Gold collapsing. Bitcoin UP.

[Peter R]

I'm pretty happy that this thread discussing development centralization was allowed to make it to the font page of /r/bitcoin:

https://www.reddit.com/r/Bitcoin/comments/3n3z9b/centralization_in_bitcoin_nodes_mining_development/

I've submitted that chart at least 6 times in the past few months and it's been censored every time except for today.

 

[rocks]

@PeterR great post on /r/bitcoin and congrats on not getting the ban hammer (yet).

Just a small suggestion for future versions. I think we need to stop calling pools miners.

Pools are middlemen who need to constantly convince a diverse collection of independent miners to operated under their banner. Any small misstep and miners leave for more profitable or aligned pools. There are zero switching costs between pools.

Considering that, the chart could show miners as a large number of small entities, and pools as the middle pie chart. It shows that mining is more decentralized than many are saying it is, which is important.

 

[Peter R]

Speaking of proof-of-stake versus proof-of-work, I just noticed this white paper by BitFury (I haven't read it yet):

http://bitfury.com/content/4-white-papers-research/2-proof-of-stake-vs-proof-of-work/pos-vs-pow-1.0.2.pdf

Kudos to BitFury for producing this type of literature.

 

[cypherdoc]

@rocks

i totally agree with that sloppy terminology. that's why i try to use the terms hashers and pools altho i do get sloppy at times.

 

[AdrianX]

It was a group effort and I only played a small part, but thank you! Also, I had nothing to do with the mention in Nature [but I have a feeling I know who did ]

We all only ever play a small part, and thank you too, your small part seems consistent enough to recognize.

Satoshi's PoW plus coinbase mechanism was a brilliant method to start currency distribution and ensure decentralization with no central point of failure. I have spent four years brainstorming if another mechanism could have done the same and have come up with nothing, the insight he brought here was just brilliant.

That said PoW mining on a large scale is wasteful, and sometime after the currency is mostly mined (i.e. fees have taken over rewards) and has had time to distribute throughout the economy, alternatives may be valid to look at.

The entire point of PoW is to fairly distribute votes among individuals in manner that is entirely within the system with no external dependences. For example if everyone mined on their personal computer (and only their personal computer), then what PoW does is it randomly selects an individual to create the next block. This distributed block construction ensures decentralization.

There are other mechanisms to achieve the same effect after coins are mostly mined, and if alternatives can do so without wasting a ton of energy they should be considered at some point (not today).

For example bitcoin could switch to a voting mechanism based on btc held. This only makes sense after wide distribution, but it would achieve the same decentralized block creation mechanism where individuals are randomly selected to create the next block, and bitcoin exits entirely within itself.

It might actually help decentralization since individuals would have less reasons to use a pool. Today since mining electricity costs are close to revenues, miners have to use pools to stabilize revenue. If there are no costs (other than saving you money) then it is easier to solo mine and risk it.

These are questions for another day, but I think it is important to see PoW as a fairer bootstrap mechanism with other mechanisms that could achieve the same ends

@rocks I'm going to plead ignorant today, while the idea for the "coinbase mechanism" has been bouncing around for a while I haven't taken the time to understand it. Can you give me a quick overview so I can re read your post with that understanding? thanks.

They *are* toxic to the health of Bitcoin Core. Wonderful for the health of Bitcoin, though.

I LOL'ed exactly what I was thinking, Gavin by the sounds of that interview posted a little earlier is trying to encourage decentralized control and the Core developers are resisting it trying to take control.

 

[solex]

By employing the finest techniques used in Kremlinology, the micro-analysis of Fedspeak, and Delphic extispicy, we can distill some important information from Bitcoin Core Dev:

http://lists.linuxfoundation.org/pipermail/bitcoin-dev/2015-October/011319.html

In principle, "feature freeze" means that any large code changes will no longer go into 0.12, unless fixing critical bugs.

I'm not keen on postponing 0.12 for such reasons - after the HK workshop I'm sure that it will take some development/testing/review before code makes it into anything. Apart from that there's a good point to decouple consensus changes from Bitcoin Core major releases.

We've seen lot of release date drift due to "this and this change needs to make it in" in the past, that was a major reason to switch to a time-based instead of feature-based release schedule.

We can always do a 0.12.1.

Wladimir

Translation: clearing the decks for implementing a fix to the 1MB, which comes out of the HK conference, in the release after v0.12. (lucky v0.13?)

 

[awemany]

The electricity waste issue will legitimize government attacks against Bitcoin, and provides governments with an easy public excuse to take over the system in order to "do good".

A possible long-term solution to the POW wasted power could be that governments around the world find mutual agreement on limiting hash power concentration but leave small-scale private mining as it is. As in an agreement that would be remotely similar to a mutual (nuclear) arms reduction treaty.

That would actually IMO be a good outcome ecology- and energy-use-wise. Note: Distant future.

Of course, they might also try to spin the ecological argument to implement all kinds of funky business like inflation or transaction censoring - that would not be such a good outcome.

 

[Justus Ranvier]

A possible long-term solution to the POW wasted power could be that governments around the world find mutual agreement on limiting hash power concentration but leave small-scale private mining as it is. As in an agreement that would be remotely similar to a mutual (nuclear) arms reduction treaty.

That would actually IMO be a good outcome ecology- and energy-use-wise. Note: Distant future

There is no plausible long term distant future in which both Bitcoin and government exist simultaneously.

The existence of Bitcoin is not something governments can survive for very long for many reasons, but primarily because it completely bypasses the restriction of possibilities which otherwise keep the incentives of the individual employees aligned with the incentives of the organization.

No organization, of any type, can survive very long if the incentives of the people whose actions are necessary to continue the organization's existence do not promote those actions.

You can talk about a long term future that has Bitcoin in it, or a long term future that has governments in it, but not both.

 

[AdrianX]

A possible long-term solution to the POW wasted power could be that governments around the world find mutual agreement on limiting hash power concentration but leave small-scale private mining as it is. As in an agreement that would be remotely similar to a mutual (nuclear) arms reduction treaty.

That would actually IMO be a good outcome ecology- and energy-use-wise. Note: Distant future.

Of course, they might also try to spin the ecological argument to implement all kinds of funky business like inflation or transaction censoring - that would not be such a good outcome.

You’re using the wrong framework, Bitcoin PoW is not wasted power usage, it's just the result of choosing the preferred way to use it.

Historically the great Austrian writers have been opposed to economic modeling because you can't practically model supply and demand. The reason being peoples demand preference is subjective and changes. People are creatively innovative when it comes to extremes of the supply and demand curve.


Bitcoin has natural price limits, or zones governed by reward halving, and if we had to stretch out of one of those zones (i.e. price shooting up) I would call it environmentally uncomfortable, people would have new choices to make, they would just choose where to spend the available energy. PoW it’s as wasteful as driving to work, or eating candy.


It’s possible to work it out and I did once, but just for example if Bitcoin went to $50,000 tomorrow, and stayed there for some time, the demand on the available energy supply would be so great, we would all make rational value judgments on how to best utilise the available energy, rioting aside as people don’t like change.


None of the energy would be wasted. If price persisted, we would continue making the same choices and we’d learn to be more efficient. Halving is a wild card. Apart from giving us 4 years to adapt and ration the market supply of electricity, the need gets cut in half every 4 years so our energy needs drop quite drastically. My hunch is it delivers a net energy benefit.

 

[lunar]

@Peter R

That chart will look way cooler when some of Jeffs BitSats come online ;-)

 

[Peter R]

Core Dev Doublespeak

Both the "A" version of the statement and the contradictory "B" version of the statement are often used by certain Core Devs even within the same conversation.

1.A. Multiple protocol implementations are impractical because the probability of forking is too high.

1.B. (contradiction) It is not possible to estimate the probability of forking.

...

2.A. Orphan rates are too high to safely permit larger block sizes.

2.B. (contradiction) We cannot rely on orphan rates to drive a fee market in the absence of a block size limit (because orphan rates might be too low).

...

3.A. Bitcoin can defend itself against developers who are no longer aligned with the interests of the community because the community can fork the protocol.

3.B. (contradiction) Attempts to fork the protocol are an attack on Bitcoin (even when supported by a significant portion of the community).

 

[Zarathustra]

There is no plausible long term distant future in which both Bitcoin and government exist simultaneously.

The existence of Bitcoin is not something governments can survive for very long for many reasons, but primarily because it completely bypasses the restriction of possibilities which otherwise keep the incentives of the individual employees aligned with the incentives of the organization.

No organization, of any type, can survive very long if the incentives of the people whose actions are necessary to continue the organization's existence do not promote those actions.

You can talk about a long term future that has Bitcoin in it, or a long term future that has governments in it, but not both.

Yes.

The Bitcoiners are going to totally destroy your society and your "laws"

https://bitcointalk.org/index.php?topic=470593.0

„We are literally in a race between our ability to build and deploy technology, and their ability to build and deploy laws and treaties. Neither side is likely to back down or wise up until it has definitively lost the race.“ John Gilmore

But, it will be the first time in history that a society (patriarchy / homo oeconomicus) can exist without organized violence (anarchy). Graeber believes it will be possible. I doubt it.

 

[Bagatell]

Society will do fine without the state and their laws. Anarchy or bust.

 

[Zarathustra]

Maybe, but i still doubt it, because it would be the first time in history. Anarchy (consensus) never existed in a society. Only communities (Dunbar!) have been based on consensus (for a million years). To go beyond Dunbar (hyper collectives, 10'000 years ago) was never possible without organized violence. A society (interacting with aliens) is not based on consensus, but on power/force and/or supermajority.

 

[awemany]

@Justus Ranvier: I am not yet so sure it will be an either-or. I can imagine many shades of gray between the black and white of (no)bitcoin/(no)gov and don't even see them at both ends of a single scale. Gold exists, too, but we still have states. Gold is arguably more cumbersome to use. Still, it is 'hard money' but it didn't make governments obsolete.

@Zarathustra: I doubt it, too. Just look at 'Bitcoin core', for example - and the social dynamics around it, the (self-) election to some kind of authority. The way it plays out, it doesn't look like too many people see Bitcoin core just as a delegation of their powers - it is rather someone telling them what to do. People have an unavoidable propensity to form social structures which will eventually be government-like.

 

[Zangelbert Bingledack]

Violence can be organized without being centralized; justice can be meted out in a manner that derives from human action without being a product of human design; law can be coercive without being a vehicle for subjugation of some group over another. That is in fact what societal norms, market law (Law Merchant, Law of the High Seas), and societal judgment systems like the Moot were for.

Consider how much of human behavior is pressured not to occur, not by statutes, but by basic shunning and tacit threats of violence (or what can be worse: ostracism) from peers, colleagues, friends, and family. Would is scarier and more life-uprooting, to serve 2 years in prison or to have everyone refuse to trade with you for 2 years? Most people would likely not survive the latter.

Now what is it that dis-enables such ostracism in modern life? Large populations and the ability to move. You don't need reputation to trade, because the state provides its own laws for bad actors. But these are exactly the areas Bitcoin addresses: with ubiquitous decentralized online money, we can have decentralized reputation systems. In the future it will likely get harder and harder to do much of anything without a good reputation in this decentralized system.

Tribes exceeding Dunbar's number (50-200 people) become less and less problematic when we can truly have systems that effect a Hayekian "extended order" to help regulate societal behavior en mass. It will probably feel somewhat oppressive even, though a far cry from state justice.

Keep in mind also that things like Bitcoin are simply state weakeners, not necessarily absolute destroyers. They might wither away all power structures larger than the government of a mid-sized city, but leave the rest intact.

In any case each step toward decentralization of money, reputation (legal action), trade, education, information sources, etc. - all the pillars of state power - will almost by definition weaken the fabric of governments. This is not even getting into Daniel Krawisz's point about Bitcoin's allure for government agents, which could really unweave the very yarn from which state power structures are woven.

For elaboration on what factors affect whether societies will end up centralized or decentralized, and why Bitcoin affects this so much, see the following posts and essays, as well as linked content therein:

https://archive.freecapitalists.org/forums/t/8889.aspx

https://bitcointalk.org/index.php?topic=230416.msg2450191#msg2450191

http://faculty.msb.edu/hasnasj/GTWebSite/AnarchyDraft.pdf

http://www7.tau.ac.il/ojs/index.php/til/article/download/694/653

[Edited to fix links]

 

[sickpig]

this is what I call volatility:

 

[Ivanhoe]

Stock market crashing hard.

 

[cypherdoc]

haha, nothing like cycles.

here's my composite chart. note several interesting things i've brought up in the past. first, note the dump in the /YM Dow futures. once again, i don't know how an avg trader who doesn't trade the futures (or even if they do) can handle a dump like that when they aren't even in the market. this is a distinct advantage of the Bitcoin 24/7 market. second, note how the $DXY (USD) is indeed following the stock mkt, unlike 2008. yes, i don't have enough data to say for sure that this will hold during this crisis but afaic, it's held since Feb this year and is a huge concern if you're US and depending on fleeing to cash. third, note how the TLT is ramping, as i expected. both the TLT and $DXY on the daily charts appear to be making a break for it, today, in determining a longer term direction; in the direction i predicted. fourth, note the ramp in gold. afaic, it's a dead cat bounce. i'm glad i covered my DZZ short b/c i have got my finger on the trigger to reload; just not now:

 

[cypherdoc]

Big Move:


lotsa ugliness in the payroll report

MS leading the way. good for them: