Bitcoin is Eating Itself(medium.com)
medium.com
Bitcoin is Eating Itself
https://medium.com/@dgenr8/bitcoin-is-eating-itself-bda69493c938
137 comments
It's more that the anti-authoritarian spirit of /r/Bitcoin (and from what I hear /r/btc as well) turned on its head, not really bitcoin users as a whole.
/r/btc doesnt censor on keywords and ban users. It also has open moderation logs. It isn't even in the same league as /r/Bitcoin. Post the word 'censorship' on /r/Bitcoin and your comment will be deleted.
/r/btc is not censored like /r/Bitcoin. Bitcoin Cash carries on the original Bitcoin vision of low fees and massive scaling through increasing blocksize.
The "vision" of low fees isn't really distinct to either chain. Low fees are due to a low amount of traffic on the network and blocks that are not full. Bitcoin Cash certainly scales better than BTC with 8x block sizes, but if it had traffic anywhere near the magnitude of Visa then it too would have high fees.
They are focused on the right things. Bitcoin Cash can grow to Visa levels on chain with today’s tech. Bitcoin Core devs are focused on a pipe dream while the reality in front of them is ignored.
https://m.youtube.com/watch?v=sbD0kiTddEs
https://m.youtube.com/watch?v=sbD0kiTddEs
This is what frustrates Bitcoin Cash supporters so much. Bitcoin had a scaling roadmap that would have allowed fees to remain very low well into mass-adoption.
The Bitcoin Core developers took it upon themselves to change that roadmap and now their supporters accuse anyone who disagrees of being radicals.
The Bitcoin Core developers took it upon themselves to change that roadmap and now their supporters accuse anyone who disagrees of being radicals.
This is completely true, I don't know who would downvote it, though every time I've been critical of the censorship and propoganda by Bitcoin core I seem to get upvoted slowly and downvoted rapidly.
Don’t know why your post is being faded. You’re absolutely correct.
Really? I've been pretty critical of Bitcoin on /r/bitcoin and haven't been banned.
I am bullish on Bitcoin's long term potential but it's true that /r/bitcoin is heavily censored, I got banned myself for being mildly supportive of Segwit2x. Luckily, it does not represent the entirety, or even a majority of the community (I'm not sure we can even talk of a "community" these days).
Care to provide proof? I was banned for talking about high fees as well...
Pardon my ignorance, but where's the "bite" of posting this now?
Is it so that transferring bitcoin now costs more than $0.01? And the amount being transferred is subject to some consideration? (if so, by whom? and in what way?)
Is it so that transferring bitcoin now costs more than $0.01? And the amount being transferred is subject to some consideration? (if so, by whom? and in what way?)
This is the subject of the article.
Last I checked, current market rates are about $30 for a typical transaction.
To happen, transactions must be included in a fixed size block in the global block chain. Currently, there is not enough room per block, so space is auctioned off on a per byte basis. The size of a transaction is not related to the number of bitcoins involved, but the number of "utxo" involved. Essentially, if Alice sends you 1BTC and Bob sends you 1BTC, you do not simply have 2BTC, you have 2 utxo's each worth 1BTC. If you want to send more than 1.5BTC in a single transaction, you will need to include both utxo's, which will increase the size and therefore the fee. In contrast, if Carol sent you 2BTC in a single transaction, you can then send 1.5BTC at the same cost as 1BTC because only 1 utxo is involved.
In a world with sufficeint space in a block, you could still need fees because the miners might decide to leave empty space instead of includeing free-rider transactions. This does not actually save them money, but if they control a non-trivial amount of the hashrate, it could encourage people to increase there fees in order to decrease their confirmation time (especially if all the major miners do this).
Last I checked, current market rates are about $30 for a typical transaction.
To happen, transactions must be included in a fixed size block in the global block chain. Currently, there is not enough room per block, so space is auctioned off on a per byte basis. The size of a transaction is not related to the number of bitcoins involved, but the number of "utxo" involved. Essentially, if Alice sends you 1BTC and Bob sends you 1BTC, you do not simply have 2BTC, you have 2 utxo's each worth 1BTC. If you want to send more than 1.5BTC in a single transaction, you will need to include both utxo's, which will increase the size and therefore the fee. In contrast, if Carol sent you 2BTC in a single transaction, you can then send 1.5BTC at the same cost as 1BTC because only 1 utxo is involved.
In a world with sufficeint space in a block, you could still need fees because the miners might decide to leave empty space instead of includeing free-rider transactions. This does not actually save them money, but if they control a non-trivial amount of the hashrate, it could encourage people to increase there fees in order to decrease their confirmation time (especially if all the major miners do this).
The vast majority of the compute time is finding the nonce that produces the output hash with the appropriate number of leading zeros. The transaction merkle tree output is an input to that calculation and transactions only need to be computed once per block. The rest of the time is generating hashes with random nonces.
Change address would also take some space
Bitcoin transaction fees have skyrocketed. They are around $50 per transaction now.
https://blockchain.info/charts/transaction-fees
https://blockchain.info/charts/n-transactions
https://blockchain.info/charts/transaction-fees
https://blockchain.info/charts/n-transactions
Wow I did not know that. I must confess that I have been only superficially involved with BTC, but I've gotta say, what you've just said:
One user up above said: "If your transaction wants to compete with the limited block space for each transaction, you have to increase your fee"
My question is: is there any end in sight where transaction costs might come down? Because otherwise BTC is totally unusable as a currency.
I think folks who are really invested in BTC (like the Winklewoss brothers who have holdings above a bil value (in essence, illiquid, as holdings of that amount tend to be) might work to make transactions low using whatever new technology thereby making it a viable monetary platform, otherwise I don't see this thing as not failing spectacularly sometime in the future.
Bitcoin transaction fees have skyrocketed. They are around $50 per transaction now.
One user up above said: "If your transaction wants to compete with the limited block space for each transaction, you have to increase your fee"
My question is: is there any end in sight where transaction costs might come down? Because otherwise BTC is totally unusable as a currency.
I think folks who are really invested in BTC (like the Winklewoss brothers who have holdings above a bil value (in essence, illiquid, as holdings of that amount tend to be) might work to make transactions low using whatever new technology thereby making it a viable monetary platform, otherwise I don't see this thing as not failing spectacularly sometime in the future.
The main cause of high transaction costs is that the demand for transactions has reached the limit for what the bitcoin network can handle (currently 1MB of global transaction data per 10 minutes). There is no general consensus as to how to solve this though and the community is split between "big blockers" and "small blockers".
Big blockers believe that it should possible to solve this problem directly, by increasing the block size limit. "Small blockers" argue that this is not a suitable solution in the long term because the block size would need to grow to gigabytes per minute to compete with existing payment networks and that would be technically challenging and politically undesirable (since only a handful of well-connected nodes would be able to handle all that traffic).
The promised solution, according to the small blockers, is to add extra layers to the bitcoin network, with things such as the Lightning Network. Regular folk would clear their transactions through payment processors and only these payment processors would still use the original bitcoin network. Big blockers complain that these second-layer solutions are not truly decentralized and do not conform to the original ideals of bitcoin. They also point out that there are lots of unsolved problems and technical challenges for these second layer solutions, which have been constantly "just around the corner" for a long time...
Big blockers believe that it should possible to solve this problem directly, by increasing the block size limit. "Small blockers" argue that this is not a suitable solution in the long term because the block size would need to grow to gigabytes per minute to compete with existing payment networks and that would be technically challenging and politically undesirable (since only a handful of well-connected nodes would be able to handle all that traffic).
The promised solution, according to the small blockers, is to add extra layers to the bitcoin network, with things such as the Lightning Network. Regular folk would clear their transactions through payment processors and only these payment processors would still use the original bitcoin network. Big blockers complain that these second-layer solutions are not truly decentralized and do not conform to the original ideals of bitcoin. They also point out that there are lots of unsolved problems and technical challenges for these second layer solutions, which have been constantly "just around the corner" for a long time...
>They are around $50 per transaction now.
Pending transactions with anything above 140 satoshis per byte are currently clearing, as you can see here:
https://jochen-hoenicke.de/queue/#2d
The average bitcoin transaction is around 250 bytes, which means transaction fees in the area of 0.00025BTC and up are clearing in half an hour or less. That's about $4.
Lets keep the hyperbole to a minimum, please?
P.S. As you can see by mousing over that chart a bit, there /are/ a lot of people paying as much as $50 for a transaction. These people are sometimes morons, but more likely they are transacting on exchanges where they have to use predefined fees instead of setting them themselves. This is why it's important to use your own wallet instead of a web wallet. It lets you control these kinds of things.
P.P.S If you set those charts to 6 months you'll see some interesting patterns start to show up. Speculation on what's causing them is left as an exercise for the reader.
Pending transactions with anything above 140 satoshis per byte are currently clearing, as you can see here:
https://jochen-hoenicke.de/queue/#2d
The average bitcoin transaction is around 250 bytes, which means transaction fees in the area of 0.00025BTC and up are clearing in half an hour or less. That's about $4.
Lets keep the hyperbole to a minimum, please?
P.S. As you can see by mousing over that chart a bit, there /are/ a lot of people paying as much as $50 for a transaction. These people are sometimes morons, but more likely they are transacting on exchanges where they have to use predefined fees instead of setting them themselves. This is why it's important to use your own wallet instead of a web wallet. It lets you control these kinds of things.
P.P.S If you set those charts to 6 months you'll see some interesting patterns start to show up. Speculation on what's causing them is left as an exercise for the reader.
hm, so things are not so bad after all, but there is no solution in sight to make tx cost under 1$ right?
More segwit use would improve the situation for everyone, but the major exchanges are dragging their feet on adopting it.
There's a lot of politics involved. Some people have vested interests in generating a fee based panic. I don't know the full picture though.
There's a lot of politics involved. Some people have vested interests in generating a fee based panic. I don't know the full picture though.
there was a comment on reddit
It's what bitcoin core developers prefer. They don't want segwit to bloat the blocksize before lightning is ready.
It's what bitcoin core developers prefer. They don't want segwit to bloat the blocksize before lightning is ready.
Increased use of segwit txs would help to clear the tx backlog. They carry less "weight" and therefor more of them can be packed into a block (which is limited by weight now).
Bitcoin is a victim of its own success. Double-whammy: the exchange rate is now higher and people are executing more transactions. If your transaction wants to compete with the limited block space for each transaction, you have to increase your fee (or your transaction will be queued until activity is low enough that no one else's fees outbid yours).
The community is considering several approaches to mitigate the problem and the different approaches have exposed the distinct underlying motivations of miners, merchants, exchanges and customers/users.
The community is considering several approaches to mitigate the problem and the different approaches have exposed the distinct underlying motivations of miners, merchants, exchanges and customers/users.
Can't you still send any amount for $5 on Bitcoin?
Thank god for bitcoin cash
Bitcoin is an early stage technology that still hasn't solved its scaling problem.
Bitcoin is also not governed as a product, so incremental scaling improvements are left for the user to use, and not to forced by protocol.
Bitcoin is currently not usable as currency, and is of course, not store of wealth - thing is not a liquid asset at all.
Proposed scaling solutions were scientific research years ago, and research is still being done. The implementation obviously takes years to finetune and the scaling solution might not work as well as research predicted.
All other coins are early stage tech and research too.
People were enjoying the tech when it was less popular and seemed like magic, now when big numbers come into play it is obvious things where blown out of proportion way too early.
Bitcoin is also not governed as a product, so incremental scaling improvements are left for the user to use, and not to forced by protocol.
Bitcoin is currently not usable as currency, and is of course, not store of wealth - thing is not a liquid asset at all.
Proposed scaling solutions were scientific research years ago, and research is still being done. The implementation obviously takes years to finetune and the scaling solution might not work as well as research predicted.
All other coins are early stage tech and research too.
People were enjoying the tech when it was less popular and seemed like magic, now when big numbers come into play it is obvious things where blown out of proportion way too early.
Bitcoin is an early stage technology that still hasn't
solved its scaling problem.
The proposed lightening network is based on an unsolved problem in computer science (routing optimization, LN thus maintains a map of all nodes be broadcast to all nodes), not to mention the LN design would rely heavily on centralized hubs of "liquidity providers" i.e. paypal style KYC payment processors - completely antithetical to the concept of "A purely peer-to-peer version of electronic cash allowing online payments to be sent directly from one party to another without going through a financial institution". LN conveniently favors large centralized liquidity provider payment hubs as the siphon for fees, which only becomes palatable when the alternative is excessive fees to miners on the underlying network.
https://medium.com/@jonaldfyookball/mathematical-proof-that-...
and they've been claiming it's just around the corner since 2015: https://twitter.com/starkness/status/676599570898419712
Bitcoin is also not governed as a product, so incremental
scaling improvements are left for the user to use, and not
to forced by protocol.
Users are subject to the developers, the moderated discussion forums, and the selfish incentive of miners/devs to extract financial value from users.
Bitcoin is suffering from a toxic cult like community, and questionable developer team.
Other crypto-currencies are working on solving the issues while BTC is being sold off to fund LN investors.
Lets say a bitcoin transaction takes 250 bytes on average. Visa processes 24,000 transactions per second. To scale to this level, the bitcoin blockchain would need to grow at a rate of about 5.7mb/s. This is a blocksize of about 3.3 gigabytes.
Growing the blocksize is not a sustainable way to scale bitcoin. This is why people are saying that Bitcoin is still not a mature technology; the problems associated with scaling it are still unsolved problems of computer science.
Growing the blocksize is not a sustainable way to scale bitcoin. This is why people are saying that Bitcoin is still not a mature technology; the problems associated with scaling it are still unsolved problems of computer science.
First, the 24,000 /s is the maximum throughput. The real number from visa themselves is about 2,000.
Second, the Bitcoin unlimited team has already tested and demonstrated gigabyte blocks. That would be about 1.6MB per second. This is already achievable with a $12 per month VPS, far less than a single btc transaction.
Second, the Bitcoin unlimited team has already tested and demonstrated gigabyte blocks. That would be about 1.6MB per second. This is already achievable with a $12 per month VPS, far less than a single btc transaction.
Cool project. I found this [0] talk on the matter.
I am still working through it, but it seems that with (somewhat optimized) current software they hit 10 minute propagation time at 1GB blocksize, with about 500tx/s (t=4549).
EDIT: This experient is also still young. As of the November 2017 talk I linked, they were using 4-6 miner nodes, and a UTXO pool simmilar to the current network (to the point where the presented would not even give numbers for memory and disk IO because he viewed them as not relevent to what would really be seen).
I submitted the linked talk to HN. Comments at [1]
[0] https://www.youtube.com/watch?v=LDF8bOEqXt4&feature=youtu.be...
[1] https://news.ycombinator.com/item?id=16012746
I am still working through it, but it seems that with (somewhat optimized) current software they hit 10 minute propagation time at 1GB blocksize, with about 500tx/s (t=4549).
EDIT: This experient is also still young. As of the November 2017 talk I linked, they were using 4-6 miner nodes, and a UTXO pool simmilar to the current network (to the point where the presented would not even give numbers for memory and disk IO because he viewed them as not relevent to what would really be seen).
I submitted the linked talk to HN. Comments at [1]
[0] https://www.youtube.com/watch?v=LDF8bOEqXt4&feature=youtu.be...
[1] https://news.ycombinator.com/item?id=16012746
Still, scaling by block size increase is still a legitimate way to scale. Right now we don't need visa level scaling. We simply need a little more room to keep transaction fees at a reasonable level. Luckily we have bitcoin cash that we can use that has higher capacity.
Luckily you could use literally any other cryptocurrency that anyone isn't using to get fast tx's and low fees.
6 MB/s is trivial for cheap servers and doable for a lot of personal connections (outside US) right now, you shouldn't even wait for Moore's law to catch up.
In 2016 Visa made 86 billion transactions, that is average of ~2600 per second, one magnitude less, than you expected.
In 2016 Visa made 86 billion transactions, that is average of ~2600 per second, one magnitude less, than you expected.
1. LN works on testnet right now.
2. Bitcoin without LN isn't nearly worth its valuation, but bitcoin with LN is worth many times its current valuation so we're settled somewhere in the middle.
3. I'm inclined to trust Brahm Cohen more than your flawed analysis of LN routing: https://medium.com/@bramcohen/in-this-analysis-nodes-arent-b...
2. Bitcoin without LN isn't nearly worth its valuation, but bitcoin with LN is worth many times its current valuation so we're settled somewhere in the middle.
3. I'm inclined to trust Brahm Cohen more than your flawed analysis of LN routing: https://medium.com/@bramcohen/in-this-analysis-nodes-arent-b...
1. If LN works to scale, it should be deployed. It's not, and has not for years.
2. You have absolutely no way to accurately verify or anticipate that claim.
Feel free to provide a retort to my claim that Bitcoin is flawed from Satoshi's implementation and upon examination of the computer science and codebase behind BTC, the false equivalence to gold and store of value will fail as it becomes obsolete to something else.
https://news.ycombinator.com/item?id=15991762
3. Brahm Cohen is suggesting a prerequisite of 3 escrow deposits, which would require 6 transaction fees.
This is a bizarre answer to the article he was responding to, as it fails to avoid the gravitation towards payment processor style hubs.
https://medium.com/@jonaldfyookball/mathematical-proof-that-...
2. You have absolutely no way to accurately verify or anticipate that claim.
Feel free to provide a retort to my claim that Bitcoin is flawed from Satoshi's implementation and upon examination of the computer science and codebase behind BTC, the false equivalence to gold and store of value will fail as it becomes obsolete to something else.
https://news.ycombinator.com/item?id=15991762
3. Brahm Cohen is suggesting a prerequisite of 3 escrow deposits, which would require 6 transaction fees.
This is a bizarre answer to the article he was responding to, as it fails to avoid the gravitation towards payment processor style hubs.
Also there’s nothing wrong with long routes. They settle
out in the middle just fine, despite the author’s
dismissiveness to the possibility that they can.
https://medium.com/@jonaldfyookball/mathematical-proof-that-...
1. LN is not deployed because it is conservatively developed like all development in a space with $500B on the line.
2. My claim is simply that Bitcoin is worth significantly more with LN than without? You then take a more preliminary argument that Bitcoin is worthless to begin with, which is laughable.
3. 6 on-chain transaction fees that support millions of off-chain payments. And your hub argument is a feature of a distributed network itself, not of LN in particular. Say a "hub" emerges and starts charging fees. Market competition paired with efficient routing solves this easily.
If you don't understand Brahm's argument, I suggest reading through it again. He's a pretty smart guy when it comes to distributed networks.
2. My claim is simply that Bitcoin is worth significantly more with LN than without? You then take a more preliminary argument that Bitcoin is worthless to begin with, which is laughable.
3. 6 on-chain transaction fees that support millions of off-chain payments. And your hub argument is a feature of a distributed network itself, not of LN in particular. Say a "hub" emerges and starts charging fees. Market competition paired with efficient routing solves this easily.
If you don't understand Brahm's argument, I suggest reading through it again. He's a pretty smart guy when it comes to distributed networks.
> This is false.
What is false? Are you saying it is governed as a product? Incremental scaling improvements are research fun projects that are not being forced on developers (that are the users of bitcoin protocol). No one forced SegWit, I'm pretty sure Schnorr signatures will not be a hard fork too.
Any kind of rational organization making a good product would get out of an extreme situation as this one is with a hard fork.
Microsoft, probably the best example of how to do backwards compatibility, decided to force Win8 on everyone because, obviously, managing old software was an issue. Just like managing transactions with uncompressed keys is, yet there's still plenty of them being added to the chain today.
Bitcoin is obviously a vehicle for intellectual stimulation first, Bitcoin as a product is out of the view. I mean, you have core developers optimizing validation code on CPU (who needs that thing to be 4x faster now, anyway?) and doing heavy refactoring for segwit, braintickling over schnorr for months, coming up with ways to do confidential transactions, doing bulletproofs to reduce the size of confidential transactions, doing prototypes of that research etc.
There's obviously no long-term scaling solution in sight, this is all still very early research.
What is false? Are you saying it is governed as a product? Incremental scaling improvements are research fun projects that are not being forced on developers (that are the users of bitcoin protocol). No one forced SegWit, I'm pretty sure Schnorr signatures will not be a hard fork too.
Any kind of rational organization making a good product would get out of an extreme situation as this one is with a hard fork.
Microsoft, probably the best example of how to do backwards compatibility, decided to force Win8 on everyone because, obviously, managing old software was an issue. Just like managing transactions with uncompressed keys is, yet there's still plenty of them being added to the chain today.
Bitcoin is obviously a vehicle for intellectual stimulation first, Bitcoin as a product is out of the view. I mean, you have core developers optimizing validation code on CPU (who needs that thing to be 4x faster now, anyway?) and doing heavy refactoring for segwit, braintickling over schnorr for months, coming up with ways to do confidential transactions, doing bulletproofs to reduce the size of confidential transactions, doing prototypes of that research etc.
There's obviously no long-term scaling solution in sight, this is all still very early research.
> It's almost 10 years old
In the world of science, that's nothing.
> Bitcoin used to have a variable blocksize that would accommodate increased usage, but at a certain point they set a hard limit at 1MB.
"They"? Who is this mystical "they"? https://en.bitcoin.it/wiki/Block_size_limit_controversy Satoshi added the limit early on and defended it as a deterrent to spamming the network.
> The proposed lightening network is an unsolved problem in computer science
Nobody brought up the Lightning Network, but it seems like you have an axe to grind here.
> This is false. Users are subject to the developers, the moderated discussion forums, and the selfish incentive of miners/devs to extract financial value from users.
I agree with this, I think Bitcoin governance has become overly political and increasingly territorial, with a cult-like worship of a sets of devs (and you belong in one cult or the other).
That being said, I have great faith in the implementation of blockchain based contracts and currency overall, even if Bitcoin is just one step on the long chain of its evolution.
In the world of science, that's nothing.
> Bitcoin used to have a variable blocksize that would accommodate increased usage, but at a certain point they set a hard limit at 1MB.
"They"? Who is this mystical "they"? https://en.bitcoin.it/wiki/Block_size_limit_controversy Satoshi added the limit early on and defended it as a deterrent to spamming the network.
> The proposed lightening network is an unsolved problem in computer science
Nobody brought up the Lightning Network, but it seems like you have an axe to grind here.
> This is false. Users are subject to the developers, the moderated discussion forums, and the selfish incentive of miners/devs to extract financial value from users.
I agree with this, I think Bitcoin governance has become overly political and increasingly territorial, with a cult-like worship of a sets of devs (and you belong in one cult or the other).
That being said, I have great faith in the implementation of blockchain based contracts and currency overall, even if Bitcoin is just one step on the long chain of its evolution.
Re: [PATCH] increase block size limit
Satoshi
October 04, 2010, 07:48:40 PM
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.
In the world of computer science, 10 years is something like 3.3x the span of time between Altavista and Google. It's the span of time between the original spinning-hard-disk iPod and the iPhone 4S. It's approximately the time it took for AWS to go from zero to where it is today.
But Bitcoin isn't a parallel to AWS. Bitcoin is a parallel to the first working implementation of virtualization.
No, Bitcoin is a parallel to distributed computing and databases.
PoW blockchains like Bitcoin only work by attempting to increase the capital cost of write access to the database. PoW blockchains purposefully waste as much computing power as possible and the transaction speed remains limited just the same even as computing power is added.
PoW blockchains like Bitcoin only work by attempting to increase the capital cost of write access to the database. PoW blockchains purposefully waste as much computing power as possible and the transaction speed remains limited just the same even as computing power is added.
The compute power wasted is unrelated to the number of transactions. The only point of wasting the compute power is to be able to say that "this block has X compute backing it". If you do that, the security of bitcoin does not care how much is contained within the block.
> In the world of science, that's nothing.
The Apple App Store came out in June 2008, 9 years ago. From the fart buttons topping the charts, entire companies and business models have been found and Bitcoin is still stuck. They're not making progress.
The Apple App Store came out in June 2008, 9 years ago. From the fart buttons topping the charts, entire companies and business models have been found and Bitcoin is still stuck. They're not making progress.
Bitcoin is not new or early stage in software terms. Node.js is just as old. Bitcoin cannot be saved. It's a commodity, and it was only a conceptual project from the very beginning.
Blockchain and the concepts around it, on the other hand, are existing tech that can be used in many sustainable ways to create distributed ledgers and other things that do not have to share the same problems (although many people are on the get rich quick plan by requiring mining, ICOs, and other plans that only reward creators and early adopters).
Blockchain and the concepts around it, on the other hand, are existing tech that can be used in many sustainable ways to create distributed ledgers and other things that do not have to share the same problems (although many people are on the get rich quick plan by requiring mining, ICOs, and other plans that only reward creators and early adopters).
Bitcoin is not just software.
Research behind implementing Schnorr signatures, lightning network, confidential transactions, efficient confidential transactions (bulletproofs), is bleeding edge research in cryptography mixed with whole bunch of other fundamentals.
Nodejs required practically no academic research while bitcoin needs it heavily today still.
https://eprint.iacr.org/2016/1159.pdf
For example, you have papers like above being published in the context of bitcoin. 60 pages of untrivial math, and that's just one idea of how to scale bitcoin.
Research behind implementing Schnorr signatures, lightning network, confidential transactions, efficient confidential transactions (bulletproofs), is bleeding edge research in cryptography mixed with whole bunch of other fundamentals.
Nodejs required practically no academic research while bitcoin needs it heavily today still.
https://eprint.iacr.org/2016/1159.pdf
For example, you have papers like above being published in the context of bitcoin. 60 pages of untrivial math, and that's just one idea of how to scale bitcoin.
>>Bitcoin is an early stage technology that still hasn't solved its scaling problem.
It isn't even trying to solve it through the most straightforward way: raising the block size limit.
Like you said, it's an experiment, and the experiment should have been allowed to play out along the original roadmap of large blocks. Hopefully the Bitcoin Cash fork will succeed where Bitcoin Core failed.
It isn't even trying to solve it through the most straightforward way: raising the block size limit.
Like you said, it's an experiment, and the experiment should have been allowed to play out along the original roadmap of large blocks. Hopefully the Bitcoin Cash fork will succeed where Bitcoin Core failed.
> It isn't even trying to solve it through the most straightforward way: raising the block size limit.
Okay. The blocksize is raised and now people find new uses when the thing scales better. Streaming money is one such use case. Now you raise the blocksize to a level that needs to support streaming money, now it's so big that your ASICs cannot validate all the incoming blocks, blockchain grows faster than validation.
How to fix the problem now?
Blocksize is a temporary solution to a current popularity issue. Let's just let the hype die a little bit, so there's time to find a proper solution.
If Internet issues were solved by meddling with topology or adding more cable we'd get no where near the current efficient protocols.
Okay. The blocksize is raised and now people find new uses when the thing scales better. Streaming money is one such use case. Now you raise the blocksize to a level that needs to support streaming money, now it's so big that your ASICs cannot validate all the incoming blocks, blockchain grows faster than validation.
How to fix the problem now?
Blocksize is a temporary solution to a current popularity issue. Let's just let the hype die a little bit, so there's time to find a proper solution.
If Internet issues were solved by meddling with topology or adding more cable we'd get no where near the current efficient protocols.
If your definition of a solution is "infinite scale", then it will never solve the scaling problem. In the meantime, potentially huge improvements in scale from raising the block size limit to much higher but still sane values, that would make Bitcoin accessible for everyday transactions for millions/billions of people, are not even being attempted.
In other words: even if raising the block size limit doesn't provide a solution for infinite scale, it could potentially still provide significant benefits, yet Bitcoin Core doesn't want to try it to find out.
In other words: even if raising the block size limit doesn't provide a solution for infinite scale, it could potentially still provide significant benefits, yet Bitcoin Core doesn't want to try it to find out.
> that would make Bitcoin accessible for everyday transactions for millions/billions of people, are not even being attempted
I'm not sure if that's correct. There's absolutely no way bitcoin can support that many transactions with just sane blocksize increase.
As I've said in my other comments, bitcoin is a research facility, not a product, so it's somewhat understandable people are going with their own research directions.
People currently have huge expectations out of an immature technology. It's equivalent to expecting the Internet of the 80s to support MMORPGs with thousands of players, the protocols just weren't mature enough.
I'm not sure if that's correct. There's absolutely no way bitcoin can support that many transactions with just sane blocksize increase.
As I've said in my other comments, bitcoin is a research facility, not a product, so it's somewhat understandable people are going with their own research directions.
People currently have huge expectations out of an immature technology. It's equivalent to expecting the Internet of the 80s to support MMORPGs with thousands of players, the protocols just weren't mature enough.
>>There's absolutely no way bitcoin can support that many transactions with just sane blocksize increase.
There's only one way to find out. This is what Satoshi said on the issue:
>“Long before the network gets anywhere near as large as that, it would be safe for users to use Simplified Payment Verification (section 8) to check for double spending, which only requires having the chain of block headers, or about 12KB per day. Only people trying to create new coins would need to run network nodes. At first, most users would run network nodes, but as the network grows beyond a certain point, it would be left more and more to specialists with server farms of specialized hardware. A server farm would only need to have one node on the network and the rest of the LAN connects with that one node.
>The bandwidth might not be as prohibitive as you think. A typical transaction would be about 400 bytes (ECC is nicely compact). Each transaction has to be broadcast twice, so lets say 1KB per transaction. Visa processed 37 billion transactions in FY2008, or an average of 100 million transactions per day. That many transactions would take 100GB of bandwidth, or the size of 12 DVD or 2 HD quality movies, or about $18 worth of bandwidth at current prices.
>If the network were to get that big, it would take several years, and by then, sending 2 HD movies over the Internet would probably not seem like a big deal."
Satoshi Nakamoto Sun, 02 Nov 2008 17:56:27 -0800 https://www.mail-archive.com/[email protected]/msg09...
Bitcoin is an experiment with many economic participants, and the parameters and goals of that experiment were changed mid-way through by key developers and forum moderators, without the agreement of all economic constituents.
There's only one way to find out. This is what Satoshi said on the issue:
>“Long before the network gets anywhere near as large as that, it would be safe for users to use Simplified Payment Verification (section 8) to check for double spending, which only requires having the chain of block headers, or about 12KB per day. Only people trying to create new coins would need to run network nodes. At first, most users would run network nodes, but as the network grows beyond a certain point, it would be left more and more to specialists with server farms of specialized hardware. A server farm would only need to have one node on the network and the rest of the LAN connects with that one node.
>The bandwidth might not be as prohibitive as you think. A typical transaction would be about 400 bytes (ECC is nicely compact). Each transaction has to be broadcast twice, so lets say 1KB per transaction. Visa processed 37 billion transactions in FY2008, or an average of 100 million transactions per day. That many transactions would take 100GB of bandwidth, or the size of 12 DVD or 2 HD quality movies, or about $18 worth of bandwidth at current prices.
>If the network were to get that big, it would take several years, and by then, sending 2 HD movies over the Internet would probably not seem like a big deal."
Satoshi Nakamoto Sun, 02 Nov 2008 17:56:27 -0800 https://www.mail-archive.com/[email protected]/msg09...
Bitcoin is an experiment with many economic participants, and the parameters and goals of that experiment were changed mid-way through by key developers and forum moderators, without the agreement of all economic constituents.
>bitcoin is a research facility, not a product
So now it's not a currency, and it's not an store of value, it's just a research project.
It feels a tad bit irresponsible for the bitcoin community to have gone around advertising this as the currency (later store of value) of the future, while apparently not knowing if scaling to worldwide levels would even be possible.
So now it's not a currency, and it's not an store of value, it's just a research project.
It feels a tad bit irresponsible for the bitcoin community to have gone around advertising this as the currency (later store of value) of the future, while apparently not knowing if scaling to worldwide levels would even be possible.
Speaking of quote unquote improvements, the community act like bad actors influencing the forks aren't an expected outcome. Somehow only the correct improvements will happen, because reasons. Nobody will subvert Bitcoin, and if they do, well they weren't true believers anyway so ignore that and HODL.
...Even though a lot of the community seem to agree the major figures who pushed for Bitcoin Cash were Judases trying to cash in so major subversion of the code/market has happened at least once already.
There may be a way to make a real, usable currency out of these ideas. It doesn't exist yet in reality.
...Even though a lot of the community seem to agree the major figures who pushed for Bitcoin Cash were Judases trying to cash in so major subversion of the code/market has happened at least once already.
There may be a way to make a real, usable currency out of these ideas. It doesn't exist yet in reality.
Yes, but blockchain technology is being investigated by a bunch of the large banks. If the banks figure out that the technology is useless we should be able to see that within 1-2 years.
it is still very much usable for mostly everything, especially when the bubble pops finally and it will be used to buy stuff, not to trade
How useful is a currency where the transaction fee is $6 at the current price? This is much cheaper than last week when it was $25/transactions? Gone are the days of gambling on Satoshi Dice and buying things on Silk Road. Now we are to believe that Bitcoin is an inherent store of wealth?!?
Edit: The fees are above $20 now.
Edit: The fees are above $20 now.
Tried to send bitcoin yesterday ($120) to an online retailer, the fee was $31.50 which I did not have. So I went to buy more bitcoin and realized it would cost additional $31.50 to transfer the new bitcoins just to cover the other network fees. Had to do it, then for whatever reason my account was put on 72 hour hold. So I just gave up, literally out $200 with nothing to show. Bitcoin is a complete joke if you can't actually use it.
I would've thought having to pay a $31 txn fee on a $100 purchase would've been enough to dissuade you.
If it's a product he really wants and is only available via bitcoin payment, it could well be worth it.
I've paid $30 shipping for a < $100 item before when I really needed it to be delivered on time, so I can see paying a $30 surcharge to purchase an item.
I've paid $30 shipping for a < $100 item before when I really needed it to be delivered on time, so I can see paying a $30 surcharge to purchase an item.
Sounds like shilling for Bitcoin. Even if we all sometimes pay exorbitant amounts for priority shipping, doesn't mean we want to do that and get _no reward_ because "Bitcoin." The fees on Bitcoin currently make it practically unusable. If you want to argue for edge cases, go ahead. But please don't try to give these edge cases any mediocrum of regularity and sensibility...
It seems like common sense, not shilling: if what you're buying is only available with Bitcoin, then you get more of a reward than when you pay for expensive shipping -- if you don't pay whatever the transaction fees end up being, then you won't get the product at all.
You don't get a reward when you buy something - you get your purchased goods. The mental yoga necessary to consider a purchased good as a reward is absolutely baffling.
there are barely products for sale with bitcoin much less bitcoin exclusive products. only things i can think of are ransoms and drugs. i'm sure there are others but this isn't super common.
Sure, it may not be common, but still, my point stands.
If you're buying some uncommon product that's only available with bitcoin, then paying a 30% transaction fee might be worth it versus not being able to purchase the product at all.
If you're buying some uncommon product that's only available with bitcoin, then paying a 30% transaction fee might be worth it versus not being able to purchase the product at all.
uh sure your point stands. pretty weak point? in obscure circumstances it might be worth performing the unappetizing act of paying bitcoin transaction fees to buy something.
Buttes6(1)
You can set your own fees. I paid $3 for a transaction today (but it obviously still hasn't verified, and I don't know when it will). That's kind of the tradeoff, unfortunately.
These days, I find Bitcoin completely unsuitable for sending money. I use Bitcoin Cash, which verifies in ten minutes for something like one cent of fees (first block), but I guess that's because nobody uses it. Still, Bitcoin itself is out of the question for me personally, I'm not paying $30 for a transaction for anything.
These days, I find Bitcoin completely unsuitable for sending money. I use Bitcoin Cash, which verifies in ten minutes for something like one cent of fees (first block), but I guess that's because nobody uses it. Still, Bitcoin itself is out of the question for me personally, I'm not paying $30 for a transaction for anything.
Bitcoin Cash has enough space in it's blocks to cover all of Bitcoin's and Bitcoin Cash' transactions.... for now.
Your $3 Bitcoin transaction might get cancelled before it gets written to the blockchain...
Your $3 Bitcoin transaction might get cancelled before it gets written to the blockchain...
Bitcoin cash doesn’t have artificially low constraints on capacity. 10 years ago, it was 1MB.
Despite all the advancements of storage and networking, it’s still essentially 1MB to a maximum of 1.8MB if everyone implements a complicated and costly to develop system called SegWit, and to fully use SegWit you have to use backwards incompatible addresses.
Despite all the advancements of storage and networking, it’s still essentially 1MB to a maximum of 1.8MB if everyone implements a complicated and costly to develop system called SegWit, and to fully use SegWit you have to use backwards incompatible addresses.
I had a similar fee when I tried to send a friend $30 of BTC to a paper wallet for Christmas. Ended up just walking him through setting up a Coinbase account and gave him $30 cash and he just link his own credit card (although he was never able to get past the pending account verification)
That's why you should use bitcoin cash instead. Cost me 1 penny to send any amount. I get confirmation within first block too.
Depends on the use-case. Definitely not useful for small transactions but $6-20 is still relatively cheap compared to other options for sending funds in cases where both parties do not have USD (or similar) bank accounts.
As far as store-of-wealth it has a different risk profile than both fiat currencies & physical stores like gold: more independent of government monetary policy, possibly harder to take by force, possibly more plausible-deniability, more liquid and lower txn-cost than gold, more volatile than both. That risk-profile is not perfect but is clearly useful to some.
Finally there's the value that it can provide as the trusted base for other off-chain solutions (like lightning-network).
As far as store-of-wealth it has a different risk profile than both fiat currencies & physical stores like gold: more independent of government monetary policy, possibly harder to take by force, possibly more plausible-deniability, more liquid and lower txn-cost than gold, more volatile than both. That risk-profile is not perfect but is clearly useful to some.
Finally there's the value that it can provide as the trusted base for other off-chain solutions (like lightning-network).
Think about it another way - the market cap of bitcoin is now $274,103,408,466. A 10E-11 fee ratio is outstanding and all you need to get it down to. Bitcoin has become more of a large balance settlement layer and smaller channels are emerging on top of it.
The market cap of the USD is $10.5T, and I can send money for $3 to another person (with my middling BOA account) which is around a 10E-14 ratio.
So in other words, all those Bitcoin cheerleaders mocking Western Union, the traditional banks for their excessive fees... Bitcoin is 1,000 times as expensive? And this is a selling point?
I've never heard of fee ratios in economics or finance - this sounds more like one of these things that people 'create' to justify things... "oh, it's an outstanding fee ratio!".
So in other words, all those Bitcoin cheerleaders mocking Western Union, the traditional banks for their excessive fees... Bitcoin is 1,000 times as expensive? And this is a selling point?
I've never heard of fee ratios in economics or finance - this sounds more like one of these things that people 'create' to justify things... "oh, it's an outstanding fee ratio!".
But you can only have the fdic insurance limit in your boa account before the solvency of boa becomes an issue - also doesn't your boa transfer take a few days to clear?
You can purchase additional insurance, much as Bitcoin exchanges with insurance will also charge higher fees, because they're not getting that insurance for free (indeed, probably substantially more expensive per "dollar", because of things like poor/poorer security, etc.).
And yes, it does. Much like a transaction on the blockchain might if you paid only $3 in mining fees. Or you could pay $30-50 and get it cleared much more quickly, just as I could pay for a wire transfer and get things done in n hour or two.
And yes, it does. Much like a transaction on the blockchain might if you paid only $3 in mining fees. Or you could pay $30-50 and get it cleared much more quickly, just as I could pay for a wire transfer and get things done in n hour or two.
How is the fdic insurance limit a disadvantage? Is there someone currently that will insure your bitcoins deposited with them?
I could buy insurance on my bitcoins - i'm not required to hope for a single institution however on a bitcoin - it's decentralized (fdic insurance isn't free, ultimately it's funded by taxes)
I vaguely think (not being in the insurance industry) that in order to be efficient, or even viable at all, insurers have to have some control over what they underwrite, which in turn requires knowledge about it.
Does it make sense that someone would be willing or able to quantify the risk of my losing a bitcoin deposit held by a third party? Is there someone selling such insurance now?
The FDIC has some ability to control and regulate the banks that it insures, including dealing with a failed bank. If somebody random claims to provide insurance, it doesn't inherently imply they have the same powers/information.
Does it make sense that someone would be willing or able to quantify the risk of my losing a bitcoin deposit held by a third party? Is there someone selling such insurance now?
The FDIC has some ability to control and regulate the banks that it insures, including dealing with a failed bank. If somebody random claims to provide insurance, it doesn't inherently imply they have the same powers/information.
I think coinbase has insurance
Edit - https://support.coinbase.com/customer/portal/articles/166237...
Edit - https://support.coinbase.com/customer/portal/articles/166237...
That is interesting. I read: "Even if Coinbase were to become insolvent, the funds held in the custodial bank accounts could not be claimed by Coinbase or its creditors. The funds held in those accounts would be returnable to Coinbase’s customers."
Which sounds like what I would want to hear as a customer. However in context, that refers specifically to "fiat currency" only. So I would have to assume that whatever the insurance does, it doesn't protect me in the same way with respect to digital currency...?
Of course, I have never been in a situation where SIPC insurance mattered, so I don't have that to compare to.
But the level of risk here is not clear to me, and the language suggests it could be different from what I think of as normal.
Which sounds like what I would want to hear as a customer. However in context, that refers specifically to "fiat currency" only. So I would have to assume that whatever the insurance does, it doesn't protect me in the same way with respect to digital currency...?
Of course, I have never been in a situation where SIPC insurance mattered, so I don't have that to compare to.
But the level of risk here is not clear to me, and the language suggests it could be different from what I think of as normal.
I think the fair market value of the coins in USD are insured, not the actual crypto currency / bitcoins. Much like insuring a ring - the insurance company doesn't stock pile rings. They pay out cash upon a claim.
Ok, every time they refer to "coins" in this article they really mean wallet addresses right? Is this a common way to refer to them now? It really took away from the point of the article for me.
Technically, they're (or should be) referring to "txouts" or "outputs". An address with a large balance could still be unspendable if it is composed of many small outputs.
A single address can be the recipient of multiple payments (outputs) and a transaction spends those outputs. Since each output must be referenced in a transaction, each output takes up some space and fees are calculated based on the size of the transaction in bytes, not its value in BTC. This diagram I made a few years ago might help visualise: https://github.com/olalonde/bitcoin-notes/blob/master/svg/tr...
A single address can be the recipient of multiple payments (outputs) and a transaction spends those outputs. Since each output must be referenced in a transaction, each output takes up some space and fees are calculated based on the size of the transaction in bytes, not its value in BTC. This diagram I made a few years ago might help visualise: https://github.com/olalonde/bitcoin-notes/blob/master/svg/tr...
So we're going to run into some sort of fragmentation problem?
Ever-growing transaction size coupled with already-to-small block size.
I knew the scaling problem was bad, but I didn't realize it gets worse as Bitcoin ages!
I knew the scaling problem was bad, but I didn't realize it gets worse as Bitcoin ages!
It doesn't really get worse over time. The amount of fragmentation is generally going to be proportional to the average transaction size.
In general, expect transactions to have two outputs. The payment, and the extra. And since outputs become inputs, transactions will average about two inputs too.
A few shavings might get orphaned here or there, but that doesn't have a huge effect on the operation of the rest of the coins.
In general, expect transactions to have two outputs. The payment, and the extra. And since outputs become inputs, transactions will average about two inputs too.
A few shavings might get orphaned here or there, but that doesn't have a huge effect on the operation of the rest of the coins.
Ah, okay, I somehow thought that a transaction with multiple inputs creates at least the same number of outputs.
I'm not whom you responded to, but, thank you, I found that diagram very helpful.
Yeah, this definitely left me with a questionable impression of the author's understanding of bitcoin.
I think his understanding of the technology is fine, he's just referring to transaction outputs as coins.
> Over 3000 BTC, worth over $4M
3000 BTC is worth over $40M, not $4M.
edit: oops, article dates from April.
3000 BTC is worth over $40M, not $4M.
edit: oops, article dates from April.
This article was written in April. Besides which, making up-to-date corrections on such volatile prices is a pedant's joy: you might be corrected next week, but you wouldn't have been wrong today.
There's a joke going around at the moment: "Dad, can I borrow a Bitcoin?" "$15000? Why should I give you $14000? What do you need $16000 for?"
There's a joke going around at the moment: "Dad, can I borrow a Bitcoin?" "$15000? Why should I give you $14000? What do you need $16000 for?"
Article is from April
I personally think that Bitcoin will eventually be taken out by Ethereum, which will then give way to the likes of Cardano or something similar that will figure out issues with scaling, sustainability, governance (ie civil resolution of conflicts and end of hard-forks) and interoperability with legacy financial systems (ie Banks). It's really quite amazing to follow the innovation in this space, once you get through all the shit coins and ICO scams that is.
Previous discussion: https://news.ycombinator.com/item?id=14241065
I bought into cloud mining a few years ago and my micro deposits are worthless because of the cost to consolidate the wallet.
Really glad I didn’t sink too much into it, but I’m still pissed when it’s several grand worth of coin that I can’t ever withdraw.
Really glad I didn’t sink too much into it, but I’m still pissed when it’s several grand worth of coin that I can’t ever withdraw.
Isn't layer two supposed to solve the fee problem? Anybody knows if thats right and when we can expect to see layer two in the wild?
Lightning Network is beginning to be tested on mainnet, but it has a long ways to go until it's widely available in wallets and merchants.
It's also a somewhat unproven concept. Trustless multi hop payment channels have been proven to work, but a fully functioning network of them hasn't.
It's also a somewhat unproven concept. Trustless multi hop payment channels have been proven to work, but a fully functioning network of them hasn't.
Obviously can't give you a date but they recently hit a milestone with all integration tests passing:
https://cdecker.github.io/lightning-integration/
https://cdecker.github.io/lightning-integration/
It is, yes, but we aren't sure exactly how it will go implementation wise. layer two is a little more complicated to use compared to bitcoin which is somewhat user friendly in comparison.
Even with wallets using Bitcoin is not user friendly in any sense of the word. If you already use PGP, sure. If not, good luck securing those keys. Oh and hope you made backups.
Well, Bitcoin doesn't have to be so complicated to use.
In fact, once you set up an account, sending and receiving money with coinbase is pretty simple. But yes, setting up an account with all the verification stuff isn't neat in the first place and storing your keys at an online provider is unacceptable for any sane person.
On the other hand, there are some very easy to use desktop wallets like Exodus and making offline backups of your keys by writing down a few words (BIP-39) is pretty simple too. Sadly, not all wallets support BIP-39 (for various reasons), and e.g. Exodus complicates the matter by asking you for a password before telling you the words which is completely unrelated to BIP-39.
So Bitcoin itself could be very easy to use. In my eyes the only real problem is obtaining them. I mean for everything else you just need to download some software and off you go. But to buy bitcoins you still need to register yourself with some institution which takes a few hours at least. It would be so much simpler if you could just buy some bitcoins at ebay/amazon/steam/...
In fact, once you set up an account, sending and receiving money with coinbase is pretty simple. But yes, setting up an account with all the verification stuff isn't neat in the first place and storing your keys at an online provider is unacceptable for any sane person.
On the other hand, there are some very easy to use desktop wallets like Exodus and making offline backups of your keys by writing down a few words (BIP-39) is pretty simple too. Sadly, not all wallets support BIP-39 (for various reasons), and e.g. Exodus complicates the matter by asking you for a password before telling you the words which is completely unrelated to BIP-39.
So Bitcoin itself could be very easy to use. In my eyes the only real problem is obtaining them. I mean for everything else you just need to download some software and off you go. But to buy bitcoins you still need to register yourself with some institution which takes a few hours at least. It would be so much simpler if you could just buy some bitcoins at ebay/amazon/steam/...
Exchange fees go up:
- when the prices shoot up, attracting speculators
- when the prices crash down, spooking speculators
- when bigger players move in and pay for quicker transaction clearance
- when time passes
Exchange fees go down:
- when it's calm and quiet, and there is no frenzy
So a bit like a fishhook, then?
- when the prices shoot up, attracting speculators
- when the prices crash down, spooking speculators
- when bigger players move in and pay for quicker transaction clearance
- when time passes
Exchange fees go down:
- when it's calm and quiet, and there is no frenzy
So a bit like a fishhook, then?
This article is fairly outdated. According to bitcoinfees.earn.com, the fastest and cheapest fee is 690 Satoshi per byte. 3.5x what it was in May.
Bitcoin is a ponzy scheme at the moment, but the block chain and the eCurrencies is the perfect platform for a Universal Income experiment.
All we need is a way so that the “coins” do not go to the one with the most computing power, or the one who got in first, but distributed equally among the population.
All we need is a way so that the “coins” do not go to the one with the most computing power, or the one who got in first, but distributed equally among the population.
Ponzy scheme has a technical meaning, and Bitcoin is not it. Bubble is the word you are looking for.
>but distributed equally among the population.
I am aware of no blockchain based technology that offers a solution to this problem. Central to the problem that blockchains are intended to solve is that there is no good way of identifying individuals. That is to say, there is nothing to stop me from opening a million accounts in the system and acting as if I was a million different people. The insight behind POW style blockchains is that it does not matter if I claim to be a million people, because that would not give me any more compute power, and so will not allow for an attack on the system.
If we could come up with a way of providing some sort of proof of individuality we would solve alot of problems.
>but distributed equally among the population.
I am aware of no blockchain based technology that offers a solution to this problem. Central to the problem that blockchains are intended to solve is that there is no good way of identifying individuals. That is to say, there is nothing to stop me from opening a million accounts in the system and acting as if I was a million different people. The insight behind POW style blockchains is that it does not matter if I claim to be a million people, because that would not give me any more compute power, and so will not allow for an attack on the system.
If we could come up with a way of providing some sort of proof of individuality we would solve alot of problems.
First, it's "Ponzi scheme", not "Ponzy scheme".
Second, if you look, I think you'll find that Bitcoin shares a lot of attributes with Ponzi schemes; you could say that it's a Ponzi whose innovation is to be globally distributed on the Internet. Specifically:
* Returns to Bitcoin investors are funded by successive waves of future investors; Bitcoin's value will collapse without a steady supply of them.
* A significant part of the capitalization of Bitcoin is owned by "hodlers" who accumulate "paper" earnings that don't demand any real-world reckoning.
* It's structurally difficult to withdraw funds --- particularly large amounts of funds --- from the Bitcoin network; see, for instance, Tim Bray's experience.
* The whole phenomenon is backed by a core group that includes significant "early" or "founder" allocations.
Part of the problem with trying to pull apart "Ponzi schemes" and "bubbles" is that many (but not all) previous bubbles were fueled in part by a series of Ponzi schemes; for instance, during the first bubble, IPOs for companies that could not possibly have succeeded under any circumstances, or, during the housing bubble, AAA-rated securities for bundles of distressed mortgages.
Second, if you look, I think you'll find that Bitcoin shares a lot of attributes with Ponzi schemes; you could say that it's a Ponzi whose innovation is to be globally distributed on the Internet. Specifically:
* Returns to Bitcoin investors are funded by successive waves of future investors; Bitcoin's value will collapse without a steady supply of them.
* A significant part of the capitalization of Bitcoin is owned by "hodlers" who accumulate "paper" earnings that don't demand any real-world reckoning.
* It's structurally difficult to withdraw funds --- particularly large amounts of funds --- from the Bitcoin network; see, for instance, Tim Bray's experience.
* The whole phenomenon is backed by a core group that includes significant "early" or "founder" allocations.
Part of the problem with trying to pull apart "Ponzi schemes" and "bubbles" is that many (but not all) previous bubbles were fueled in part by a series of Ponzi schemes; for instance, during the first bubble, IPOs for companies that could not possibly have succeeded under any circumstances, or, during the housing bubble, AAA-rated securities for bundles of distressed mortgages.
Ponzi schemes involve fraud by an operator secretly paying out existing investors with new investors' money. Unless exchanges are artificially inflating the price and running fractional reserves then Bitcoin is not a Ponzi scheme.
That's not necessary. From wikipedia: "A Ponzi scheme (/ˈpɒn.zi/; also a Ponzi game)[1] is a fraudulent investment operation where the operator generates returns for older investors through revenue paid by new investors, rather than from legitimate business activities or profit of financial trading."
Bitcoin's only real value is that of the chance of being adopted as currency. For it to become a currency people have to start buying bitcoins, as it is the only realistic way get hold of them. So the only way to make value for the current holders(older invenstors) is more people buying into it(revenue paid by new investors)
Bitcoin's only real value is that of the chance of being adopted as currency. For it to become a currency people have to start buying bitcoins, as it is the only realistic way get hold of them. So the only way to make value for the current holders(older invenstors) is more people buying into it(revenue paid by new investors)
But where is the fraud? And who is the "operator" perpetrating it?
Anyone can do their own research and come to conclusions about the future valuation of Bitcoin.
Anyone can do their own research and come to conclusions about the future valuation of Bitcoin.
Sure, but you can say that about a lot of totally bogus investment instruments. Every pump-and-dump pink sheet scam has the same property.
Sure, but you're arguing Bitcoin is a "Ponzi scheme", which has a specific meaning, not just a bad investment.
Right. Again: look at the characteristics of a Ponzi:
* Outsized returns
* All the returns are funded by successive waves of investors
* Most "investors" hold, riding it out in the hopes of accumulating gains
* Easier to get into than out of, even if some eventually can
* Outsized returns
* All the returns are funded by successive waves of investors
* Most "investors" hold, riding it out in the hopes of accumulating gains
* Easier to get into than out of, even if some eventually can
Also:
* Fraud
* Fraud
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> If we could come up with a way of providing some sort of proof of individuality we would solve alot of problems.
I've been thinking about this in the past weeks because I find the energy consumption hard to justify.
Proof of individuality still would allow people of power to use an army of identity soldiers... but the same people can buy hash rate today, so that would not be a regression.
I've been thinking about this in the past weeks because I find the energy consumption hard to justify.
Proof of individuality still would allow people of power to use an army of identity soldiers... but the same people can buy hash rate today, so that would not be a regression.
> Proof of individuality still would allow people of power to use an army of identity soldiers (...)
Which would point toward some form of Proof of (Human Free Will + Random Selection) being the "ideal" mining scheme (at least theoretically). And all other schemes, being practical attempts to approach that as much as possible.
Which would point toward some form of Proof of (Human Free Will + Random Selection) being the "ideal" mining scheme (at least theoretically). And all other schemes, being practical attempts to approach that as much as possible.
It could also provide people in power with a reason to control or enslave other individuals to acquire control of the network.
At the risk of sounding like a teenager:
How different is that from powerful people controlling or enslaving individuals to make money which they can then use to acquire control over the network?
How different is that from powerful people controlling or enslaving individuals to make money which they can then use to acquire control over the network?
> If we could come up with a way of providing some sort of proof of individuality we would solve alot of problems.
I wonder how this would work. Let's assume there was a database of public keys for every citizen of the world, and every citizen knew their private key - how could we use that?
Could we assign the right to mine the next block according to some deterministic pseudo-random algorithm that selects the next public key from the previous one? I guess that could work, though it would reqire some timeout in case someone is not interested in mining.
The next question, how do we define some sort of public-private key pair in a way so a natural person can only create a single public key and can keep their private key secret?
I wonder how this would work. Let's assume there was a database of public keys for every citizen of the world, and every citizen knew their private key - how could we use that?
Could we assign the right to mine the next block according to some deterministic pseudo-random algorithm that selects the next public key from the previous one? I guess that could work, though it would reqire some timeout in case someone is not interested in mining.
The next question, how do we define some sort of public-private key pair in a way so a natural person can only create a single public key and can keep their private key secret?
Bitcoin isn't a Ponzi Scheme, but there are some Ponzi Schemes built around it...the big one being Bitfinex and their worthless Tether currency. And if/when those schemes collapse they could greatly destroy the (market) value of Bitcoin.
Bitcoin is a ponzi because current market conditions are hiding the huge amount of potential volatility rested in convertable worthless currencies like Tether AND the gigantic number of "turtled" speculators. By definition, Bitcoin can't provide value without future buyers. With securities, there are dividends and settlements - or the "potential for future dividends."
Bitcoins true value might be close to $500 once these hidden potential sellers emerge and transact. The current back and forth market activity does not illuminate the true supply and demand. In fact because the exchanges are unregulated, the market activity is highly manipulated. So even just thinking it's worth a lot because its going up, is falling for a Ponzi. The reason it's going up is precisely because of the greedy pouncers waiting in the grass. When they decide to act it will be equivalent to a bank run. Then we will see the true supply and demand curves. Until then, the charts are as if Madoff is supplying them...
Bitcoins true value might be close to $500 once these hidden potential sellers emerge and transact. The current back and forth market activity does not illuminate the true supply and demand. In fact because the exchanges are unregulated, the market activity is highly manipulated. So even just thinking it's worth a lot because its going up, is falling for a Ponzi. The reason it's going up is precisely because of the greedy pouncers waiting in the grass. When they decide to act it will be equivalent to a bank run. Then we will see the true supply and demand curves. Until then, the charts are as if Madoff is supplying them...
Don't forget about BitConnect.
How do you identify a natural person?
Because you'd need to do that to replace the proof of work and assign coins to natural persons.
Bitcoin doesn't identify natural persons, it just knows public keys. There might be thousands of them belonging to the same entity.
Because you'd need to do that to replace the proof of work and assign coins to natural persons.
Bitcoin doesn't identify natural persons, it just knows public keys. There might be thousands of them belonging to the same entity.
Allocating among real humans in a distributed, privacy-preserving way would be an even bigger technical innovation than the blockchain.
It would solve identity theft almost as a corollary.
Ironically, if you want to exchange any significant amount of money for bitcoins online, you need to identify yourself by providing both your ID and a selfie to the exchange.
https://i.imgur.com/bjRILt4.png
Now, a mere mention of this will get you banned from /r/bitcoin. It's amazing how quickly the anti-authoritarian spirit of Bitcoin turned on its head.