Gold collapsing. Bitcoin UP.

[cypherdoc]

stocks making a run for it again.  down.

[cypherdoc]

nom, nom, nom, nom:

[cypherdoc]

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.

i agree.  with enough lead time, we shouldn't get a fork.

[cypherdoc]

USD definitely making a break for it, up.  pm bugs gotta look out:

[cypherdoc]

https://twitter.com/cypherdoc2/status/497404702460739584

[HeliKopterBen]

what i don't get is why isn't Gavin moving to increase block size now as opposed to when we're in the middle of the next bubble or two when tx size will have surely increased along with price and his back is against the wall?  i'm not advocating this, just asking the question.

he's already shown a reticence to make changes to the protocol.  not that i'm complaining, mind you, as i think he's done a stellar job as lead dev.  but at that point, it may be such a political hot potato that nothing may get done at all.  

The block size may not need to be increased if m of n oracle side chains can be used for most transactions.  The main chain would be more of a backbone chain being used to settle side chains and other major transactions periodically.  Bitcoin would be primarily used as a store of value and transfer of major value.  This is in line with you thoughts of bitcoin being a reserve currency.  We shall see how it plays out.

[justusranvier]

The main chain would be more of a backbone chain being used to settle side chains and other major transactions periodically.  Bitcoin would be primarily used as a store of value and transfer of major value.  This is in line with you thoughts of bitcoin being a reserve currency.  We shall see how it plays out.

That can't work.

Mining has to be paid for via usage fees, not the block subsidy. The only way that works is if the cost is amortized over an very high transaction volume.

Again, forcing most transactions off-chain also denies the benefits of Bitcoin to most of the world's population.

[cypherdoc]

The main chain would be more of a backbone chain being used to settle side chains and other major transactions periodically.  Bitcoin would be primarily used as a store of value and transfer of major value.  This is in line with you thoughts of bitcoin being a reserve currency.  We shall see how it plays out.

That can't work.

Mining has to be paid for via usage fees, not the block subsidy. The only way that works is if the cost is amortized over an very high transaction volume.

Again, forcing most transactions off-chain also denies the benefits of Bitcoin to most of the world's population.

that's not necessarily true either.  with small blocks and fewer tx's, fees would increase substantially (hundreds of dollars) to hopefully compensate for diminishing block rewards.  if Bitcoin is used as a world reserve currency, then tx volumes wouldn't have to be high and could be used to settle international balance of payments btwn nations.

i understand the potential role for worldwide cheap transactional volume.  i'm just saying that from a teleological standpoint, Bitcoin may not evolve that way.  you need to be aware of this.

[justusranvier]

that's not necessarily true either.  with small blocks and fewer tx's, fees would increase substantially (hundreds of dollars) to hopefully compensate for diminishing block rewards.  if Bitcoin is used as a world reserve currency, then tx volumes wouldn't have to be high and could be used to settle international balance of payments btwn nations.

Those two conditions are mutually exclusive.

Few advantages an altcoin might have could overcome Bitcoin's network effect, and a three or four order of magnitude reduction in transaction fees is one of them.

[HeliKopterBen]

The main chain would be more of a backbone chain being used to settle side chains and other major transactions periodically.  Bitcoin would be primarily used as a store of value and transfer of major value.  This is in line with you thoughts of bitcoin being a reserve currency.  We shall see how it plays out.

That can't work.

Mining has to be paid for via usage fees, not the block subsidy. The only way that works is if the cost is amortized over an very high transaction volume.

Usage would be higher at much higher rates of adoption, especially as a reserve currency status, even as a backbone currency.  As a reserve currency many major transactions would compete to get into a block at 1mb limit, increasing usage fees and almost completely cutting out any spam.  At that state the block size limit may have to be increased still. 

Again, forcing most transactions off-chain also denies the benefits of Bitcoin to most of the world's population.

Why would most of the world's population not have just as much access to off-chain solutions as they do to bitcoin directly?  I realize m of n oracle systems are not completely decentralized but they should be decentralized enough and they would be completely digital and global.

[justusranvier]

Why would most of the world's population not have just as much access to off-chain solutions as they do to bitcoin directly?  I realize m of n oracle systems are not completely decentralized but they should be decentralized enough and they would be completely digital and global.

If it was possible to build an off-chain transaction system that provides the same properties as Bitcoin, then we'd just use what ever that system was and abandon Bitcoin entirely.

[cypherdoc]

that's not necessarily true either.  with small blocks and fewer tx's, fees would increase substantially (hundreds of dollars) to hopefully compensate for diminishing block rewards.  if Bitcoin is used as a world reserve currency, then tx volumes wouldn't have to be high and could be used to settle international balance of payments btwn nations.

Those two conditions are mutually exclusive.

Few advantages an altcoin might have could overcome Bitcoin's network effect, and a three or four order of magnitude reduction in transaction fees is one of them.

well, that's not how things are evolving.

Bitcoin continues to outpace all altcoins no matter what they've promised.  and that's despite Bitcoin's 1MB limit.

[justusranvier]

Bitcoin continues to outpace all altcoins no matter what they've promised.  and that's despite Bitcoin's 1MB limit.

Because it hasn't become an issue yet.

But ultimately if Bitcoin isn't the best medium of exchange it won't be a store of value.

"Store of value" is an emergent property of a good medium of exchange. It's not something that can be separated as if it were independent.

[cypherdoc]

Banks' Failure on 'Living Wills' Frays Relations With Regulators

http://online.wsj.com/articles/regulators-banks-optimism-killed-living-wills-1407367909?mod=rss_markets_main

[cypherdoc]

Because it hasn't become an issue yet.

maybe it will never become an issue.

[cypherdoc]

huh, this is a new one:

http://www.wired.com/2014/08/isp-bitcoin-theft/

[oda.krell]

Bitcoin continues to outpace all altcoins no matter what they've promised.  and that's despite Bitcoin's 1MB limit.

Because it hasn't become an issue yet.

But ultimately if Bitcoin isn't the best medium of exchange it won't be a store of value.

"Store of value" is an emergent property of a good medium of exchange. It's not something that can be separated as if it were independent.

I don't think the two are necessarily linked (gold, for s.o.v. without m.o.e. functionality, local currencies in high inflation regions for m.o.e. functionality without that of s.o.v.). However, it simply seems like an unnecessary risk to me to not provide that "service" (functioning as medium of exchange, scaled up to global demand) when the costs of a solution (sliding size) seem relatively low to me.

[cypherdoc]

this too is actually good news:

https://www.schneier.com/blog/archives/2014/08/the_us_intellig.html

[justusranvier]

I don't think the two are necessarily linked (gold, for s.o.v. without m.o.e. functionality, local currencies in high inflation regions for m.o.e. functionality without that of s.o.v.).

How good is gold as a store of value, really?

[jmw74]

Bitcoin continues to outpace all altcoins no matter what they've promised.  and that's despite Bitcoin's 1MB limit.

Because it hasn't become an issue yet.

But ultimately if Bitcoin isn't the best medium of exchange it won't be a store of value.

"Store of value" is an emergent property of a good medium of exchange. It's not something that can be separated as if it were independent.

I haven't given this too much thought yet, but after seeing the document on "Rapidly Adjusted Micropayments to a Predetermined Party", it sure sounded like an off-chain solution to me.

It's just that the solution given in the article was a specific use case, I couldn't see any reason it could not be made generic to include more than two parties, and and adjustment period of however long you want.

https://en.bitcoin.it/wiki/Contracts#Example_7:_Rapidly-adjusted_.28micro.29payments_to_a_pre-determined_party

For example, seems plausible you could implement changetip.com's off-chain ledger using this.  Each user might need 2 channels, since tips are not monotonically increasing (you might send a tip too).

Isn't the whole point of being "off chain" is that you know certain parts of the transaction graph are isolated from the rest, and that you can simply reduce them using some other mechanism and just transmit the final result to the bitcoin network?  That seems like exactly what the above document describes.


Edit: ah, the article says you can adjust both ways if nLockTime'd transactions can now enter the memory pool.  I don't know if that's enabled now or not. I think I read that locktime works but replacement does not.