Gold collapsing. Bitcoin UP.

[cypherdoc]

When historians look back they might well conclude that the 1MB limit resolution was Bitcoin's "betamax moment", the most important decision point deciding its ultimate fate.

coinmarketcap.com is interesting because it gives a market assessment of Bitcoin's future prospects.

Right now the total cryptocurrency market cap is $8,197,074,397 and Bitcoin's is $7,678,842,953 or 93.68%
(higher if MSC and XCP and other BTC-based alts are included).

So, the cryptocurrency market is effecting pricing a >93% probability of Bitcoin dominating this new asset class - long term. An asset class of such importance that many crypto investors consider could make all fiat obsolete and perhaps even demonetize precious metals as well.

If the 1MB limit is not handled properly, in good time, and is allowed to seriously disrupt organic growth, then that percentage will fall significantly. Perhaps even causing an irrecoverable erosion in the first-mover status, opening the window for alts like NXT and XMR.

This is the stakes in play.

here's a novel thought: it may not matter either way.  i can construct reasonable game theory scenarios where Bitcoin can succeed both ways.  the economic incentives may be so strong against the existing inflationary fiat monetary system that participants will work hard to make either scenario workable.  the main incentive being an open and transparent fixed supply monetary system.

Bitcoin can not disrupt fiat currencies unless it's a network that everyone on the planet is actually capable of transacting on.

i guess you don't think much about my Bitcoin Standard.  however, by providing an instant, almost realtime method of settling international balance of payment imbalances, Bitcoin could put the screws to overleveraging in the overlying fiat system.  perhaps the sustainability that i suggest of that system is what puts you off but i still think it's the path of least resistance for integration of existing and new technology.

Pulling out all the FUD/propaganda stops to keep the transaction throughput rate capped is the best possible strategy the defenders of he legacy system could employ to save themselves.

i probably should say that i am neutral on the issue of block size, currently.  i understand both halves of the argument and honestly think it may not matter which way we go as the network could adapt. but even so, you can't label those who argue against what you propose as spewing FUD.  most of those ppl honestly believe that keeping blocks at 1MB is the right thing to do, and perhaps it is.  we'll see.

If they can force most transactions off chain, into the waiting arms of Coinbase and Circle, then most of the benefits of Bitcoin will remain inaccessible to most of the world's population.

i must admit, i don't like what i'm seeing on Coinbase's behalf regarding KYC/AML.  they're being too intrusive.  we'll have to see how this evolves as i'm sure they are under severe pressure to conform which could change for the better with time.

having said that, we do need a way to bring all the unbanked online with Bitcoin.  that will require cheap tx fees.  my hope is that the market will force down fees thru increased competition.  we're beginning to see that with 0% fees via Circle.

Given the stakes involved, I don't trust Gavin to be capable of making good decisions even if he wanted to. A single point of control is a single target for blackmail and extortion.

you do know that Gavin agrees with you when it comes to increasing tx rates?  i seriously doubt he could be manipulated given his political leanings and actions heretofore.  i'm just glad he's being paid by the BF while being alongside Matonis, who i think has his head on straight.

they are very aware of issues like block size limits and bandwidth limitations.

What you're talking about are  symptoms of a sub-optimal network layer.

The fact that the P2P network suffers from a tragedy of the commons effect because there is no price discovery for bandwidth or storage is nothing inherent to Bitcoin - it's inherent to the current design of the reference client.

i'm not seeing it.  every day we get more positive news and year on year we are still up around 500%.  

If people who don't want Bitcoin to succeed can stop that problem from ever being fixed in the reference client, they can point to the tragedy of the commons problem as an example of why never to raise the transaction rate, forever.

Of course, that strategy only works when a single codebase has a monolopy on the implementation of the protocol.

i would say that if it ain't broke, don't fix it.

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[justusranvier]

most of those ppl honestly believe that keeping blocks at 1MB is the right thing to do

Of course. That does not preclude their believe being incited from people will less pure motives. That's a pretty standard political movement infiltration/disruption tactic.

i must admit, i don't like what i'm seeing on Coinbase's behalf regarding KYC/AML.  they're being too intrusive.  we'll have to see how this evolves as i'm sure they are under severe pressure to conform which could change for the better with time.

What I'm most worried about is fractional reserves once the majority of the coins are herded into off-chain processors.

Consider this scenario:

The IRS devotes a lot of resources to auditing anyone who withdraws their coins. If you withdraw coins and move them, they assume it's a taxable event with the burden of proof on you to show otherwise. Coinbase/Circle are more than happy to tip them off.

Most people don't want to deal with the hassle, so they leave their coins in their online "wallets" that handle their tax reporting automatically (how convienient!)

Bitlicences make it unprofitable to operate a Bitcoin company, except for banks which are except. Coinbase and Circle get bought out by JPM and Goldman Sachs.

You'll never see your coins again, just like Germany will never see their gold again.

you do know that Gavin agrees with you when it comes to increasing tx rates?  i seriously doubt he could be manipulated given his political leanings and actions heretofore.  i'm just glad he's being paid by the BF while being alongside Matonis, who i think has his head on straight.

I know Gavin agrees and I generally agree with what Matonis does.

Nevertheless, they are in positions of influence and vulnerable to coercion and so I'll never be able to trust them. I'd love for the situation to be such that they don't have any power that anyone would coerce them to misuse, so that I could trust them.

Note that Bitlicenses may have legal implications for both of them.

i would say that if it ain't broke, don't fix it.

"640k ought to be enough for anyone"

[cypherdoc]

most of those ppl honestly believe that keeping blocks at 1MB is the right thing to do

Of course. That does not preclude their believe being incited from people will less pure motives. That's a pretty standard political movement infiltration/disruption tactic.

i must admit, i don't like what i'm seeing on Coinbase's behalf regarding KYC/AML.  they're being too intrusive.  we'll have to see how this evolves as i'm sure they are under severe pressure to conform which could change for the better with time.

What I'm most worried about is fractional reserves once the majority of the coins are herded into off-chain processors.

why would ppl leave significant amounts of coins at the processors anymore than they do now just b/c they're forced off chain by high fees from a 1MB block?  spending amounts maybe, but not savings.  the only indisputable principle here is to never leave your privkeys to someone else.

Consider this scenario:

The IRS devotes a lot of resources to auditing anyone who withdraws their coins. If you withdraw coins and move them, they assume it's a taxable event with the burden of proof on you to show otherwise. Coinbase/Circle are more than happy to tip them off.

Most people don't want to deal with the hassle, so they leave their coins in their online "wallets" that handle their tax reporting automatically (how convienient!)

Bitlicences make it unprofitable to operate a Bitcoin company, except for banks which are except. Coinbase and Circle get bought out by JPM and Goldman Sachs.

You'll never see your coins again, just like Germany will never see their gold again.

the IRS doesn't have those kind of resources.  audit rates are minimal and have been going down.  even so, just leave small spending amounts on offchain processors.

you do know that Gavin agrees with you when it comes to increasing tx rates?  i seriously doubt he could be manipulated given his political leanings and actions heretofore.  i'm just glad he's being paid by the BF while being alongside Matonis, who i think has his head on straight.

I know Gavin agrees and I generally agree with what Matonis does.

Nevertheless, they are in positions of influence and vulnerable to coercion and so I'll never be able to trust them. I'd love for the situation to be such that they don't have any power that anyone would coerce them to misuse, so that I could trust them.

Note that Bitlicenses may have legal implications for both of them.

i would say that if it ain't broke, don't fix it.

"640k ought to be enough for anyone"

maybe i'm just more optimistic than you.  every open source project has a leader.  maybe not one with so much at stake as Bitcoin.  as i said in a post earlier today on the Nash Equilibrium; i think corruption won't want to take the risk of being exposed to the sunlight of the Bitcoin system as there would be too much at stake for them to risk it.  if billionaires like Branson and Ka-shing ever got wind of something like that, we might actually see some gubmint apparatchiks go to jail.

[justusranvier]

maybe i'm just more optimistic than you.

Probably true.

I'd rather err on the side of too many precautions than too few precautions in this area.

[solex]

i would say that if it ain't broke, don't fix it.

"640k ought to be enough for anyone"

For the non-technical: what is "not broken" is as good as this idea for slowing down a train...  FFS! We can do better, surely?

[cypherdoc]

maybe i'm just more optimistic than you.

Probably true.

I'd rather err on the side of too many precautions than too few precautions in this area.

that's fine, but just don't f*ck it up. 

[cypherdoc]

i would say that if it ain't broke, don't fix it.

"640k ought to be enough for anyone"

For the non-technical: what is "not broken" is as good as this idea for slowing down a train...  FFS! We can do better, surely?

to which i could respond:

"The Geeks Fail to Understand That Which They Hath Created"?

[Poker Tilt]

Gold collapsing? I don't follow the metal prices. Link?

maybe some save money in gold thats better than bitcoin. but bitcoin reallt high returns

[justusranvier]

that's fine, but just don't f*ck it up. 

Note that Gavin has said in the past that he wants to see multiple implementations of the protocol, yet somehow the other core developers managed to fend off every attempt by other teams to do exactly this.

Finally somebody showed up that was good enough that they couldn't stop by stonewalling them, so now they just ignore them and hope everybody else does too.

[cypherdoc]

that's fine, but just don't f*ck it up. 

Note that Gavin has said in the past that he wants to see multiple implementations of the protocol, yet somehow the other core developers managed to fend off every attempt by other teams to do exactly this.

Finally somebody showed up that was good enough that they couldn't stop by stonewalling them, so now they just ignore them and hope everybody else does too.

i'm very much for btcd and Bitcoinj.  the resiliency gained from those implementations strengthens Bitcoin.

i also think that projects like Open Transactions will be good for the system.  at least they don't blow wind. can't wait for them to get something up and running.

maybe you like Gavin more than you think...

[FNG]

The crunch increased interest in tenders divorced from a single nation’s strength, spurring the International Monetary Fund to boost almost 10-fold the allocation of special drawing rights, a reserve asset whose value is based on a basket of currencies, and fueling demand for so-called virtual currencies, such as bitcoin.

http://www.bloomberg.com/news/2014-08-06/russia-sanctions-accelerate-risk-to-dollar-dominance.html

Nice find

"Such a transformation may take as long as 25 years, with the dollar remaining “top of the heap” even as other currencies play a greater role"

Sure.. then we're in at least year 23

[Melbustus]

When historians look back they might well conclude that the 1MB limit resolution was Bitcoin's "betamax moment", the most important decision point determining its ultimate fate.

I'm in justusranvier's camp on this one. Not raising blocksize, *at least* roughly allowing for Moore's Law, seems insane, and would just drive some alt to gain significant marketshare. I think most of us in this thread realize that an alt achieving a significant portion of bitcoin's market-cap for an extended period would be a major detriment to long-run health of the entire crypto-ecosystem. It'd empirically refute the notion that bitcoin is a good store of value, giving a lot of fuel to the argument that bitcoin isn't scarce due to alts. That'd reduce investment-in/monetization-of crypto in general since none could be considered a decent parking place for capital, and that hurts everyone (which is the core point alt-boosters miss).

We need to allow bitcoin itself to fulfill its basic promises, and one of those is cheap global transactions. Part of the path to mainstream use (and the trojan-horse that widespread bitcoin ownership represents) is through demonstrating feature superiority versus fiat (sidenote: Chamath on this: https://www.youtube.com/watch?v=6AoPHNsX2x8 ). Transaction-cost is one of the most direct, most easily understandable, and most easily usable of bitcoin's "features" for new users.


Back to blocksize, I'll just drop the obligatory Satoshi quote to directly refute the notion that blocksize was always intended to remain fixed (though JR's and Peter R's orphan-cost-dynamics arguments upthread are obviously the proper args):

It can be phased in, like:

if (blocknumber > 115000)
    maxblocksize = largerlimit

It can start being in versions way ahead, so by the time it reaches that block number and goes into effect, the older versions that don't have it are already obsolete.

When we're near the cutoff block number, I can put an alert to old versions to make sure they know they have to upgrade.

So, the cryptocurrency market is effecting pricing a >93% probability of Bitcoin dominating this new asset class - long term. An asset class of such importance that many crypto investors consider could make all fiat obsolete and perhaps even demonetize precious metals as well.

I think significantly demonetizing PMs comes before making a significant dent in fiat.

[molecular]

It's almost as bad as outright increasing the maximum number of Bitcoins from the current 21M maximum.

Wachtwoord, do you think the limit should be permanently set to 1 MB? Or just that it should remain "limited" in order to drive a healthy fee market?

I think there should be a limit otherwise no-one will pay any meaningful fees ever and people will stop mining. The system will only work when there is a limited amount of space because if it is unlimited it is advantageous for miners to include transactions with any fee, even 1 Satoshi. If that happens Bitcoin will stop to function correctly as the block rewards decrease.

Why the limit should be at 1 MB? Well the same reason the maximum amount should be at 21M Bitcoin. If it is ever increased it creates a precedent to do so again, and again and again, ad infinitum. I signed up for Bitcoin with a 21M unit cap and a 1MB block cap. Any changes to that will force me to seriously reconsider my investment as the chances of Bitcoin going to zero will increase tremendously.

If people want the limitation to be removed I hope it's published as an altcoin (Bitcoin2) and the initial distribution as proposed by you Peter will be used.

No amount of fees being paid will result in more than 7 transactions to fit into a block.

Also: empirical evidence suggests people pay fees even if there's enough space in blocks (like right now).

I wonder which chain people would use in case of a fork over this issue. I'm guessing the one with lower tx fees.

[oda.krell]

When historians look back they might well conclude that the 1MB limit resolution was Bitcoin's "betamax moment", the most important decision point determining its ultimate fate.

I'm in justusranvier's camp on this one. Not raising blocksize, *at least* roughly allowing for Moore's Law, seems insane, and would just drive some alt to gain significant marketshare. I think most of us in this thread realize that an alt achieving a significant portion of bitcoin's market-cap for an extended period would be a major detriment to long-run health of the entire crypto-ecosystem. It'd empirically refute the notion that bitcoin is a good store of value, giving a lot of fuel to the argument that bitcoin isn't scarce due to alts. That'd reduce investment-in/monetization-of crypto in general since none could be considered a decent parking place for capital, and that hurts everyone (which is the core point alt-boosters miss).

We need to allow bitcoin itself to fulfill its basic promises, and one of those is cheap global transactions. Part of the path to mainstream use (and the trojan-horse that widespread bitcoin ownership represents) is through demonstrating feature superiority versus fiat (sidenote: Chamath on this: https://www.youtube.com/watch?v=6AoPHNsX2x8 ). Transaction-cost is one of the most direct, most easily understandable, and most easily usable of bitcoin's "features" for new users.


Back to blocksize, I'll just drop the obligatory Satoshi quote to directly refute the notion that blocksize was always intended to remain fixed (though JR's and Peter R's orphan-cost-dynamics arguments upthread are obviously the proper args):

It can be phased in, like:

if (blocknumber > 115000)
    maxblocksize = largerlimit

It can start being in versions way ahead, so by the time it reaches that block number and goes into effect, the older versions that don't have it are already obsolete.

When we're near the cutoff block number, I can put an alert to old versions to make sure they know they have to upgrade.

Been following this thread for a while, my first post in here to say: excellent post, Melbustus, especially the bolded part. The exception being an alt of course that adds utility that btc cannot offer in principle (like high level of anonymity) but you know that yourself, as you've posted about it before.

[cypherdoc]

I've known about this since 2008,  but everytime I read this it never fails to make me angry as hell:

If the Federal Reserve and the bankers who control it believe that they can continue to devalue the savings of Americans and continue to destroy the US economy, they will have to face the realization that their trillion dollar printing presses will eventually plunder the world economy.

http://www.sott.net/article/250592-Audit-of-the-Federal-Reserve-Reveals-16-Trillion-in-Secret-Bailouts

[justusranvier]

maybe you like Gavin more than you think...

Who said anything about liking anyone? I was talking about trust.

[cypherdoc]

maybe you like Gavin more than you think...

Who said anything about liking anyone? I was talking about trust.

Why wouldn't you trust Gavin anymore than any other dev? If anything he's been pretty darn close to the best representative for Bitcoin that we could have hoped for, imo.

Of course, everyone is free to disagree with some of his decision making but that doesn't equate to a betrayal of trust.   

[cypherdoc]

btw, i don't agree with Gavin's view on anonymity.  he seems to think that identification is no big deal in Bitcoin.  i totally disagree and believe that anonymity should be upheld and is fundamental to fungibility.

[cypherdoc]

this is actually good news:

http://www.lawfareblog.com/2014/08/snowden-residency-in-moscow-extended/

[cypherdoc]

oil continuing the plunge: