Gold collapsing. Bitcoin UP.

[Odalv]

I like this explanation.

ok here in detail how and why it works:

1. payer and payee agree on a 2-of-2 address and own addresses
2. payer crafts a bond transaction that deposits X to the common address, but sends only the hash (outpoint) of it to payee. payer does not yet broadcast it, hence no risk to him.
3. payee crafts and signs a refund transaction that spends the outpoint back to payee time locked, such that it can not be included into the block chain until that time point. Payee can safely sign since if he does not own any coin with the outpoint.
4. payer verifies that the refund transaction if counter-signed and broadcasted by him would return the bond to him and if so broadcasts the bond transaction. He can safely do so, since if payee would not proceed, but he could get his money back on his own after the timeout.
5. now payer wanst to use some service of payee and crafts and signs a settlement transaction spending the same outpoint that pays him X-delta and delta to payee. The transaction is not yet valid since it needs payee's signature, hence payer can not broadcast it. Payer sends it to Payee.
6. Payee verifies that the settlement transaction has valid signature of payer and that it gives him enough to offer the service. Payee could countersign and broadcast the settlement transaction thereby closing the channel and also invalidating (double spending) the refund transaction.
7. Payer keeps sending new versions of the settlement transaction with increasing deltas while using the service. If delta does not increase sufficiently Payee closes the channel.
8. At close of the channel Payee will counter-sign and broadcast latest version, since that is most favorable to him.
9. Payee will close the channel well before the refund timout to avoid a race of the two alternatives.

edit:
This can be used as fast credit card. There is no need to wait for confirmations. Payment is instant. It can be used for all payments during month and then cleared by 1 transaction at the end of month.  (with credit card company)

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[smooth]

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

Why ? If we split same amount of transactions into 10,000 chains then
a) you can mine all 10,000 chains (it will cost you same resources as 1 BIG chain)  -> big corporation
b) you can mine/verify only 1-3 small chains on your phone -> 99.9% ordinary people

i pointed out upthread how that will lead to tremendous centralization of mining as small miners with poor connectivity would be crushed trying to deal with 10000 chains at once in terms of resources, maintenance, coding reqs, etc.

not good.

It isn't really clear whether one chain 10000x as large is better or worse for small miners than 10000 separate chains. In the latter case at least a smaller miner could drop some of the least important/valuable chains. You can't drop part of blocks.

[Odalv]

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

Why ? If we split same amount of transactions into 10,000 chains then
a) you can mine all 10,000 chains (it will cost you same resources as 1 BIG chain)  -> big corporation
b) you can mine/verify only 1-3 small chains on your phone -> 99.9% ordinary people

i pointed out upthread how that will lead to tremendous centralization of mining as small miners with poor connectivity would be crushed trying to deal with 10000 chains at once in terms of resources, maintenance, coding reqs, etc.

not good.

It isn't really clear whether one chain 10000x as large is better or worse for small miners than 10000 separate chains. In the latter case at least a smaller miner could drop some of the least important/valuable chains. You can't drop part of blocks.

It is even more important if you are not miner. With 10,000x as large chain ordinary user cannot verify if block is valid.  If there are only last 5 big miners left then they can start to produce fake block. b/c there is nobody (except 5 miners)  who has enough resources to verify all blocks.


Edit:
Everyone must verify everything is bad design. => this will collapse.

[cypherdoc]

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

Why ? If we split same amount of transactions into 10,000 chains then
a) you can mine all 10,000 chains (it will cost you same resources as 1 BIG chain)  -> big corporation
b) you can mine/verify only 1-3 small chains on your phone -> 99.9% ordinary people

i pointed out upthread how that will lead to tremendous centralization of mining as small miners with poor connectivity would be crushed trying to deal with 10000 chains at once in terms of resources, maintenance, coding reqs, etc.

not good.

It isn't really clear whether one chain 10000x as large is better or worse for small miners than 10000 separate chains. In the latter case at least a smaller miner could drop some of the least important/valuable chains. You can't drop part of blocks.

It is even more important if you are not miner. With 10,000x as large chain ordinary user cannot verify if block is valid.  If there are only last 5 big miners left then they can start to produce fake block. b/c there is nobody (except 5 miners)  who has enough resources to verify all blocks.


Edit:
Everyone must verify everything is bad design. => this will collapse.

More facepalm

[tvbcof]

Please let us know how well Elements is working. I honestly want to know.

Go to hell.  You can stand by and find out whether Maxwell and company's stuff pans out better than your assumptions that technology will keep up with exponential growth and Bitcoin will be unmolested by TPTB as it takes over for fiat.

You could piddle around with gmax's cli while you wait if you want since the stuff is already in released alpha it seems.

Confidential Transactions
 -> it is another excellent project from gmaxwell

Confidential Transactions is enabled in Elements and used by default by all ordinary transactions.

and

...

Just wow.  I lacked the ability and interest to think up such stuff.

I was negative about all the bells and whistles being added to the native Bitcoin protocol over the years.  Because I was by and large to lazy to follow the commits and technical discussions, I took my impression of the technical capabilities as the core team as a group from my impression of Gavin and his talking-paperclip class nonsense and nearly complete disregard/misunderstanding of the salient risk factors more than I should have.  This made me feel that there was great risk to putting almost anything into Core since it could be sufficient as a backing store in it's very primitive form.  Now I'm starting to see the genius of what some of these less visible players were shooting for in some of their work over the years.  My hat is off to them!

There really is a significant risk, I think, that what is evolving is simply so powerful that it will have to be stopped by TPTB by any and all means possible.  I've long held that this battle would be best to happen earlier than later.  My only hope was that it would start up before the likes of Hearn managed to contaminate the existing blockchain whereupon the value I have within it would ultimately be significantly reduced.

[cypherdoc]

Please let us know how well Elements is working. I honestly want to know.

Go to hell.  You can stand by and find out whether Maxwell and company's stuff pans out better than your assumptions that technology will keep up with exponential growth and Bitcoin will be unmolested by TPTB as it takes over for fiat.

You could piddle around with gmax's cli while you wait if you want since the stuff is already in released alpha it seems.

Confidential Transactions
 -> it is another excellent project from gmaxwell

Confidential Transactions is enabled in Elements and used by default by all ordinary transactions.

and

...

Just wow.  I lacked the ability and interest to think up such stuff.

I was negative about all the bells and whistles being added to the native Bitcoin protocol over the years.  Because I was by and large to lazy to follow the commits and technical discussions, I took my impression of the technical capabilities as the core team as a group from my impression of Gavin and his talking-paperclip class nonsense and nearly complete disregard/misunderstanding of the salient risk factors more than I should have.  This made me feel that there was great risk to putting almost anything into Core since it could be sufficient as a backing store in it's very primitive form.  Now I'm starting to see the genius of what some of these less visible players were shooting for in some of their work over the years.  My hat is off to them!

There really is a significant risk, I think, that what is evolving is simply so powerful that it will have to be stopped by TPTB by any and all means possible.  I've long held that this battle would be best to happen earlier than later.  My only hope was that it would start up before the likes of Hearn managed to contaminate the existing blockchain whereupon the value I have within it would ultimately be significantly reduced.

my, such anger.

[tvbcof]

my, such anger.

I don't do anger very much, but I will admit to being fairly passionate about Bitcoin.  I've been dicking around with it off and on for a long while and I've got something riding on it both in monetary and philosophical terms.

[smooth]

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

Why ? If we split same amount of transactions into 10,000 chains then
a) you can mine all 10,000 chains (it will cost you same resources as 1 BIG chain)  -> big corporation
b) you can mine/verify only 1-3 small chains on your phone -> 99.9% ordinary people

i pointed out upthread how that will lead to tremendous centralization of mining as small miners with poor connectivity would be crushed trying to deal with 10000 chains at once in terms of resources, maintenance, coding reqs, etc.

not good.

It isn't really clear whether one chain 10000x as large is better or worse for small miners than 10000 separate chains. In the latter case at least a smaller miner could drop some of the least important/valuable chains. You can't drop part of blocks.

It is even more important if you are not miner. With 10,000x as large chain ordinary user cannot verify if block is valid.  If there are only last 5 big miners left then they can start to produce fake block. b/c there is nobody (except 5 miners)  who has enough resources to verify all blocks.

It isn't clear that having non-miners using 1 of 10,000 chains is good either. It means you can't transact with someone using one of the other 9999 chains without an intermediary.

[Odalv]

More facepalm

Let's implant doubling-cancer into bitcoin. I'm sure that more politicians will join(eat) us.

[Odalv]

It isn't clear that having non-miners using 1 of 10,000 chains is good either. It means you can't transact with someone using one of the other 9999 chains without an intermediary.

- Usually you are not transacting with all people in the world (if you are not world wide spread corporation and you have office in all regions).

- 99% of your transaction are located in your town (quarter).

 - I think you are not interested in collecting and verifying all transaction from China or Russia, USA, EU

=> 9,997 chains are irrelevant for you. You only cares if number of bitcoins is same .. less than 21,000,000 and if chain holding your coins is valid

[smooth]

- 99% of your transaction are located in your town (quarter).

Incorrect.

Nevertheless the idea of partitioning payment systems by some sort of natural (if fuzzy) boundaries is reasonable.

I still prefer off-chain (possibly partitioned) payment systems with a single settlement chain though. Not sold on merged mining at all.

[cypherdoc]

- 99% of your transaction are located in your town (quarter).

Incorrect.

Nevertheless the idea of partitioning payment systems by some sort of natural (if fuzzy) boundaries is reasonable.

I still prefer off-chain (possibly partitioned) payment systems with a single settlement chain though. Not sold on merged mining at all.

Merge mining, the hidden requested SC subsidy.

[Odalv]

- 99% of your transaction are located in your town (quarter).

Incorrect.

Nevertheless the idea of partitioning payment systems by some sort of natural (if fuzzy) boundaries is reasonable.

I still prefer off-chain (possibly partitioned) payment systems with a single settlement chain though. Not sold on merged mining at all.

ok, if you do not like "natural boundaries" we can create corporate chains. :-)
 a) local-Tesco-Sidechain  
 b) or you can use Coca-Cola-Sidechain
 c) or use Free-Wifi-Geaks-Sidechain
 d) ... some local drug dealer chain

I do not know exactly how to build TREE OF CHAINS what will serve all people needs .. but I know that it is possible and free market will choose what is important and what is not

[cypherdoc]

- 99% of your transaction are located in your town (quarter).

Incorrect.

Nevertheless the idea of partitioning payment systems by some sort of natural (if fuzzy) boundaries is reasonable.

I still prefer off-chain (possibly partitioned) payment systems with a single settlement chain though. Not sold on merged mining at all.

ok, if you do not like "natural boundaries" we can create corporate chains. :-)
 a) local-Tesco-Sidechain  
 b) or you can use Coca-Cola-Sidechain
 c) or use Free-Wifi-Geaks-Sidechain
 d) ... some local drug dealer chain

I do not know exactly how to build TREE OF CHAINS what will serve all people needs .. but I know that it is possible and free market will choose what is important and what is not

Instead of putting the entire Bitcoin protocol at risk for your speculative endeavors, why don't you just have the balls to build those businesses that accept BTC?

[smooth]

- 99% of your transaction are located in your town (quarter).

Incorrect.

Nevertheless the idea of partitioning payment systems by some sort of natural (if fuzzy) boundaries is reasonable.

I still prefer off-chain (possibly partitioned) payment systems with a single settlement chain though. Not sold on merged mining at all.

ok, if you do not like "natural boundaries" we can create corporate chains. :-)
 a) local-Tesco-Sidechain  
 b) or you can use Coca-Cola-Sidechain
 c) or use Free-Wifi-Geaks-Sidechain
 d) ... some local drug dealer chain

I do not know exactly how to build TREE OF CHAINS what will serve all people needs .. but I know that it is possible and free market will choose what is important and what is not

I never said anything negative about natural boundaries. It is merged mining of multiple chains that is a sham, and also attempting to peg units of different assets (with different security, liquidity, network, etc. properties) to the same price.

I see nothing wrong with payment channels though. There doesn't seem to be any good reason to put routine micro transactions on a chain (side- or otherwise) at all.

[cypherdoc]

New poll above reminder.

[Odalv]

Instead of putting the entire Bitcoin protocol at risk for your speculative endeavors, why don't you just have the balls to build those businesses that accept BTC?

I'm not putting the entire Bitcoin protocol at risk for my speculative endeavors. ... lol, do you think I have the power to build all new businesses that will accept all BTCs ? ... do you think I will rule ALL THE WORD ? -> You are WRONG I will NOT and at the same time I will not let you to rule my word.

[cypherdoc]

Instead of putting the entire Bitcoin protocol at risk for your speculative endeavors, why don't you just have the balls to build those businesses that accept BTC?

I'm not putting the entire Bitcoin protocol at risk for my speculative endeavors. ... lol, do you think I have the power to build all new businesses that will accept all BTCs ? ... do you think I will rule ALL THE WORD ? -> You are WRONG I will NOT and at the same time I will not let you to rule my word.

Its not you I'm worried  about. It's your ideas.

[Peter R]

With 10,000x as large chain ordinary user cannot verify if block is valid.  If there are only last 5 big miners left then they can start to produce fake block. b/c there is nobody (except 5 miners)  who has enough resources to verify all blocks.

According to the "high growth rate" curve in the graph above, the blockchain will be 10,000x as large in 2035.  Here's a quick estimate of some of the costs to run a node twenty years from now, assuming no change in the cost of disk space or Internet bandwidth for 20 years.



Even under these (a) optimistic growth rates, and (b) extremely pessimistic cost improvements for disk space and bandwidth, the cost is still not so prohibitive that there would only be "5 big miners left."  For example, I'd image that all major research universities, bitcoin corporations, various branches of governments, and power users (whales) would still run nodes (1000+ nodes).  The network could actually be more decentralized than it is now.  

Everyone must verify everything is bad design. => this will collapse.

Only full nodes need to verify everything.  Not every user needs to run a full node.  

Why do so many people equate users with full nodes?

[smooth]

According to the "high growth rate" curve in the graph above, the blockchain will be 10,000x as large in 2035.  Here's a quick estimate of some of the costs to run a node twenty years from now, assuming no change in the cost of disk space or Internet bandwidth for 20 years.

Nice work Peter R. I often find your presentations compelling and this is no exception.

One quibble. You gloss over the distinction between miners and nodes:

Even under these (a) optimistic growth rates, and (b) extremely pessimistic cost improvements for disk space and bandwidth, the cost is still not so prohibitive that there would only be "5 big miners left."  For example, I'd image that all major research universities, bitcoin corporations, various branches of governments, and power users (whales) would still run nodes (1000+ nodes).  The network could actually be more decentralized than it is now.