Gold collapsing. Bitcoin UP.

[Zangelbert Bingledack]

It occurs to me that in the case of a persistent split in Bitcoin, there is the big additional factor of the network effect in trade. That is, will dark market users and other merchants and services want to accept Core bitcoins or big-block bitcoins? Trade is still a minor use of Bitcoin compared to store of value and investment, but since that investment is based on Bitcoin's future use in commerce, the investment should follow the trade network effect even though it is small, since it can be quite sticky.

As might be unfolding in ETH/ETC, merchants may gather around whatever seems the "official" version, which presents a headwind for us. However, if the fees on Core's chain are high enough, most won't want to deal with it. Or at least they will want to accept both coins, knowing many customers prefer to use the low-fee chain. If LN and such are ready in time and they are simple to use, a big block version would likely not fare well in trade. In all other cases, though, it likely would do well.

A while ago I said the fork away from Core/BS will happen when the deadweight loss from lack of capacity exceeds the friction involved in forking. The above suggests a slightly more precise condition: the fork away will happen when tx fees are high enough for a sustained period (or using LN, etc. are burdensome enough) to shift the bulk of the network effect in trade over to the big-block version - or at least to ensure both are accepted by most merchants.

This also seems to put a but more of a concrete upper bound on the amount of damage Core/BS can do before they get forked away. Unless of course they stall so much that people gradually turn to altcoins in commerce and one gains the network effect and takes it away from Bitcoin.

 

[Norway]

@freetrader

That's my favourite chart!

EDIT: And it shows that "the three richest people in the world" doesn't own anything compared to the derivates in the world. Only two conclusions from this:

1. The ownership of derivates are distributed to a lot of people (not very likely).

or

2. It's hidden who owns the derivates. Remember: Every company has some old men at the top, no matter how complex the company structure is.

 

[Justus Ranvier]

For your daily dose of Core dishonesty deconstruction, consider the following:

@johnny1000 describes Gavin's XT plan as "shocking and out of character." Those are negative adjectives designed to scare you, while containing zero intellectual content. The fact that he uses this tactic along should be enough to ostracise him from the conversation because nobody would use emotional manipulation to make their case if they could use facts and logic instead.

Notice that nowhere in his post does he describe tests refuting the results of Gavin's experiments showing the viability of 20 MB blocks. If 20 MB was indeed too high, the correct way to establish this would be with evidence, not with hysteria about how the proposal disturbed their feels.

The Core cartel have never admitted that Gavin was right about the urgency in terms of timeline. The timeline proposed for XT was the timeline needed to avoid harmful effects of congestion, as we've seen.

They were wrong, everyone in the world can see they were wrong, and everyone in the world can watch them double down by refusing to acknowledge they were wrong. That pattern is going to end in disaster - it's just a question of whether they take Bitcoin down with them or if they're cut loose to fail on their own.

 

[Norway]

Conspiracy theory:
Li Ka-shing ownes bitcoin.

Fact: He is the second richest person in Asia.
https://en.wikipedia.org/wiki/Li_Ka-shing

Fact: He is the single man behind Horizons Ventures, a Blockstream and Bitpay investor.
https://en.wikipedia.org/wiki/Horizons_Ventures

The question is: Does he control the ASIC manufacturing in China? (If you control the ASIC manufacturing, you control the miners.)

 

[Bagatell]

@Norway Li Ka-shing is far from being the only player.

 

[Tomothy]

So Jihan Wu made a presentation at Google on Monday; this is the transcript. I thought it was interesting.
It is different from what took place during the scaling meeting over the weekend.

http://diyhpl.us/wiki/transcripts/2016-july-bitcoin-developers-miners-meeting/jihan-wu-google-tech-talk/

My take away thoughts from his speech were the following and things that I found interesting:
1, Google is interested.
2, Bitmain is or is planning on making LTC chips.
3, LN/sidechains will be used for confidential transactions.
4, They don't want price to rise in the near to short term, as in, it seemed to be if bitcoin was too valuable to soon, nations would fight and go to war over it; we don't want mass adoption now, as bitcoin couldn't handle it, and it's good that it's small and not worth what it will be in the future because this allows us to develop it more.
5, planning on addressing nation state competition.
6, Bitmain's S9 miner is expected to last 4-5 yrs, mining hardware and chip production is starting to hit walls.
7, increasing need and urgency to capture excess electricity for mining.
8, scaling delayed in part due to verification times and not having solved that yet

It was also pointed out to me how Pieter references himself in the discussion;
"Hi, I am Pieter. I work for Bitcoin Core"

https://petertodd.org/2016/hardforks-after-the-segwit-blocksize-increase
So, Hardfork segwit, no scaling increase. Yay. :/

 

[Norway]

@Bagatell
I know that, and it's a cool diagram.
But I'm talking about the top dawg. The second richest guy in Asia. With high stakes in Blockstream. My question is still the same:

Does he control the ASIC manufacturing in China? (If you control the ASIC manufacturing, you control the miners.)

 

[lunar]

Progress On Hardfork Proposals Following The Segwit Blocksize Increase
https://petertodd.org/2016/hardforks-after-the-segwit-blocksize-increase

@Justus Ranvier

Anti-Replay
I mentioned Tom Harding’s work, above; I’ll also mention that Gregory Maxwell proposed a generic - and very robust - solution to anti-replay: have transactions commit to a recent but not too recent (older than ~100 blocks or so) block hash.

the 100 blocks is a familiar number, is this what you were talking about the other day?

 

[Norway]

4, They don't want price to rise in the near to short term, as in, it seemed to be if bitcoin was too valuable to soon, nations would fight and go to war over it; we don't want mass adoption now, as bitcoin couldn't handle it, and it's good that it's small and not worth what it will be in the future because this allows us to develop it more.

This was a quote from Greg Maxwell. He is trying to prevent a disruption of the financial system. He is protecting the banks.

But even if the blocksize limit was removed today, bitcoin wouldn't kill the banks. They will do the job themselves with easy-to-print-fiat based on loans.

It's not Brexit, Grexit, Syria conflict, slowdown in China or any other lame excuse. It's the type of money that is the problem.

And bitcoin should be ready with open arms when that system collapses

 

[freetrader]

I am posting this here for reference so y'all can see firsthand the FUD department kicking into gear:


The amount of misdirection and conflation in that post might work on some people, I see that.
Like @seweso said :

I believe the toxic prey on the naive within Core.

However, of course this extends beyond Core. They will try to peddle snake oil to anyone they can.

Response to that politician will be forthcoming.

 

[Norway]

@freetrader
/u/midmagic is a known troll and should be blocked according to the rules at /r/btcfork

EDIT: Just reported him to the moderator of /r/btcfork

 

[79b79aa8]

@freetrader
[The chart] shows that "the three richest people in the world" doesn't own anything compared to the derivates in the world. Only two conclusions from this:

1. The ownership of derivates are distributed to a lot of people (not very likely).

or

2. It's hidden who owns the derivates. Remember: Every company has some old men at the top, no matter how complex the company structure is.

That's not how it works. Derivatives are not some kind of hard asset, they are contracts, which can default. The USD $1.2 quadrillion value of the derivatives market is notional.

Here is a simplified example. The most commonly used type of derivative are interest swaps. Entity A assesses it is paying too much interest at a 4% fixed rate on a $50M USD loan, entity B assesses it has too much exposure to fluctuating rates (which currently let's say are at 2% but look like they may go north) on $50M USD of its debt. A and B agree on a contract in which they swap, say, 1/5 of their interest obligations involving those loans. Thus they both hedge positions which they have estimated are risky.

The notional value of this derivative contract is the full underlying debt whose interest the entites are hedging on, i.e. USD $100M. But the actual amount A has to pay B or viceversa depending on how interest rates move would be, given the toy numbers above, about 1/2 a million dollars. And whoever pays the other (because interest rates moved in the direction contrary to which they hedged), is disbursing less overall than they would have had they not hedged.

Thus take that USD $1.2 Q with a grain of salt, it is not like someone owns all that wealth over and above all the other assets in the chart. This is not to say the derivatives market could not blow up. The exposure to derivative contracts for some banks like DB or JPM is larger than their asset base. That is to say, if a significant part of their derivative bets go the wrong way, they will not have the money to honor the contracts they've entered, and go bankrupt. And as some banks go bankrupt they fail to pay their debts to other banks, which might then default on their contracts, causing a chain reaction and and a financial crisis. This is part of what happened in 2008 when some banks and insurance companies defaulted on Collateralized Debt Obligations, which are a form of derivative based on loans taken against underlying real estate assets whose price plummetted.

 

[freetrader]

@Norway: midmagic is not expressing direct opposition to the idea of forking though, he's very careful about that. So his post imo does not violate the guidelines for discussion in the sub.

What he's trying to do is discredit, in many ways, while at the same time painting a virtuous picture of the current crew.

The ironic thing is that he's demanding a level of accountability that might be appropriate for an asset of a corporation, but Bitcoin is (not yet) simply an asset of a corporation. But there are some who think themselves as its owners, and betray these thoughts by their actions. That can't be evil, it must be something else.

Archive of his comment, in case it gets yanked: http://archive.is/C5VSM

 

[79b79aa8]

"But there are some who think themselves as its owners, and betray these thoughts by their actions".

This attitude was on clear display recently when some core devs thought it would be appropriate to edit parts of the white paper to reflect (their views on) the current status of the system.

To me this is what this whole issue is about: only superficially about the blocksize limit (which will resolve itself), rather an effort to disabuse some people of the notion that they own Bitcoin or, specifically, that they are the the only ones entitled to an opinion on how it should evolve.

 

[Norway]

midmagic is not expressing direct opposition to the idea of forking though, he's very careful about that. So his post imo does not violate the guidelines for discussion in the sub.

No, you are right. He is breaking this rule for /u/btcfork (down in the picture, marked in orange):

EDIT: Good thing you saved a copy.
[doublepost=1470430147][/doublepost]

The notional value of this derivative contract is the full underlying debt

Yes? And that is how fiat is made? What did I miss?
[doublepost=1470430865,1470429713][/doublepost]@79b79aa8
Sorry, I have to read it later. It's friday and the letters are dancing before my eyes. I'll try to make better feedback later, lol!

 

[79b79aa8]

@Norway -- in response to: "Yes? And that is how fiat is made?":

No fiat is made. Some contracts are entered into, usually for hedging purposes, at the closure of which one party pays another an amount, which is significantly less than the notional value of the contract. In general this provides a way to spread risk more evenly across the economy. But in absence of regulation and transparency some institutions can enter into contracts they may not be able to honor, creating systemic risk.

To take the full notional value of these contracts and compare it vs. hard asset worth (cash, real estate, equities, BITCOIN), as the chart does, is misleading. Which is why the chart seems unbelievable.

 

[Norway]

Sorry for the bad formatting, just got this weired PM shit from @bracek



bracek

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   hi, I have an idea,
   but not the knowhow
   
   to check if cypherdoc has his nodes up and running,
   he said he had more of them,
   maybe even 9 or so,
   they should be close geographically, BU or classic,
   so...
   
   I would be interested to know if they are up or not
   
   bracek, Yesterday at 10:43 PM
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   Norway
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   Why?
   
   Norway, Yesterday at 10:45 PM
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   bracek
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   in my logic, I would think that he is alive and well, if they are up, and still ideologically motivated and not coerced to go dark,
   otherwise, if they are down, he could be ill, forced to disappear, hacked maybe...
   
   bracek, Yesterday at 10:56 PM
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   Norway
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   ok
   
   Norway, Yesterday at 11:02 PM
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   bracek
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   I did not post this idea on the forum, for obvious reasons...
   would you have the will to check that, please ?
   It is not "that" important, but I am curious to know that info
   
   bracek, Yesterday at 11:02 PM
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   Norway
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   What are the obvious reasons?
   
   Norway, Yesterday at 11:09 PM
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[Norway]

• 
  bracek
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  cypher reading that post and changing the current state of his nodes, whichever it is now ?
  and thus ruining our "measurement"
  why are you asking me so much, wouldn't it be interesting to you too to know the state his nodes are in now ?
  
  bracek, 52 minutes ago
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  Norway
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  You sound paranoid. What are you really afraid of? Most people on this forum is not that scared.
  
  You are not a new troll, are you? Or an old, he he he he he
  
  Norway, 36 minutes ago
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  Norway
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  I will pubiish your "private" discussions with me, unless there is a reason for not to do it.
  
  Norway, 34 minutes ago
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  bracek
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  I am paranoid, and your first few replies looked like what ?
  as far as I am concerned, you can publish this, but at least do a measurement before and after, could be a nice side discussion in the thread.
  my only reason for not going directly is courtesy to cypher
  
  bracek, 18 minutes ago
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  Norway
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  What the fuck do you mean "courtesy"? Show some respect! Be open!
  
  Norway, 5 minutes ago
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  Norway
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  Talk in the open, don't be a fucking snake.
  
  Norway, 4 minutes ago
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  bracek
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  Newok,
  you have the idea now,
  so do as you wish...

[doublepost=1470436264][/doublepost]

No fiat is made.

Really? Where do you think USD is comming from?
[doublepost=1470436798,1470436074][/doublepost]I like the moderation rules at /r/btcfork . I don't want them here. I don't want them at /r/btc. But I want those strict rules in a woking place where the goal is to fork bitcoin and do it the best way possible. The trolls are real. The paid trolls are real. Debate is one thing, a creative space is something different.
https://www.reddit.com/r/btcfork/comments/4vupzp/the_rbtcfork_subreddit/
[doublepost=1470437561][/doublepost]PS. Sorry about the massive blog space I used. I just copy-pasted it.

 

[Norway]

The resistance is so strong and heavy now. In so many channels, in cultural expressions.
Bitoin is under attack. Not on the surface. Much success on the surface.

But it's all happening below the surface. And it all boils down to one success factor:

Tx/second​

[doublepost=1470446284,1470445482][/doublepost]

 

[Norway]

Fucking Greg Maxwell, talking to Google-people:

"Gregory would you like to answer that?

A: I have this interesting thought about the growth of bitcoin. If you, and maybe others don't share this, but I like this one. If you imagine that everyone in the world would wake up tomorrow and know in their heart of hearts that bitcoin would be the true reserve currency of the world, then this would not be good news.

The result would be war. People would fight over the supply of bitcoin. The adoption of bitcoin into society, for it to not be a huge wealth transfer from everyone to me, requires time."

He might not know it, but USA is in a constant war. And my country, Norway, support the US wars with planes and personel. My nephew told me about one of his friends. Who was a sniper in Afghanistan. And he killed 80+ people. Why? I don't know, but I think it's about natural resources and power. It's not about creating "democracy" or building "girl schools".

And what is the natural resource in Afghanistan? It's not oil. For many years, Afghanistan was just a theoretical playground/sandbox where the US and Soviet were testing their guns.

Later, I learned that Afghanistan was the prime fields of Heroin. The short period of time when taliban had control in the country, the price for heroin hit the roof in Norway. The desperate junkies in norway did everything to pay for a "hit". My cousin died because of heroin, 19 years old. Long before Taliban had temporary control in that country...