Gold collapsing. Bitcoin UP.

[Mengerian]

@Roger_Murdock Great post! It really lays out clearly the mechanics around soft and hard forks.

So the idea that "hard forks risk chain splits" seems misguided -- and indeed essentially backwards. Chain splits are always ultimately caused by the willingness of some individuals to either begin enforcing, or continue enforcing, a "validity" rule

Yes! This point is so important. Enforcing validity rules, other than most proof-of-work, is what causes chain splits. So if a majority of the network decides to loosen enforcement of validity rules (aka "hard fork"), and a chain split results, then the split is the responsibility of those who choose to continue enforcing the validity rule. They may have a good and valid reason to do so, so it is not necessarily a bad thing. But that reason has to be weighed against the huge cost in lost network effect of splitting from the majority.

In the context of of a 1MB block size limit, if one doesn't want such a limit, it makes no sense to enforce this rule. And for a business serving its clients, it should be prepared to accept bigger blocks if miners start producing them, whether or not it strongly favors them. It is their responsibility to serve the interests of their clients. So if there is a reasonable chance that miners might start producing bigger blocks, it is incumbent on these businesses to be prepared for that.

Forcing a market referendum when the hash power majority is dangerously wrong
In rare cases, you may also choose to enforce a validity rule even when you're confident that doing so puts you in the current hash power minority.

The only thing I would add here is that one could do a similar thing, but in the hopes that the majority hash power would capitulate to your desired validity rule. You would essentially "call their bluff" in the hopes that they would capitulate. So you night not actually need to force a chain split, merely create the risk of one, to rein in the errant miners. To make this effective, one would need to clearly communicate the rule, and convincingly signal your commitment to enforce it. This is risky, however, so should only be done for validity rules that add value to the network. This is the process I attempt to describe in more detail in my recent Medium article.

 

[molecular]

Speculation: All this really means is the Chinese exchanges will be having proper KYC and the volumizer bots will be turned off?

Any thoughts?

If it has the effect of dampening the "fake volume" figures and makes exchange volumes more comparable across continents, then that's a good thing.

If it increases the perceived legitimacy of bitcoin exchanges and bitcoin itself in the minds of chinese people, then that's a good thing.

If this is just part of a pump and dump scheme played by some chinese officials and their buddies, then meh... fool me thrice...

 

[satoshis_sockpuppet]

So can someone, who understands that stuff please help me out: Do I see it right, that with all the "Lightning Network" implementations, that get alpha-released and what not, nobody touched the central problem of the actual network?

They build and build and build on details without knowing what the fuck they are building? Or am I blind / too stupid?

edit: Peter R seems to be excited about the "progress" but I still don't see what they are building. The old car/motor analogy on reddit isn't even on point it seems. It's more like
"Hey let's build a car."
"What is a car?"
"No idea, that will be the real challenge, but I already sewed the sails we will need."
"Whoah! Great! Hey guys, they already sewed the sails for our car!"

 

[awemany]

Two observations:

1) It looks like Greg's earliest Bitcoin involvement is past when I bought my first few coins. I thought he's an early bird and earlier than myself but it looks like that might actually be wrong.

2.) As we all know, one way the network is tried to be attacked by Core (LN+SegWit+Small blocks) is to sell fancy vaporware. It occured to me that this is likely one of the most feasible and effective attacks on the Bitcoin community - because I think us 'tekkies' like shiny new stuff, toys, ideas and so forth. If this approach has been planned since a longer while, someone must have studied the general psychology of the Bitcoin crowd in detail.

 

[Erdogan]

I'm also posting on a tangent here I'm increasingly frustrated by all this attention on the fees.

Now and for the practical future fees are largely irrelevant to scaling bitcoin, it's about increasing the network of users. I agree some mandatory fee is necessary in the case the network is being abused with spam but it need not be greater than $0.005 for fresh transactions to be effective.

Bitcoin has an inflation subsidy given to miners to lubricate corporation between network participants thus creating and giving the bitcoin network value.

The subsidy comes from the inflation of the money supply paid by all those invested in bitcoin's success, it is a tax that subsidized security and writing of transactions to the blockchain. (@Justus Ranvier I know you don't like tax but inflation is a tax just one I've committed to pay by holding bitcoin)

At the moment the cost per transaction is over 96% subsidized. bother sides of this debate are focusing on the fee per transaction as if it's too cheep or too expensive, that's not an issue today or in the practical future, as is the networks ability for the bitcoin network to handle blocks that could only be processed by a datacenter.

Looking at manipulating fees now is ludicrous and incredibly shortsighted, especially using fee pressure, created by limited block space, to justify a fee market.

How can any rational person look at <4% of a transaction cost and come to a definitive conclusion about what the total fee should be. Whatever method is used it will be wrong given the subsidy is decreasing by 50% every 4 years. An instant 50% increase in cost is sure to disrupt an existing supply and demand equilibrium in a free market no mater how predictable it is due to limited knowledge of every market participants future fee tolerance.

If fees were an order of magnitude cheaper or more expensive they would still be largely irrelevant and most notably distorted by the subsidy. How can a free market determine a value for a service when the service is >96% subsidized.

BS/Core Fundamentalists are being incredibly irresponsible by enforcing a fee market by limiting block size now and big block proponents are being naive complaining about the transaction cost when the fee paid is +-<4% of the subsidized cost.

It's only with economies of scale in transaction volume and a resulting increase in block size that we can maintain the existing level of security as the reward drops.

The bitcoin inflation is not a tax, due to the cost of producing new coins. The cost tend to approach the price. This is the same for gold, except in bitcoin it is more pronounced because of the adjustment of the difficulty.

In fiat, the cost of producing a note (or the electronic equivalent in QE) is far less than the value printed on the note. It is the seigniorage, a part of the value of the existing units moved to the money manager.

In gold and bitcoin, there is no seigniorage, the value of the new coins has to be "paid to nature", and current holders keep their value.

 

[satoshis_sockpuppet]

Oh, let's see how routing is solved in the Lightning whitepaper, they spent a whole paragraph in a 60 page paper on that problem:

[...]
Node discovery can occur along the edges by pre-selecting and offering
partial routes to well-known nodes.

Oh. How decentralized.

But wait, Rusty Russell knows how to solve it:

One of my most fascinating early conversations with the original Lightning Network paper author, Joseph Poon , had us speculating on what the Lightning Network will look like once it’s up and running. Your phone would initially connect to the Lightning Network by establishing channels with five random nodes, we posited. From there, you could make payments for some variable but small fee to anyone else on the network.

(from https://blockstream.com/2015/09/01/lightning-network.html)

Oh, yeah that looks like a good plan. Five random nodes with five random amounts in the channels. Problem solved.

Will this actually happen? I have no idea!

Thanks, Rusty! It looks like nobody has a fucking idea who works on Lightning.

And because it's so beautiful, from the whitepaper again:

Presume Alice wishes to send 0.001 BTC to Dave. She locates a route
through Bob and Carol. The transfer path would be Alice to Bob to Carol
to Dave.

Presume I want Pi to be exactly 3. I locate proof for that and therefore: Pi=3!

God damnit. I'm absolutely no expert in networks or routing or whatever but how can anybody think that this bullshit is anything but a sham?

- There is no definition for a lightning network
- There is no formal proof, that the proposed channels are always in a defined state (I guess it's easy to prove, but that's the duty of the lightning proponents..)

And finally: All "solutions" I've seen rely on at least some trust in the end. I don't get where the proposed real world advantage over cascaded micropayment channels (that exist) is?
I have the suspicion, that there actually is no solution to that trust problem. And that every "improvement" they come up with just makes it more complicated and relocates the need for trust to some other entity, but keeps the needed "amount of trust" the same. No idea, whether it's possible to formally prove that, but the empirical evidence until now supports that idea.

The more I read, it looks like Lightning is a case of massive over engineering. I don't have a problem with fine tuning, a car today does a lot of control work, that the first cars didn't do and the manufacturers improve their control software to get 0.01 % more efficiency. That's fine. But it's not fine to not build the first car, just because it's possible to build a better car in a few decades.

1. On chain transactions must be affordable by normal users, for normal transactions. That is the working system, that needs the least amount of trust in third parties.
2. Micropayments (I talk about amounts smaller than e.g. five dollars) should be done offchain. I'm very excited for possibilities to anonymously support bloggers, pay for newspaper articles or something like netflix with Bitcoin micropayments etc. without having to register and give away credit card information.
But that can be done with existing micropayment channels in a way that's pretty close to what LN allows (allegedly). Without messing up Bitcoin.[/quote][/quote]

 

[Richy_T]

The bitcoin inflation is not a tax, due to the cost of producing new coins. The cost tend to approach the price.

The cost is irrelevant and doesn't factor into things. It would be exactly the same if it was Luke-jr with his 286 mining.

However, just as with gold, you are correct, it is not literally a tax. However, it *is effectively* a tax in that value is taken from holders and given to miners to encourage their activity. One might also call it a fee. With modern government, the difference between the two is often almost nothing.

 

[Mengerian]

1. On chain transactions must be affordable by normal users, for normal transactions. That is the working system, that needs the least amount of trust in third parties.

This can't be emphasized enough.

It's nice that people are innovating with Lightning Network. Just don't use it as an excuse to hobble on-chain capacity.

 

[albin]

In my guts what initially turns me off hard to how Rusty Russell is acting, is that he's voicing his blog as glamorous and epic memoirs of ingenuity and invention, as though he's Thomas Edison or Archimedes working in the present day, but the jury is still out on whether he and his peers have actually accomplished anything at all of note. This approach reminds me strongly of Adam Back and his ilk, where instead of earning respect of the readership or community, it's extracted by entitlement.

 

[Richy_T]

Presume Alice wishes to send 0.001 BTC to Dave. She locates a route
through Bob and Carol. The transfer path would be Alice to Bob to Carol
to Dave.

See, here's my issue with that. We know that Alice and Dave are almost certainly different people but how do we know that Carol is not Bob or that Alice is not Carol and Bob or that Dave is not Carol and Alice is not Bob? (This is a decentralized, permissionless network, right?). And if this can be the case, why do we need these middlemen anyway? Why would Alice want to pay Bob and Carol when she can run the node herself and keep the money to herself? Unless Bob and Carol occupy some kind of privileged position. And there goes your decentralization.
[doublepost=1484250237,1484249415][/doublepost]@albin, I may be missing something but I still haven't seen a "This is what using the lightning network is going to look like". That leads me to think there are going to be usability issues in a field which is pushing the edges of the envelope already. A quick scan through the white-paper doesn't really assuage my doubts either (really need to read that thing in full sometime).

 

[albin]

@Richy_T

I'm not aware of any such work either. Maxwell's go-to claim is that we can always fall back on doing routing as a flooding gossip network to discover peers, but what a strange position on two fronts: 1) there goes a lot of the claims about lighting out the window; and 2) weren't we being abused and labeled idiots for having questions and skepticism, ostensibly because they were a dream team of routing genius after routing genius?

 

[Peter R]

So can someone, who understands that stuff please help me out: Do I see it right, that with all the "Lightning Network" implementations, that get alpha-released and what not, nobody touched the central problem of the actual network?

edit: Peter R seems to be excited about the "progress" but I still don't see what they are building.

The "core" of Core wants to block us from increasing MAX_BLOCK_SIZE to prevent on-chain scaling. What I was trying to communicate in my reddit comment was that I'm not trying to block anyone from developing anything....I want to see a bunch of people trying a bunch of different things.

Do I think LN is an interesting idea that's worth exploring? YES

Do I think LN is a replacement for on-chain transactions? NO

AFAIK, this alpha prototype addresses the routing problem by "broadcast[ing] all the things," which according to LN developer @RustyRussell "clearly...won't scale to thousands of nodes." Like LN developer @roasbeef says, "the real challenge is in efficiently handling the dissemination of the dynamic information in the channel graph." In other words, they don't know how my LN node in Vancouver will figure out how to get a payment to Chung's node in Chendu (which is of course the primary problem).

 

[satoshis_sockpuppet]

...
Do I think LN is an interesting idea that's worth exploring? YES

Do I think LN is a replacement for on-chain transactions? NO

You made that clear in your reddit comment.

Do I think LN is an interesting idea that's worth exploring? YES

Imho it is very much oversold. It is something a few enthusiasts could work on, that could some day replace existing micropayment channels. But actually it shouldn't have a place in the so called "scaling debate". To use a often-used phrase by Greg: The development of "Lightning" is orthogonal to the scaling debate.

AFAIK, this alpha prototype addresses the routing problem by "broadcast[ing] all the things," which according to LN developer @RustyRussell "clearly...won't scale to thousands of nodes."

This is what really pisses me off. The handwaving, that is already present in the ugly "whitepaper". As I said, one paragraph for the central problem. I have no idea why anybody takes that serious and why so many companies etc. give the "lightning developers" so much of their time. It just doesn't exist and I am very, very certain: There is no decentralized, effective solution for this problem. It will be deployed with a "working solution for now" which exists of a big hub everybody connects to. There will be Onion routing along the route A->Blockstream/BTCC Hub ->B... And this will be it, for now and forever.
"Broadcasting all the things" for a hyped alpha release. For something, that "needs to be deployed to solve Bitcoins scaling problems".

I can understand, that for someone, who is interested in applied cryptography and smart contracts, Lightning is an interesting playing field. But I don't start a fucking stalling movement and block the greatest economic invention in centuries because I'm afraid, that my solution might actually not have a real world application..

It's not the "big blockers" obligation to prove, that big blocks are safe. That's just how Bitcoin worked and will work.
It's the LN proponents obligation to a) present in a comprehensive way what the hell they want to deploy and b) that their changes to Bitcoin don't endanger Bitcoin.

As a Bitcoin miner I would block Segwit just for the reason, that I don't want a possible trojan horse like LN deployed. And any malleability fix should be blocked as long as they can't explain what on god's earth they want to do.

Hard science, that's something the sheeple on /r/bitcoin like to say. Show me some hard science about LN. No romantic prose (read the technical overview on the lightning website..), no handwaving, hard science. A network topology.

AND A FUCKING ROUTING ALGORITHM. They can stick their onion routing wherever they want if they have no idea HOW TO FIND A FUCKING ROUTE.

 

[AdrianX]

The bitcoin inflation is not a tax, due to the cost of producing new coins. The cost tend to approach the price. This is the same for gold, except in bitcoin it is more pronounced because of the adjustment of the difficulty.

In fiat, the cost of producing a note (or the electronic equivalent in QE) is far less than the value printed on the note. It is the seigniorage, a part of the value of the existing units moved to the money manager.

In gold and bitcoin, there is no seigniorage, the value of the new coins has to be "paid to nature", and current holders keep their value.

good point, now wish they would stop producing more coins and devaluing mine. ;-)

 

[lunar]

In an interesting turn of events.

Dial up Junior, has just become Data centre Dashjr.

https://www.reddit.com/r/Bitcoin/comments/5nma6i/flexver_to_enable_secure_datacentre_hostingvps/

Link to short explanation of FlexVer

Basically it allows VPSs that are secure against tampering by the datacentre or people with physical access. The most they can do is shutdown and/or destroy your VPS.

This could be huge for Bitcoin. No longer will it be critical for everyone to be able to run their full node at home.

 

[jbreher]

Two observations:

1) It looks like Greg's earliest Bitcoin involvement is past when I bought my first few coins. I thought he's an early bird and earlier than myself but it looks like that might actually be wrong.

Hmm. I thought this was already known. Oh bother...

 

[awemany]

@jbreher: Thinking about it, I have a slight deja-vu feeling as well. I think it is noteworthy because somehow Greg gives of the appearance as if he came in 2009.

 

[AdrianX]

Greg projects that image when he was called out for stealing an ID from Git and started making claims that the BS/Core team had made more contributions that the Core team I found an article on CoinDesk where the reporter said Greg had been in bitcoin since 2009 the time of the then claimed ID.

I asked him to contact the reporter and make the correction he shrugged it off as the article was old and out of circulation.

I'm sure given he was interviewed he would have had an opportunity to fact check.

 

[sickpig]

This "prevents a chain split" by essentially 51% attacking those who don't upgrade.

You mean those *miners* who don't upgrade. Cause non mining full nodes are not forked off by definition in a soft fork.

This is another way to say that there's no such a thing as a soft-fork for miners. Every miners *have to* upgrade once a soft fork activates otherwise they will be "orphaned".

In other words, in a word where every full node is a mining node the difference between soft and hard forks is non existant.

edit: typos

 

[Peter R]

@jbreher: Thinking about it, I have a slight deja-vu feeling as well. I think it is noteworthy because somehow Greg gives of the appearance as if he came in 2009.

@awemany: I know you looked very careful into the issue of Satoshi's misattributed commits. When I read your synopsis, I was left with the impression that Greg claimed various commits made by Satoshi Gavin and Sirius. However, Greg vehemently denies this. But his denial seems to be more of "yes I did this but I did it for a good reason" without actually admitting that he did in fact attribute the commits to his own account.

So my question: is it an indisputable fact that Greg attributed commits of Satoshi's other people to his own account? (Leaving the rationale for why he might have done this and whether it was right or wrong out of it).