Gold collapsing. Bitcoin UP.

cypherdoc

Well-Known Member
Aug 26, 2015
5,257
12,995
for anyone with a stock trading program.

just scroll thru several of the top retailers round the world and compare to the $DJI over this last year. warning: most if not all of them have that top left to bottom right sick look from the beginning of the year. i highly doubt what we're seeing in the major indices is a small dip before we shoot higher. we saw this same leading drop in retailers going back to the 2008-9 crisis. in fact, the retailers led the drop out of all the sectors with JWN (Nordstrom) starting it's drop Feb 2007, well before TSHTF.

be forewarned. but good for Bitcoin.
 

rocks

Active Member
Sep 24, 2015
586
2,284
There are more Keynesians (the Blythe Masters and Jamie Dimonds) with economic energy, than there are people invested in Bitcoin. They will form the economic majority during the next growth stage. There are more of them than there are of us, so there is a lot of change that can happen. If we want the growth to happen in Bitcoin they have to buy in to the immutable rules and the blockchain needs to accommodate the economic majority. They'll then hold the fort. If the protocol facilitates off chain growth, the majority will put there economic energy there. They'll invest in blockchain-tech side chains and LN with rules that suite the Keynesians view.
This may be, but even if they build Keynesian fiat concepts with "blockchain not bitcoin", they can not remove Bitcoin from the equation, they can only build their own competing solutions which are based on unsound money.

Let's say Blythe, Jamie and Blockstream get their way and build an extension of fiat money on top of blockchain technology, making themselves rich middlemen. You still have the same situation as today of Bitcoin as sound money competing against fiat as unsound money. Yes, they may be using the blockchain in ways we don't approve and not recognize BTC as money, but as long as they pay a minimum fee on blockchain transactions it does not matter, they are just adding fees and increasing security.

Bitcoin's success as money depends on the general population slowly walking away from unsound central bank money and adopting sound money mechanisms on their own. As long as Bitcoin still exists underneath whatever Blythe, Jamie and Blockstream create, people will still have a choice available. If history is any guide, the upcoming currency crises that will destroy the value of money, will cause most people to seek out alternatives. We see this today in states with failed money systems (such as Venezuela, Argentina or Zimbabwe), in these countries people abandoned their national currency and now use the US dollar. What happens when the US dollar crashes, what do they run to. The only options are gold, silver and bitcoin.
 

Zangelbert Bingledack

Well-Known Member
Aug 29, 2015
1,485
5,585
@AdrianX

Bitcoin investors control Bitcoin, not the economic majority (of the world). A richer group than the Bitcoin investors can fork Bitcoin and make it into a higher market cap coin, but they can't force Bitcoin investors to sell.

Just like how when we fork away from 1MB, some people might keep that coin going and we cannot force them to sell. Some people like MP might still accept coins in the old 1MB fork and some people might still mine it, etc. It will still have a market cap commensurate with investor support for it, though probably miniscule *because 1MB Bitcoin offers nothing valuable over an uncrippled Bitcoin.*

When Blythe and friends come for Bitcoin and try to bastardize it or outcompete it, though, the unbastardized Bitcoin will offer great value over their version. They can pump their version higher, but - like with Fedcoin - Bitcoin will always retain its unique value proposition, that being whatever key features they decide to remove in their version. (Now if they just clone Bitcoin and restart the mining, we have the Fedcoin scenario #2 where the world wins but BTC investors lose. Still a fine result overall.)
 

cypherdoc

Well-Known Member
Aug 26, 2015
5,257
12,995
the other thing we can hope for is that ppl like Blythe et al have bought some BTC on the side. in fact, i'd be highly surprised if not. didn't her group win part of the last auction? once they get invested in it and if the price starts to rise, the hope is their viewpoint changes.
 

AdrianX

Well-Known Member
Aug 28, 2015
2,097
5,797
bitco.in
This may be, but even if they build Keynesian fiat concepts with "blockchain not bitcoin", they can not remove Bitcoin from the equation, they can only build their own competing solutions which are based on unsound money.

Let's say Blythe, Jamie and Blockstream get their way and build an extension of fiat money on top of blockchain technology, making themselves rich middlemen. You still have the same situation as today of Bitcoin as sound money competing against fiat as unsound money. Yes, they may be using the blockchain in ways we don't approve and not recognize BTC as money, but as long as they pay a minimum fee on blockchain transactions it does not matter, they are just adding fees and increasing security.

Bitcoin's success as money depends on the general population slowly walking away from unsound central bank money and adopting sound money mechanisms on their own. As long as Bitcoin still exists underneath whatever Blythe, Jamie and Blockstream create, people will still have a choice available. If history is any guide, the upcoming currency crises that will destroy the value of money, will cause most people to seek out alternatives. We see this today in states with failed money systems (such as Venezuela, Argentina or Zimbabwe), in these countries people abandoned their national currency and now use the US dollar. What happens when the US dollar crashes, what do they run to. The only options are gold, silver and bitcoin.
We get one shot at this. If we can keep the original vision and the incentive design from degrading Bitcoin will win. If Bitcoin is degraded, I dont think we'll have the same chance we have now to let it grow organically in my lifetime. There are a fie hundred pages dedicated to how SideChains allow value to move off the Bitcoin blockchain, (blockchain-tech they they call it) while still keeping your bitcoin and the relative private keys secure. I totally get blockchain tech is a nice The Trojan Horse idea, but the sidechain white paper highlighted very clearly how value can move onto other blockchains while keeping your keys secure. I'm just saying don't be so confident, lots of smart people working to make that a reality.
 
  • Like
Reactions: solex

AdrianX

Well-Known Member
Aug 28, 2015
2,097
5,797
bitco.in
Bitcoin investors control Bitcoin, not the economic majority (of the world). A richer group than the Bitcoin investors can fork Bitcoin and make it into a higher market cap coin, but they can't force Bitcoin investors to sell.
I agree with this, I'm just saying bitcoin is but a drop in the ocean of trillions, I want those trillions to wake up and invest in bitcoin just like the rest of us. I just dont think for a minute TPTB are lining up to move that wealth into bitcoin, they are looking for ways to leverage and preserve there wealth before the fiat ponzi collapses.

I know how bitcoin works, and I know TPTB are not going to be comfortable transferring vasts amounts of wealth to any early bitcoin adopter, its going to be so uncomfortable it's going to become problematic.

TPTB if they had any wealth to preserve would logically be working with companies like Blockstream trying to figuring out how to leverage bitcoin, and looking for ways to create off blockchain growth and value without having to do a huge wealth transfer to bitcoin incumbents.

Wherever the trillions go the growth happens, it may move into FedCoin. FedCoin may even be a pegged sidechain.

I know enough about human behavior to know if bitcoin can be depreciated it will be.
[doublepost=1447460107,1447459499][/doublepost]
Bitcoin's success as money depends on the general population slowly walking away from unsound central bank money and adopting sound money mechanisms on their own.
This is a growing demographic, I am not totally convinced people will walk away as much as I’d like (I struggle to even convince trusted friends) , I tend to agree with Keynes that still not 1 in a million will see it as a problem. If you listen to James Rickards, he talks with confidence that the next reset will result in a global reserve Fiat currency like the SDR. Paraphrasing he says the opportunity for gold depends on whether or not the public buy into the idea of a fractional reserve global fiat system and we have a reset and more of the same.
 

Zangelbert Bingledack

Well-Known Member
Aug 29, 2015
1,485
5,585
@AdrianX

It all boils down to what we already knew going in. Bitcoin will be adopted by those who value what it provides.

At first this is "just" all the people who don't trust their governments and central bankers and banks all around the world, but then more and more people will value what it does: The incentive structure that holds together governments and other power structures will be rended by Bitcoin's "shroud of allure and secrecy," escalating fiat shenanigans around the world will drive people to Bitcoin because it's more effective than gold for protection, the wealthy will gradually move their offshore trillions into BTC because they trust it more than tiny island governments (and it offers far better access and deniability), the dark markets will continue to grow and decentralize through things like OB, and then reputation and identity systems will be the final piece of the puzzle, enabling decentralized arbitration, insurance, protection services, and even governance...all powered by Bitcoin and not the governments' and banks' sanitized schemes.

These decentralized power structures will eat away at the establishment power structures as well, in all manner of ways, and the price will skyrocket as investors wake up to these future outcomes. Damn right Blythe is a hodler, too, @cypherdoc, even if she thinks she can outrun this rocket.

We're entering the accelerando :D
 
Last edited:

cypherdoc

Well-Known Member
Aug 26, 2015
5,257
12,995
time for a bull mkt in volatility! i say Bitcoin UP as investors flee traditional assets. why flee into the USD when you know the Fed will have to do another QE to bailout the bad actors?:

 

rocks

Active Member
Sep 24, 2015
586
2,284
There are a fie hundred pages dedicated to how SideChains allow value to move off the Bitcoin blockchain, (blockchain-tech they they call it) while still keeping your bitcoin and the relative private keys secure. I totally get blockchain tech is a nice The Trojan Horse idea, but the sidechain white paper highlighted very clearly how value can move onto other blockchains while keeping your keys secure. I'm just saying don't be so confident, lots of smart people working to make that a reality.
Although I still strongly question sidechains and their motives, sidechains only work if the 21M cap is kept by all the sub-systems. In order to move value onto another blockchain, you have to be able to move it back, and you can only do that if coins are kept honest on a 1-to-1 ratio (otherwise the peg breaks). Without the ability to move value back to bitcoin, what is the point of moving value onto other blockchains in the first place? A one way transfer is simply a transfer mechanism to get people to use something other than Bitcoin. But bitcoin will still exist, so why should I burn my coins.

I think Jamie and other bankers have this vision of taking over Bitcoin the way they did with the FED and transferring people off of Bitcoin and onto their own system. And once everyone is captured again then they own the system again.

The only way this works though is if people can't use Bitcoin directly. As long as Bitcoin can be used directly you can not force people onto other systems, and so far direct usage keeps growing.

That is why removing the blocksize limit is so important. With the blocksize limit Jamie can force most people into his system enabled by blockstream. Without the blocksize limit Jamie can only offer a sub-optimal system and hope people move to it.

To me getting rid of the limit is the #1 priority, everything will fall into place if the limit is removed. If it is not the project fails.
 

albin

Active Member
Nov 8, 2015
931
4,008
Honestly I still don't understand why "blockchain technology" is even a thing, please can somebody elucidate something that I'm missing?

Byzantine fault tolerance as applied to a group of nodes is something that's been around a long time. Time-ordered a series of messages by including a cryptographic hash of the previous message is also something that's been around a long time.

The problem that Bitcoin fundamentally solves is how to allow permissionless participation while still preventing a sybil-attack on the consensus state of the system. "Blockchain technology" has nothing to do with any of that. Why would the invention of Bitcoin suddenly inspire general fintech to incorporate technologies that have been around forever?
 

Peter R

Well-Known Member
Aug 28, 2015
1,398
5,595
@AdrianX

It all boils down to what we already knew going in. Bitcoin will be adopted by those who value what it provides.

At first this is "just" all the people who don't trust their governments and central bankers and banks all around the world, but then more and more people will value what it does: The incentive structure that holds together governments and other power structures will be rended by Bitcoin's "shroud of allure and secrecy," escalating fiat shenanigans around the world will drive people to Bitcoin because it's more effective than gold for protection, the wealthy will gradually move their offshore trillions into BTC because they trust it more than tiny island governments (and it offers far better access and deniability), the dark markets will continue to grow and decentralize through things like OB, and then reputation and identity systems will be the final piece of the puzzle, enabling decentralized arbitration, insurance, protection services, and even governance...all powered by Bitcoin and not the governments' and banks' sanitized schemes.

These decentralized power structures will eat away at the establishment power structures as well, in all manner of ways, and the price will skyrocket as investors wake up to these future outcomes. Damn right Blythe is a hodler, too, @cypherdoc, even if she thinks she can outrun this rocket.

We're entering the accelerando :D
Indeed.

Here's another interesting dynamic: if the elite/banksters are ever worried about Bitcoin enough to try to stop it, then they must acknowledge (at least to themselves) that it might succeed. But if they accept that it might succeed, then their rational course of action is to move (for example) 0.5% of their wealth into Bitcoin as a hedge. Of course the aggregate result of many people hedging like this is to create the self fulfilling prophecy that they were hedging against.
 

rocks

Active Member
Sep 24, 2015
586
2,284
I am not totally convinced people will walk away as much as I’d like (I struggle to even convince trusted friends) , I tend to agree with Keynes that still not 1 in a million will see it as a problem. If you listen to James Rickards, he talks with confidence that the next reset will result in a global reserve Fiat currency like the SDR. Paraphrasing he says the opportunity for gold depends on whether or not the public buy into the idea of a fractional reserve global fiat system and we have a reset and more of the same.
History has shown people only walk away after the money they have been using is literally worth less than toilet paper or firewood. At that point no one trusts government money and they look towards something else (today that is another government's money, but in the past it was gold or silver)

The reason the dollar has worked for so long is they have been able to get away with destroying it at only a slow moderate pace, i.e. boil the frog slowly. They will continue to get away with it as long as they can keep the destruction to a moderate pace. However if the destruction of value accelerates, then they will lose control.

I look at the volume of debt in the world that is unsupportable even with 0.1% interest rates, and believe they are going to have to increase the pace of the destruction of value. How much so is an open question, if it is just a little bit more than today bitcoin/gold won't be adopted, if it is enough that people lose confidence then bitcoin or gold will be adopted out of necessity.
 
  • Like
Reactions: AdrianX

AdrianX

Well-Known Member
Aug 28, 2015
2,097
5,797
bitco.in
@AdrianX

It all boils down to what we already knew going in. Bitcoin will be adopted by those who value what it provides.

At first this is "just" all the people who don't trust their governments and central bankers and banks all around the world, but then more and more people will value what it does: The incentive structure that holds together governments and other power structures will be rended by Bitcoin's "shroud of allure and secrecy," escalating fiat shenanigans around the world will drive people to Bitcoin because it's more effective than gold for protection, the wealthy will gradually move their offshore trillions into BTC because they trust it more than tiny island governments (and it offers far better access and deniability), the dark markets will continue to grow and decentralize through things like OB, and then reputation and identity systems will be the final piece of the puzzle, enabling decentralized arbitration, insurance, protection services, and even governance...all powered by Bitcoin and not the governments' and banks' sanitized schemes.

These decentralized power structures will eat away at the establishment power structures as well, in all manner of ways, and the price will skyrocket as investors wake up to these future outcomes. Damn right Blythe is a hodler, too, @cypherdoc, even if she thinks she can outrun this rocket.

We're entering the accelerando :D
:D your preaching to the converted.;), When I listen to Blythe and DimonI I see some naivety, I also rationally ask myself what do they know that I don't, and (given they not pumping bitcoin atm) if I was in their shoes what would I do.

DimonI latest YouTube Clip supported by Blythe, does show fear, it also shows hes not fucking around and hes gearing up for a fight.

I have faith in Bitcoin, but I've seen things! bitcoin has weaknesses, Bitcoin is like Helm's Deep an impenetrable fortress but there is a way, and wizards are working.



 

AdrianX

Well-Known Member
Aug 28, 2015
2,097
5,797
bitco.in
The only way this works though is if people can't use Bitcoin directly. As long as Bitcoin can be used directly you can not force people onto other systems, and so far direct usage keeps growing.

That is why removing the blocksize limit is so important. With the blocksize limit Jamie can force most people into his system enabled by blockstream. Without the blocksize limit Jamie can only offer a sub-optimal system and hope people move to it.
.
Side-chains can have both inflation and a 1:1 bitcoin peg, not that I think any bitcoiners would promote it but it can be done, and I can think of many uses foe such a peg.

Just before the last pump I concluded that the block size debate had been won, its just breathing room and demand that is limiting block size now.

As for your 2 points in bold, I'm in total agreement, but it's actually amazing to see the most die-hard supporters of privacy and independents from TPTB that are advocating for small blocks, it's a truly engineered fracture in the bitcoin community, affecting those who lack understanding - theymos, ICE, hbdick, marcus of augustus, (at a squeeze even Trace Mayer fits in with that crowd when I look beneath the questions coming from him.) They fail to see the mechanisms that make bitcoin work and are easily manipulated and swayed by silly arguments like micropaments taking over the network and filling block space.
 

AdrianX

Well-Known Member
Aug 28, 2015
2,097
5,797
bitco.in
Honestly I still don't understand why "blockchain technology" is even a thing, please can somebody elucidate something that I'm missing?

Byzantine fault tolerance as applied to a group of nodes is something that's been around a long time. Time-ordered a series of messages by including a cryptographic hash of the previous message is also something that's been around a long time.

The problem that Bitcoin fundamentally solves is how to allow permissionless participation while still preventing a sybil-attack on the consensus state of the system. "Blockchain technology" has nothing to do with any of that. Why would the invention of Bitcoin suddenly inspire general fintech to incorporate technologies that have been around forever?
You are not missing anything, but if you can accept that a sidechain can have a 1:1 peg and value is a subjective phenomenon it is possible that someone will secure their bitcoin in a sidechain and move the value into another chain thinking they can always reverse the peg and get the same bitcoin back

They can get their bitcoin back guaranteed but not the value. The value is not in the bitcoin itself the value is in the control of a piece of the agreed ledger created by a network of opt in users who agree with the immutable rules of Bitcoin. "blockchain technology" is about moving value from chain to chain. (without going through the free market )

It's only the value stored on the bitcoin blockchain that incentivizes miners to protect the network of users that solves the Byzantine generals delema.

"blockchain technology" when the words come out of Blythe's mouth translates to a "decentralized database". Nothing to worry about she doesn't understand the language of the people she is dealing with. But when it comes out of Adam Backs, or Maxwell's mouth it means using technology to move value in a trust free way off the Bitcoin blockchain onto another chain or network without the discovery process of the free market. Not 1 in 10 million people will be able to detect that inflation. Thats what I here when I here "blockchain technology"
[doublepost=1447474990][/doublepost]
Indeed.

Here's another interesting dynamic: if the elite/banksters are ever worried about Bitcoin enough to try to stop it, then they must acknowledge (at least to themselves) that it might succeed. But if they accept that it might succeed, then their rational course of action is to move (for example) 0.5% of their wealth into Bitcoin as a hedge. Of course the aggregate result of many people hedging like this is to create the self fulfilling prophecy that they were hedging against.
Wish I could like this twice.
 
  • Like
Reactions: majamalu

theZerg

Moderator
Staff member
Aug 28, 2015
1,012
2,327
Bitcoin Unlimited liftoff!!!!!

I've set the "excessive" block limit to be 100k bytes for testing, and the acceptance depth at 6 (when an excessive block is 6 deep the code will accept that chain as valid):

Starting with 1 chain:

Status: active height: 284, length: 0 (this is the chain info)
Date: 2015-11-13 22:50:16 Size: 181 NumTx: 1 Ver: 3 (these are blocks on the chain)
Date: 2015-11-13 22:50:16 Size: 181 NumTx: 1 Ver: 3
Date: 2015-11-13 22:50:16 Size: 181 NumTx: 1 Ver: 3
Date: 2015-11-13 22:50:16 Size: 181 NumTx: 1 Ver: 3
Date: 2015-11-13 22:50:16 Size: 181 NumTx: 1 Ver: 3
Date: 2015-11-13 22:50:02 Size: 181 NumTx: 1 Ver: 3
Date: 2015-11-13 22:50:01 Size: 181 NumTx: 1 Ver: 3

Now I write a bunch of TX on another node and generate a block. Note the fork! Active chain does not contain the excessive block:

Status: valid-headers height: 285, length: 1
Date: 2015-11-13 23:07:37 Size: 128789 NumTx: 402 Ver: 3
Status: active height: 284, length: 0
Date: 2015-11-13 22:50:16 Size: 181 NumTx: 1 Ver: 3
Date: 2015-11-13 22:50:16 Size: 181 NumTx: 1 Ver: 3
Date: 2015-11-13 22:50:16 Size: 181 NumTx: 1 Ver: 3
Date: 2015-11-13 22:50:16 Size: 181 NumTx: 1 Ver: 3
Date: 2015-11-13 22:50:16 Size: 181 NumTx: 1 Ver: 3
...

Let's generate more blocks. The "active" chain remains the same, even though the other chain is growing:

Status: valid-headers height: 288, length: 4
Date: 2015-11-13 23:08:14 Size: 181 NumTx: 1 Ver: 3
Date: 2015-11-13 23:08:13 Size: 181 NumTx: 1 Ver: 3
Date: 2015-11-13 23:08:12 Size: 181 NumTx: 1 Ver: 3
Date: 2015-11-13 23:07:37 Size: 128789 NumTx: 402 Ver: 3
Status: active height: 284, length: 0
Date: 2015-11-13 22:50:16 Size: 181 NumTx: 1 Ver: 3
Date: 2015-11-13 22:50:16 Size: 181 NumTx: 1 Ver: 3
Date: 2015-11-13 22:50:16 Size: 181 NumTx: 1 Ver: 3
...


Now generate 6+ blocks. Note that the ACTIVE fork now contains the excessive block!!!

Status: active height: 291, length: 0
Date: 2015-11-13 23:08:24 Size: 181 NumTx: 1 Ver: 3
Date: 2015-11-13 23:08:24 Size: 181 NumTx: 1 Ver: 3
Date: 2015-11-13 23:08:24 Size: 181 NumTx: 1 Ver: 3
Date: 2015-11-13 23:08:14 Size: 181 NumTx: 1 Ver: 3
Date: 2015-11-13 23:08:13 Size: 181 NumTx: 1 Ver: 3
Date: 2015-11-13 23:08:12 Size: 181 NumTx: 1 Ver: 3
Date: 2015-11-13 23:07:37 Size: 128789 NumTx: 402 Ver: 3
Date: 2015-11-13 22:50:16 Size: 181 NumTx: 1 Ver: 3
Date: 2015-11-13 22:50:16 Size: 181 NumTx: 1 Ver: 3
Date: 2015-11-13 22:50:16 Size: 181 NumTx: 1 Ver: 3

(In this case, the other "fork" disappears because no blocks were generated on it)
 

kyuupichan

Member
Oct 3, 2015
95
348

Zangelbert Bingledack

Well-Known Member
Aug 29, 2015
1,485
5,585
Thought experiment:

Imagine that both the block reward schedule and the block size limit could be adjusted with a command-line option in Bitcoin Core. Assume the block reward schedule defaults to the current schedule. What would happen?
Of course this is no problem because it just makes it more convenient for miners to do what they already could do, and if convenience were the only thing stopping them then Bitcoin would be perpetually vulnerable to an "attack" where someone simply releases a mod that enables this.

If we don't trust miners, we already largely gave up on Bitcoin. /u/eragmus even raised the point that BIP100 gives the power to the miners, hence obliquely to the market (at least in theory). The final card investors can play if miners all misbehave is to sell their chain and buy a spinoff that maintains the Bitcoin ledger but with a different mining algorithm so that those miners cannot 51% attack it.

Although probably more or less obvious to most here, it's worth running through the exercise to see exactly why miners wouldn't adjust the block reward upward even if it were a matter of just clicking a button:

Any miner that upped the reward could end up building on a block that is destined to be orphaned, losing a lot of money, and any miner that upped the reward and then mined such a block would know this incentive exists in other miners and hence that their mined block would be orphaned. Of course non-mining nodes would have even more incentive to refuse to propagate such blocks, since they have nothing to gain from it even theoretically.

Crucially, this situation holds only because allowing such a block would destroy the BTC price, which is the what the miners' profits are denominated in.*

Only in the case where there is widespread insanity among miners and nodes could this option being available cause any problem, but in that case Bitcoin was already dead.

Meanwhile, with the blocksize cap, the situation above holds if and only if miners and nodes deem raising the blocksize cap to be damaging to the BTC price. I don't think they will expect it to damage the price; quite the opposite.

And again, in the case where the current crop of miners and nodes do so, investors will fork them off or spin them off and make their efforts worthless, or at least worth a lot less. The ledger is preserved, hodlers keep their purchasing power, and all that good stuff. Control over Bitcoin always remains with the investors who like Bitcoin's monetary properties.

*Some might object, "So maybe the BTC price falls by 99% in the event the miners and nodes accept a 100BTC reward block. But what if miners colluded to make the reward ultra high, like 10,000 BTC? Then their profits would outstrip the BTC price loss." Of course this doesn't work, because a 99% (actually probably more) drop would be the result of just *one* block getting solidly into the blockchain with just a *somewhat* inflated reward. Mining more blocks at much, much higher inflation rates would cause the price to fall far, far lower still - likely to near zero. The misbehaving miners simply can't win. The incentives never even come close to working in their favor.

So we see that even without getting into fork arbitrage or spinoffs, investors already have some granularity in their power to enforce their view through the BTC price, along with miners' knowledge of investor intent, which is again why the blocksize cap can be easily raised by a dropdown menu option but the block reward cannot be.
 
Last edited:

Zangelbert Bingledack

Well-Known Member
Aug 29, 2015
1,485
5,585
The above line of reasoning suggests a tiered or layered structure of investor control, in order of increasing radicalness and increasing directness of the exercise of investor will:

Tier 1: Expression of Intent

Investors simply make it known, in a credible way, that they support some change (say bigger blocks), meaning they intend to buy more BTC if the change is made in good time, and sell BTC if it is not. Then there are three levels of ways the ecosystem can react:

(i) Core Capitulates: Core is pressured to up the blocksize cap and does so in a way that satisfies investors.

(ii) Competing Implementations Arise: If Core refuses or raises the cap too slowly, other implementations like XT spring up and miners - keen on getting the additional gains through a higher BTC price - adopt it.

(iii) Bitcoin Unlimited Renders the Previous Two Moot: Miners - especially if it is easy for them, such as through a pulldown menu - will up the size of the blocks they mine as tx demand grows, and as long as they do so conservatively other miners and nodes (all interested in seeing the BTC price rise) will approvingly build on and propagate these blocks.

In a BU world, this messy set of sub-levels is replaced by just the preceding paragraph. Investors announce, ideally through a prediction market or futures market but cruder measures should also work, and miners and nodes react through the pulldown menu to get those juicy profits.

Tier 2: Fork Arbitrage on Exchanges

This case is more radical, but it is only required if a change is too controversial for something like XT's 75% threshold to be relied upon. Here, several weeks/months before the fork is to occur, Bitcoin exchanges prepare futures contracts for, say, coins in Core and coins in XT, and let investors effectively sell coins in Core to buy more coins in XT, or vice versa.

In almost all conceivable cases a definitive winner emerges (and if not, no other method is going to do any better at determining the winner), and the other fork either dies or becomes a niche alt-protocol coin (not really an "altcoin," since it shares Bitcoin's ledger). The niche coin would likely only arise and persist if there truly were a key tradeoff being made, as some small block adherents argue. In any case, hodler purchasing power is completely preserved by default if they choose not to bet in the "forkbitrage" process, even in the event of a persistent split.

This forkbitrage process represents a more direct expression of investor will than in Tier 1. (Also, it may be possible that this process starting up would kick off Tier 1 effects that would allow the more radical measure of forbitrage to be halted early, with the exchanges returning investors' money.)

Tier 3: Spinoff with New Hashing Algorithm

This is the most radical, because it is only required in the scenario where "miners go insane" and do something ridiculous like upping the block reward or refusing to implement obvious necessary changes like blocksize cap increases, despite investor support, and where the miners would threaten to 51% attack the investors' chosen fork in the above forkbitrage process. Of course this can only be a short term threat, since the fork winning the Tier 2 forkbitrage process would soon have far more hashpower, but short term matters when you could be 51% attacked.

Here the Bitcoin ledger is copied over to the investors' chosen protocol, so that all holders have the same number of coins (and same percentage of all outstanding coins) in the "new" coin, say a larger blocksize cap coin. The World Wide Ledger is preserved, which is all that should matter to investors, and the "old" Bitcoin is again sold off to nothing or goes niche. Hodler purchasing power is preserved, etc.

This is the very purest expression of investor will. Miners can be called a kind of investor, but with some complications. Spinoffs allow investors to circumvent even the miners - a radical measure for outlandish scenarios.

Tier 1 lets investors deal with attempted developer control, Tier 2 lets investors deal with controversy, and Tier 3 lets investors deal with pervasive miner irrationality. This is how investors rule the roost.
 
Last edited:
  • Like
Reactions: AdrianX and Peter R