by the community, but it gives disproportionate influence to a few actors.

have we seen evidence of them doing this yet? i'm not aware of them throwing their weight around like that.  and that's even when alot of the mining is in China.  perhaps their is more decentalization going on than we think with mining spread out round the world that it is not possible for them to collude. 

as far as which tx's to include in a block, that is being worked on with things like getblocktemplate.

[cypherdoc]

from gmax:

"So far the mining ecosystem has become incredibly centralized over time."

i totally disagree.  the trend has been back towards decentralization since ghash and ghash has been punished accordingly by the market down to a measly 3.6%.  what i see in this graph is a normal, expected distribution gradient from large to small share.  btw, gmax has been complaining about mining centralization since at least 2012 but yet here we are.  why do we accept his arguments on this when there hasn't been one major incident of a 51% attack?:

What people seem to keep missing in this "mining is centralized" claim, is that pools are not miners. They are services with ZERO barriers to entry and exit from the mining community.

As long as there is ONE honest P2P node who would publicly flag that a pool was behaving badly (an assumption I believe will always be true), then the pools can not abuse their position.

If any corrupt pool, or collection of corrupt pools, tried to falsify the record, it would immediately become public and that pool would lose most of it's miners in a matter of hours. Miners could simply switch to another honest pool, and there will always be an honest pool to switch to.

This would completely destroy the future profit stream for an established pool. Why the heck would anyone try this, especially given that it would be a futile effort?

yep, i was a long time miner and it is incredibly easy to switch back and forth btwn pools.  i would sometimes do it multiple times a day.  it's simply a matter of pointing your machine to a specific ip address.  software, like cgminer, allows auto switching btwn pools if one goes down or payout terms changed.  pool operators have 0 control over you.  in fact, they do everything they can to bend over and court your hashing power.  they all run their own IRC channels where you can go immediately if somethings up and there always manned by staff.  the scrutiny i'm sure can be overwhelming for them. 

[cypherdoc]

from gmax:

"So far the mining ecosystem has become incredibly centralized over time."

i totally disagree.

I guess it is in the eye of the beholder. I still see 3 pools with >50%. The other tiny little slices don't matter at all as long as the top 3 agree and if even two of them agree, the tiny slices still hardly matter at all.

all it takes is for the owners of the 3 pools to be corrupt and btc is screwed. that isnt decentralization... thats asking for trouble.

then tell me, why hasn't it happened already?  there are supposedly billions to be made doing this.

Maybe the reason is that Bitcoin only grows to the point where its network state provides adequate confidence and security. So you are looking at causality in the wrong direction. Maybe it would be much, much bigger if it were actually decentralized and it were in fact not possible for "the big three" to attack it and users/investors didn't have to rely on "why aren't they doing it".

is "not possible" achievable?  as JR asked, what distribution would make you happy?  of course, what makes you happy maybe won't satisfy marcus.

fact of the matter is, Bitcoin has done something in a mere 6 yrs that is unprecedented.  no one thought we'd be where we are today.  look at all the banks, gvts, and CB's scrambling to compensate.

sure what you say is possible but otoh, maybe the anti-Gavin crowd is just whining about something they don't fully understand.

[smooth]

Maybe the reason is that Bitcoin only grows to the point where its network state provides adequate confidence and security. So you are looking at causality in the wrong direction. Maybe it would be much, much bigger if it were actually decentralized and it were in fact not possible for "the big three" to attack it and users/investors didn't have to rely on "why aren't they doing it".

is "not possible" achievable?  as JR asked, what distribution would make you happy?  of course, what makes you happy maybe won't satisfy marcus.

Maybe in a metaphysical sense it isn't but if it requires a non-trivial number of actors (e.g >3), who don't know each other, to collude, that becomes practically impossible.

What has the largest number of pools needed to achieve a majority ever been since pool mining got entrenched? 4 or 5?

This of course ignores selfish-mining type attacks where a strict majority might not even be needed.

[cypherdoc]

Maybe the reason is that Bitcoin only grows to the point where its network state provides adequate confidence and security. So you are looking at causality in the wrong direction. Maybe it would be much, much bigger if it were actually decentralized and it were in fact not possible for "the big three" to attack it and users/investors didn't have to rely on "why aren't they doing it".

is "not possible" achievable?  as JR asked, what distribution would make you happy?  of course, what makes you happy maybe won't satisfy marcus.

Maybe in a metaphysical sense it isn't but if it requires a non-trivial number of actors (e.g >3), who don't know each other, to collude, that becomes practically impossible.

What has the largest number of pools needed to achieve a majority ever been since pool mining got entrenched? 4 or 5?

This of course ignores selfish-mining type attacks where a strict majority might not even be needed.

here's what Ed Felten of Princeton thinks of selfish mining:

https://freedom-to-tinker.com/blog/felten/bitcoin-isnt-so-broken-after-all/

[marcus_of_augustus]

maybe the anti-Gavin crowd is just whining about something they don't fully understand.

yeah, sipa and jgarzik are just a bunch of whiners who don't fully understand bitcoin ... as well as you, I'm supposing you were implying? recall we were spoon-feeding you UTXO's knowledge for free just last week? That is a very good reason to oppose increasing the maximum block size. - Gavin Andresen

You don't have to be such a full time abrasive jerk to make your point, the pointless, incessant snark, insinuations and character assassination is nauseating not to mention it adds nothing to understanding.

It was the same with the sidechains 'debate' on here ... you didn't want to listen to counterpoints but just blasted the volume of FUD for your chosen position on some kind of 1 man PR propaganda campaign. I don't know about net benefits surrounding sidechains, they seem interesting and there is no implementation in the wild, but I do know you did absolutely nothing to advance understanding, yours and anybody reading your emotive blather ... I just scrolled on most of your SC stuff, 1 level above ignore tbh. God gave you 2 ears and 1 mouth ...