Gold collapsing. Bitcoin UP.

[Zangelbert Bingledack]

@lunar

My thought is that so many people will jump at the opportunity to "double their coins" at the start of futures trading that it will be a sensation of sorts. From the example of 8 BTC in Huobi above, if you believed the spinoff (say the Classic fork) would definitely fail, if you got in fast enough you could probably sell those 8 ClassicBTC for 8 more CoreBTC, walking away with 16 CoreBTC come September 1st. Or if you believe in Classic, vice versa. Seems there are plenty of diehards on both sides who would be champing at the bit for this "easy money."

 

[freetrader]

@Zangelbert Bingledack :
I was not in Bitcoin during the time of MtGox. I gather there were "GoxBTC", but these were more fractional reserve than a spin-off, right?

I do think an exchange that offered such fork futures would have to do quite a bit of education to demonstrate how the concept differs, as users may have negative associations from past exchanges.

And also, there'd be a whole bunch of people who invariably try to withdraw their "ClassicBTC" to their Core wallets. Classic is not a good example in this case because it is different from a non-elective spin-off in that it aims to retain (woo over) the P2P network and not form its own by splitting off hard.

Whereas a true "SpinoffBTC" would require users to run their own wallets supporting the new coin in order to receive the withdrawals.

If users accidentally withdrew to a Core-based address, they would have to sweep that key into their "SpinoffBTC" wallet. Quite ugly to deal with in terms of customer support, but I don't see how to avoid it really except if the spinoff introduced a new address format to be incompatible with the old chain.
And having to introduce a new address format for each new spin-off would probably make this mechanism non-viable in the long run.

 

[jonny1000]

Okaaay, Classic could certainly have used something other than a rolling window for its activation trigger ... but that doesn't make your statement that "25% miner opposition is locked-in" when Classic activates any less nonsensical

Yes it does, if there was a voting window, its possible Classic could get 95% support in the window.
[doublepost=1465472083][/doublepost]

Because the underlying mathematical nature of the system is *precisely* that a simple majority can change it. If one had to pick the *key* operational rule that enforces consensus, it's the "longest chain rule"; ie, the fact that miners *assume* everyone else is working off of the highest-PoW chain. This is what resolves forks (which happen several times a day with orphans), and enables the very idea of truly distributed consensus.

I guess all I can do is quote the whitepaper:

"We consider the scenario of an attacker trying to generate an alternate chain faster than the honestchain. Even if this is accomplished, it does not throw the system open to arbitrary changes"

I am not sure how it could be any clearer...

 

[Zangelbert Bingledack]

@freetrader

It may be messy in the case of a persistent split, but for a simple blocksize increase like this I think it's extremely unlikely that both sides would retain value. One would prevail and the switchover would be no harder than it would otherwise be. It's even possible Huobi could have a policy where they roll back all trades if there is not definitive winner after a certain time period, thus avoiding this ever causing a split.

 

[freetrader]

@Zangelbert Bingledack

... a simple blocksize increase like this

The 2MB proposed by Classic seems simple on the face of it [1]. However, it requires miner participation, and as we have seen that turns out not to be simple. Because it's not a spin-off. I don't see how an exchange could make good on promises to deliver "ClassicBTC", even if there was a definitive "winner" after a while. The exchange has no power to force miners to mine Classic blocks or network nodes to adopt Classic block size rules after some time X. It can only hope that the rest of the ecosystem notices its market and transforms itself accordingly (Butterfly effect?). If I'm wrong or inadequately understanding the futures market concept, please correct me.

For reasons given, I think the only type of spin-offs that can really lead to change and for which such a futures market would be attractive are non-elective spin-offs tied to an actual deadline (like the Sept 1 in your example).

There are finer points to consider with those - i.e. even if they are merely trying to break free of a simple rule like the 1MB limit, they are technically not so simple to get right (I realize this might be covered under your "no harder than it would otherwise be" clause).
To elaborate a little, a POW-preserving spin-off would find itself under attack upon its foray onto the Bitcoin network, interfering with its capability to deliver spin-off coins. A POW-changing spin-off would be required to increase safety from attack by the existing mining powers, but would require a lot more adaptation by downstream software systems.

At the minimum, spin-offs need clean separation from other chains in terms of their transactions, to enable fork arbitrage at all. There's a lot of devil in those details.

[1] http://gavinandresen.ninja/a-guided-tour-of-the-2mb-fork

 

[sickpig]

The basic game theory has changed, since the separation of mining from nodes and hence nodes from voting. This has led to a division of voting power and signalling - Miners without a good read on the market and the economic majority without a good voice. The byzantine generals solution seems to require a caveat as nodes can no longer vote with their CPU power.

The economic majority and the mining power must be a reciprocally altruistic pair. Whereas before it was "If a greedy attacker is able to assemble more CPU power than all the honest nodes" We must say "If a greedy attacker is able to assemble more ASIC and economic power combined than all the dishonest power" Satoshi then went on the say that 'an attacker ought to find it more profitable to play by the rules'. This statement no longer holds true.

I couldn't agree with you more.

 

[yrral86]

@Zangelbert Bingledack :
I was not in Bitcoin during the time of MtGox. I gather there were "GoxBTC", but these were more fractional reserve than a spin-off, right?

I do think an exchange that offered such fork futures would have to do quite a bit of education to demonstrate how the concept differs, as users may have negative associations from past exchanges.

And also, there'd be a whole bunch of people who invariably try to withdraw their "ClassicBTC" to their Core wallets. Classic is not a good example in this case because it is different from a non-elective spin-off in that it aims to retain (woo over) the P2P network and not form its own by splitting off hard.

Whereas a true "SpinoffBTC" would require users to run their own wallets supporting the new coin in order to receive the withdrawals.

If users accidentally withdrew to a Core-based address, they would have to sweep that key into their "SpinoffBTC" wallet. Quite ugly to deal with in terms of customer support, but I don't see how to avoid it really except if the spinoff introduced a new address format to be incompatible with the old chain.
And having to introduce a new address format for each new spin-off would probably make this mechanism non-viable in the long run.

As long as we have subsidy and the exchange can get their hands on some post split subsidy they can pass the coins through that address and then send a transaction that is only valid on one chain. However, there-in lies a confounding factor: post-split subsidy coins (and coins that have been disambiguated via this mechanism) would be at a premium during the transition phase.

Of course, one of the sides would probably go to zero before the actual split, so it might be very easy to handle.

 

[cypherdoc]

I couldn't agree with you more.

one thing important to consider is that we see an impending to-be-publicly-owned major mining pool, Bitmain, beginning to sell single units out into the individual hasher market place. like i've said all along, this is a good thing. it seems to me that this was probably decided with the assistance of the new investors/shareholders of the company as a long term strategy. this, to me, represents the first step in the professionalization of mining. it only makes sense given the most likely razor thin margins of mining for these public companies to diversify their income stream to include sales of units worldwide since there is clearly demand. those that don't diversify most likely will lose, as we just saw with KNC. all this driven by the commodification of ASIC mining which is clearly topping out in terms of tech advancement. this trend is already being driven by 21co who has been extremely successful in selling, afaik, with plans to further integrate/sell hashing units. and if Intel and AMD ever get into the sale of ASIC chips, look out (all which would be a good thing).

 

[Mengerian]

Effective summary by Eric which is the important message, (not how Coin Telegraph is regarded by reddit). He is building some backbone but it is taking a long time,.

I wish Coinbase/BitPay/Xapo etc. would announce that they've modified their nodes to accept larger blocks today (either by running BU or with a 1-byte change to Core).

Shapeshift could be a good candidate to follow @Peter R's suggestion the Bitcoin businesses should just remove the 1MB limit unilaterally, without waiting for the miners.

They could just state "We will accept bigger blocks today. If the miners produce a longer proof-of-work chain with bigger blocks, we will accept it". It would be easy to do, by running Unlimited, or just patching their code.

Erik Voorhees has taken stands with his business in the past, like refusing to implement the New York "Bitlicence", perhaps he would be willing to consider this idea also.

If several major Bitcoin businesses announced that they would accept bigger blocks today, it would send a strong message to the miners.

Edit:

 

[freetrader]

one thing important to consider is that we see an impending to-be-publicly-owned major mining pool, Bitmain, beginning to sell single units out into the individual hasher market place. like i've said all along, this is a good thing. it seems to me that this was probably decided with the assistance of the new investors/shareholders of the company as a long term strategy. this, to me, represents the first step in the professionalization of mining. it only makes sense given the most likely razor thin margins of mining for these public companies to diversify their income stream to include sales of units worldwide since there is clearly demand. those that don't diversify most likely will lose, as we just saw with KNC. all this driven by the commodification of ASIC mining which is clearly topping out in terms of tech advancement. this trend is already being driven by 21co who has been extremely successful in selling, afaik, with plans to further integrate/sell hashing units. and if Intel and AMD ever get into the sale of ASIC chips, look out (all which would be a good thing).

If I was buying a SHA256 ASIC miner right now, I would do so from a company which supports bigger blocks.
@Jihan has signalled support at many times. I just wish his company would translate that into some visible support for BIP109 on the blockchain.

 

[lunar]

Roger Ver and Erik Voorhees – Scaling Debate and the Future of Bitcoin


Nothing new for this thread but well worth a listen, if you were ever in any doubt what the economic majority are thinking.

 

[Richy_T]

we see an impending to-be-publicly-owned major mining pool, Bitmain, beginning to sell single units out into the individual hasher market place.

Perhaps this could be because professional miners have slowed down on equipment purchases because of the halving. Though there was that big hashrate bump a while back so possibly not.
[doublepost=1465487145][/doublepost]We are starting to see >4BTC hanging out in the mempool waiting to be swept up. Will pressure start mounting?

 

[Melbustus]

...
I guess all I can do is quote the whitepaper:

"We consider the scenario of an attacker trying to generate an alternate chain faster than the honestchain. Even if this is accomplished, it does not throw the system open to arbitrary changes"

I am not sure how it could be any clearer...

In case anyone's interested, here's the full context, which, by the way, emphasizes the importance of the node network's acceptance rules:

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. The race between the honest chain and an attacker chain can be characterized as a Binomial Random Walk.

That's section 11, "Calculations".


And further up, in Section 4, "Proof of Work", I am indeed as well "not sure how it could be any clearer":

The proof-of-work also solves the problem of determining representation in majority decision making. ... The majority decision is represented by the longest chain, which has the greatest proof-of-work effort invested in it.

Now hopefully we're done quoting bible verses, and can get back to acknowledging that this boils down to nomenclature. What is considered an "attacking" chain vs an "honest" chain, and who makes that decision? The whitepaper clearly uses the word "attack" in the context of some entity trying to damage Bitcoin. In this current blocksize debate, I do not consider either side to be a conscious attacker. I consider a small-block world potentially quite damaging, but I don't think the motive is malicious (I'm not one for conspiracy theories), just misguided and narrow-minded. So that leaves the mathematical nature of the system where the "longest chain" of >50% PoW reigns as "Bitcoin".

So again, you need to accept the reality that the *fundamental* nature of Bitcoin is currently a system you defined as "totally useless". So I'm not sure why you continue to spend time on it.

 

[Jonathan Vaage]

Speaking of Daniel Krawisz, does anybody know what he's up to? I haven't seen anything from him in a while, but he is absolutely one of the best and most brilliant thinkers in the Bitcoin space. Lots of good (but older) stuff by him here.

http://nakamotoinstitute.org/authors/daniel-krawisz/

Would love to see more from him.

Last I heard, he was working on a Coin-shuffle implementation in Java and maybe some work on the bitmessage daemon... Lots of activity on github this year!

https://github.com/DanielKrawisz

 

[Roger_Murdock]

Two good comments on funding mining through perpetual inflation versus fees:

Also (unrelated), I was rereading that great Daniel Krawisz piece, "Reciprocal Altruism in The History of Money" and this quote struck me as a really interesting hypothesis:

There are, however, other systems of cooperation that humans rely on. All of them require investment by the participants, and they are therefore all in competition with one another. I think that the extraordinary benefits of money explain much about why group ideologies like religions, political parties, and nationalist ideologies maintain teachings which are so averse to it. Both the money economy and ideological groups are enablers of group altruism. Consequently, they are in competition with one another. Both require investment of their members’ time and effort, and a person can only give so much. Yet the money economy gives such a superior return for most things than do ideological groups that it leaves the groups at a severe disadvantage. When you hold a large cash balance, you are investing in the whole human race rather than in one group, and you are invested in a system capable of a vastly greater degree of specialization and invention. Such steep competition would threaten the cohesion of any ideological group.

 

[Aquent]

"Ethereum 3.0 (yet unnamed): ‘unlimited’ scalability release. Expected late 2018."

unlimited?

http://cointelegraph.com/news/vitalik-buterin-sets-milestones-on-ethereums-route-to-be-the-world-computer

 

[albin]

@Roger_Murdock

I'm extremely skeptical of the feasibility of building perpetual inflation into a cryptocurrency for this purpose, because no matter how you design it, this is just a roundabout way of price-fixing the amount of security applied to the chain.

 

[Roger_Murdock]

@albin - I agree 100%, and I think that was sort of the point of the second comment. Theoretically, there's not a really a huge difference in the two methods of paying for security, but the problem is that whereas it's easy for transaction fees to be set by "the market," the same cannot be said when it comes to setting an agreed-upon base rate of inflation.

 

[Peter R]

@albin:

Let me preface this comment by saying that I think it is way too early to try to make decisions on what we'll do about blockchain security when the block reward runs out (we don't even know if it's a problem yet!).

With that out of the way, I believe the long-run inflation rate could be market driven using a BU-esque process. My grand-granddaughter's Bitcoin node might accept blocks so long as the value of the coinbase transaction was less than 1 BTC + fees (0.25% inflation per annum). Your grand-grandson might be more conservative and only permit 0.5 BTC + fees per block. If we apply this to all of our descendants, then probably a market-drive consensus would emerge on what the appropriate inflation rate is (which could very well be "0").

If a miner believes that the economic majority supports 0.25% inflation, then he can mine a block with a 1 BTC block reward. If he's correct, then his block will be accepted into the longest chain and he'll benefit by 1 BTC; if he is incorrect, then he'll also lose the transaction fees that he could have otherwise claimed. The safe thing to do would be to produce blocks with no inflation because the miner would be guaranteed to have them accepted. However, it might be worth the risk to produce blocks with a little bit of inflation if he's confident they'll be excepted. In other words, an equilibrium would emerge (and once again, that equilibrium could very well be "0 inflation").

 

[albin]

@Peter R

That's kind of a brilliant idea that leverages market mechanisms.

One immediate thing that pops out at me: do you think there could be an externality issue with this scheme that could disconnect the emission rate from security, for example the market wanting a certain rate for other macro-related reasons?