Gold collapsing. Bitcoin UP.

[sickpig]

Until recently I was mostly content to ride Bitcoin's ups and downs; the risk of near term total failure never seemed that great. Now, I believe the risk of failure (of both chains) to be much higher: the legacy Bitcoin can enter a state of Death Chain Spiral paralysis (great articles @lunar) while at the same time Bitcoin Cash proves unable to support the mining base, which crashes into bankruptcy leaving a mini-bitcoin and the field open for an alternative crypto to dominate

Was't the increase of Bitcoin Cash tokens value one of the premises that will trig Bitcoin "Death Spiral"?

If this doesn't happen no Death Spiral will trig, in the opposite scanrio Bitcoin Cash value will rise and it will able to support the miners.

Any other scenarios I could come up with involves the miners shooting themselves in the feet or an attack carried bye one of the infamous "state size" malevolent actor. IMHO the latter could have happened even before the Aug 1st fork.

Other things I'd like to add to the mix:

- the new weaker security model that SegWit will bring to the Bitcoin chain (see excellent @Peter R's presentation at TFOB). To make a long story short SegWit introduce an incentive for miners to mine block without verifying the txn sigs (if they did now they won't be able to collect txns fees).

- the change in economic incentives induced by 1MB constraint and the fact that from mid beginning of 2016. Such change will reduce the security of the network the long run because it reduce miners' fee produced income transferring it to 2nd layer actors.

So I guess that the Bitcoin chain do not have just one enemy (Bitcoin cash chain), it has also to fight with all the changes made to the protocol that are fracturing and eroding the solid base it used to be built upon.

edit: just wanted to add an image from @Peter R to give an idea of the amount revenue shifted from miners to 2ns layers operators:

 

[Mengerian]

A collection of emails between Mike Hearn and Satoshi has been published by /u/CipherionX

In the first two emails, dated April 12, 2009, they mention Ripple. But wasn't Ripple created in 2011/2012?

 

[Norway]

@Mengerian Ripple is older than that:
https://en.wikipedia.org/wiki/Ripple_(payment_protocol)#Early_development_.282004.E2.80.9312.29

EDIT: And yes, I was also surprised when I read about Ripple in the emails

 

[Mengerian]

@Norway, OK, thanks. So I guess it's plausible that Ripple was mentioned then.

Upon further investigation, I also found mention of it in 2010 on Bitcointalk also: https://bitcointalk.org/index.php?topic=35642.0

Seems like pre-2011 it would have been more commonly called "Ripplepay" though, rather than just "Ripple".

Edit: Another 2010 Bitcointalk thread, this time it's also referred to as "Ripple" https://bitcointalk.org/index.php?topic=1923.0

 

[Norway]

@Mengerian
One mystery: Who released the emails? Mike or Satoshi?

EDIT: Maybe they did it together?

 

[lunar]

@Norway

 

[bluemoon]

Was't the increase of Bitcoin Cash tokens value one of the premises that will trig Bitcoin "Death Spiral"?

If this doesn't happen no Death Spiral will trig, in the opposite scanrio Bitcoin Cash value will rise and it will able to support the miners.

Patrick says that it is an "inherent vulnerability" in BTC that if the chain loses mining power it will have to wait a full 2016 blocks before the difficulty can be adjusted to bring the block time back to the normal 10 minutes. [1]

He says, "this increase in block time affects the mining profitability" and may cause miners to switch chains making the problem progressively worse, possibly resulting in "the dreaded Chain Death Spiral." He says if the price of BCH goes up making BCH more profitable to mine, this will cause miners to switch. [2]

The thing is, if miners switch out of the chain, blocks will indeed be found more slowly until the next difficulty adjustment, but that does not affect the expected time it takes the individual remaining miners to find their blocks: that is determined by their hash power in relation to the difficulty, which is unchanged. The principal effect of slower blocks is felt by users and on miners (if at all) only through the effect on BTC mining profitability caused by any change in user valuations. It seems to me the Death Spiral risk is overstated.

As you point out, BTC suffers a number of weaknesses and in competition with BCH slow difficulty adjustment may be another. In time these weaknesses may possibly cause a transfer of value between the two.

John Millibit (who Patrick references) postulates that miners may switch to BCH even before BCH value exceeds that of BTC, "due to the better value proposition." If enough do, the BTC chain may become so congested that many more miners then switch out of panic and BTC becomes completely unusable. He assumes that the value lost by BTC as its problems multiply flows into BCH, also causing miners to switch. [3]

[1] http://bitcoinandtheblockchain.blogspot.com/2017/08/chain-death-spiral-fatal-bitcoin.html
[2] http://bitcoinandtheblockchain.blogspot.com/2017/08/btc-is-dead-long-live-btc-updated-and.html
[3] https://medium.com/@john.s.millibit/cashing-out-of-bitcoin-72ffe6226ab4

Edit: Reworded para on John Millibit's view.

 

[AdrianX]

The vulnerability is the transaction limit. They're just turning a blind eye. As pointed out miners mine unaffected while users suffer the exponentially increasing backlog it's a result of limiting transaction capacity. The problem was exposure by and because of insisting the limit be kept it's not directly the difficult adjustment time.

 

[Peter R]

Bitcoin Unlimited's finances are in great shape. Here is the financial report for the first half of 2017:

https://bitco.in/forum/threads/bitcoin-unlimited-financial-report-1-january-2017-30-june-2017.2534/

 

[Christoph Bergmann]

I like that BU integrates OP_Return in the GUI. Wonder why nobody did this before. If you increase tx size by some byte, you can add a message. That was something missing all the time.

 

[solex]

I recall reading recently that Maxwell still considers Ethereum is destined to go to zero.
On this matter: he...has...no...idea...whatsoever. Nothing could be further from the truth.

What is being done in Ethereum tokens is truly amazing.
https://etherscan.io/tokens
Every one of these tokens is linked to a different initiative in blockchain development. The whole is a highly competitive landscape of Darwinian natural selection.

This is looking like the Burgess Shale of 21st Century innovation in finance. Anything could come out of it, and whatever does will have strong pre-existing links to the Ethereum ecosystem.

Bitcoin, and Bitcoin Cash, have a real battle on their hands.

 

[Dusty]

@solex : I totally agree, I recently met with a few teams creating ICOs on the ERC20 platform and the amount of new work and innovation happening there is amazing.
Just yesterday the ethereum network handled an all time high number of transactions in 24H (around 410.000 if I remember well), and that number dwarfes the amount of activity in Bitcoin chain(s).

That's why I sincerely hope that rootstock will be integrated/enabled in Bitcoin Cash: developers would be able to switch network without much work (smart contract language and VM is the same) and they could access a much more sound money system with them.

 

[adamstgbit]

I recall reading recently that Maxwell still considers Ethereum is destined to go to zero.
On this matter: he...has...no...idea...whatsoever. Nothing could be further from the truth.

What is being done in Ethereum tokens is truly amazing.
https://etherscan.io/tokens
Every one of these tokens is linked to a different initiative in blockchain development. The whole is a highly competitive landscape of Darwinian natural selection.

This is looking like the Burgess Shale of 21st Century innovation in finance. Anything could come out of it, and whatever does will have strong pre-existing links to the Ethereum ecosystem.

Bitcoin, and Bitcoin Cash, have a real battle on their hands.

I always say that bitcoin will "soon" have the same kind of programmable aspect as ether, and when it dose ether will become old news, an early test of this kind of thing.

I foresee a pretty big development explosion! for bitcoin. now we have competing bitcoin clients and even competing bitcoin chains!

significant progress is sure to come.

tx mal fix probably opens up a whole new world of "second layer solutions" not just LN. i strongly believe that bitcoin cash needs to also implement tx mal fix to stay competitive, cheap & reliable TX is not enough of a competitive edge.

 

[adamstgbit]

BCC under went some kind of stress test. mem pool was spamed with low fee paying TX.
I'm a little surprised TX of such low fee's we're even relayed.
@Peter R you once computed a cost / TX based on block propagation time, it would be cool if you could recompute this given 8MB blocks. we should be able to convince miners and nodes to not include or relay TX that aren't paying a high enough fee.

i see no need to process TX if miners are doing so at a lose. there is some sense to core's extremist view, if we do end up with 16MB blocks filled with "spam" we start degrading decentralization, in order to maintain decentralization with bigger blocks, legit useage must also incress.

 

[79b79aa8]

Miners always look after their own profitability. Miner behavior may appear opaque, as short and long term profitability strategies vary for each one. Either this works without external tinkering -- as if guided by an invisible hand -- or it does not work at all.

Ethereum does not and cannot function as sound money. 1) They have turned the clock back on transactions in the past and have said they may do it again. 2) The Ethereum blockchain is not designed to be securitized beyond factual possibility of breach.

On the other hand, the fintech being developed around the Ethereum ecosystem requires the existence of a form of digitized sound money.

Sound money is Bitcoin's killer app, and the greatest conceivable prize. This feature has been jeopardized in Bitcoin SegWit (because of developer-led economic planning, and of fundamental changes introduced to the incentive structure for miners, upon which the security of the ledger depends). Not so in Bitcoin Cash, which in addition preserves low-friction transactability, contributing to the possibility of its widespread adoption as money.

 

[adamstgbit]

@79b79aa8

Miners always look after their own profitability. Miner behavior may appear opaque, as short and long term profitability strategies vary for each one. Either this works without external tinkering -- as if guided by an invisible hand -- or it does not work at all.

so what we should put miners in a box to isolate them from outside influence, and hope they figure out whats most profitable all be themselfs?

na, users pressuring miners to do one thing or another is an important part of the game.

 

[79b79aa8]

ok, but if a miner decides to put 8MB worth of low-fee txs in a block and pocket the fees, why should anyone discourage him from doing so?

 

[adamstgbit]

@79b79aa8

miners are free to do that, but i'm also free to not like it, and encourage them to only include reasonable fee paying TX.
as a node operator i can set the min fee tx relay thing to what i feel is reasonable, and i can also protest big blocks Via EB / AD settings.
and as a user i can make some noise on reddit or somthing.

I would do this because I believe its good for the over all health of the network. Imagine if we are under a truly obscene and constant spam attack ( and with miners choosing to include free TX this is very possible and cheap like dirt attack to pull off ) suddenly running a node for me become expensive and for no good reason.

I'm not saying 1MB forever, I'm not even suggesting that node cost should always be in my reach. not at all. i'm saying we could fall into a scenario where we have GB blocks and very little nodes on the network. if we keep things in check we can eventually get GB blocks WHILE maintaining a high degree of node decentration

I do believe decentralization IS important. right now that decentralization depends on some home users running nodes, this is less and less a requirement as the network grows and usefulness increases, eventually node decentralization will be maintained by various businesses corporations and Governments(is that a bad word?) all with competing interests. home users need not run nodes to maintain a high degree of decentration at this point. but we are NOT there yet ( altho we appear to be getting there ).

there will be a day in which the network has grown so much that adding 8MB of free TX to each block is not much of a burden on the network's nodes. but that's not today!

 

[NewLiberty]

There is a battleground currently, fee market floors may not always be a factor.
There may be also non-economic players currently.

Miners mine BCC at a relative loss, (so strictly non-economic).
They could be buying additional BCC to make up for it through doubling down, (if the economics can pull it up).
Point being, current strategies are atypical and changing frequently.

The value of decentralization is of great importance but also a decreasing return, beyond a point it adds scant value.

 

[awemany]

The moment a single other person uses segwit, you also get the benefit of more capacity even if you're not using it yourself.

It will take some time to have a full effect-- this is by design, creating a sudden shock for the system is not good.

https://archive.fo/3OX1Z

Emphasis mine.