Can the Block Chain get too big and make Bitcoin unworkable?

[paraipan]

Ok, so off-the-chain transactions is when Bob & Alice both use the same centralized third party but third party can't run off with money because of some multi-sig trickery.

Quiet nice, but its still centralization.

It's not really centralization because there can be many such third parties. The barrier to entry is low and the trust required is low.

So resuming what i got from the Gavin's blog post: bitcoin developers don't know how to scale the project and Gavin proposes making off-the-blockchain tx's with the help of p2sh. Is this true?

That's just one proposal.  Basicly it's the same as what I proposed about a 'paypal' type company serving many members and keeping a single collective wallet, but in my case one has to trust the company that you are using to not be doing anything with the funds without your concent.  In Gavin's proposal, they can't do anything with the funds without your consent, but neither can you without their's.  I think that there are better ways, but this one would work.  It would likely also permit bitcoin banking while also prohibiting fractional reserve bs.  

Ok, i get it, what i'm interested to know if a true p2p proposal exists. Someone must be working on it, or not?

A solution will come, I'm sure about that.

[yogi]

They may not be able to run off with your money, but they can control other things such as prior restraint.

I don't understand this question in this context.

It's a statement, I would be interested in your opinion of its validity.

[MoonShadow]

Ok, so off-the-chain transactions is when Bob & Alice both use the same centralized third party but third party can't run off with money because of some multi-sig trickery.

Quiet nice, but its still centralization.

It's not really centralization because there can be many such third parties. The barrier to entry is low and the trust required is low.

So resuming what i got from the Gavin's blog post: bitcoin developers don't know how to scale the project and Gavin proposes making off-the-blockchain tx's with the help of p2sh. Is this true?

That's just one proposal.  Basicly it's the same as what I proposed about a 'paypal' type company serving many members and keeping a single collective wallet, but in my case one has to trust the company that you are using to not be doing anything with the funds without your concent.  In Gavin's proposal, they can't do anything with the funds without your consent, but neither can you without their's.  I think that there are better ways, but this one would work.  It would likely also permit bitcoin banking while also prohibiting fractional reserve bs.  

Ok, i get it, what i'm interested to know if a true p2p proposal exists. Someone must be working on it, or not?

A solution will come, I'm sure about that.

Bitcoin is the true p2p solution.  If most people choose to use services to cut their own costs, this still will not prevent you or anyone else from starting their own client and running directly upon the main bitcoin network, or using an overlya such as Stratum.  It's not an all or nothing system.  You can favor p2p privacy and control and I can favor convience, speed & lower costs of transactions; and we don't affect one anothers' choices and we can still exchange with each other using bitcoin in many flavors.

[MoonShadow]

They may not be able to run off with your money, but they can control other things such as prior restraint.

I don't understand this question in this context.

It's a statement, I would be interested in your opinion of its validity.

Try restating it so that I can parse it.

[yogi]

They may not be able to run off with your money, but they can control other things such as prior restraint.

I don't understand this question in this context.

It's a statement, I would be interested in your opinion of its validity.

Try restating it so that I can parse it.

Whats to stop them from blocking my account, or anything else that's not in my best interest?

[MoonShadow]

They may not be able to run off with your money, but they can control other things such as prior restraint.

I don't understand this question in this context.

It's a statement, I would be interested in your opinion of its validity.

Try restating it so that I can parse it.

Whats to stop them from blocking my account, or anything else that's not in my best interest?

Who is 'them' in this context?  If you mean the bitcoin bank, then the answer is nothing.  Excepting, of course, that they lose a customer & they have no access to your funds, so there is no incentive for them to do so.

[yogi]

They may not be able to run off with your money, but they can control other things such as prior restraint.

I don't understand this question in this context.

It's a statement, I would be interested in your opinion of its validity.

Try restating it so that I can parse it.

Whats to stop them from blocking my account, or anything else that's not in my best interest?

Who is 'them' in this context?  If you mean the bitcoin bank, then the answer is nothing.  Excepting, of course, that they lose a customer & they have no access to your funds, so there is no incentive for them to do so.

Yeah, but the cops told them to ban me cos I used silk road. Now my addresses are banned from all the bitcoin banks.

[MoonShadow]

They may not be able to run off with your money, but they can control other things such as prior restraint.

I don't understand this question in this context.

It's a statement, I would be interested in your opinion of its validity.

Try restating it so that I can parse it.

Whats to stop them from blocking my account, or anything else that's not in my best interest?

Who is 'them' in this context?  If you mean the bitcoin bank, then the answer is nothing.  Excepting, of course, that they lose a customer & they have no access to your funds, so there is no incentive for them to do so.

Yeah, but the cops told them to ban me cos I used silk road. Now my addresses are banned from all the bitcoin banks.

All of them?  All your addresses & all the bitcoin banks?  Well, the long arm of the law stretches to the ends of the Earth & the deepest parts of the Internet then.  In that, rather extreme, distopian future why can't you fall back to starting your own client?  Does anyone here not use a bank for something today?  Does anyone here really trust them?

[yogi]

All of them?  All your addresses & all the bitcoin banks?  Well, the long arm of the law stretches to the ends of the Earth & the deepest parts of the Internet then.

Bank and payment processor are subject to rules and regulations, even though there are lots of them and they are located all around the world. Our own bitcoin exchanges are being subjected to ever growing regulations and it will be no different for bitcoin banks or transaction gateways.

In that, rather extreme, distopian future why can't you fall back to starting your own client?  Does anyone here not use a bank for something today?  Does anyone here really trust them?

The reason I had to start using the bitcon bank in the first place was that the resource requirements of the client had grown beyond those available to the average user.

It would be interesting to know what percentage of bitcoin users would prefer a p2p solution to this problem.

[Meni Rosenfeld]

All of them?  All your addresses & all the bitcoin banks?  Well, the long arm of the law stretches to the ends of the Earth & the deepest parts of the Internet then.

Bank and payment processor are subject to rules and regulations, even though there are lots of them and they are located all around the world. Our own bitcoin exchanges are being subjected to ever growing regulations and it will be no different for bitcoin banks or transaction gateways.

What, in your opinion, is the difference between miners and banks in this regard? Sure, miners are anonymous by default, but Bitcoin banks can also be anonymous, unlicensed and operating through TOR if they want. Exchanges have a problem because they deal with traditional money which isn't a cryptocurrency.

What makes Bitcoin decentralized is that there are many nodes and miners, with a low barrier of entry to becoming one. The situation is almost as good if there are multiple payment processors which have a low barrier of entry and trust requirement. Barrier of entry is really the key issue, and what the raw Bitcoin network allows, with all its power, is the lowering of barrier of entry to processors.

You may also want to take a look at my new idea for trustless payment processors: https://bitcointalk.org/index.php?topic=91732.0.

[MoonShadow]

All of them?  All your addresses & all the bitcoin banks?  Well, the long arm of the law stretches to the ends of the Earth & the deepest parts of the Internet then.

Bank and payment processor are subject to rules and regulations, even though there are lots of them and they are located all around the world. Our own bitcoin exchanges are being subjected to ever growing regulations and it will be no different for bitcoin banks or transaction gateways.

Not those on Tor.  The Silk Road is, in effect, both an online wallet & a mixer, while also creating a convient market.

In that, rather extreme, distopian future why can't you fall back to starting your own client?  Does anyone here not use a bank for something today?  Does anyone here really trust them?

The reason I had to start using the bitcon bank in the first place was that the resource requirements of the client had grown beyond those available to the average user.

Not likely, many will exist long before it's a resource issue.

[yogi]

What, in your opinion, is the difference between miners and banks in this regard?

The difference from my perspective is that I can use a bitcoin bank but I can not use a miner for sending transactions due to not having enough resources to run the full client.

Sure, miners are anonymous by default, but Bitcoin banks can also be anonymous, unlicensed and operating through TOR if they want.

I agree, there probably will be shady unlicensed operators in country beyond the reach of the regulations. But, I do not want to entrust them with my transaction history.

Exchanges have a problem because they deal with traditional money which isn't a cryptocurrency.

So are you saying bitcoin will never be view by the authorities as real money? because I think its probably just a matter of transaction volume.

What makes Bitcoin decentralized is that there are many nodes and miners, with a low barrier of entry to becoming one. The situation is almost as good if there are multiple payment processors which have a low barrier of entry and trust requirement.

The growing resource requirements are a barrier to entry, as are the regulations that will be imposed on payment processors.

Barrier of entry is really the key issue, and what the raw Bitcoin network allows, with all its power, is the lowering of barrier of entry to processors.

Barrier of entry is 'an' issue, for the average user there is also freedom and privacy.

[Meni Rosenfeld]

Exchanges have a problem because they deal with traditional money which isn't a cryptocurrency.

So are you saying bitcoin will never be view by the authorities as real money? because I think its probably just a matter of transaction volume.

No, I said it's not a cryptocurrency and thus you technically can't do with it what you can do with a cryptocurrency.

What makes Bitcoin decentralized is that there are many nodes and miners, with a low barrier of entry to becoming one. The situation is almost as good if there are multiple payment processors which have a low barrier of entry and trust requirement.

The growing resource requirements are a barrier to entry, as are the regulations that will be imposed on payment processors.

The resource requirements will be lower if we keep most transactions off the chain. And payment processors of the kind I'm considering can't really be regulated any more than miners and network nodes, if they choose not to be.

[yogi]

The resource requirements will be lower if we keep most transactions off the chain.

This is a circular argument, the reason people started using bitcoin bank in the first place was because of the resource requirements.

And payment processors of the kind I'm considering can't really be regulated any more than miners and network nodes, if they choose not to be.

Even if you are able to create an un-shutdownable bitbank (TOR I assume?) it still doesn't solve the privacy issue.

[Meni Rosenfeld]

The resource requirements will be lower if we keep most transactions off the chain.

This is a circular argument, the reason people started using bitcoin bank in the first place was because of the resource requirements.

Not circular argument, positive feedback loop. People using Bitcoin banks will make the blockchain lighter, which in turn will make it easier to make competitive and efficient banks.

An analogy to explain the distinction: Why, quantitatively, does Bitcoin have (edit: fundamental) value? Because you can buy stuff with it. Why can you buy stuff with it? Because it has value. Is this a circular argument? No, it's a positive feedback loop with two equilibria - one where the value is 0, and one where the value is proportional to the commerce Bitcoin enables. Luckily, we have managed to bootstrap ourselves away from the 0 equilibrium.

[MoonShadow]

Even if you are able to create an un-shutdownable bitbank (TOR I assume?) it still doesn't solve the privacy issue.

Why not?  What says that a bitcoin bank (on Tor or otherwise) needs to have your true identity?  Unless they are forced by some government edict, the bitcoin bank doesn't need that in order to either pay your bills, they have your money (or, at least, a irrevocable contract to do so, enforceable within the bitcoin network itself).  I can see no reason why a bitcoin bank, uncoerced by some government ditate, would need to know your name, your home address, or any other such stuff.

[yogi]

The resource requirements will be lower if we keep most transactions off the chain.

This is a circular argument, the reason people started using bitcoin bank in the first place was because of the resource requirements.

Not circular argument, positive feedback loop. People using Bitcoin banks will make the blockchain lighter, which in turn will make it easier to make competitive and efficient banks.

An analogy to explain the distinction: Why, quantitatively, does Bitcoin have value? Because you can buy stuff with it. Why can you buy stuff with it? Because it has value. Is this a circular argument? No, it's a positive feedback loop with two equilibria - one where the value is 0, and one where the value is proportional to the commerce Bitcoin enables. Luckily, we have managed to bootstrap ourselves away from the 0 equilibrium.

Bitcoin had speculative value before you could buy things with it, but this is beside the point.

If the resource load lightens then people will start using the full client again. The system will attempt to reach equilibrium but there will be a resource impoverished underclass that will always be forced to use the bitbank.

Even if you are able to create an un-shutdownable bitbank (TOR I assume?) it still doesn't solve the privacy issue.

Why not?  What says that a bitcoin bank (on Tor or otherwise) needs to have your true identity?  Unless they are forced by some government edict, the bitcoin bank doesn't need that in order to either pay your bills, they have your money (or, at least, a irrevocable contract to do so, enforceable within the bitcoin network itself).  I can see no reason why a bitcoin bank, uncoerced by some government ditate, would need to know your name, your home address, or any other such stuff.

Google doesn't have to build profiles on us and sell our data to other companies, but they do. Our data has value and that provides incentive.

[MoonShadow]

Google doesn't have to build profiles on us and sell our data to other companies, but they do. Our data has value and that provides incentive.

Oh, I see what you mean now.

That's true enough, but still true regardless of whether or not you have an account or not, so nothing changes.  If your bitbank asks for personal data, in order to sell it or for any other reason, just find one that does not or start your own.

[ymer]

2 years later... Blockchain is too damn big

[MoonShadow]

2 years later... Blockchain is too damn big

compared to what, exactly?