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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 1803915 times)
Melbustus
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June 21, 2015, 04:27:33 AM
 #26981


Visa level right about when the debasement becomes so miniscule it has essentially stopped funding mining and the effect of block variance on delays due to nominal transaction fees will destroy any remaining decentralization Bitcoin.

Realize the miner cares about nominal not the percentage of the value you are transacting.
...

Let's talk nominal:

Right now, the block reward is 25 BTC x $250 / BTC = $6250.  In 2032, the inflation rate should be be 0.78 BTC / block.  Each bitcoin would then need to be worth

   $6250 / 0.78 BTC = $8,000 / BTC

to achieve the same security ignoring transaction fees.  $8,000 / BTC is a very modest price if we assume this level of growth.

But transaction fees would no longer be negligible and will help improve security too.  If there's 2,000 TPS in 2032, that's 1.2 million transactions per block.  Ignoring the block reward now, the average fee required to maintain the current level of security is:

   $6250 / 1,200,000 txs = 0.5 cents / tx.

This is a very affordable fee, and still gives the same security level as today even ignoring the block reward.

Any way you slice it, if we assume continued growth, the network security should be greater in 2032 than now.  


And that's precisely why we need to keep all those TX's on the mainchain.


+1.

As an aside, it's amusing that people like Pierre Rochard and Tim Swanson are essentially both trolling on the same side of the argument. Pierre wants to use the blocksize to throttle transactions and artificially jack up fees for the sake of security, which is effectively the same argument that perpetual-concern-troll Swanson makes in his overlong and tedious diatribes against the fact that bitcoin's security is (currently) effectively subsidized by inflation.

Some variant of the above calcs would show plenty of viable future equilibrium conditions for bitcoin where mining is paid for by transaction fees at security levels higher than today's.

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TPTB_need_war
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June 21, 2015, 04:46:40 AM
 #26982

I was going to ask for a link to his analysis of side chains, until I read that myopic "analysis" on the block size limit.

Did this guy every hear of arbitrage? If the market is undervaluing the peg, then there is an incentive to trade back to main chain, vice versa back to side chain. The technical peg insures that arbitrage will destroy any deviation. NuBits only has an algorithmic (qualified) arbitrage peg to $USD and it appears to working. An absolute technical peg is even stronger.

http://bit.ly/1wlut8a
http://www.reddit.com/r/Bitcoin/comments/2k9fcp/pdf_on_sidechains_sidechained_bitcoin_substitutes/

Quote
Whenever   an SBS changes hands through a transfer   of control on its own
sidechain,   
  it   
  should   
  be   
  expected   
  to   
  do   
  so   
  at   
  some   
  
floating   
  
market   
  rate
(
barring   
  
legal   
   price   
  
controls)
.   
   However,   
   this
rate
may   
   well   
  
not
perfectly   
   match   
  
current   
  
m
arket   
  rates   
  for   
  bitcoin,   
  that   
  is,   
  
an
SBS’s   
  technical   
  conversion   
  rate
with   
  bitcoin
may   
  not   
  
be
the   
  sole   
  factor   
  
influencing
its   
  
market   
  rate.
The
se
rates   
  
could
match,   
  
but   
  
the
grounds   
  for   
  assum
ing   
  that   
  they   
  actually   
  would   
  
in   
  any   
  given   
  case
do   
  not   
  
seem   
  compelling
.
T
he   
  two
-­‐
way   
  peg
,   
  while   
  certainly   
  
expected   
  to   
  be   
  
a   
  large   
  valuation   
  factor,
coexists   
  
with   
  
other   
  
complex   
   discounting
and   
   premium
factors
.   
   These   
   could   
   combine
to
result   
   in   
   each   
  
SBS
trading   
   at   
   a
market
rate
that   
  
diverges   
   from   
   that   
   of
bitcoin
within   
  some   
  unpredictable   
  and   
  
changing
range
.
Each   
  SBS   
  
might   
  
likewise
differ   
  in   
  
current   
   market   
  
value   
   from   
   each   
   other   
  
o

TPTB_need_war
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June 21, 2015, 04:51:25 AM
 #26983

to achieve the same security ignoring transaction fees.  $8,000 / BTC is a very modest price if we assume this level of growth.
In 2032, how do you know $1 won't be worth a $0.01 in current purchasing power?

I think it was implied that I meant 2015 $s.  

My point was never about absolute values but relative weight of transaction value versus debasement value. You entirely missed my point, as indicated below...

If there's 2,000 TPS in 2032, that's 1.2 million transactions per block...Any way you slice it, if we assume continued growth, the network security should be greater in 2032 than now.  

The point of my logic was not about whether we would have network security, rather whether we would have decentralization.

Why do you always construct strawmen and lose the plot?

Your exact words:

Visa level right about when the debasement becomes so miniscule it has essentially stopped funding mining

I showed that the block subsidy would very likely not be "so minuscule it has essentially stopped funding mining."

...and the effect of block variance on delays due to nominal transaction fees will destroy any remaining decentralization Bitcoin.

^ I couldn't parse this statement.  

Do you have a point?

"essentially stopped funding mining" means relative to transaction fees as pertains to the logic I presented that block size variance's effect on "transaction delays" due to fees will grow as transaction fees are relatively more of the nominal revenue relative to debasement by 2032.

Are you an engineer? You have very low reading comprehension. You are not able to apply the logic from a prior post to a subsequent one to understand the context.

You can still can't parse that last quote given the context?

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June 21, 2015, 04:57:11 AM
 #26984

5 yr after 1MB, the network is much bigger, stronger, and more resilient.

Is the capacity of the network to handle large blocks 8x bigger, or 20x bigger? Is there a high degree of confidence that it can handle 1000x bigger blocks in 15 years?


I suspect the answer is yes.  Here's what it might look like graphically:



If anyone can see a mistake in the above chart, please let me know.  I'd like to post it to r/bitcoin once I'm confident it's correct.

(Please ignore PM. For some reason right after I sent it your chart rendered correctly.)

The mistakes (at least questionable assumptions) I see:

1. There is nothing in the chart that relates the growth rate to any underlying technological limits at all. It is like a chart of global population extrapolating unlimited growth forward without any consideration of food supply, water, population density, etc.

2. Why would you increase the slope starting now? If anything one should be conservative about sustainable growth rates going forward relative to the past, in the absence of clear knowledge of what scaling bottlenecks might exist.



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June 21, 2015, 05:10:47 AM
 #26985

The truth is that both smaller and larger blocks will destroy low valued transactions unless centralization is achieved.

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June 21, 2015, 05:21:42 AM
 #26986

by 2024, over 94% of all bitcoins will be completely mined.


the supply curve is too sharp for us to legitimately argue that by 2024, whereby we reach paypal level of TXs that 30,000 tx/s will be reachable solely by people exchanging value. We will undoubtedly need some existing legacy rail (e.g. Banking & financial institution & stock/equities) to be entirely placed on the blockchain to justify this harsh supply curve. In other words, relatively speaking, today's bitcoin's fundamentals lags far (1 order of magnitude) behind where we actually stand in today's supply curve.


This to me is very very concerning because it will pigeon hole bitcoin's pathways to massive value.
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June 21, 2015, 05:29:01 AM
 #26987

by 2024, over 94% of all bitcoins will be completely mined.


the supply curve is too sharp for us to legitimately argue that by 2024, whereby we reach paypal level of TXs that 30,000 tx/s will be reachable solely by people exchanging value. We will undoubtedly need some existing legacy rail (e.g. Banking & financial institution & stock/equities) to be entirely placed on the blockchain to justify this harsh supply curve. In other words, relatively speaking, today's bitcoin's fundamentals lags far (1 order of magnitude) behind where we actually stand in today's supply curve.


This to me is very very concerning because it will pigeon hole bitcoin's pathways to massive value.

Why do you think Nasdaq and NYSE are poking around the tech right now?  Today's  announcement is great news for them.

Welcome to Bitcoin!
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June 21, 2015, 05:33:38 AM
 #26988

by 2024, over 94% of all bitcoins will be completely mined.


the supply curve is too sharp for us to legitimately argue that by 2024, whereby we reach paypal level of TXs that 30,000 tx/s will be reachable solely by people exchanging value. We will undoubtedly need some existing legacy rail (e.g. Banking & financial institution & stock/equities) to be entirely placed on the blockchain to justify this harsh supply curve. In other words, relatively speaking, today's bitcoin's fundamentals lags far (1 order of magnitude) behind where we actually stand in today's supply curve.


This to me is very very concerning because it will pigeon hole bitcoin's pathways to massive value.

Why do you think Nasdaq and NYSE are poking around the tech right now?  Today's  announcement is great news for them.

Welcome to Bitcoin!

hello cypher,

excuse my ignorance, but can you link me to the news? I cant find anything new from nyse/nasdaq.

I know that they are using colored coins on the bitcoin network to track pre-IPO stock transfers as a pilot program, but i havent heard anything new since.


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June 21, 2015, 05:42:00 AM
 #26989

by 2024, over 94% of all bitcoins will be completely mined.


the supply curve is too sharp for us to legitimately argue that by 2024, whereby we reach paypal level of TXs that 30,000 tx/s will be reachable solely by people exchanging value. We will undoubtedly need some existing legacy rail (e.g. Banking & financial institution & stock/equities) to be entirely placed on the blockchain to justify this harsh supply curve. In other words, relatively speaking, today's bitcoin's fundamentals lags far (1 order of magnitude) behind where we actually stand in today's supply curve.


This to me is very very concerning because it will pigeon hole bitcoin's pathways to massive value.

Why do you think Nasdaq and NYSE are poking around the tech right now?  Today's  announcement is great news for them.

Welcome to Bitcoin!

hello cypher,

excuse my ignorance, but can you link me to the news? I cant find anything new from nyse/nasdaq.

I know that they are using colored coins on the bitcoin network to track pre-IPO stock transfers as a pilot program, but i havent heard anything new since.




No, nothing new.

Just the fact that they are experimenting with colored coins is a great sign. It's been clear to me by my reading if the news that for quite a while now traditional institutions have been laughing at us because of our miserable 2-3 TX/'s bottleneck. I'm sure they are laughing at the infighting as well.

But Gavin's announcement is sticking tight to the top of reddit and is the beginning of a new dawn for Bitcoin. It's a clear  signal that we are going to make an attempt to drive this thing hard. They won't be laughing any longer.
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June 21, 2015, 05:46:54 AM
 #26990

5 yr after 1MB, the network is much bigger, stronger, and more resilient.

Is the capacity of the network to handle large blocks 8x bigger, or 20x bigger? Is there a high degree of confidence that it can handle 1000x bigger blocks in 15 years?


I suspect the answer is yes.  Here's what it might look like graphically:



If anyone can see a mistake in the above chart, please let me know.  I'd like to post it to r/bitcoin once I'm confident it's correct.

It looks awesome.
I would like to see one more white label. The introduction of the 1MB limit to limit spam.

Smooth, you've made a good point about spam however how do we weigh up the trade offs between limiting money velocity and spam?

On that note if I look at Peter's graphic the space available for spam was relatively high after the introduction of the limit and orders of magnitude greater back then that with the 8MB jump.

On a gut level I'd go with a limit until we have a 6.25 BTC block reward, until then I see transaction fees as inconsequential the motive is smaller blocks that propagate fast, and later once block subsidies have diminished there is a pressure to include and optimize fees.

Thank me in Bits 12MwnzxtprG2mHm3rKdgi7NmJKCypsMMQw
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June 21, 2015, 05:51:43 AM
 #26991

by 2024, over 94% of all bitcoins will be completely mined.


the supply curve is too sharp for us to legitimately argue that by 2024, whereby we reach paypal level of TXs that 30,000 tx/s will be reachable solely by people exchanging value. We will undoubtedly need some existing legacy rail (e.g. Banking & financial institution & stock/equities) to be entirely placed on the blockchain to justify this harsh supply curve. In other words, relatively speaking, today's bitcoin's fundamentals lags far (1 order of magnitude) behind where we actually stand in today's supply curve.


This to me is very very concerning because it will pigeon hole bitcoin's pathways to massive value.

Why do you think Nasdaq and NYSE are poking around the tech right now?  Today's  announcement is great news for them.

Welcome to Bitcoin!

hello cypher,

excuse my ignorance, but can you link me to the news? I cant find anything new from nyse/nasdaq.

I know that they are using colored coins on the bitcoin network to track pre-IPO stock transfers as a pilot program, but i havent heard anything new since.




No, nothing new.

Just the fact that they are experimenting with colored coins is a great sign. It's been clear to me by my reading if the news that for quite a while now traditional institutions have been laughing at us because of our miserable 2-3 TX/'s bottleneck. I'm sure they are laughing at the infighting as well.

But Gavin's announcement is sticking tight to the top of reddit and is the beginning of a new dawn for Bitcoin. It's a clear  signal that we are going to make an attempt to drive this thing hard. They won't be laughing any longer.

Ok, and I also think those programs are insanely beneficial for the odds of a Winklevoss ETF kicking off.


But the supply curve really worries me. By 2024, the entire earth will be blanketed with wifi.


I do not think that you can justify people buying into a commodity that is 95% mined and only real hope is for a legacy rail to take over it. That's strictly from an investment perspective

Similarly, because 95% has been mined, I am not so sure that people will use bitcoin over an altcoin as a means of p2p transfer. It's supply in 2024 will be far too small to facilitate hundreds of million of people buying in to actually use it. Because by 2024, either the legacy rail has taken over and bitcoin is far too expensive relative to it's supply OR, it will not have happened and bitcoin will be worth nothing. Perhaps this is too simplistic an argument to make, but 10 years is not actually very long.

It didnt use to concern me, but it does now.
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June 21, 2015, 05:52:31 AM
 #26992

It's been clear to me by my reading if the news that for quite a while now traditional institutions have been laughing at us because of our miserable 2-3 TX/'s bottleneck.

Bitcoin can in theory give them very high Txs/sec (and Txs/block) by centralizing the mining onto to higher powered miners.

They may not care when that centralization leads to mandatory KYC tags for all transactions on the block chain due to regulatory capture of hosted mining.

Some other individuals will care about privacy and be pissed off that Bitcoin became another fiat, and they will leave to coin that can remain decentralized and anonymous.

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June 21, 2015, 05:55:04 AM
 #26993

Similarly, because 95% has been mined, I am not so sure that people will use bitcoin over an altcoin as a means of p2p transfer. It's supply in 2024 will be far too small to facilitate hundreds of million of people buying in to actually use it. Because by 2024, either the legacy rail has taken over and bitcoin is far too expensive relative to it's supply OR, it will not have happened and bitcoin will be worth nothing. Perhaps this is too simplistic an argument to make, but 10 years is not actually very long.

It didnt use to concern me, but it does now.

Unless they are given BTC loans. The masses have always used leveraged money (fractional reserves) and not real money, because the capitalists have all the real money.

The real game here is not changing whether the masses will use leveraged money. (nothing will ever change that)

It is the game of protecting the (knowledge age) capitalists from the State (industrial age capitalists+masses).

I have argued that a Knowledge Age is replacing the Industrial Age and the age of high fixed capital is being replaced by active knowledge. Knowledge capitalists don't want to be dictated to by a State because it is incompatible with knowledge production.

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June 21, 2015, 05:55:32 AM
 #26994

Smooth, you've made a good point about spam however how do we weigh up the trade offs between limiting money velocity and spam?

I think you may have slightly misunderstood my point. It isn't that spam itself needs to be limited, it is that the system is vulnerable to a sort of denial of service from having too much data (whether that happens to be spam or "real" data, although obviously spam is less desirable) stuffed into it. Satoshi made a judgement at one time that 1 MB was an appropriate limit based on that vulnerability, considering the state of the technology, storage, propagation, etc.. What is the evidence for that vulnerability being sufficiently smaller now or in the near future that a 8x or 20x or 1000x is appropriate instead?

I'm sorry but I just see a lot of wishful thinking going on. Of course, we all want it to scale, but instead of actually improving how it scales, the proposal today is to simply push back the safety limit and change not much else. (A bit like ripping out the airbags and safety belts from a car to cut weight and make it go faster.)
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June 21, 2015, 06:00:01 AM
 #26995

And that's precisely why we need to keep all those TX's on the mainchain.

That can't be overstated, Bitcoin won't / can't securely scale if those fees move somewhere else.
Federated Sidechains are ok as people trust the server owner enough to do business with them, there is a balance risk reward.

But changing the Bitcoin rules to make tools to move those fees of the blockchain and calling it an upgrade to the Bitcoin protocol  is short sited or just plain evil.

Thank me in Bits 12MwnzxtprG2mHm3rKdgi7NmJKCypsMMQw
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June 21, 2015, 06:06:54 AM
 #26996



If anyone can see a mistake in the above chart, please let me know.  I'd like to post it to r/bitcoin once I'm confident it's correct.

Another great chart Peter.

One suggestion. Is it worth mentioning IBLT because by the time 16MB blocks are being mined they will likely be taking up just 500KB of bandwidth overhead to propagate. Obviously the real-time unconfirmed transaction overhead does remain. and is large long-term.

Just as during the 1MB debate so many people kept confusing the block size limit as the average block size, so is the case with Gavin's doubling schedule. These big block sizes are disk block sizes, the bandwidth-using blocks will be far smaller.

Full blocks will only need to be sent between nodes on resync and bootstrapping, not a normal state for most nodes. Even then, future Bitsat-type blockchain download services should mean that nodes catching up have a faster option than relying on terrestrial broadband.

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June 21, 2015, 06:09:44 AM
 #26997

And that's precisely why we need to keep all those TX's on the mainchain.

That can't be overstated, Bitcoin won't / can't securely scale if those fees move somewhere else.
Federated Sidechains are ok as people trust the server owner enough to do business with them, there is a balance risk reward.

But changing the Bitcoin rules to make tools to move those fees of the blockchain and calling it an upgrade to the Bitcoin protocol  is short sited or just plain evil.

Unless the mining on the side chain does not require fees (which can be accomplished in numerous ways!), in which case, maybe it wasn't going to be paid on the Core chain either.

Remember you all want unlimited size blocks right? So that means transaction fees should approach 0 (as the cost of bandwidth and CPU is probably insignificant).

And you are thus encouraging a power vacuum where cartels and monopolies come to raise scarcity and pricing.

All this shit is way more complex than all the silly, simpleton "sound bite" summaries.

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June 21, 2015, 06:13:20 AM
 #26998



If anyone can see a mistake in the above chart, please let me know.  I'd like to post it to r/bitcoin once I'm confident it's correct.

Another great chart Peter.

One suggestion. Please mention IBLT because by the time 16MB blocks are being mined they will likely be taking up just 500KB of bandwidth overhead to propagate.

Just as during the 1MB debate so many people kept confusing the block size limit as the average block size, so is the case with Gavin's doubling schedule. These big block sizes are disk block sizes, the bandwidth-using blocks will be far smaller.

Full blocks will only need to be sent between nodes on resync and bootstrapping, not a normal state for most nodes. Even then, future Bitsat-type blockchain download services should mean that nodes catching up have a faster option than relying on terrestrial broadband.


Well if he's gonna mention IBLT he might as well mention pruning because that is now. As in available now and probably in the next release. That's almost more exciting to me. I'm looking to add about a dozen more XT nodes to my portfolio once I figure out how to set that set up.
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June 21, 2015, 06:18:58 AM
 #26999

Yep. I will be running my node as XT, but waiting for the patch before changing.
I still hope that Core Dev just adds the patch to BitcoinCore and they get on with normal dev work, rather than sulking about it.

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June 21, 2015, 06:30:06 AM
 #27000

Yep. I will be running my node as XT, but waiting for the patch before changing.
I still hope that Core Dev just adds the patch to BitcoinCore and they get on with normal dev work, rather than sulking about it.

Unfortunately, they are going to remain entrenched until they see a cross over in XT vs Core nodes in Bitnodes. And or a majority of XT version blocks.

The gamble they make is if they wait too long their core dev positions probably come into jeopardy as Gavin will probably want to clean house at that point. Can you blame him?
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