Gold collapsing. Bitcoin UP.

[cypherdoc]

fascinating, our NSA:

http://boingboing.net/2014/07/03/if-you-read-boing-boing-the-n.html

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[Melbustus]

... [Allaire] mainly sees it as a payment system and not as a store of value even though as the protocol stands now it can satisfy both those needs.  and this is what he is missing.
... 

I recall him saying in more than one interview that the capitalization of bitcoin will have to increase by a couple orders of magnitude in order to support the use cases he sees. He always phrases such comments as secondary to his stated mission of bringing bitcoin to the global masses in a regulated structure, but he *does* understand that bitcoin's value needs to be a lot higher. It's just not fashionable for a guy in his position to be talking about >$10,000 bitcoin.

All these guys get the value argument... Marc Andreessen has made similar sideways comments. Talking about bitcoin's potential unit value, and therefore its value as an investment, is not the "interesting" or fashionable thing to talk about. So they don't. But they're not fools - they see what has to happen to market cap if any of their technological disruption theses are to play out.

...

Not sure what I'm trying to say besides pointing out that Allaire must actually understand the store-of-value proposition.

But I too was very dissatisfied with that last article/interview of his. He does indeed seem to miss a lot of important points.

[cypherdoc]

... [Allaire] mainly sees it as a payment system and not as a store of value even though as the protocol stands now it can satisfy both those needs.  and this is what he is missing.
...  

I recall him saying in more than one interview that the capitalization of bitcoin will have to increase by a couple orders of magnitude in order to support the use cases he sees. He always phrases such comments as secondary to his stated mission of bringing bitcoin to the global masses in a regulated structure, but he *does* understand that bitcoin's value needs to be a lot higher. It's just not fashionable for a guy in his position to be talking about >$10,000 bitcoin.

All these guys get the value argument... Marc Andreessen has made similar sideways comments. Talking about bitcoin's potential unit value, and therefore its value as an investment, is not the "interesting" or fashionable thing to talk about. So they don't. But they're not fools - they see what has to happen to market cap if any of their technological disruption theses are to play out.

...

Not sure what I'm trying to say besides pointing out that Allaire must actually understand the store-of-value proposition.

But I too was very dissatisfied with that last article/interview of his. He does indeed seem to miss a lot of important points.

it would've been really helpful if he spelled out exactly what his concerns were so we don't have to sit here and speculate.

but agreeing with Vitalik and cpu mining was just off. 

[cypherdoc]

Development is still moving slow as molasses, the blocksize limit isn't getting any attention, and there is no viable solutions the massive elephant in the room, ghash. Those guys are up to something, there is no way they can continue providing a 0% fee pool unless they are up to something. I don't know if they have been coopted by the russian mafia or what but they are likely amassing huge amounts of owned hardware and they are not doing it for the basic profit incentive... there is something much larger at play here. While the developers are off having their childish pissing matches we need people to step up and actually *solve* something.

here's my economic solution to ghash:  why doesn't someone just duplicate their 0 fee model along with mining contracts?  with time and future growth of Bitcoin, this should happen naturally as competitors "see" a successful model they want to get in on.  competitors may already be organizing as far as we know.  no need to panic.  others are also planning ways to further decentralization: 

https://bitcoinfoundation.org/2014/07/03/mining-decentralisation-the-low-hanging-fruit/

0 fee models aren't sustainable.  remember when BTCChina charged 0?  then along came Huobi.

[cypherdoc]

what's interesting is that i've been pool mining since March as the difficulty has risen too steep for me to continue solo mining.  but i wouldn't hesitate to restart solo mining if i thought it was necessary to protect the network.

the point i wanted to make is that i've used BTCGuild or Ozcoin exclusively b/c of their service.  the 0 fee Ghash offer never interested me.  i more happily support Eleuthria (BTCGuild owner) b/c he's shown constraint in the last run of his pool close to 50% by restricting new pool miners back in 2012/13.  he also gave up 20 blocks or so back early 2013 when we had the 0.8.1 hard fork just to re-merge the 2 chains.  that's loyalty and dedication to Bitcoin.  so he gets my hashing, no questions asked.

[Peter R]

...the blocksize limit isn't getting any attention...

With an open-source community it is difficult to know for sure, but I believe we already have a plan to deal with the blocksize limit:

    - move to a higher but still hard-coded limit when required (this requires a few new lines of code);

    - agree to work towards a "floating limit" to be implemented when ready (this is a more complex change).

Assuming the historical rate of growth in the number of transactions per day¹ holds, the network should approach its bandwidth limit sometime near Halloween 2015.  If the Metcalfe Value model continues to hold as well, bitcoin's market cap at this point in time would be in excess of 1/2 a trillion dollars.  






¹Actually, we would hit it slightly sooner as I'm plotting transactions per day excluding popular addresses to remove the "on-chain gambling bubble" of 2012 - 2013.  Also, the 7 TPS is an estimate based on a probably unrealistically small average TX size.

[_mr_e]

Ya but you are a small piece. The majority of miners out there are for profit and nothing else.

I honestly don't know if it's true but I read somewhere that other companies cannot compete with ghash's model because it is actually illegal in many places of the world due to the trading platform and the contracts being deemed securities. This is likely why no one has shown up to complete with them yet.

[cypherdoc]

Ya but you are a small piece. The majority of miners out there are for profit and nothing else.

and with many other controversial issues in Bitcoin, it comes down to your view of the motivations and game theory involved in miner choices.

i'm a little more optimistic than you.

[cypherdoc]

...the blocksize limit isn't getting any attention...

With an open-source community it is difficult to know for sure, but I believe we already have a plan to deal with the blocksize limit:

    - move to a higher but still hard-coded limit when required (this requires a few new lines of code);

    - agree to work towards a "floating limit" to be implemented when ready (this is a more complex change).

Assuming the historical rate of growth in the number of transactions per day¹ holds, the network should approach its bandwidth limit sometime near Halloween 2015.  If the Metcalfe Value model continues to hold as well, bitcoin's market cap at this point in time would be in excess of 1/2 a trillion dollars.  






¹Actually, we would hit it slightly sooner as I'm plotting transactions per day excluding popular addresses to remove the "on-chain gambling bubble" of 2012 - 2013.

but isn't the speed (7 tx/s) different than the block size limit (1MB/block)?

[cypherdoc]

actually illegal in many places of the world due to the trading platform and the contracts being deemed securities. This is likely why no one has shown up to complete with them yet.

well then, this should catch up with them too. 

i'm not recommending anyone doing this but you could report them if you wanted to stop them from doing this.

[Peter R]

but isn't the speed (7 tx/s) different than the block size limit (1MB/block)?

Sort of, but they are related.  The real limit is the 1 MB blocksize limit.  1 MB every 10 minutes is 10^6 bytes / (10 min x 60 sec/min) = 1,667 bytes per second and 1 MB every 8 minutes is 2,084 bytes per second.  The "seven transactions per second" concept apparently stems from the scalability wiki.  At 1,667 bytes/s, it implicitly assumes that each TX is about 240 bytes (or 300 bytes at 2,084 bytes/s).

The average TX in bytes is most certainly larger than both of these figures (although I don't have a reference on hand).  Simple 1-input/2-output TXs like this are 226 bytes.  Txs that have more inputs or more outputs, or more complex scripts, will be larger.  In other words, the network would likely hit the 1 MB/block bandwidth limit at less than seven transactions per second.  

In any case, the bitcoin community seems to think of the limit as "seven transactions per second."  Although this is an approximation, I think it is useful nonetheless.

[justusranvier]

here's my economic solution to ghash:  why doesn't someone just duplicate their 0 fee model along with mining contracts?  with time and future growth of Bitcoin, this should happen naturally as competitors "see" a successful model they want to get in on.  competitors may already be organizing as far as we know.  no need to panic.  others are also planning ways to further decentralization:

What you need to know about Ghash is they are just one part of a vertically-integrated operation.

BitFury is the manufacturer who builds the ASICs.
CEX is the retail side, selling shares of the hashing power and creating a commodity exchange for trading those shares.
Ghash.io is the pool where CEX points their hashing power. They constitute about half of the total Ghash.io network, with independent miners making up the rest.

The underlined portion is why the BitFury/CEX/Ghash conglomerate is doing better than everybody else. They get greater access to capital because they offer a commodity exchange which is  apparently what mining investors want.

The reason no one else does this is because the operators of CEX are in Ukraine, one of the few places where the SEC/CFTC can't easily get to them.

[_mr_e]

actually illegal in many places of the world due to the trading platform and the contracts being deemed securities. This is likely why no one has shown up to complete with them yet.

well then, this should catch up with them too.  

i'm not recommending anyone doing this but you could report them if you wanted to stop them from doing this.

The point being that they are actually being run by a far more powerful entity, one that is capable of breaking these sorts of rules with no repercussions. They may have not started off that way but let's face it, that area of the world is filled with corruption and who wouldn't want to get their paws all over the most powerful global currency ever invented? Normal miner incentives don't affect these sorts of players the same way.

[cypherdoc]

actually illegal in many places of the world due to the trading platform and the contracts being deemed securities. This is likely why no one has shown up to complete with them yet.

well then, this should catch up with them too.  

i'm not recommending anyone doing this but you could report them if you wanted to stop them from doing this.

The point being that they are actually being run by a far more powerful entity, one that is capable of breaking these sorts of rules with no repercussions. They may have not started off that way but let's face it, that area of the world is filled with corruption and who wouldn't want to get their paws all over the most powerful global currency ever invented? Normal miner incentives don't affect these sorts of players the same way.

you may be right and i'm glad to see that solutions are being worked on as proposed in Hearn's blog post.  as long as these solutions stay away from the main core protocol.

iirc, Bitfury themselves pulled 1.5 PH/s from ghash during this issue so there are solutions being implemented as we speak. also Petamine voted to move to p2pool.  i may in fact move to p2pool as soon as some of the software issues get cleared up.

[Peter R]

actually illegal in many places of the world due to the trading platform and the contracts being deemed securities. This is likely why no one has shown up to complete with them yet.

well then, this should catch up with them too.  

i'm not recommending anyone doing this but you could report them if you wanted to stop them from doing this.

The point being that they are actually being run by a far more powerful entity, one that is capable of breaking these sorts of rules with no repercussions. They may have not started off that way but let's face it, that area of the world is filled with corruption and who wouldn't want to get their paws all over the most powerful global currency ever invented? Normal miner incentives don't affect these sorts of players the same way.

You said "that area of the world is filled with corruption and who wouldn't want to get their paws all over the most powerful global currency ever invented" but your logic applies to all areas of the world.  We're witnessing the same game theory playing out over and over, each time with higher and higher stakes.  If bitcoin continues to grow in importance, increasingly powerful entities will move into mining.  I find it very unlikely that they will all see eye to eye.  Which means the arms race will continue and the consensus mechanism will remain objective.  

[cypherdoc]

but isn't the speed (7 tx/s) different than the block size limit (1MB/block)?

The block size determines the transactions per second. Allowing a larger block size means that more transactions can be included per block.

thx for making me review that. i was getting confused with data rates.  is there a maximum MB/s that constrains the network speed?

[cypherdoc]

"He added that since his government announced it is to set up a licensicng scheme/register, it has received a lot of interest from bitcoin companies across the world looking to relocate to the island."

http://www.coindesk.com/bitfin-day-one-circle-talks-p2p-payments-isle-man-details-bitcoin-plans/

i'm telling you; the first country to formally open up regulations (hands off) to Bitcoin is going to blow the doors off.  

it's inevitable.

[cypherdoc]

bwahahaha!

[justusranvier]

Speaking of BitFury, they are the real reason for the mining centralization uproar. The idea that Allaire/Hearn are concerned about decentralization is laughable. Seriously, a Goldman Sachs veteran and a Google veteran?

This is all a propaganda campaign necessitated by the fact that the single largest holder of hashing power is Russian, and all the hardware is manufactured in China.

They've successfully created a Pavlovian reaction associated with the word "decentralized" and now intend to use it to convince the community to switch over to a mining network more easily controlled by the vampire squid.

[cypherdoc]

"Testifying, Binney accused the NSA of having a "totalitarian mentality" and wanting "total information control" over citizens in breach of the US constitution. It was an approach that until now the public had only seen among dictators, he added."

"The NSA represented the "greatest threat" to American society since the US Civil War of the 19th century, Binney added."

http://www.dw.de/nsa-totalitarian-ex-staffer-tells-german-parliament/a-17757008