Gold collapsing. Bitcoin UP.

[AdrianX]

Mr. Adam Back, when you read this, feel free to create an account, login and respond. And while you're at it, maybe tell us a little bit more about your game theory expert?

it could be this guy Dr. Narayanan http://randomwalker.info/publications/mining_CCS.pdf his argument is not a criticism on BU but bitcoin itself, BU exposes what I think we should call the "@jonny1000 attack"

Honestly the incentives don't exist in the first place so these concerns have relatively no probability of coming to pass.

In my view the argument does not stand up to critical analysis as the cost of relaying blocks is small with Xthin and if my simple mind can thwart the behavior presented in this paper in the example below* - that is miners just orphan each other never building on the chain.

*As a miner if I was dealing with an absurd orphan rate and I wanted the block chain progressed I'd just add transactions with fees to the mempool and once it confirmed spend the transaction again to prevent dishonest blocks from orphaning previously confirmed blocks.
[doublepost=1486586272][/doublepost]

Would the Segwit OmniBus changeset need more than 29 parallel softforks if it was entirely granular?

@bitsko do you remember where you read that? I recall Adam saying this but I cant find the quote anywhere.
[doublepost=1486586503,1486585790][/doublepost]

Just sent a message to Cameron Winklevoss that they should use Gavin's definition of bitcoin for the ETF in case of a fork.

Better yet they should also define what happens to your BTC in case of a fork or a spin-off. Is it treated like a stock split or is it treated like a stock split but they keep the split?

 

[bitsko]

@AdrianX I was making a joke about version bits https://bitcoincore.org/en/2016/06/08/version-bits-miners-faq/

Wish I had a better link for you specific to segwit...

 

[freetrader]

Ways in which SegWit may end up being good for Bitcoin:

If it is evident that a majority of users and economic nodes want seg wit and Bitcoin's politics prevents litecoin miners from signaling support /u/coblee stated in his AMA that litecoin is prepared to take drastic measures such as changing the POW algorithm to fire all the miners, or changing the activation threshold to 50% or even other measures. He however does not want to hard fork and end up with a coin split.

https://np.reddit.com/r/litecoin/comments/5ss5tt/coblee_ama_litecoin_may_take_drastic_measures_if/

Link to coblee AMA:
https://np.reddit.com/r/litecoin/comments/5srvqg/charlie_lee_ama_on_reddit/

Can anyone explain a little more about his statement "Lightning networks will connect LTC to BTC" - if anything is known about how that would work?

I'm assuming here that someone will be able to exchange these (and other) currencies somehow via LN hubs which function as exchanges?

EDIT: thanks to Aaron van Wirdum for pointing me at Atomic Swaps and these articles:

https://bitcoinmagazine.com/articles/atomic-swaps/how-the-lightning-network-extends-to-altcoins-1484157052/

https://segwit.org/my-vision-for-segwit-and-lightning-networks-on-litecoin-and-bitcoin-cf95a7ab656b

 

[Norway]

Just sent a message to Cameron Winklevoss that they should use Gavin's definition of bitcoin for the ETF in case of a fork.

EDIT: I also mailed Gavin to reach out to them for the same reason.

WOW, I'really see this shit before they happen! Maybe I'm a psychic?

From the latest amendment of their filings, just released:

They added:

As of the date of this registration statement, Convergex Execution Solutions LLC, KCG Americas LLC, and Virtu Financial BD LLC have each signed an Authorized Participant Agreement with the Trust and, upon the effectiveness of such agreement and the registration statement, may create and redeem Baskets as described below.

Heavily edited:

In the event a developer or group of developers proposes a modification to the Bitcoin Network that is not accepted by a majority of miners and users, but that is nonetheless accepted by a substantial plurality of miners and users, two or more competing and incompatible Blockchain implementations could result. This is known as a “hard fork.” In such a case, the “hard fork” in the Blockchain could materially and adversely affect the perceived value of bitcoin as reflected on one or both incompatible Blockchains, and thus the value of the Trust’s bitcoin.

more:

In the event of an upcoming modification to the Bitcoin Network that could potentially result in a hard fork with two separate and incompatible Bitcoin Networks, the Custodian, in consultation with the Sponsor, will elect to support the Bitcoin Network that has the greatest cumulative computational difficulty for the forty-eight (48) hour period following a given hard fork, in order to engage in bitcoin transactions and the valuation of bitcoin. During this forty-eight (48) hour period and for the twenty-four (24) hour period prior to the anticipated fork, creation and redemption of baskets will be halted. The greatest cumulative computational difficulty is defined as the total threshold number of hash attempts required to mine all existing blocks in the respective Blockchain, accounting for potential differences in relative hash difficulty. If the Custodian, in consultation with the Sponsor, is unable to make a conclusive determination about which Bitcoin Network has the greatest cumulative computational difficulty after forty-eight (48) hours, or determines in good faith that this is not a reasonable criterion upon which to make a determination, the Custodian will support the Bitcoin Network which it deems in good faith is most likely to be supported by a greater number of users and miners. Under the terms of the Trust Custody Agreement, the Trust may be required to indemnify the Custodian for any losses arising in connection with its determination to elect the Bitcoin Network with the greatest computational difficulty in the event of a hard fork.

Looks like the Facebook twins go for Nakamoto Consensus, not "Whatever Greg says".

Good news for BU!


EDIT: Obviously, I'm not a psychic. But maybe I connected the dots from signals on social media. I got the idea when I read Adam Back's weired post about the ETF and how a fork could be confusing related to the ETF. It made me think about the blogpost Gavin wrote yesterday about a clear definition of bitcoin, which was also a little weired. Why now?

 

[79b79aa8]

either mr. back fails to understand the fundamentals of cryptocurrency, or he is disingenuous.

no, mr. back, forking bitcoin 100 times, or launching 1000 alts, does not alter digital scarcity, for the simple reason that the vast majority of forks and alts will never hold any significant market value.

and you know who decides which digital token, or which branch of a fork, holds value? not you, not your company, not your engineers, not your investors. the market decides. long term, the market will follow paths that tend towards value creation and growth. those paths are certainly not built on either embarrassing misunderstanding or foolish disingenuity.

but it's ok, if the people you are addressing do not already see this, they will soon be disabused of their money. that is all.

 

[Roger_Murdock]

I think this is a pretty nice summary of the approach taken by BU's critics (if I do say so myself):

"Basically, criticisms of BU boil down to doing the following: (1) pretending that people haven't always had the ability to modify their software to choose what size blocks to generate and/or accept; (2) ignoring economic incentives and imagining that people will set their settings in a completely arbitrary and economically-irrational manner; and (3) bikeshedding over the not-terribly-important details of BU's specific Accept Depth logic."

 

[Norway]

Another connection I have seen, related to the ETF (Yes, it's a tinfoil thing):

For the last months, in most articles with Wall Street people talking about the chances for the ETF to be approved, they allways talk about the trading volume in China as an obstacle to get the ETF approved. And guess what, the PBoC forced the Chinese exchanges to apply fees to every trade, removing high frequency trades and bringing volumes down to a similar level as the dollar exchanges.

Yes, I predict the ETF will be approved, unless it isn't.

 

[albin]

@Norway

Has anybody covered what the SEC rule change that they're dependent on actually is? Article after article mentions that the ruling concerns a rule change, but I literally cannot find a single article that explains the rule in question.

 

[Norway]

@albin
I think some journalists are confusing the three ETFs applying for approval, and that this rule change is related to one of the two other ETFs. But not sure about this.

 

[jbreher]

@albin - your comment is too new to quote.To wit: "What ever happened to IETF-like procedures..."

This is new, too:

[note: INCITS is the InterNational Committee for Information Technology Standards.]

--------------

eb-2017-00060

Document Date:
January 31, 2017

To:
INCITS Community, INCITS Executive Board, Interested Parties and Prospective Members

Reply To:
Jennifer Garner

Subject:
New INCITS Technical Committee on Blockchain and Electronic Distributed Ledger Technologies (EDLT) - Notice of March 2, 2017 Organizational Meeting (Washington, DC), Call for Members and Call for Contributions

Due Date:
February 15, 2017

Action:
The new Technical Committee, INCITS/Blockchain and Electronic Distributed Ledger Technologies (EDLT), was established at the January 2017 INCITS Executive Board meeting and will hold its first meeting on March 2, 2016. To join this technical committee, please complete the membership request form at http://standards.incits.org/kcpm/signup.

Contributions for the organizational meeting should be submitted to Jennifer Garner (jgarner@itic.org)by February 15, 2017 for inclusion on the two-week agenda.

RSVPs for the organizational meeting should be submitted to Jennifer Garner (jgarner@itic.org) by February 20, 2017.

----------------------

The upshot: standardization is coming.

Perhaps I should mention that I already sit on several of INCITS' Technical Committees. Unfortunately, I will be unable to attend the initial meeting of this TC due to a schedule conflict.
[doublepost=1486602107][/doublepost]

@AdrianX I was making a joke about version bits https://bitcoincore.org/en/2016/06/08/version-bits-miners-faq/

Wish I had a better link for you specific to segwit...

If it is the name you seek, I'm pretty sure that I coined The SegWit Omnibus Changeset. Because that's what we're being sold. By itself, segwit is a nice innovation. Of course, there are many ways one might implement not making malleable elements part of the hash that derives the transaction identifier. And segwit is one. But segwit itself is packaged up with a bunch of other cruft, then being forced down our throats in a so-called 'soft' fork. The SegWit Omnibus Changeset is meant to refer to the entire steaming pile of poo.

 

[79b79aa8]

Has anybody covered what the SEC rule change that they're dependent on actually is? Article after article mentions that the ruling concerns a rule change, but I literally cannot find a single article that explains the rule in question.

TL;DR: Bats exchange, where the Winklevoss ETF is to be listed, needs to make changes to one of its own rules in order to be able to offer Bitcoin as an investment vehicle, since it has features different from those of all other asset classes.

The filing for the rule change in the Federal Register:
https://www.federalregister.gov/documents/2016/07/14/2016-16604/self-regulatory-organizations-bats-bzx-exchange-inc-notice-of-filing-of-a-proposed-rule-change-to

The purpose of the rule change according to Bats: "The Exchange believes that the proposal ... is designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in facilitating transactions in securities, to remove impediments to and perfect the mechanism of a free and open market and a national market system and, in general, to protect investors and the public interest."

"The proposed rule change is further designed to promote just and equitable principles of trade and to protect investors and the public interest and to promote market transparency in that there is a considerable amount of bitcoin price and market information available for free on public Web sites and through financial, professional and subscription services"

Latest proceedings to determine whether to approve or disapprove the rule change:
https://www.gpo.gov/fdsys/pkg/FR-2016-10-18/pdf/2016-25082.pdf

 

[Zangelbert Bingledack]

The ETF news is a great help but still not ideal in two senses.

1) They imply a hardfork split is negative. This may be immaterial but it shows an error in the applicant's understanding.

2) They're going to have to say what they do with the minority chain coins. This is analogous to Coinbase's mistake in the ETH/ETC split, where as I recall they refused to credit users for the ETC. The result is that the operator can pocket the minority coins. This policy must be made clear in advance, and if it is made clear I doubt many people will support a Coinbase-style policy as it potentially makes the ETF shares worth up to 50% less than actual BTC (in case of a "51/49" split).

Result? Eventually they will have to adopt this [edit: all substantial forks credited] policy. The only reason I can see for not adopting it is an error in understanding.

no, mr. back, forking bitcoin 100 times, or launching 1000 alts, does not alter digital scarcity, for the simple reason that the vast majority of forks and alts will never hold any significant market value.

True regarding altcoins, but regarding hardforks it is crucial to realize that *even if* 100 forks were to all hold significant value, it would not alter digital scarcity at all. This is a basic fact of ledger economics.

For example, the ETH/ETC split didn't alter digital scarcity. Trivially there are twice as many "ethers" as before, but an "ether," like a "bitcoin," is just a shorthand term for the more unwieldy "0.00~X% of the total ledger." That is, a bitcoin is just a shorthand for a certain percentage of the total Bitcoin pie, a 21 millionth of the eventual total (or 1/16,152,300 of the current total ledger as of now). The percentage is unaltered by forks, despite accounting appearances.

This ultimately much more elucidating and completely correct "percentage of the total ledger" expression being unwieldy to write down allows people to fall into the error of thinking that forks/spinoffs actually dilute holder stake in any way. They absolutely do not, in the same mathematically undeniable way that 2+2 is absolutely not 5.

See the beginning section of my article:

https://medium.com/@Iskenderun/artificially-limiting-the-blocksize-to-create-a-fee-market-another-variety-of-lifting-the-21-f972b6e3afd8

Adam's statement is thus equivalent to saying something like 2+2=5. Demonstrably, provably wrong. It will be uncontroversially understood as a fallacy by all who take a serious look at an elucidation like I gave above.

One could of course fall back on the position that hardfork splits create confusion that could shrink the total pie of which hodlers hold a constant percentage, but that issue is separate from the naive "split means more coin units, therefore breaks digital scarcity" fallacy. This one must be broadly recognized as a pure falllacy as soon as possible.

 

[Zangelbert Bingledack]

Note the endgame here:

Stage 1: "We go with the hashpower majority fork."

Stage 2: "Hmm, now that you mention it, I guess we DO have to credit all hardfork split coins over a given threshold market value. So that's the new policy."

Stage 3: "Waitaminute, effectively this means this ETF is really just tracking *the* Bitcoin *ledger* as of ETF launch, regardless of how it splits itself into different chains and/or re-merges (as a chain dies out)."

Stage 4: The whole community goes, "Waitaminute, that's effectively what buying a bitcoin does as well. That's effectively what Bitcoin *is*: a ledger you can obtain a percentage of at time T and always maintain the same percentage (or rather a predictable percentage, following Satoshi's original inflation schedule). That's *all* it is. It isn't the protocol. It isn't the blockchain. It isn't even necessarily maintained on a single blockchain or by a single protocol."

This is the final deep-yet-kind-of-pedestrian understanding, superseding Gavin's definition. This is the practical definition of Bitcoin from the perspective anyone who buys BTC as money (a store of value) at a given time. The rest is wallet UI details. All the chains, spinoffs, protocols, etc.* can sprout up or die as they please, and each hodler's share of the Bitcoin ledger (a.k.a. World Wide Ledger) is preserved as long as even one single unattackable ledger copy remains.

*"etc." of course does not include what are now known as altcoins, as they use a different ledger entirely

Likely at least one of those Bitcoin ledger copies - and the dominant one, and quite possibly the only significant one - will be on the chain that satisfies Gavin's definition, yes, but I hope it is now clear to the reader why it is nonetheless crucial to bring community understanding to Stage 4 above. Without that understanding, hard forks will be endlessly feared and many other errors in thinking about Bitcoin and its governance and scaling will persist - needlessly.

 

[yrral86]

Just sent a message to Cameron Winklevoss that they should use Gavin's definition of bitcoin for the ETF in case of a fork.

EDIT: I also mailed Gavin to reach out to them for the same reason.

Don't worry, they've already got you covered.

"Bitcoin Network that could potentially result in a hard fork with two separate and incompatible Bitcoin Networks, the Custodian, in consultation with the Sponsor, will elect to support the Bitcoin Network that has the greatest cumulative computational difficulty for the forty-eight (48) hour period following a given hard fork, in order to engage in bitcoin transactions and the valuation of bitcoin."

https://www.sec.gov/Archives/edgar/data/1579346/000119312517034708/d296375ds1a.htm

Also, https://en.wikipedia.org/wiki/Virtu_Financial has signed on as an authorized participant.... that is a very good sign.

 

[solex]

Sadly, it looks like the recent large increase in hash-rate is mostly BitFury and other non-BU miners...
This is proving to be an arm-wrestle.

 

[awemany]

Don't worry, they've already got you covered.

"Bitcoin Network that could potentially result in a hard fork with two separate and incompatible Bitcoin Networks, the Custodian, in consultation with the Sponsor, will elect to support the Bitcoin Network that has the greatest cumulative computational difficulty for the forty-eight (48) hour period following a given hard fork, in order to engage in bitcoin transactions and the valuation of bitcoin."

https://www.sec.gov/Archives/edgar/data/1579346/000119312517034708/d296375ds1a.htm

Also, https://en.wikipedia.org/wiki/Virtu_Financial has signed on as an authorized participant.... that is a very good sign.

Good that they track the miners ('greatest cumulative computational difficulty' could however include a POW change) I do wonder about the 48h. I think it is highly unlikely to lead to contention, but why do they make this decision period so short?

I'd make it at least a difficulty adjustment period long.

By the way: This also gives 'power to the miners' (in Core's words), as this basically means that the ETF will follow the miners! Ironically, I could see this catalyzing miner action towards a BU bigger blocks fork.

(In case the miners are pondering about node counts and that is what keeps them undecided yet)

 

[freetrader]

 

[Zangelbert Bingledack]

@awemany Good point that the ETF policy dimishes the importance of node count.

This is in line with my insistence on referring to "economically significant nodes" rather than the number of nodes. Naturally, the more economically signficant a node the greater its influence. Exchange nodes and ETF nodes have especially great influence. Government nodes could have great influence if they start to accept BTC for payment of taxes. And so on. These particulars are *far* more consequential than any node count.

 

[steffen]

The Importance of Clear Definitions in Bitcoin’s Block Size Debate

https://medium.com/@johnblocke/the-importance-of-clear-definitions-in-bitcoins-block-size-debate-f8ce550d0919#.xncz259ax

 

[Norway]

News from Norway:
The government has finally removed the VAT at 25% from exchanges between local fiat, NOK, and bitcoin! Yieeehaaaawww!

http://e24.no/boers-og-finans/bitcoin/myndighetene-snur-naa-faar-bitcoin-momsfritak/23920267