Gold collapsing. Bitcoin UP.

[jonny1000]

Q: if you're building a global monetary system and want a small minority to have veto power on change, who do you think that small minority will eventually be? Clue.... They own all the bombs and guns.

I think it will be everyone. Making a hardfork very difficult, unless the whole community is behind it. That is the point.

You miss the point, its not one particular minority, it is any minority

 

[Peter R]

3. Without a block size limit, orphan risk is guaranteed to be large compared to miner's revenue

"You state this as fact, yet it is pure speculation" -- @Peter R

It is a logical consequence from 1 in itself, but also the other idea about wallets lowering fees to just over the expected marginal orphan rate cost. Each of these two things on their own are enough to cause the problem.
...
Anyway, this is all based on the assumption of a high level of competition. I look at this problem from the angle of ensuring the network is resilient. You seem to say my argument is not a logical consequence of #1, which may be true for some shapes of the marginal cost curve that I have not seen. However, we need to ensure the network is resilient for all feasible shapes of the cost curve.

You've said both that #3 is a logical consequence of #1 and then later that that might not be true for some curves (it is definitely not true for some curves--just imagine the case of near zero demand for block space but high demand for the block rewards). So if it is not true for some curves, then it is not true in general, which was my point all along.

With that out of the way, I think you introduced a new idea in your last sentence quoted above. The new idea is a requirement that orphaning risk be small compared to miners revenue for all supply and demand curves. The way I view this, the important metric is for PoW to be big enough to secure the ledger, where

PoW = miners revenue - profit - orphaning risk​

So yes, I think I agree with you here. But how can the design of the software guarantee this to be true? For example, if the miners revenue is very small (e.g., due to lack of demand for block space or lack of demand for block rewards), then PoW will also be very small and the blockchain will have low security. This is largely independent of orphaning risk. In fact, doesn't this make it clear that what's most important is miners revenue?

 

[jonny1000]

it is definitely not true for some curves--just imagine the case of near zero demand for block space but high demand for the block rewards

Peter, I am sorry I do not understand what you mean here. Who has high demand for block rewards. Remember we assume the block reward is insignificant.

So if it is not true for some curves, then it is not true in general, which was my point all along.

You have yet to show me a curve when it is not true. In almost all cases it is true (When also considering the demand side it is always true, as revenue cannot be driven by orphan risk if orphan risk is insignificant). Or are you assuming a significant block reward again, in which case you are totally right of course? Anyway even if it is true for some curves of marginal cost vs blocksize, this is still a problem.

PoW = miners revenue - profit - orphaning risk

Sorry I do not get this equation, please could you explain it a bit more. What does the PoW mean? Why do you deduct profit from miners revenue, is that not just cost?

So yes, I think I agree with you here. But how can the design of the software guarantee this to be true?

You cannot guarantee it, but one idea of protecting the industry is to have an economically relevant blocksize limit such that orphan risk costs is very low and therefore totally insignificant. technology is likely to improve so much anyway, such that the capacity level will be way higher than current levels, such that nobody should really be concerned. All I saying it lets not remove the limit until we decide what to do here.

This is largely independent of orphaning risk. In fact, doesn't this make it clear that what's most important is miners revenue?

Yes miner revenue is important. I think we should try to maximise volume * fees * FX rate = fee revenue. That is why allowing miners to vote for the limit as a group is such a great idea, they maximise revenue but since its as a group it solves all these tragedy of the commons problems, that apparently half the community think could be a risk and the large blockers are totally convinced is nonsense or propaganda. Please can you be prudent about these risks and stop dismissing them, when in reality nobody knows.

My point is, lets not use orphan risk to drive fees. If orphan risk drives revenue, then you make miners compete over orphan risk, push orphan risk to the limit and you guarantee orphan risk is significant in relation to fees. This is a very dangerous idea and not necessary.

Please respond to this:

How can orphan risk drive the entire mining industry revenue if orphan risk is insignificant? In order to significantly impact total revenue orphan risk must be significant.

 

[freetrader]

Someone woke up the PR department at BW:
It looks like the set of ETH miners includes a set of the well-known characters from BTC mining.
Perhaps we should take this as an omen, and say good luck:

 

[Peter R]

"Peter, I am sorry I do not understand what you mean here. Who has high demand for block rewards. Remember we assume the block reward is insignificant." -- @jonny100

Are you saying that the arguments you've been making assume that block rewards are insignificant? That you're debating about a point in the far future and not about today? If so, then, yeah, no one knows for sure how we'll pay for blockchain security when the block reward goes away. I've discussed this many times.

"How can orphan risk drive the entire mining industry revenue if orphan risk is insignificant? In order to drive total revenue it must be significant." -- @jonny100

When we use the term "insignificant" we're normally comparing one thing to another thing. E.g., the added load of pedestrian traffic over a vehicle bridge might be insignificant compared to the load from cars and trucks. But the load of those same pedestrians is significant if they all attempt to cram inside an little elevator.

Orphaning risk is significant to the miner when deciding how big to make his blocks, as I've described many times. Orphaning risk is hundreds of dollars per block which is large compared to the pennies it costs a miner to optimize the size of his block. So orphaning risk can--and does--drive fee revenue.

Orphaning risk is insignificant (given today's orphaning rates of 1-2%) to the miner when deciding where to point his hash power, as the slight advantage a large pool has is small compared to the PPS fees or luck (miner variance). I don't feel like digging up the numbers, but I calculated them a few weeks ago in this thread.

Lastly, orphaning risk is just one driver of fee revenue (that happened to be the easiest to analyze mathematically). The bigger idea is to promote free-market "bottom up" solutions to on-chain scaling, rather than accept top-down diktats from Blockstream/Core.

 

[xhiggy]

Maybe this is all just an attempt to prove that the blocksize should stay small by flooding this forum with crap

 

[jonny1000]

Are you saying that the arguments you've been making assume that block rewards are insignificant? That you're debating about a point in the far future and not about today?

Absolutely I am, yes!! I keep repeating this. My concern is for when the block reward is insignificant, not for today. This issue is not a concern when the block reward is large. I repeat this in every point, yet you only seem to take it board 1 in a hundred times!! That is why we should not commit to anything now, for when the block reward comes small, we need to keep our options open.

Please try to keep this in mind, I do not have this problem at all when the block reward is large.

Lastly, orphaning risk is just one driver of fee revenue (that happened to be the easiest to analyze mathematically). The bigger idea is to promote free-market "bottom up" solutions to on-chain scaling, rather than accept top-down diktats from Blockstream/Core.

Does all your stuff assume a significant block reward? If so then we probably agree anyway. How can you keep arguing with me when we agree?

Nobody wants top down diktats from Core. This is just a political misrepresentation of your opponents. This language is not helpful to healthy debate.

 

[Peter R]

Oh I see. You're concerned about the far future.

Well I don't know whether or not orphaning risk will be sufficient to drive miner revenue when the block reward is small (and I made this clear in my Montreal talk). My model actually suggests that equilibrium fees will drop to exactly zero (as the block reward goes to zero), but I don't think this is correct because other assumptions in my paper no longer hold (e.g., block times will no longer follow an exponential distribution in the far future). This is something I've been wanting to work on actually.

 

[molecular]

@molecular

I've been considering this situation to be like Schrödingers coins. - with prefork coins until you spend them they can be either ETH ot ETC ? is this the correct way to think about it?

In a way yes, but not quite: they actually are both as long as transactions are replayed on the other chain until you "collapse the wave function" by nailing the coins to different addresses on each chain. Now it's different of course: we have 2 cats, one dead, one alive. Of course if you say the analogy is made in this way that the "wave function collapses" only when one of the chain finally dies, then maybe we're still in the "both dead and alive" stage of the unobsered cat.

So yeah, one could probably construct something like that, just not sure how helpful this really is.
[doublepost=1469428621][/doublepost]

It can very easily be made harder. Its probably only easy now because the fork is still very new. The way to make it harder is t set up a "bridge" that sends all transactions directly to miners on both forks. It seems to me that miners of both forks have an incentive to make sure the ledgers on both forks agree as much as possible. The more they diverge, the more likely neither fork will "win" and the entire currency collapses.

It probably doesn't matter since this ETH fork is so tiny (5%), but if the fork was 50/50, you would be shooting yourself in the foot by moving your coins into different addresses on each fork. If I were a merchant, and you tried to pay me with coins that don't exist in the other fork, I wouldn't accept the payment as valid.

Such a "bridge" (or multiple one) were active at the time. Even worse: the classic chain was under attack miners and I strongly suspect those guys were actively mining cross-chain transactions. So you had to

* be well-enough connected in both networks,
* time it right (beating the bridge, I did this manually trying to use my mouse quickly. Maybe had a 0.3 second lag or something)
* and also be lucky and see the next 2 blocks on each chain mined by honest miners not cross-mining deliberately but honoring first-seen tx.

 

[freetrader]

@molecular: I'm curious how did you get coins from the exchange which were definitely from a particular chain, for your manual separation?

Did the exchanges provide any facility to help with that? If you bought ETC, were you guaranteed to get some coins from newly minted blocks?

 

[molecular]

@freetrader: I had no prefork eth on any exchanges. At the time they didn't offer to withdraw separately (only ethf) afaik.

I bought etc from individuals on bitsquare (which I checked out for the first time and is awesome) and assumed (which was true) I would get coins only valid on the classic chain (assumed pre-fork, but split). Of course I wouldn't have been sad at all had someone accidentally sent me coins valid on both chains

 

[Inca]

Poloniex naming the minority chain 'classic' seems a political move. What a great way to associate failure with the classic name in everyone's minds!

I have noticed a few /r/bitcoin shills parrotting pro ethereum classic narratives in the ethereum subreddits.

Sometimes I feel like I am a conspiracy theorist. The problem with bitcoin is that the conspiracy is actually the reality!

 

[Christoph Bergmann]

That last bit about the name had been going through my mind as well.

If they manage to build it up they can also tear it down, besmirching the name. And probably damaging Ethereum's entire reputation in the process.

It's a win-win situation: Either Eth Classic succeeds - than the "no-hard-fork"-side is strengened - or Eth classic dies - than "Classic" is a synonym for loosing.

 

[freetrader]

@Christoph Bergmann : Indeed, many of the usual pro-Core / small-block suspects are working all these angles in the Ethereum subreddits. It's instructive.

 

[MoonShot]

Maybe this is all just an attempt to prove that the blocksize should stay small by flooding this forum with crap

I think they sent their best theoretician and he was found to be ... confused about the future.

 

[Christoph Bergmann]

Hei ...

If I send Ether right now to shapeshift, I make them for me to ETH and destroy the ETC part of them. Right?

If I, on the other way round, buy ETH with Bitcoin through Shapeshift, I just pay for ETH but I get ETH and ETC. Am I right?

 

[MoonShot]

Absolutely I am, yes!! I keep repeating this. My concern is for when the block reward is insignificant, not for today. This issue is not a concern when the block reward is large. I repeat this in every point, yet you only seem to take it board 1 in a hundred times!! That is why we should not commit to anything now, for when the block reward comes small, we need to keep our options open.

Please try to keep this in mind, I do not have this problem at all when the block reward is large ... <snip>

You seem to have written 100s or 1000s or words prefaced with an assumption not fully shared. The assumption makes almost every argument of little importance i.e. we can all speculate about the micro-economic drivers and outcomes of a fees market in 12-20 years time. But it's not likely to be useful when inputs like technology, legal and fiscal policy, government oversight will have changed beyond recognition compared to today ...

The one & only message I see coming out from your extended prose is to trust the current dev team and not do anything "contentious" ... makes me wonder if you realize what Bitcoin technology was designed to do: DISRUPT and REMOVE financially driven intermediaries and allow a P2P money transfer network to grow.

 

[Zangelbert Bingledack]

It's nice to agree with Gmax and disagree with a few of you folks on occasion, thanks to the Ethereum fork. Reminds me we are all independent thinkers. Of course Core is arguing for ETC partly because of their general extreme consensus view, a general disapproval of controversial hardforks.

@Peter R To me the story here is that @jonny1000 demonstrates once again extreme consensus is the splinter that drives almost all the other disagreements. The only people who would worry about far future scenarios like when the block reward runs out are those who believe that if we hard fork to a bigger cap now we may be "committing" forever due to extreme consensus being the only way to change going forward. (Since in general 95% consensus simply won't be achievable; we'll soon be pretty much totally "locked in" according to that bizarre view.)

It sure seems to me that both (a) we will never be able to agree with someone who holds the extreme consensus view, and likely even (b) if we can convincingly debunk the extreme consensus notion most of the other disagreements should fall away. In other words, I think disabusing people who hold to the extreme consensus view of that notion is both necessary (in all cases) and sufficient (in many cases at least) for reaching common ground.

 

[solex]

@Zangelbert Bingledack
> we will never be able to agree with someone who holds the extreme consensus view

We will also never know when the extreme consensus view is a front behind which ulterior motives lie, especially the desire to see Bitcoin crippled so that another alt can compete more successfully. We have seen people with interests elsewhere: Viacoin (Drak, Todd), Freicoin (Friedenbach), Monero (Icebreaker) and now ETH holders as extreme proponents of small-blockerism who will never change their view because it will cost them potential profit.

 

[lunar]

@Justus Ranvier

I think the issue comes from a lack of understanding on the true nature of money. 'Money is the communication of value'. (over distance and time) Nothing more.

The biggest problem I have with that explanation is that "value" is a verb, not a noun. Just because in English we can form grammatically-correct sentences that turn arbitrary verbs into nouns doesn't mean those sentences meaningful.

Money is a measurement of yet-to-be-reciprocated altruism.

A little side trip into semantics, but i'm going to call you on this one, mainly becasue your sentiment here is brilliant and it would be a shame to let it go to waste. (We both knew my intended meaning anyway. )

Origins of the word value are from old French - (n) value "worth, price, moral worth; standing, reputation" and first used in English as a Noun (c. 1300), "price equal to the intrinsic worth of a thing;" It's use as a verb didn't come until ~200 years later. Oxford Dictionary primarily defines value as a noun.

Is this another case of across the Atlantic confusion? Hopefully bitcoin will become the SI unit of Money and future generations will not have such problems.