Gold collapsing. Bitcoin UP.

[Zangelbert Bingledack]

There is an important thing I think our camp has been misunderstanding or conflating, and I have a sense that it is a key confusion in the year-long impasse.

Satoshi wrote about two very different kinds of "voting" or "consensus" in the whitepaper:

• Nakamoto (chain-tip) consensus through PoW (consensus on a single chain; determines transaction ordering / the ledger state, given a certain set of block validity rules)
• Fork prediction market consensus (on protocol rules) through PoW (determines which set of block validity rules prevail in the event of controversy; now kind of busted or maybe even defunct due to mining specialization)

The "fork prediction market consensus" is something I think Satoshi was only grasping dimly toward and did not realize the full import of, so he did not differentiate it as explicitly from Nakamoto consensus as he could have. He called it a consensus mechanism, and it really effects consensus via a prediction market, or at least a very similar dynamic. This is what he is referring to in the famous quote from the whitepaper (not Nakamoto consensus):

Nodes can leave and rejoin the network at will, accepting the proof-of-work chain as proof of what happened while they were gone. They vote with their CPU power, expressing their acceptance of valid blocks by working on extending them and rejecting invalid blocks by refusing to work on them. Any needed rules and incentives can be enforced with this consensus mechanism.

When there is no controversy about what the rules for block validity should be, there is no miner vote (or everyone is voting the same way). However, when there is a controversy, under this system users were to vote with their CPU power - but this wasn't to be a democratic vote where it costs nothing to vote and you gain nothing if you vote for the eventual winner. It was to be a prediction market bet, where it costs resources to vote and you gain more money if you vote for the eventual winner (and lose it all if you vote for the loser).

The blue text is effectively betting for a fork, and the red text is betting against it. If you mine on the wrong fork during a controversy, you lose the block reward, just like in a prediction market where if you buy CoreBTC and Core loses, your CoreBTC market value go to zero. Meanwhile if you mine the winning fork, you get many more blocks than usual because other miners are off wasting hashpower on the losing fork.

It's essentially the fork arbitrage I've been harping on for years now, already right there in the whitepaper; except that it doesn't even require trading on exchanges, or futures contracts.

The catch is, mining with CPU doesn't work any more. Mining has become specialized and users don't have this voting mechanism available. While it's true that the miners still have the market incentive to do what users want, this means two different things for the two types of consensus:

• Mining still soundly determines Nakamoto (chain-tip) consensus for transaction ordering, and it is fine to trust the miners to follow incentives not to doublespend. "This is how Bitcoin works." No, actually it's not exactly how it was supposed to work, because users and miners were to be one and the same (or at least closer to that). We can still trust miners to be prudent, but there is the remote possibility of misbehavior, in which case we do have the Big Red Button (changing PoW). In this case, though, it is far-fetched that we would ever have to use it, simply because miners are intensely profit-seeking.
• Mining no longer very soundly determines fork prediction market consensus, for the simple reason that miners are no better at ascertaining the economic community's wishes than anyone else. "Bitcoin already relies on trusting miners to do the right thing." Not exactly! Bitcoin relies on them to avoid doublespending and tx censorship, as it is obviously against their interests, but it does not rely on them to make the best choices regarding blocksize, etc. How can they know? They have the same problem with weeding out sockpuppetry and such as the rest of us. (And history has borne this out: miners are not exactly the most clued-in actors in the space.*)

The solution is to bring back the prediction market in forks that Satoshi originally envisioned. Except since we cannot do it with mining remaining so specialized, so we'll have to do it through trading of fork futures on the exchanges. This also implies to me that this miner/node split is a reason this debate has dragged on for so long at such loggerheads: we are both a bit wrong (OK, Core is a lot wrong ). I can see better how the Extreme Consensus view comes about, by being wrong on this aspect. What is really needed is a prediction market, which in fact famously does produce "extreme consensus" - in most cases (that is, barring the case where the market values a true split).

*Now maybe, in the absence of an effective prediction market in forks, miners would increasingly see the business as one where they have to correctly ascertain users' wishes, so they could start specializing in it more. The trouble is, this is pretty fragile until we get very flexible forking set up, which itself probably requires a prediction market. Without the ability to fork and change PoW at will, miners making an error in their choice would be unnecessarily messy and probably dangerous because it could induce a large portion of users to break away (which is fine if needed, but pointless for something like 1MB vs. 2MB).

Since this might be a pretty hard concept to get across, if this post wasn't clear, I've written two more posts summarizing the idea in slightly different ways, including one to /u/brg444:

 

[awemany]

@Jonathan Vaage : Hi! Regarding Justus, glad to hear this as well. Do you know why he exited reddit so drastically (deleting his account) and is quiet around here?

Greetings!

 

[Jonathan Vaage]

@awemany
Thanks! I've been following this thread for quite some time. Regarding @Justus Ranvier, all I can say is that everything seems to be fine and that he's taking a break from social media to focus on some really important work.

 

[awemany]

@Jonathan Vaage : That's great to hear, he's always been a good voice in the good fight, so it was a bit weird (and somewhat discouraging actually) to see him disappear. All the better to hear this.

 

[majamalu]

This place has the vibe of a Founding Fathers meeting before the Declaration of Independence. But @Zangelbert Bingledack , man... you truly are an indispensable reference in the ongoing struggle for the separation of money and state. I want to thank you for having motivated me to keep understanding, divulging and defending the principles underlying this paradigm shift initiated by Bitcoin. I think your powerful intellectual and moral influence will be remembered for a long time.

 

[jonny1000]

@jonny1000 I think it is better to embrace the concept of a split. If people want to split the chain over any change let them. It is their freedom of choice to do so. Attempting to make this harder seems futile, instead of fighting peoples freedom of choice I think it would be better to embrace this as a positive feature of Bitcoin. If certain people prefer to split the chain by staying behind when the blocksize is increased then good for them, they made their own choice. It is better to just let people do what they want to do, that is how the protocol is designed.

Yes, I have no problem with splitting. As I indicated way back in January 2014, let the market decide. I would love the opportunity to make a few extra basis point on my coins for free, from the irrational "large blocks at any cost, except consensus" traders.

Re: Fork The Blockchain And Block The Seized FBI Coins.
January 27, 2014, 07:37:16 PM
#173
I have seen that many people appear to think forking Bitcoin to seize some coins the FBI hold is a good idea. I think this is an interesting concept, however I am not sure if it is that much of a good idea. However, if you think this is a sensible move which can succeed, I am giving you the opportunity to buy this altcoin now. I will sell 10 of these coins for just 1 BTC. I own over 10 BTC in the current chain and will therefore be granted 10 coins in the new anti-FBI altcoin. I am happy to pre-sell these now, this could be an opportunity for you.

You will be able to multiply your money by 10x for free if the new chain succeeds.

Please bid at the following website
https://www.coingig.com/Shopping/10-Bitcoin-on-any-anti-FBI-fork---Guaranteed-Now---10x-your-money-9308

Now if you want to split that is fine, I would say the following:

• If you want to take the majority of the hashrate with you, do not complain when the majority of the miners decide not to come and do not complain when the existing Bitcoin people hold discussions with the miners.
• If you want to call your new alt Bitcoin, do not complain when the existing private Bitcoin forums decide not to become a platform for your program, that seems entirely reasonable to me, the forums should try to avoid this confusion.
• If you are going to split, please try to do so in a responsible way without causing chaos, why not create a new transaction type.
• Do not complain when Theymos says you are creating an altcoin, when that is exactly what you want to do

[doublepost=1465262981][/doublepost]

i keep telling you that you should put it forward within kore code.

As I have said many times, during the period of Classic being put forward, all I will do is rally behind the existing rules to defend the system. You do not understand this, however I see this as a crucial part of system dynamics.

[doublepost=1465263131][/doublepost]

It was actually introduced as a hard fork it's adoption is empirical data

No, it was introduced as a softfork.
[doublepost=1465263925,1465262868][/doublepost]

Do you realize that every time a soft-fork activate it's like someone is peeling an onion one more time?

No I did not realize that no. Once the version bit is used up it can be recycled again, there can therefore be an infinite number of softforks.

 

[AdrianX]

@jonny1000 here you are again overlooking how the hard fork was adopted and again avoided actually addressing the context of my post, if you want to be semantic it wasn't a consensus rule until it was introduced as a hard fork.

You stand corrected, the obvious empirical data is this consensus rule was introduced as a hard fork.

 

[VeritasSapere]

Yes, I have no problem with splitting. As I indicated way back in January 2014, let the market decide. I would love the opportunity to make a few extra basis point on my coins for free, from the irrational "large blocks at any cost, except consensus" traders.

I am rather certain that if seventy five percent is triggered at this stage you will most certainly will be in the minority, clinging onto the minority chain because you still consider it to be irrational and invalid. Not because you disagree with the change on a technical level but because of ideology, governance by consensus in the literal meaning of the word, which is practically impossible in terms of an effective governance mechanism, it also guarantees stagnation in development, which would make such a chain unable to compete with most of the alternatives.

I imagine that there might still be a small niche group that would still be happy with such an outcome. Which is why I said this earlier:

However if you do want to have a cryptocurrency that has robust rules, then you can choose to stay behind when the rest of the world increases the blocksize limit. Splitting the chain, transforming your chain so that it perfectly reflects your values and ideology. It would be your freedom of choice to do so.

This is an old quote that I think does emphasize this difference in ideology:

In my discussions with various members of Core, I have reached the conclusion that most of them simply disagree with the design of Bitcoin, which by design allows the consensus rules to be changed by a sufficient majority of miners and users, independent of what any group of technocrats wish.

It is important to remember not to attribute malice where ignorance is equally explanatory. All of the devs I engage with are very strong in cryptography and computer science, which may make them less accepting of the fact that at its core, Bitcoin relies in the economic self-interest of the masses to govern consensus, not a group of educated technocrats. As an educated technocrat myself I can understand the sentiment. It would be better if math and only math governed Bitcoin. But that's not how Bitcoin is actually governed.

At the end of the day, if social engineering and developer manipulation can kill Bitcoin, well then we're all betting on the wrong horse.

 

[solex]

Coindesk reporting on a code review meeting for SegWit which gathered in Zürich about 20 Core developers.
Lombrozo sums it up: “is pretty high-stakes”. He wants yet more people testing it.

So, how does that square with the Back-Maxwell mantra that SegWit is a code change comparable to a 2MB hard-fork?

Well the 2MB HF is straight-forward enough that it is a one-man job (thanks Gavin) and doesn't need a massive meeting of developers to review it and ponder all the "edge cases".

Let's sum it up for Lombrozo: "A 2MB HF is pretty low-stakes" because it will work just fine.
It is not like SegWit, hugely complex, and will do what it says on the tin without an explosion of edge cases.

 

[jonny1000]

@jonny1000 here you are again overlooking how the hard fork was adopted and again avoided actually addressing the context of my post, if you want to be semantic it wasn't a consensus rule until it was introduced as a hard fork.

You stand corrected, the obvious empirical data is this consensus rule was introduced as a hard fork.

Introducing the 1MB limit was a softfork, that is a fact. I genuinely do not understand what you are talking about.


"In my discussions with various members of Core, I have reached the conclusion that most of them simply disagree with the design of Bitcoin, which by design allows the consensus rules to be changed by a sufficient majority of miners and users, independent of what any group of technocrats wish."

We consider the scenario of an attacker trying to generate an alternate chain faster than the honest chain. Even if this is accomplished, it does not throw the system open to arbitrary changes, such as creating value out of thin air or taking money that never belonged to the attacker. Nodes are not going to accept an invalid transaction as payment, and honest nodes will never accept a block containing them. An attacker can only try to change one of his own transactions to take back money he recently spent.

As I explained before, clearly there is a strong disagreement over how to eliminate a consensus rule. But surely you guys are not ideologically opposed to changing a rule with consensus, you just think its not necessary, right? Therefore why don't we just stop trying to eliminate the 1MB rule without consensus, shift to 2MB with consensus and then carry on this discussion when we have 2MB blocks?

 

[VeritasSapere]

@jonny1000 A sufficient number of miners is defined by a simple majority, that is how the governance mechanism of Bitcoin which we call "consensus" works. This is how the protocol works on the technical level, assuming that the super majority of miners will be rational and follow the longest chain thereby avoiding a split.

At this point I do not think that a significant amount of people would want to split the chain over increasing the blocksize limit to two megabytes, though by the way that you are talking it sounds like you might justify such an action, I am one of the few people that would respect your right to do so at least.

 

[jonny1000]

@jonny1000 A sufficient number of miners is defined by a simple majority, that is how the governance mechanism of Bitcoin which we call "consensus" works. This is how the protocol works on the technical level, assuming that the super majority of miners will be rational and follow the longest chain thereby avoiding a split.

The whitepaper makes it very clear:

"Even if this is accomplished, it does not throw the system open to arbitrary changes, such as creating value out of thin air or taking money that never belonged to the attacker. Nodes are not going to accept an invalid transaction as payment, and honest nodes will never accept a block containing them"

A simple majority of miners cannot eliminate an existing consensus rule. Do you run a Classic node and do you own any Bitcoin? If you do you will understand that your Classic node will not recognize a transaction that steals your coins and gives it to the miners, even if that is the longest chain. You may not like this, but this is how your node actually works in the real world.

At this point I do not think that a significant amount of people would want to split the chain over increasing the blocksize limit to two megabytes

If Classic activates successfully, I will exit the ecosystem, since I would not consider the system robust enough for the long term.

Let my explain my reasoning, based on the assumption Bitcoin succeeds:

1. New people will join the system
2. The new people will try to change the 21M cap
3. The new people will at some point have a majority of the hashrate and a majority of funds
4. The system needs to be robust enough to prevent an elimination of a rule against the desire of any significant minority, even if the majority want the consensus rule eliminated.
5. I think Bitcoin does have this property and is robust enough.
6. If Classic wins I will have been proven wrong, I will believe the 21M cap will eventually be breached and I will leave the system, wishing the rest of you the best of luck.

 

[VeritasSapere]

@jonny1000 You are falsely equating a change in blocksize with miners stealing coins. The difference being is that the users, who still choose what software to run are more likely to agree with the former and almost guaranteed to not be convinced to agree to the later, having their own coins stolen.

 

[jonny1000]

The difference being is that the users, who still choose what software to run are more likely to agree with the former and almost guaranteed to not be convinced to agree to the later

Right, so you agree 51% of miners cannot change the rules? Miners need the users to be "convinced to agree", that is all I am saying. Therefore this is not "Nakamoto consensus", but something different. Or as Satoshi brilliantly put it, the longest chain rule "does not throw the system open to arbitrary changes"

 

[VeritasSapere]

@jonny1000 Correct, it is the "economic majority" that rules Bitcoin, however it is the miners that actually have the vote in proxy for this "economic majority". Which is determined by a simple majority vote of hashing power. Individual users even have the freedom of choice on top of this governance mechanism, they have the freedom to not go along with any rule changes regardless of "consensus" or what the majority wants.

Even a small minority of miners can split off from the main chain, and operate under their own rules. You are attempting to find a set of hard rules within the protocol that can somehow be considered sacrosanct. I am telling you such rules do not exist and Bitcoin is governed by the economic self interest of the masses. Not by some set of immutable laws as if Moses himself came down from mount Sinai with commandments etched in stone.

 

[jonny1000]

@jonny1000 Correct, it is the "economic majority" that rules Bitcoin, however it is the miners that actually have the vote in proxy for this "economic majority". Which is determined by a simple majority vote of hashing power. Individual users even have the freedom of choice on top of this governance mechanism, they have the freedom to not go along with any rule changes regardless of "consensus" or what the majority wants.

Ok sure. I agree with this apart from "Which is determined by a simple majority vote of hashing power", only in the sense that I do not know what this means. I am looking for 95% a a signal, you are looking for 51%, so what? In this case its only 5% anyway.

In this case Core has the strong economic majority and Classic has lost. Core has:

• 95% of the hashrate
• 88% of the nodes
• The strong majority in any other metric you can name

Therefore what are you complaining about? Why don't you accept defeat, listen to the economic majority and then get to 2MB with the 95% miner threshold and 6 month grace period that the economic majority want?
[doublepost=1465269532][/doublepost]

You are attempting to find a set of hard rules within the protocol that can somehow be considered sacrosanct. I am telling you such rules do not exist

I am not looking for sacrosant rules. I want to, for example, get rid of the 1MB limit.

 

[VeritasSapere]

Accept defeat? You are treating this like some kind of war where the other side needs to be destroyed, we are not going away, you will only be fighting an eternal war forever attempting to squash dissent but never succeeding in reaching your mythical "consensus".

It is not about Core vs Classic. It is about on chain scaling vs off chain scaling. Or more limited it is about a one megabyte blocksize vs a two megabyte blocksize. Stop making this about sides and who is in control. What is important here is the code that we choose to run, not who made it.

Also if it is the intention of Core is to release a two megabyte blocksize hardfork with a 95% percent acceptance threshold with a six months grace period. How come they have not released it now? Should we not start the grace period now? This is why I find this claim by Core to be so disingenuous, I will believe it and possibly even support it if they ever release the code. I do not accept that we have to trust this group of people with the destiny of Bitcoin, without them actually releasing the code it is just based on trust, especially considering the contradictory statements coming out of that camp and the veto powers they possess over each other in that repository. Until it has actually been coded and released it is just vaporware and we already have real alternatives that can increase the blocksize today, we do not need a single development team to decide over the future of Bitcoin. Just choose the code that best expresses your will.

You should be running nodes that support an increased blocksize @jonny1000 if that is what you want. You should go to Core and ask them to include the code for this type of hard fork in Core, ask them for permission and if your ideology then compels you to still run their nodes even after they refuse then you should re examine your ideology and possibly start to side with people that do want to see the blocksize increased. I definitely see room for a new implementation that would activate at 95% with a six months grace period, you should release it if that is what you think the economic majority wants, since I am fairly confident Core will not release it no matter how nicely you ask them, they do not want to give people this freedom of choice.

I very much expect the blocksize to be increased without the consent of Core. Core is continuing to lose support from the economic majority, it is becoming increasingly obvious to most people what is happening here and the narrative is gradually changing in support for increasing the blocksize limit regardless of what Core dictates.

 

[jonny1000]

Accept defeat? You are treating this like some kind of war where the other side needs to be destroyed

You are trying to capture the majority of the hashrate on your side, therefore there is only one winner and its a war in that sense. I am trying to make sure your attempt is defeated. I am prepared to take all necessary measures to ensure you are defeated, even if it means the price falls to zero.

we are not going away, you will only be fighting an eternal war forever attempting to squash dissent but never succeeding in reaching your mythical "consensus"

Well then we may have 1MB forever then, due to your irrational refusal to shift to 2MB with consensus. That is probably fine, Core already has a roadmap of an effective 10x on-chain capacity increase with the 1MB limit anyway. I am sure people will think of more ideas in the future, since there is quite a lot you can do with softforks. Then LN will come (off chain with the chain used to settle disputes) and we will have near infinite capacity.

And besides, Classic is very close to falling to insignificant levels anyway. It currently has 5% miner support, I am looking for this to fall to the 2% to 3% level and then it could be classified as insignificant, clearing the way for Core to propose a HF to 2MB.

It is about on chain scaling vs off chain scaling

Core are doing both on-chain scaling and and on-chain capacity increases. For example with on-chain capacity increases:

• SegWit
• Schnorr signatures
• Aggregated signatures

The capacity enhancements of these combined is far greater than a move to 2MB.

Stop spreading false, divisive and counterproductive rumors, which indicate Core is not doing on chain capacity increases.

 

[Roger_Murdock]

A simple majority of miners cannot eliminate an existing consensus rule.

It depends on the rule. The first rule of Bitcoin is that there are no rules. Or rather, everyone gets to decide for themselves what the "rules" are by deciding which version of software to run and which version of the ledger to value. Of course, as a practical matter, the overwhelming importance of network effects strongly incentivizes people to reach universal (or at least near-universal) agreement on one set of rules and one official version of the ledger. But the agreed-upon "rules" are, by Bitcoin's very nature, always subject to change. Or as I wrote previously, "there is never any 'real' (i.e., objective / hard-and-fast) protocol, only provisional and shifting Schelling points." But not all Schelling points are created equal, and the potential always exists for two different Schelling points to come into conflict, at which point you get to see which is stronger.

The Schelling point "the 'valid' Bitcoin chain is the longest (highest-PoW) chain, i.e. the chain that has the largest amount of hash power dedicated to extending it" is a very powerful Schelling point. But the Schelling point regarding Bitcoin's total supply and distribution schedule is even stronger (i.e., "the 'valid' chain creates a total supply of 21M coins via a block reward that is initially set at 50 BTC / block and is halved every 210,000 blocks"). So if a majority of the hash power suddenly started mining blocks with 1,000 BTC rewards (creating a conflict between the first and second Schelling points), the rest of the network would correctly perceive that as an attack and thus would not recognize the legitimacy of the longest chain.

On the other hand, the current Schelling point that says that "the 'valid' chain does not include blocks larger than 1-MB" is a very weak one. It was explicitly intended to be temporary and, even more importantly, it undermines Bitcoin's monetary usefulness by reducing Bitcoin's transactional efficiency. (This is in stark contrast to the 21-M supply cap which enhances, and indeed is crucial to, Bitcoin's monetary usefulness by ensuring its reliable scarcity.) So if a majority of the network's hash power (even a simple majority) were to begin to mine blocks with a size up to let's say 2MB, it's a no-brainer which Schelling point would win.

Related reading:

• two very different uses of the word "consensus"
  
• the insanity of the "strong consensus" position
• the subjectivity of Bitcoin "validity"
• who controls Bitcoin - the "economic majority" vs. the "mining majority"
• acknowledging possible pragmatic reasons for a "supermajority" fork trigger (even though 95% is still crazy excessive)

 

[cypherdoc]

@Roger_Murdock Home Run Deep Center Field.