Gold collapsing. Bitcoin UP.

[xhiggy]

As an example, I would not appoint Elizabeth Holmes to head up a technology company. I would be hesitant to hire any of the senior management, and I would want to thoroughly vet the research/marketing staff, based on them being associated with a disaster of an organization (Theranos).

 

[Roger_Murdock]

[USER=29]@Peter R Currently running a full node is the only way to detect a systemic breach, and it's currently not possible for a full nodes that detects such a breach to communicate this fact to SPV nodes.

That's why you want fraud proofs.[/USER]

Realistically, that breach is going to be communicated by the market when the price craters. That's the incentive system that we rely on to keep the hash power majority honest. And obviously not every single market participant needs to have first-hand evidence of a breach for the market to do its job. So I guess I have a hard time envisioning a scenario where it's become so outrageously expensive to run a full node that the market would lose the ability to disincentivize cheating because miners will believe they won't get caught. The incentive system certainly won't break down just because every Johnny Two-Bits can't afford to verify a breach for himself on his laptop. And of course, if running a full node were to become "outrageously expensive," that implies that Bitcoin has become massively more popular and valuable which in turn implies that there will be many more people with an incentive to police the network's integrity.

So while fraud proofs certainly seem like a "nice-to-have," I have a hard time seeing how they'd ever be truly essential.

 

[Richy_T]

I think it's like locks. They keep honest people honest.

 

[Dusty]

As the transaction rate increases, and as the number of users increases, the security will drop.

It seems like you imply that more transaction and hence more users implies less (full) nodes.

I disagree: isn't this the whole point about raising the block size?

If you grow it, but you keep it under a reasonable size, for example such that an entry level pc is able to nimbly keep up with the network, as the number of users and use-cases grows, the number of full nodes should grow too.

 

[solex]

@Bloomie, that's why we encourage new members to provide a public key as soon as possible. After time passes they become known on this forum, their style is consistent both here and on places like slack or reddit. People build up credibility over the long-term. Now, someone, "B", might join here pretending to be "A" with a public persona, but how long could that be kept up? It is not so important that safe-guards against a false identity are watertight, just that the bar is raised very high.

 

[Zarathustra]

> In general, yes we should adopt the best tech while crediting and giving opportunity to those who invented/developed it. If this tech is being offered by someone who has sewn distrust and discord repeatedly for their own benefit, then you should just make your own, and shun them until there is evidence they have changed.

There are several independent implementations of SegWit

Out of interest, what terrible things have Johnson Lau and Pieter Wuille done? I think they are two of the nicest and most genuine people in the Bitcoin space

They - as you do - march in fours with totalitarian censors, with the traitors of a libertarian project. Instead of fighting those sick idiots and their disgusting behavior, they are in complicity. Nice complicits.
Millions of nice citizens elected the Nazis.

 

[Roger_Murdock]

I was pretty happy with this analogy:

Suggesting that you need to run a full node to protect yourself from the hash power majority is like suggesting that you need to wear, at all times, bulky and expensive arrow-stopping armor (that does nothing against a bullet) to protect yourself from being murdered by a guy with a high-powered rifle who isn't even your enemy. (Again, Bitcoin is premised on the idea that the hash power majority will be incentivized to protect the network's integrity.)​

The idea that we should artificially constrain Bitcoin's transactional capacity, thereby making it dramatically more expensive and less reliable to actually transact with Bitcoin, something that affects every Bitcoiner and that is absolutely fundamental to Bitcoin's money property -- in order to make it slightly cheaper for people to run a "full node," something that provides users with, at best, an incredibly marginal improvement in security and that 99.9% of users will have no interest in doing regardless of the cost -- is insanity.

It's absolutely incredible that BS/Core's propaganda has managed to convince some people that this madness actually represents any kind of sensible tradeoff. It's like convincing someone they should always walk around with a piece of duct tape over their mouth and nose. Oh sure, it makes certain activities more difficult, you know, things like eating, drinking, talking, and breathing. But whenever a situation comes up where you need a piece of duct tape, boom, you've got one right there at your fingertips. Super convenient, right?

Although, I guess I can sort of understand how they pulled it off. On the one hand, running a fully-validating node IS the only way to independently verify that ALL validity rules are being followed. So, at least on a superficial first glance, it does seem like it might be really important for everyone to run a full node, or at least be able to run one. How else could Bitcoin ever function as a "trustless" system, right? Until you dig a little deeper and recognize that a malicious / dishonest hash power majority can do just as much damage (in fact, more) without mining any invalid blocks.

On the other side of the equation, they've managed to make concerns about transactional friction seem trivial in many people's eyes with their "coffee money"-type rhetoric. And there's a kernel of truth to the rhetoric because, as I've pointed out before, Bitcoin's currently most important use cases aren't particularly fee sensitive (and don't include general retail payments). But that doesn't mean that all use cases aren't being harmed. If you're someone who's buying 50 bucks worth of Bitcoin as a speculative investment which you're planning to hold for a few years, paying a two-dollar fee to transfer the funds to your own wallet is an immediate 4% "tax" on your investment. That's not trivial. Now some might scoff and say that 50 bucks isn't an "investment"-sized purchase, but for some people it absolutely is. And of course there are other people who might be doing 50-dollar weekly buys which they want to immediately transfer to their own wallet (because isn't avoiding counterparty risk sort of the whole point?). In addition to this kind of direct harm to Bitcoin's utility from high fees, there's also harm to Bitcoin's "virality" as it becomes increasingly impractical for holders to send their friends a few bits to get them started, and for new users to practice with and gain confidence in the technology. Finally, I'd identify "speculative harm" as a third, and very significant, category of harm. Prospective investors surveying the crypto landscape think to themselves: "well, Bitcoin's ledger is the first, most mature, and still the most valuable, and the Bitcoin 'brand' is the most dominant in the space -- all of which make the Bitcoin ledger a strong Schelling point for the market to ultimately converge on. But on the other hand, they still haven't increased their absurdly-tiny block size limit which is leading to an increasingly shitty user experience and hemorrhaging market share. So their current governance looks completely dysfunctional as their existing stakeholders seem bizarrely content to squander their first-mover / network effect advantage. Hmm, maybe I should consider investing in some of the alternatives instead -- or at least hedging with them heavily."

 

[Peter R]

@Roger_Murdock

Another bullet to the chest of the "everyone should validate everything" argument is that to really do so one would also have to validate that the tool they were using to validate validated correctly. In other words, they would have to independently check ever line of source code related to validation and the build process.

Of course, most people don't. Instead they trust that every line of code has been scrutinized by enough people that if something was awry it would have been caught. Which is the exact same argument for why not everyone needs to run a full node: we trust that every transaction will been scrutinized by enough people that if something went awry it will have been caught.

 

[jonny1000]

They - as you do - march in fours with totalitarian censors, with the traitors of a libertarian project. Instead of fighting those sick idiots and their disgusting behavior, they are in complicity. Nice complicits.

Pieter and Johnson seem to stay out of politics and anything to do with forum moderation as much as possible. They rarely post on /r/bitcoin.

 

[Zangelbert Bingledack]

As a owner of bitcoins, you expect that:

• your balance represents a defined percentage of the total ledger
• your coins can not be spent without meeting the conditions you've specified
• you can spend your coins by meeting those conditions

In light of @Tomas van der Wansem's arguments on reddit that full "nodes" don't really provide protection against majority hashpower that wants to doublespend, while providing protection (compared with SPV wallets) only against much more far-fetched attacks, I'm really not seeing the benefit of running a full "node" other than to give you early warning that Bitcoin is completely dead (or at least on life-support and needing an emergency PoW change).

Non-mining nodes don't seem to be part of the original design (a Satoshi comment paraphrased: "to run a node, turn on mining" - among others), and even the idea that "mining got decoupled from the everyday user due to variance so therefore we now need full non-mining nodes even though Satoshi didn't anticipate this" seems wrong since he talked about scaling via data centers and such. It seems a heavy stretch that Satoshi ever intended non-mining nodes to be a thing, even taking into account his apparent failure to anticipate mining pools. Especially in view of the recent discussion here about SPV wallets, which concluded that SPV wallets are in fact (contrary to Gmax, etc.) already working as Satoshi intended them.

Not that Satoshi is always right, but if full "nodes" really are just wallets with fairly meaningless extra "fancy locks" in all scenarios where Bitcoin isn't totally hosed, *and* they were never part of the design *and* nothing has in fact changed to make them necessary to include as part of the design, that seems like a strong case against full "nodes" mattering for scaling or security. (I put "nodes" in quotes because I don't see what network they are supposed to be nodes of. Certainly not the Bitcoin mining network. And the idea that they are part of some kind of relevant "validating" sub-network is the very issue in question, so their status as "nodes" of any relevant network is likewise in question.)

EDIT: Bitcoin is trustless in the sense of "we don't trust miners to be nice," but it is NOT trustless in the sense of "we don't trust miners to intelligently seek profit in BTC." We *do* trust them to do that, or rather we simply expect them to. In fact that is a key piece of the genius of the design.

 

[jonny1000]

Hi guys

I am trying to build a website, to help explain the various opinions on the blocksize debate, and help look at the situation from multiple angles.

http://blocksizecompass.com/

If possible, please could some of you "larger blockers" fill in the chart, by filling in the survey. I suspect most of you are on the top right of the chart. Luke-Jr has filled it in and he is probably as far left as we will see.

Perhaps we could see the overwhelming majority most people are on the right hand side of the chart. Then, perhaps those on the right, both on the top and bottom side, may be able to unite and form a coalition, capable of defeating those on the left hand side, and finally get larger blocks. Or perhaps many of you here also hate those in the bottom quadrant (like me), and are not interested in a pragmatic coalition?

I am also trying to build a resource, of all the blocksize related issues and the arguments people from the 4 sides of the debate have (or perhaps 3 sides, as maybe nobody will be in the top left quadrant). It would be good if a "top right" person from this forum could help articulate that side for all the issues.

Many thanks

 

[Zangelbert Bingledack]

http://blocksizecompass.com/

I appreciate the effort, but there is one major error and one major bias baked into the compass as it stands:

The error is to equate lower fees with lower total fee income, which I assume is what you are referring to with "Less robust mining incentives".

The bias is to presume that flexibility and innovation are at odds with monetary sovereignty / digital gold and robustness. This is covered well in @go1111111's market governance FAQ and @Mengerian's Medium articles. I hope you didn't miss those as they go to the core of your "strong consensus" ("extreme consensus") position. It seems pretty crucial for such a compass to measure one's position on that rather than baking it in.

The links:
https://bitcoindebates.miraheze.org/wiki/Market_Governance_FAQ
https://medium.com/@Mengerian/two-theories-of-bitcoin-f4da84468a7a#.4fgh1piwh

 

[jonny1000]

The error is to equate lower fees with lower total fee income, which I assume is what you are referring to with "Less robust mining incentives".

No it does not.

Firstly, we do not need to agree on the labels for this analysis to have any value.

Secondly, I absolutely do not mean that larger blocks mean lower fee income. Nor do I agree with that. As I explained in my Why I support BIP100 post (https://bitcointalk.org/index.php?topic=1163102.0), the impact of changes in the blocksize limit on fee income, depends on the the price elasticity of demand.

What I meant by "Less robust mining incentives", is that there is less certainty over how miners will be incentivized, not that the level of fees will be lower. A "smaller block" argument, that I am sure you disagree with, is the following:

1. In a perfectly competitive market, the price = the marginal cost of production

2. The marginal cost of production, in this context, is the marginal cost of adding one more transaction to a candidate block. This cost mostly excludes the cost of hashing and electricity costs.

3. Therefore, if the mining industry moves towards the competitive end of the spectrum, after the block reward is low, then there will be no revenue to pay for the cost of electricity and hashing.

As I have repeated many times, I mostly agree with the larger blockers here, I think this type of competitive mining industry is unlikely and may not occur most of the time. However, I hope you appreciate this is a reasonable point, which deserves to be discussed and debated.

 

[freetrader]

I absolutely do not mean that larger blocks mean lower fee income.

Well then, maybe you should consider putting a "lower potential transaction volume" / "higher potential transaction volume" on the left and right sides respectively.

I disagree with your point about income because miners are perfectly able to regulate the rate of transaction confirmation on their own in accordance with required fees to sustain their operations.
This ability is impaired - and Bitcoin miners continued existence directly threatened (*) - by an artificial capacity limit well below what technology can handle.

(*) because altcoins do not need to impose such silly rules on themselves.

 

[jonny1000]

Well then, maybe you should consider putting a "lower potential transaction volume" / "higher potential transaction volume" on the left and right sides respectively.

That is not really a political statement

I disagree with your point about income because miners are perfectly able to regulate the rate of transaction confirmation on their own in accordance with required fees to sustain their operations.
This ability is impaired by an artificial capacity limit well below what technology can handle.

Your view appears to be that miners are not forced to make blocks bigger and therefore miners can make small blocks if they want anyway. This view could be correct, however I think it is likely to be wrong, in some circumstances.

Each individual miner will try to maximize their own profit and share of revenue. Miners will therefore be incentivized to sweep up as large a share of the transaction fees as they can. The is just like the classic tragedy of the commons scenario, each individual miner produces larger blocks, in the hope that other miners produce smaller blocks, to maintain a reasonable average fee level. However the Nash equilibrium ensures that each miner makes larger blocks. Miners need to maximise their own profit to remain competitive and they would have little choice but to produce larger blocks. Fee levels would then fall and the equilibrium difficulty would be too low.

The consensus response in the community is that this line of thought is too theoretical and has too much unproven game theory. I disagree and think this is highly likely to be the outcome. In fact this is the behavior that often occurs in the global commodity space, and has happened time and time again. Each individual miner producers more and more resources, to maximise their own profit, in the hope that other producers reduce production to allow prices to increase. Each individual miner acts against the interests of the whole industry and increases production.

Why can miners not voluntarily individually produce smaller blocks?

This is the common question, but who is this question about, each individual miner or the whole mining industry? In 2015 I could have asked the following analogous questions:

• Why is Iran increasing oil production? Can Iran not voluntarily individually produce less oil to support the price, as the industry is currently loss making?
• Why is BHP Billiton increasing iron ore production? Can BHP Billiton not voluntarily individually produce less iron ore to support the price, as the industry is currently loss making?
• Why is Goldcorp increasing gold production? Can Goldcorp not voluntarily individually produce less gold to support the price, as the industry is currently loss making?
• Why is Freeport-McMoRan increasing copper production? Can Freeport-McMoRan not voluntarily individually produce less copper to support the price, as the industry is currently loss making?

The answer, (to all of the above questions) is of course, no. The Nash equilibrium is for each miner to increase production or produce bigger blocks. Miners keep producing large volumes until they close the mine, or in the case of Bitcoin, miners keep producing larger blocks until they stop mining altogether.

In the examples above, had there been an effective cartel of producers, miners would be able to collaborate and keep production down to support the price. The industry would have been supported. This would be against the interests of consumers. Luckily most cartels have mostly broken down and the prices of these commodities are crashing. The consumer wins and gets lower prices. As a result, we see a global commodity super cycle, we see periods where prices fall and industry players fail, capacity then falls and the commodity prices increase again. Producers then over invest in capacity and the cycle repeats. This may be a reasonably healthy cycle.

However, Bitcoin mining is different in two respects, first we need a healthy and viable mining industry at all times and secondly, the above cycle cannot occur, because when transaction fees start to fall and miners begin to fail, this will not reduce capacity, like it does for resources. Any one miner can provide all the capacity we need. All that will happen is we enter a downward spiral when fees fall and miners fail and then difficulty falls.

 

[Peter R]

@jonny1000

You're making up trade-offs that don't exist. I can hand wave too:

 

[jonny1000]

You're making up trade-offs that don't exist

I am not claiming these trade offs do exist. I agree we can both increase the blocksize limit and protect monetary sovereignty ect

I support larger blocks, so I do not know I am on the left had side of your chart

EDIT: I removed some of the labels you guys may not like

 

[awemany]

http://blocksizecompass.com/

An attempt to frame the argument. I am as conservative as it gets: Original plan please.

 

[go1111111]

@jonny1000, cool project overall. I have a few pieces of feedback.

A "smaller block" argument, that I am sure you disagree with, is the following:

1. In a perfectly competitive market, the price = the marginal cost of production

2. The marginal cost of production, in this context, is the marginal cost of adding one more transaction to a candidate block. This cost mostly excludes the cost of hashing and electricity costs.

3. Therefore, if the mining industry moves towards the competitive end of the spectrum, after the block reward is low, then there will be no revenue to pay for the cost of electricity and hashing.

I think what's driving the complaints in this thread is that you're not distinguishing between a low block size, a high but fixed block size, and an uncapped block size. Although some people here disagree with you about mining incentives in an uncapped situation, I think you're right about that. Transaction fees will equal the marginal cost to include a transaction, which might result in fees that are too low to pay for adequate security.

However, this is a very different issue than whether we should have a low fixed cap or a high fixed cap. This "tragedy of the commons" situation can be avoided with a high fixed cap, and we can get the benefits of more throughput.

Maybe of block size is 1 MB, fees will be $1.00, and maybe if block size is 16 MB, fees will be 10 cents. Imagine there's a fee backlog in each case. Total miner income (and security) is higher in the later scenario. Also, I don't think there is any sense in you can call the mining incentives "less robust" in the bigger block case. I would argue that mining incentives are more robust in the long term in the bigger block case, because there's less room for competitors to eat away at Bitcoin's network effect.

I think the main issue with your site is that you don't distinguish between a high fixed block size cap, vs. no cap. To be fair, it's hard to make this distinction with only two axis. Still, I'd remove the 'robustness' labels since I think they're misleading.

Relatedly, I think this question should be reworded: "After the block reward becomes small, if the mining industry is competitive, miners will only charge fees high enough to cover the marginal costs directly linked to including the transactions in the blocks, and therefore there will be no fee subsidy to pay for network security"

What you should be saying is "if there is no block size cap", not "if the mining industry is competitive." You can have a competitive mining industry and a fixed (high) cap and not get into this situation. See example above. Also, even if that wasn't a problem, you should change "there will be no fee subsidy" to "fees might not be enough to pay for adequate security." It's very unlikely that fee income would actually be zero with no block size limit.

Lastly, one of your questions is "We should listen to the experts and not have mob rule."

I know small blockers see rule by the market as "mob rule", but as I describe here, market governance is very different from mob rule. Your question seems to implicitly accept a false premise that mob rule is the alternative to listening to experts. At the very least, you should add another question/statement checking people's agreement that market governance is different than mob rule.

 

[AdrianX]

Transaction fees will equal the marginal cost to include a transaction, which might result in fees that are too low to pay for adequate security.

We have empirical data to show this is not the case while we are in the distribution stage with the security subsidy.

The distribution stage of bitcoin involves decentralizing the coin base it's given as a security reward and encourages free transactions to lubricate network interactions.

You could be correct a 123 years from now although I don't think it's reasonable to think miners will include transactions that degrade their business. So practically speaking they will charge a fee for convenience and all transactions will net a profit on the cost of securing the blockchain.

If developers think it is a problem they should set a block size to kick in in 2140 to solve the issue not limit now for a hypothetical situation that won't happen for over a century.