Gold collapsing. Bitcoin UP.

[cypherdoc]

we're walking up the support line:

 

[cypherdoc]

that's for real. they almost included in their statement a cut'n'paste version of the post I made here and on BCT. this what I'm referring to



I didn't realize it was such a big deal posting on f2pool thread, again I should know better.

That said Anthony Towns gave updated the computations on gain provided by SegWit based on the last changes committed by Pieter wullie. to make a long story short in case of p2pkh txs the gain raised from 166%-173% to174%-181%.

sipa is for sure a hell of engineer.

can you link to the updated Towns calcs again?

 

[cypherdoc]

take a look at my bolded edits around an alternative reason why the SW discount has been constructed the way it has.

i've been puzzled as to why gmax et al have suddenly become ok with a 4MB block worth of SWSF data + witness when up to just a couple of months ago they were steadfast at 1MB blocksizes as a limiting bandwidth of the network. i think i finally understand. first, look closely at the original SW calculation quote from AJTowns which still applies:

The 4MB consensus limit could only be hit by having a single trivial
transaction using as little base data as possible, then a single huge
4MB witness. So people trying to abuse the system have 4x the blocksize
for 1 block's worth of fees, while people using it as intended only get
1.6x or 2x the blocksize... That seems kinda backwards.

http://lists.linuxfoundation.org/pipermail/bitcoin-dev/2015-December/011869.html

let me try re-writing the above through the thought processes of a gmax by tweaking the same above paragraph:

The 4MB consensus limit could only be hit approached by having a single trivial
as many complex multi-sig LN transactions using as little base data as possible, then a single huge 4MB witness LN subsidy. So people trying to abuse promote the LN system have almost 4x the blocksize for 1 block's worth of fees, while people using it as intended for routine Bitcoin tx's only get 1.6x or 2x the blocksize... That seems kinda backwards, if you're interested in promoting the Bitcoin mainchain versus LN.

 

[sickpig]

@cypherdoc

http://lists.linuxfoundation.org/pipermail/bitcoin-dev/2016-January/012265.html

you're welcome

 

[cypherdoc]

take a look at my bolded edits around an alternative reason why the SW discount has been constructed the way it has.

i've been puzzled as to why gmax et al have suddenly become ok with a 4MB block worth of SWSF data + witness when up to just a couple of months ago they were steadfast at 1MB blocksizes as a limiting bandwidth of the network. i think i finally understand. first, look closely at the original SW calculation quote from AJTowns:

The 4MB consensus limit could only be hit by having a single trivial
transaction using as little base data as possible, then a single huge
4MB witness. So people trying to abuse the system have 4x the blocksize
for 1 block's worth of fees, while people using it as intended only get
1.6x or 2x the blocksize... That seems kinda backwards.

http://lists.linuxfoundation.org/pipermail/bitcoin-dev/2015-December/011869.html

let me try re-writing the thought processes from the perspective of a gmax by tweaking the same above paragraph:

The 4MB consensus limit could only be hit approached by having a single trivial
as many complex multi-sig LN transactions using as little base data as possible, then a single huge
4MB witness LN subsidy. So people trying to abuse promote the LN system have almost 4x the blocksize for 1 block's worth of fees, while people using it as intended for routine Bitcoin tx's only get 1.6x or 2x the blocksize... That seems kinda backwards, if you're interested in promoting the Bitcoin mainchain versus LN.

imo, this is a huge negative bonfide reason for not liking SW if you believe in promoting onchain growth vs overlay LN.

 

[cypherdoc]

another interesting dynamic from AJ:

In particular, if you use as many p2pkh transactions as possible, you'd
have 800kB of base data plus 800kB of witness data, and for a block
filled with 2-of-2 multisig p2sh transactions, you'd hit the limit at
670kB of base data and 1.33MB of witness data.

note that the more the block is filled with multisig tx's (to be expected if LN takes off) the less space allowed for regular tx fees for miners (was 800kB now 670Kb). this is going in the wrong direction for miners.

note that the network will also be forced to pass around larger & larger blocks for lesser and lesser onchain gain consuming greater & greater bandwidth. this is all b/c LN sigs are much bigger and more complex.

@sickpig comments appreciated.

 

[albin]

The irony is killing me:

 

[Richy_T]

The 4MB consensus limit could only be hit approached by having a single trivial
as many complex multi-sig LN transactions using as little base data as possible, then a single huge 4MB witness LN subsidy. So people trying to abuse promote the LN system have almost 4x the blocksize for 1 block's worth of fees, while people using it as intended for routine Bitcoin tx's only get 1.6x or 2x the blocksize... That seems kinda backwards, if you're interested in promoting the Bitcoin mainchain versus LN.

Yes. Diddling with the reward structure was an immediate red flag. They have built a complex structure of malfeasance.

One can only hope that the miners will not put up with it even if they do stick with core. Perhaps someone should release a patch that can be simply applied to the source.

 

[albin]

I'm convinced that the weird unenforceable tx pricing policy they're going for in SFSW is a prelude to Flexcap, where they're going to make this and more part of the consensus layer.

 

[cypherdoc]

yes, that's in their stupid roadmap.

 

[YarkoL]

What do you econ pundits think of this theory?

 

[AdrianX]

@YarkoL It is somewhat likely that Bitcoin ends up as a settlement layer and people just invest in Bitcoin like they do treasury bonds. But Bitcoin's going to eat the bankers lunch in that case. And no one is willingly going to transfer huge amounts of wealth to early Bitcoin adopters so that they can use Bitcoin as a settlement layer if they don't have too.

Bitcoin has to prove its worthy it has to take that piece of the pie. It does that by just doing what it's designed to do. Like gold before it, it was money first before gold devolved into a settlement commodity. Bitcoin will earn it's place at the table by being a good accessible money first.

Bitcoin needs to grow two or three orders of magnitude before it's ready to be the settlement layer candidate. It doesn't just happen by decree we need to make it happen, it's a grass roots movement from the bottom up, it rewards the risk takers who make it happen, the hard money advocates.

 

[albin]

@YarkoL

That argument is so bad, it's not even wrong.

It's basically a fuzzy imprecise free-association trying to emotionally tie a certain position on blocksize to a certain unpalatable mindset, without actually attempting to analyze the fundamental money properties whatsoever.

 

[sickpig]

another interesting dynamic from AJ:

In particular, if you use as many p2pkh transactions as possible, you'd
have 800kB of base data plus 800kB of witness data, and for a block
filled with 2-of-2 multisig p2sh transactions, you'd hit the limit at
670kB of base data and 1.33MB of witness data.

note that the more the block is filled with multisig tx's (to be expected if LN takes off) the less space allowed for regular tx fees for miners (was 800kB now 670Kb). this is going in the wrong direction for miners.

note that the network will also be forced to pass around larger & larger blocks for lesser and lesser onchain gain consuming greater & greater bandwidth. this is all b/c LN sigs are much bigger and more complex.

@sickpig comments appreciated.

the base line: the more "complex" the transaction the higher will be the ratio size(witness)/sitze(tx). On the other hand p2pkh txs will have a lower ratio.

Hence once SegWit will be active, all conditions equal, block space consumption will be skewed in favour of multisig txs.

In other words SegWit will change the economic rules of the game, Jeff Garzik say it quite clearly:

 

[tynwald]

If the Banks want a settlement layer they will simply write one, possibly using blockchain code or maybe not. The banks are far, far more capable of building an efficient, designed-for-purpose block chain than Core developers, for example, are of writing a basically functional payments or settlement system.

It's amusing to see some Core developers mention they think Bitcoin is better as a settlement tool, when they have no experience and AFAIK no input on how one even functions.

 

[sgbett]

and if the banks write a settlement layer that is closed, then that would require trust. Given that they all already trust each other (enough, at least, to settle) then why would they even need to change the current settlement system!?

I reckon the banks are just trying to EEE 'blockchain'

 

[Zangelbert Bingledack]

Pretty drunk but felt I had to answer. How'd I do?

 

[sickpig]

wow, just wow. I've just managed to watch the video. her thinking of bitcoin "maximalists" as a bunch of naive folks prove her own naivite, IMHO.

further demonstration of her attitude is this continuous reference to blockchain-tech narrative in which all the transnational transactions inefficiencies will be magically whashed away.

tech to solve such problems existed well before bitcoin appearance, and they are called distributed databases, two phase commits, etc etc.

those mechanisms were not applied simply because banks and financial institutions had no incentives to do it.

now such institutions fear to loose their dominant position and they are slowly reacting, of course using the wrong paradigm.

bumping up this post as it is related to the bank settlement layer thing. (bold added to the original)

 

[cypherdoc]

the base line: the more "complex" the transaction the higher will be the ratio size(witness)/sitze(tx). On the other hand p2pkh txs will have a lower ratio.

Hence once SegWit will be active, all conditions equal, block space consumption will be skewed in favour of multisig txs.

In other words SegWit will change the economic rules of the game, Jeff Garzik say it quite clearly:

Would you agree that my conclusions above are correct? That being SW is bad for the long term health of miners and network resources in terms of BW consumed because it encourages bigger block relays up to 4mb composed primarily of multi sig txs that will pay less in fees (1/4) than otherwise would be paid by a simple increase in the block size limit to 4mb filled with regular p2pkh txs that pay 4x the fees compared to the multi sigs?
[doublepost=1454501890,1454501038][/doublepost]

What do you econ pundits think of this theory?

@albin is quite right above. OP is attempting to tie the concept of debt to that of a block size increase. Ridiculous. The increase is simply a well thought out attempt to grow the network worldwide so that Bitcoin cam become digital gold and overcome physical gold's deficiencies as a settlement layer due to its immobility.

Don't forget where you are; this is the Gold collapsing, Bitcoin UP thread where we've discussed just these principles of Sound Money, settlement layers, etc for over 4.5 years now by former big pm holders, such as myself.

That guys techno babble conflating numerous economic terms was childish.

 

[Zangelbert Bingledack]

No idea why this isn't showing up yet (perhaps they quarantine all my comments before approving?), but here is my drunken reply to/u/Ilogy.

This is absolutely untrue of the big blockers that I regularly converse with. The main thread where our discussions have gathered has been for years been titled, "Gold Collapsing. Bitcoin UP." Gold. We are hard money folks through and through.

Bitcoin is Gold 2.0, but limiting its ability to transact directly in the settlement layer is a form of censorship - who decides who gets to transact? If it must be decided, it must be decided by the market, which requires a hard fork or else the choice is binary: YES to Bitcoin as it stands or NO to Bitcoin as it stands.

Without a hard fork, or at least a futures market in hard forks, it is impossible for the market to voice a choice in what might be rather than what is vs. nothing. As /u/justusranvier recently said, the ledger is valuable because it is uncensorable AND updatable. Messing with the updatability by artificially limiting transaction volume is messing with the fundamental driving force of the ledger's power.

You simply cannot have a settlement system without having wide use in commerce. Otherwise you have too little network effect; when a company is going out of business they can't rely on the settlement units because they don't buy anything in the real commercial economy. Something can only be trusted in settlement if it is known that there is always demand for it. All the banks simply switching to a different system, such as due to government pressure, would kill the settlement units' value. It needs to spread as far and wide as possible.

Thus settlement layer and everyday commerce are intimately connected. It won't do to pretend that the other doesn't exist. And whatever you may think this argument, know that it is absolutely false that most big blockers - at least any that I know of - think Bitcoin should be a credit or payment-only system.