Gold collapsing. Bitcoin UP.

[bluemoon]

@cypherdoc

If it's not Stockholm Syndrome it's some other form of capture. Bribery perhaps? Or political coercion?

Some of them have complained about Core quite bitterly from time to time, but haven't actually broken away.

The willingness of the miners to hobble bitcoin ranks along with 'who is Satoshi?' as one of the great bitcoin puzzles.

 

[Inca]

The longer that those economic buffoons masquerading as 'Core' developers put off giving the market and ecosystem what it requires the worse the fallout will be.

There are now easy routes for capital to leech from btc to other chains. Meanwhile blocks are filling up and so far we have absolutely no actual scaling implemented and it is nearly June 2016.

If I were a hedge fund a possible route to riches would be to wait until just at the point of the Halving to spam attack the basically full already blockspace and then dump tens of thousands of coins on the exchanges whilst being short BTC and long ETH. Buying up large % of hash power in the weeks approaching the halving then also turning it off as the halving occurs would also disrupt the network..

When is the ecosystem going to wake up and move past this disaster. It is like a watching a wreck in slow motion because of something on the tracks which will obviously derail the oncoming train - visible to horrified onlookers while the train driver is oblivious.

 

[cypherdoc]

The hash rate matters in a race condition. Getting your block to the miners with more hash power first is critical to win the race and not become the orphan.

but if i'm a small miner who taps into the RL, i can get my block to another large miner just as fast as a large miner can. IOW, as @Dusty says, hashing speed is different and separate from block propagation speed.

Higher orphan risk probably will not be a significant deterrent to larger blocks due to Matt’s relay network and other technologies like thin blocks. If this technology proves ineffective or insufficient, then relying on orphan risk as a tool to keep blocks small and drive the fee market is a terrible idea for the following reasons:

i think you're concentrating too much of your argument against bigger limits on @Peter R's orphaning argument.

there are other reasons for all miners to restrict the size of their blocks. namely profitability. we're already seeing miners unilaterally decide that 0 fee tx's won't be included in blocks today. is this hard coded into the protocol? no. it's self determined. similarly, some miners are engaging in SPV mining which pushes around 0-1 tx sized blocks. also, self determined. these are free market decisions which auto regulate the transmission of uberblocks that you so fear and constantly FUD about.
[doublepost=1463591940][/doublepost]great news for Trezor:

https://medium.com/@satoshilabs/ethical-hacker-and-bitcoin-hero-johoe-joins-satoshilabs-as-trezor-cryptographer-36c9a6b10d52#.fv1ky6je7

 

[Peter R]

"The hash rate matters in a race condition. Getting your block to the miners with more hash power first is critical to win the race and not become the orphan." -- @yrral86

"but if i'm a small miner who taps into the RL, i can get my block to another large miner just as fast as a large miner can. IOW, as @Dusty says, hashing speed is different and separate from block propagation speed." -- @cypherdoc

Yes small miners and large miners can propagate their blocks just as fast like you said, cypherdoc. The advantage comes to large miners every time they mine two blocks in a row.

If the average orphaning rate is 1%, then this means that an average block is taking about 6 seconds to propagate (6 sec / 600 sec = 0.01).

This means that a miner's hashing power is being put to good use for 594 sec and wasted for 6 sec. In other words, the miner is 99% efficient at deploying his hash power.

If this miner is a small miner, then that's the end of the story. A small miner essentially never mines two blocks in a row, so he always loses 6 seconds for every block he solved.

A large miner is different. Every once and a while the large miner will solve two blocks in a row. For that second block, the miner didn't have to wait the 6 seconds. In other words, his hash power was deployed 100% efficiently for that block.

A miner who controls 10% of the hash rate will mine two blocks in a row 10% of the time, and so he is 99.1% efficient (assuming 1% orphan rates):

0.9 x 99% + 0.1 * 100% = 99.1%
​

A miner who controls 30% of the hash rate will mine two blocks in a row 30% of the time, and so he is 99.3% efficient (assuming 1% orphan rates):

0.7 x 99% + 0.3 * 100% = 99.3%​

In other words, a large miner can deploy his hash power a fraction of a percent more efficiently than a small miner, given today's orphan rates between 1 and 2%. The advantage also increases as orphan rates increase (but historically, orphan rates have been fairly constant).

I acknowledge that this theoretical advantage exists, but I see it as noise compared to other terms in the miner's profitability equation. With ASICBoost, some miners will be 20% more efficient, which dwarfs the fraction-of-a-percent advantage we're talking about here.

 

[AdrianX]

On another topic, I remember when I first released my transaction fee market paper, Maxwell and Co. said that orphaning wasn't a deterrent against larger blocks because miners use Corallo's Relay Network and thus don't suffer block-size-dependent orphaning risk (and then later they said that we can't have bigger blocks because orphaning risk would be too high blah blah blah but let's ignore that contradiction for now).

Blockchain.info keeps tabs on orphaned blocks, and I wrote a script to scrape their site and import that raw data into Mathematica. The data goes back about two years and only appears to be missing a gap from last summer.

If the theory that larger blocks actually are more likely to be orphaned than small blocks is true, then hopefully there would be evidence of this in real orphan data. The figure below shows that indeed this does appear to be the case. Orphaned blocks are consistently larger (on average) than their neighbouring main-chain counterparts.

Miners incur a real cost by producing extra block space; the supply curve for block space is nonzero and has a positive slope (i.e., it behaves like a normal commodity).

that's brilliant work @Peter R one would think its intuitive, but pulling out the empirical evidence is extremely valuable.

Now if you're a crony Core Dev., the new change is to find a reason to justify avoiding empirical evidence, I predict a new wave of personal attacks flowed by the new meme that economics is irrelevant to the computer science in relation to Bitcoin the value exchange protocol.

 

[cypherdoc]

@Peter R

yes, Gavin calculated this out a long time ago:

http://gavinandresen.ninja/are-bigger-blocks-better-for-bigger-miners

 

[AdrianX]

Higher orphan risk probably will not be a significant deterrent to larger blocks due to Matt’s relay network and other technologies like thin blocks. If this technology proves ineffective or insufficient, then relying on orphan risk as a tool to keep blocks small and drive the fee market is a terrible idea for the following reasons:

Oh the irony, Matt’s relay network, is not Bitcoin, (the Core developers should not be using there resources to fund it as a Core project)

Matt’s relay network is a fundamental attack on the intensive design that makes bitcoin viable. I don't blame miners for using it, but its like Heroin, you get a one time profit gain, and the your addicted to it for life.

Core developers should be focusing on tech like Xthin, and implementing ways to make Matt’s relay network obsolete.
[doublepost=1463594872][/doublepost]

"The proportion of the network to relay a new block is always everybody except the one discovering the block."

Yes, that is what I mean.


* If a pool has 50% of the hashrate they only need to propagate to 50%

* If a pool has 1% of the hashrate they need to propagate to 99%

99% > > 50%

@jonny1000 this has been discussed here at length, while its not a 1:1 correlation it's largely irrelevant if you followed all the discussion around here:
https://bitco.in/forum/threads/gold-collapsing-bitcoin-up.16/page-494#post-18089

 

[cypherdoc]

lol, i'm always surprised how fast the analysts can read the FOMC Meeting Release Notes which were theoretically released at 11:00 AM. the dump started to the second:

 

[AdrianX]

given that the RL, Xthins, SPV mining, equal internet access, and headers first mining presumably levels the playing field btwn large and small miners and especially given that all miners, large or small, can construct block sizes according to their own needs (transmission efficiency) and to defend against spam, your presumption that big blocks (higher limit or even no limit) lead to catastrophic problems with the network is invalid.

yes another big irony, how Gavin is attacked for headers first mining - effectively achieving the same result as the Relay Network but with the benefit of making Matt's centralized relay network attack obsolete.

When you look at it in conjunction with his other proposals like BitPay's Flexible block size it's a great idea that keeps the incentive system intact allowing a maximum of 30 seconds to validate a block, which effectively allows block size to scale according to technological developments with a fixed parameter unlike the 1MB limit.

and to highlight the irony, Core Champion the Relay network despite the damage it is doing to Bitcoin, and demonize @Gavin Andresen for fixing it with a win win solution.

 

[cypherdoc]

hmm, it's comforting (to me) that pm's and stocks appear to be moving together now, which is why i have the DZZ and DXD positions that i do. that'd be deflation as i have been arguing. but what may be surprising here is that the $DXY is moving up and the TLT down, which is the opposite of what i was expecting long term. dollar UP, everything else DOWN? this bears watching.
[doublepost=1463595974][/doublepost]this is actually good news:

http://news.utexas.edu/2016/05/16/computer-science-advance-could-improve-cybersecurity

 

[albin]

I think a factor that underlies the rhetoric about orphan rates and miner profitability is that Core devs (especially Todd) like to routinely confuse the business models of actual mining farms versus pools.

Pools are the ones likely to be operating at razor-thin margins. Other than ghash.io, I would argue that pretty much every monstrously big public pool I can think of has gotten that way because pool members like PPS. For example, BTCGuild was the biggest pool in the world for quite a while offering PPS at a staggering I believe 6% (maybe 8%?) fee! F2pool is PPS right now at 4%.

It's impossible to do PPS without either a big pool or sitting on a large amount of reserve liquidity, because streches of poor luck can drain the pool (for example, BTCGuild was rocked hard by a supposedly inadvertent block withholding attack in spring 2014 which most likely lead to discontinuing PPS and a collapse in the userbase, and eventual closing).

So the moral of the story is that if F2Pool can't tolerate losing a single-digit percentage more orphan races, then maybe Peter Todd should wonder if his rhetoric is simply propping up a business model of public pool centralization that rightly should go out of business.

 

[cypherdoc]

hey @Inca

pretty basic usage of SHA256 but interesting nonetheless:

Doctors use Bitcoin tech to improve transparency in clinical trial research

http://www.eurekalert.org/pub_releases/2016-05/fo1-dub051116.php

 

[Mengerian]

However I am very strongly opposed to a hardfork without strong consensus. To me (and I believe the economic majority) this issue is much much more important than the blocksize issue and goes right to the core of Bitcoins unique value proposition. It is clear you don't agree, all I ask is that you respect those who do have this view.

Agreed on the desirability of having respectful discussion with those who have differing views.

Regarding your opposition to "contentious" hard forks, it seems to me this stance can put you in a difficult position. You can easily end up either a) held hostage by a vocal minority who oppose your proposal, or b) worrying about trying to control the actions of others who are trying to create hard fork.

It is better to accept the fact that there is nothing stopping anyone from creating a hard fork at any time. With a few changes to Bitcoin Core software, I could create "Mengercoin" which would branch from the Bitcoin ledger with some change to the transaction format making it incompatible with the current network. (for example concatenate a magic number to the transaction data during the signing process). Everyone holding bitcoin would also hold Mengercoin. It is likely, however, that no one would notice and the coin's value would be roughly zero.

At the end of the day, it is economic incentives that push the Bitcoin network towards consensus. The only way a hard fork could persist is if a significant number of people are willing to invest in it. And that will only happen if they see it as having some value that the other side of the hard fork is not providing.

I actually think that making it easier to create hard forks would increase people's confidence in Bitcoin's consensus stability, and reduce worries about "contentious" hard forks. The market will never embrace a frivolous hard fork, or one that betrays Bitcoin's fundamental sound money values. Hard fork proponents could promote their proposals using @Zangelbert Bingledack's fork arbitrage on exchanges. Most would likely fail, with only those offering clear and significant value enhancement, and very low risk, having a chance at prevailing

 

[Inca]

Yep a simple timestamping proof using a blockchain and a hash of a trial protocol..

I am on the lookout for a health blockchain startup idea and if you have any thoughts PM me..

 

[cypherdoc]

this too is actually good news:

https://www.wired.com/2016/05/allo-duo-google-finally-encrypts-conversations-end-end/

 

[Zangelbert Bingledack]

How high can the Ethereum pump go? Would it mean anything? Considering Litecoin got to, what, 15% of Bitcoin's market cap (or 20%?) while being a very elementary kind of fork, ETH could go a lot higher - temporarily - regardless of its merits, simply because it is a lot harder to dismiss due to it being so complicated and high-falutin.

Of course it could crash and burn at any time, and I don't expect it to amount to anything in the long run. My point is we should prepare for the arguments if it temporarily approaches or exceeds Bitcoin's market cap. Such a thing is quite possible in the investing world. Manias can get huge.

On top of the hype machine behind ETH, the second-to-Bitcoin altcoin is always going to be used for pumping schemes, because that's the best place for Bitcoin whales to play since it has the most liquidity outside Bitcoin, as TheKoziTwo explained:

https://bitcointalk.org/index.php?topic=624223.msg7662665#msg7662665

 

[cypherdoc]

hey @Zarathustra you'll like this one:

... Saudi Arabia can also add liquidity worries which just spilled out into the open, because Bloomberg reported moments ago, Saudi Arabia has told banks it is considering paying some outstanding bills to contractors with government-issued bonds, citing people with knowledge of matter say.

http://www.zerohedge.com/news/2016-05-18/saudi-arabia-admits-full-blown-liquidity-crisis-will-pay-government-contractors-ious

 

[jonny1000]

If the average orphaning rate is 1%, then this means that an average block is taking about 6 seconds to propagate (6 sec / 600 sec = 0.01).

This means that a miner's hashing power is being put to good use for 594 sec and wasted for 6 sec. In other words, the miner is 99% efficient at deploying his hash power.

If this miner is a small miner, then that's the end of the story. A small miner essentially never mines two blocks in a row, so he always loses 6 seconds for every block he solved.

A large miner is different. Every once and a while the large miner will solve two blocks in a row. For that second block, the miner didn't have to wait the 6 seconds. In other words, his hash power was deployed 100% efficiently for that block.

A miner who controls 10% of the hash rate will mine two blocks in a row 10% of the time, and so he is 99.1% efficient (assuming 1% orphan rates):

0.9 x 99% + 0.1 * 100% = 99.1%
​

A miner who controls 30% of the hash rate will mine two blocks in a row 30% of the time, and so he is 99.3% efficient (assuming 1% orphan rates):

0.7 x 99% + 0.3 * 100% = 99.3%​

This is not true. As I keep explaining, your theory is to allow supply to be driven by this orphan risk. The economic cost of the orphan risk would therefore be almost the same as fee revenue. The "advantage" is not 0.2% but could be 20%
[doublepost=1463620228][/doublepost]

Yes small miners and large miners can propagate their blocks just as fast like you said, cypherdoc.

You keep contradicting your initial point. Yes we all agree that miners will probably be able to propagate their blocks just fine. The point is your theory rests on the assumption that this is not the case and therefore orphan risk can drive fees. Please stop making this mistake again and again.
[doublepost=1463620337][/doublepost]

given that the RL, Xthins, SPV mining, equal internet access, and headers first mining presumably levels the playing field btwn large and small miners and especially given that all miners, large or small, can construct block sizes according to their own needs (transmission efficiency) and to defend against spam, your presumption that big blocks (higher limit or even no limit) lead to catastrophic problems with the network is invalid.

That is not my point. My point is that if larger blocks do cause propagation issues (a necessary condition for Peter's fee theory) then we have large issues in the network.
[doublepost=1463620581][/doublepost]

I don't understand what is meant by wasted work. Hashing is by design "wasted" work. Orphans resulting in additional waste would only seem to increase the effective difficulty, which auto-adjusts anyway.

If the argument is that this burden falls disproportionately on smaller or less connected miners, that is a separate argument that doesn't seem to warrant using the term "wasted work."

Yes "wasted work" and the disproportionate impact on smaller miners are separate things.

Wasted work is a significant problem, as I explained to Peter a while ago. Wasted work makes the network less secure and easier to attack. (less equilibrium difficulty level)
[doublepost=1463621267,1463620103][/doublepost]

Regarding your opposition to "contentious" hard forks, it seems to me this stance can put you in a difficult position. You can easily end up either a) held hostage by a vocal minority who oppose your proposal, or b) worrying about trying to control the actions of others who are trying to create hard fork.

a) That is what strong consensus means, if a significant minority is not happy then we do not go ahead. That is veto power. This power ensures that other people's money cant be changed without their consent. That is what makes Bitcoin unique. This characteristic must be defended at all costs as it makes bitcoin viable money.

b) I am not worrying about trying to control anyone. It is just that in the event of attackers trying to hardfork without consensus, the incentives are structured such that the economic majority rallys behind the existing rules to defeat the attack. Even those that agree with the rule change (like me) rally behind the existing rules to protect the system. This looks like it is working and Classic is being defeated. If the defeat against Classic is resounding it should deter further attacks.

 

[chriswilmer]

For all of the analysis that goes on in this thread, I am surprised there isn't more speculation on why the miners are running Core right now. I still haven't seen a compelling explanation for this.

@Zangelbert Bingledack what do you think? Just widespread (and temporary) irrational behavior? Rational short term interest behavior (but even so, how?)? Some kind of law enforcement based arm twisting?

 

[Melbustus]

How high can the Ethereum pump go? Would it mean anything? Considering Litecoin got to, what, 15% of Bitcoin's market cap (or 20%?) while being a very elementary kind of fork, ETH could go a lot higher - temporarily - regardless of its merits, simply because it is a lot harder to dismiss due to it being so complicated and high-falutin.

Of course it could crash and burn at any time, and I don't expect it to amount to anything in the long run. My point is we should prepare for the arguments if it temporarily approaches or exceeds Bitcoin's market cap. Such a thing is quite possible in the investing world. Manias can get huge.

On top of the hype machine behind ETH, the second-to-Bitcoin altcoin is always going to be used for pumping schemes, because that's the best place for Bitcoin whales to play since it has the most liquidity outside Bitcoin, as TheKoziTwo explained:

https://bitcointalk.org/index.php?topic=624223.msg7662665#msg7662665

I agree that ETH has the potential for a massive bubble, given the reasons you cite. And *especially* given Core Dev crippling Bitcoin. A fact of which ETH holders/bulls/pumpers are plenty aware:


Some further thoughts on ETH:

1) As you allude, no alt coin has exceeded about 15-20% of Bitcoin's market-cap (IIRC), even during manias. So perhaps that means ETH could get to 20-25% while still being in the kinda "normal" alt-mania zone. But given your points above, plus some others (see below), I wouldn't be all that surprised if ETH is the first coin to crack that barrier (also wouldn't be surprised if it crashes). Next stable point would probably be right around Bitcoin's market-cap, and then I don't know. All just gut feel on my part, of course.

2) In any event, I think we should acknowledge that there is indeed fundamental merit to what Ethereum is trying to do. It's always been one of the very few coins I found at all interesting, and my biggest criticism since it was first described in 2014 was that it would be a potential nightmare from a security and predictability standpoint, and thus unfit as sound-money. I still think that's the case. But that is NOT the same as saying that it's just a fancier useless alt like litecoin et al. Remember, Satoshi *wanted* to build Bitcoin with a much richer scripting lang and Hal (also Ray Dillinger, I think) talked him into constraining it for security reasons. That was indeed the right call, in my opinion, especially at the time when the core consensus/pow ideas were untested, but that doesn't mean there isn't merit to the notion of a stateful Turing complete chain. Sound money to me is still the most powerful (and high-market-cap-generating) permissionless-blockchain application, by far, in my view, but I also think it's folly to straight-up dismiss Ethereum.

3) Ethereum has a real developer community around it. I have not seen this with any other coin except Bitcoin. This also makes it a lot harder to dismiss ETH as a temporary phenomenon.