Gold collapsing. Bitcoin UP.

[Mashuri]

@cypherdoc

Because the other platforms you mention are not as secure and involve leaving the bitcoin ecosystem. The market will choose LN hubs because of their higher security and resulting lower costs. Miners will welcome the increased demand for BTC resulting in higher value.

@Justus Ranvier

Exciting stuff. I just hope Chris develops things a little faster than he has previously.

 

[cypherdoc]

@Mashuri

my bet is if we lifted the limit and setup LN alongside, the inc security and decreased expense of the blockchain would win every time. in fact, i've made this proposal before but it sounds like there is a group of ppl who don't want to compete with a free and unfettered Bitcoin network.

 

[Mashuri]

@cypherdoc

I agree. LN with free market block size is ideal.

 

[cypherdoc]

@Mashuri

there you go. agreed.

let Bitcoin run unfettered and if that means free mkt determines further need for LN, so be it.

 

[Justus Ranvier]

I think what we're going to see develop is a digital cash economy - people will do most of their transactions directly with btc rather than transacting with btc-substitutes issued by intermediaries.

What might be tripping people up right now is the idea that a cash economy is a feature-reduced version of the banked economy.

That's true when cash is physical, but not necessarily when cash is digital.

The world has never seen money with the privacy, freedom, and no counterparty risk advantages of cash combined with low friction digital payments.

It's too soon to say, "of course we need extra layers on top of base money because that's how money has always worked."

 

[Melbustus]

@Peter R

Forgive me if this has been discussed here (I'm a few days behind), but where did you land on the tail-emission issue? Your paper suggests that R/T (inflation) needs to be positive in order for blockspace to have a cost to the supplier. I don't have an intuitive of understanding of why that would be true.... Seems to me that orphan risk should apply regardless of whether the payoff from winning a race comes from new coin, fees, or both...

Seems like it might be NP-complete; eg, an instance of the knapsack problem, but where we're also simultaneously solving for optimal "weight limit"...(need to think this through more).

 

[Peter R]

@Melbustus

I'm not sure what happens in the limit as R/T --> 0. We do know that the "mining gap" will exist (miners will turn off their machines for a few minutes at times when the mempool doesn't contain enough fees to make mining worthwhile)[1]. What is not clear to me is if the equilibrium hash rate goes to 0 or goes to something nonzero. I was speaking with Miles Carlsten (the "mining gap" presenter from Princeton) and he didn't have a good answer either.

Regarding your comment about it not being completely intuitive, I agree; that's just the way the math worked out.

Justus had some related insights several pages back that I thought were helpful:

http://bitco.in/forum/threads/gold-collapsing-bitcoin-up.16/page-13#post-416
http://bitco.in/forum/threads/gold-collapsing-bitcoin-up.16/page-13#post-414

[1] @Mengerian also made some plots that illustrate the mining gap in the previous Gold thread on BCT and possibly has insight into what happens as R/T --> 0.

 

[Justus Ranvier]

I just realized that we might be thinking about the problem in the wrong terms.

It's not enough to pay miners to put transactions into blocks. We need to pay them to extend the blockchain.

Otherwise, they could just have a single block that grows in size that just gets replaced by new versions at the same height but with more proof of work.

 

[Justus Ranvier]

And, before anyone asks what's actually so bad about just having one block, the reason we need them to extend the chain is so that double spending remains expensive.

 

[Mashuri]

The advantages LN provides for exchanges are too great to ignore. It provides the best combination of BTC-level security and central database speed by a very wide margin. Traders will flock to LN hubs.

 

[Justus Ranvier]

The impending failure of the most successful merge mined proto-sidechain:

http://blog.onename.com/namecoin-to-bitcoin/

 

[AdrianX]

@cypherdoc

Because the other platforms you mention are not as secure and involve leaving the bitcoin ecosystem. The market will choose LN hubs because of their higher security and resulting lower costs. Miners will welcome the increased demand for BTC resulting in higher value.

@Justus Ranvier

Exciting stuff. I just hope Chris develops things a little faster than he has previously.

It's actually not correct to think Bitcoins security is superior in that regard.

Bitcoin is designed to secure the value that is represented by the network effect of Money.

Yes by all means do whatever you want with smart contracts they have no impact on incentives.

The only reason Bitcoin has superior security today is because miners are being subsidized ~98% to provided that security during this fragile growing stage. This abundant security is temporary.

And we are paying for it with inflation with the potential promise of growth.

Transaction fees will eventually be marginalized to the coat of securing blockchain transactions and that value is a function of the money velocity in a fixed quantity system.

Should some other network eclipse Bitcoin as everyday money it's value can't be guaranteed and be protected by the Bitcoin blockchain. The Bitcoin tx fees get processed by the lowest bidder and network security scales accordingly.

It's necessary that Bitcoin tx fees go to miners.

 

[AdrianX]

And, before anyone asks what's actually so bad about just having one block, the reason we need them to extend the chain is so that double spending remains expensive.

Why wouldn't two pools not compete, say both find a block and both hold on for more profit. someone will accept fewer transaction and take the pot as soon as it's profitable. @Justus Ranvier

 

[cypherdoc]

The impending failure of the most successful merge mined proto-sidechain:

http://blog.onename.com/namecoin-to-bitcoin/

wow, thanks for this.

that article hits on MANY of the concerns i've had about SC's from the very beginning of the concept last year. if anyone doubts me, go back to the BCT gold thread from Oct 2014 and you'll find my variations on all of the below:

1. With a merge-mined cryptocurrency like Namecoin, the security of the blockchain is typically a subset of the “main chain.” We noticed in late 2014 that a single mining pool consistently had more than 51% of the hashing power on Namecoin while having significantly less of the hashing power on Bitcoin. Recently, the situation has been even worse with a single mining pool controlling over 60% of Namecoin’s hashrate. If this pool were to attack the network, it could reorganize the blockchain, censor name registrations, deny updates, and squat names as they expire. The Namecoin community has known about this for some time but there is little to nothing that they can do about it. Below is a mining power plot for the past 5 weeks (raw data here). We've actually seen Discus Fish controlling up to 75% mining power in a particular week.

this is the dreaded 51% merge miner attack incentivized by a lack of consequences to their original hardware investment, the inevitability of less mining security on the SC, and the ability to short a scBTC on an exchange.

2. Despite originally sharing the same codebase as Bitcoin, Namecoin was not kept up-to-date with advancements made in Bitcoin development.

i made this same pt with regards to complex mining software. a miner really has not the time, money, or expertise to keep up with hundreds of SC implementations, all of which will be different.

3. The more peers a cryptocurrency network has, the more resilient the network is to denial of service attacks. As a relatively small network, Namecoin has many fewer nodes than Bitcoin, which makes it more vulnerable in this respect.

i just made this pt the other day:


4. Namecoin requires a “hard fork” and requires miners to upgrade their software. Anecdotal evidence suggests that this is hard to do and oftentimes miners don’t have enough incentive to do software upgrades for a small cryptocurrency.

again, this would be a reflection of a miner not willing to spend the time and effort to upgrade his software when merge mining a SC which results in security vulnerabilities.

final selected key quote:

"we strongly believe that decentralized applications and services need to be on the largest, most secure blockchain. Currently, there is no other blockchain that even comes close to Bitcoin in terms of these security requirements."

Blockstreams SPV proof enabled SC's are doomed.

 

[cypherdoc]

@Melbustus

I'm not sure what happens in the limit as R/T --> 0. We do know that the "mining gap" will exist (miners will turn off their machines for a few minutes at times when the mempool doesn't contain enough fees to make mining worthwhile)[1]. What is not clear to me is if the equilibrium hash rate goes to 0 or goes to something nonzero. I was speaking with Miles Carlsten (the "mining gap" presenter from Princeton) and he didn't have a good answer either.

Regarding your comment about it not being completely intuitive, I agree; that's just the way the math worked out.

Justus had some related insights several pages back that I thought were helpful:

http://bitco.in/forum/threads/gold-collapsing-bitcoin-up.16/page-13#post-416
http://bitco.in/forum/threads/gold-collapsing-bitcoin-up.16/page-13#post-414

[1] @Mengerian also made some plots that illustrate the mining gap in the previous Gold thread on BCT and possibly has insight into what happens as R/T --> 0.

seems to me that @Melbustus original supposition should hold true in a no limit situation, that being that given the ideal scenario where Bitcoin makes the transition from rewards to fees, blocks full of tx fees should provide the same incentives to stick with the crowd of miners so as not to be orphaned.

i still have to listen to the mining "gap" talk but i don't understand why in a world 50 yrs from now where billions of tx's are going off round the clock, there would be points in time where a miner would switch off their hardware to try and avoid the variance in fees. there's a significant cost and effort in doing that, if you've ever mined.

 

[Peter R]

> i don't understand why in a world 50 yrs from now where billions of tx's are going off round the clock, there would be points in time where a miner would switch off their hardware to try and avoid the variance

Imagine that there are very few TXs in mempool for some reason, and then the next block completely clears everything. If the block reward is very small, but the difficulty is high, then it may be more economical to turn your rigs off for a few minutes (assuming shutdown costs are low) while you wait for the mempool to fill up with fee-paying transactions.

I don't see anything negative about this in terms network security, by the way.

 

[cypherdoc]

>Imagine that there are very few TXs in mempool for some reason, and then the next block completely clears everything.

well i guess that's why we need to lift the limit and make sure that all tx's stay on mainchain if at all possible. Bitcoin needs to grow into every corner of the world so as to create a situation where there are always enough tx's available for miners to process 24/7 in every block.

 

[theZerg]

Re SCs: this is why I never saw SCs as a threat and so support them. They could be a great gateway between essentially centralized corporate sponsored financial apps and the decentralized bitcoin. They are still much more secure and honest then for example users balances stored in a sql db.

 

[Justus Ranvier]

Why wouldn't two pools complete say both find a block and both hold on for more profit. someone who will accept a fiew transaction will take the pot as soon as it's profitable.

I'm having trouble parsing this question.

 

[solex]

If there is uncertainty about mining incentives breaking down when inflation approaches zero then this is a risk which can be considered within a threat model. The probability is known, and so is the timescale. However, this is a long while out. We won't see the reward drop below 1 BTC until about 2032. If Bitcoin is thriving then its price will be in 5-figures. If not, then something has gone horribly wrong and mining incentives at zero inflation will be the least of Bitcoiner's concerns.

That article about Namecoin is really interesting. It shows that incentives do push towards a single blockchain. F2 Pool certainly just wants extra income by mining NMC, however, anyone who has a service dependent on it can't take the risk that their whole business can be junked at any time.

It's necessary that Bitcoin tx fees go to miners.

I think this is absolutely right. Going down any other route is playing with fire. It might be different when global computing and bandwidth growth has hit a plateau, then off-chain solutions would be much more important. But while technology improves then the main-chain volume and therefore fees direct to miners should be allowed to grow as well.