Gold collapsing. Bitcoin UP.

Erdogan

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Aug 30, 2015
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What do you think on confidential transactions? I think they are the biggest risk bitcoin is facing in 2016. Much bigger than no increase of the blocksize, much bigger than a contentious hardfork to 20 MB.

Confidential Transactions will break the existing KYC/AML procedures on exchanges. It will set Bitcoin out of reach of regulation, and the consequence will be a worldwide ban.
The regulation is the attack.
 
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VeritasSapere

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Nov 16, 2015
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I agree with you that regulation is the attack. However I am personally opposed to increasing anonymity of the Bitcoin blockchain to much. Increased IP obfuscation would be fine for instance however obscuring the links between transactions for example I would be opposed to. I think that transparency is an important feature of Bitcoin, this might not be a popular opinion but I think that we should use alternative cryptocurrencies instead for when we do desire increased anonymity.

I would like to see governments and large corporations operate off the bitcoin blockchain eventually, since this would solve many problems of corruption and accountability.
 

freetrader

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Regulation can be an attack, but it can also help.
There should be regulation to protect cryptocurrency fungibility at least to some practical level.
In the absence of that Bitcoin is easy prey for offensive regulatory attacks.
 

Erdogan

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Aug 30, 2015
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No, the ideal situation for everybody is that money is the same for all. Not by coercion, but that is what the market will land on if possible. Normal situation is that there are a few money types, with one type far more used than all the others (the reason being liquidity, the ease with which you can rid yourself of them). Bitcoin has good qualities overall, the best in my view, but fungibility (a coin is a coin is a coin) is slightly worse than with gold or fiat paper rectangles, because of the public blockchain. If possible, and if deemed necessary, that should be improved. Regulation is coercion.
 
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freetrader

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I may be reading too much into recent news of governmental moves to get rid of cash. But it gave me the impression that they quite dislike the existing fungibility of it, and putting the screws on cash (*) while tolerating people's use of popular, transparent digital currencies (which give them *far* more insight) is an easy choice for them.

* see asset forfeiture laws in US
 

VeritasSapere

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Nov 16, 2015
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It can be improved, but balance needs to be found here I think. Since if we improved the anonymity to much we would lose transparency. Monero might be a good example of a cryptocurrency which takes this to far, which I think is fine for Monero but would not be fine for Bitcoin. Monero has no rich list and transactions can not be linked unless a view key is supplied.

A practical example of this might be if we payed taxes in Bitcoin. We should be able to follow those coins on the Blockchain and if anyone attempted to anonymize these coins through a mixer for instance then we would know about that at least. If all transactions are highly anonymous by default we would no longer be able to do this, and this I would consider a loss and a divergence of the original vision of Bitcoin.
 

molecular

Active Member
Aug 31, 2015
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One way to protect bitcoins from extortionists who might threaten you physically is to use distributed trusted third parties.

Take the seed for a deterministic wallet and split into n fragments. Spread these fragments around between close personal friends who ideally live on another continent. This gives you some deep savings that you aren't capable of accessing without outside assistance.

From there, you can add as many other protocols as you wish in terms of how you communicate with the other fragment holders so they know when you're in distress or not.
Might I suggest using shamirs secret sharing algorithm (ssss) for the splitting step? It allows doing an "any n of m" fragments scheme with n and m freely choosable.
 

VeritasSapere

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Nov 16, 2015
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Yeah, I use armory myself it has lots of great features.

Took a little break from focusing on Bitcoin for a few days, I think the closing down of the #rekt thread was my queue to take a little break from this. Really want to read through all of the pages I missed and like many of them, though might not end up being able to catch up so my apologies if I fail to do so.

Still trying to make up my mind about the RBF thing as well, will most likely ask some questions about that in the BUIP thread soon.
 

VeritasSapere

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Nov 16, 2015
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I think, looking back in regards to XT, mistakes were made. Not because of anyone's fault and I don't think anyone is to blame, but it's just how things went in the circumstances. If we are to see realistically, XT has become a stale, old and tainted thing.

BU is the new hip stuff and cuts through. So far the other side has been able to only criticise etc, latching to the status quo sort of thing, focusing their points on what if this, what if that. This has obfuscated their position in my view and XT sort of gave them amo.

In some ways the real debate has not even started because they have been able to demonise by criticising. The argument... well bring your own options, bring your how, why, when, didn't need to be addressed because all they needed to "win" was to make XT loose and fear/scaremongering is unfortunately often pretty effective if it contains any, however small and out of hand not dismissible, truth.

I've had the opportunity of speaking to some of the more influential small blockers about BU and their arguments so far are from what I can see very ineffective and even comical. They'll be embarrassed to repeat it twice in public.

BU forces them to reveal their true position, that is this settlement thing. We have not addressed the settlement proposal heads on even after some months of debate because the small blockers have tried by all means to avoid it as they know there is no public support for it whatever. They have instead focused on bringing down the alternative, and by definition when there is no alternative the settlement thing wins by default.

There is no criticism they can make towards BU however that in any way has any persuasive power, so they either have to change their position or argue honestly and make the ridiculousness of their position apparent.

Moreover, miners have rejected XT. It is not for me to decide whether rightly or wrong, that's for historians, but they have raised concerns, whether rightly or wrongly, and if we are to think they are self interested parties with a lot to lose and win then we necessarily need to conclude that some of their concerns are valid and need to be addressed.

As we are seeing from the blocksize question, there is a delicate balance between miners and the economic majority. When miners are 100% in agreement as shown by only 3 xt blocks, and the economic majority on the other hand is too 100% in agreement in the opposite direction as shown by all statements, both sides are deeply hurt if they decide to engage in a game of who has the upper hand, therefore both sides are hugely incentivised to come to a solution that benefits both.

The miners are saying that XT may hurt them and their decision says to us that they think it is not in their self interest to adopt XT. We don't want to hurt the miners nor their self interest. The miners have in many ways a bigger incentive than most of us as single individuals, so we need to take account of their concerns.

Even more incentivised however are the businesses (the proxy of us, the users) and the miners do not want to hurt the businesses. Nor do the businesses want to hurt the miners. They are fully dependent on each other. If one is hurt, both are hurt. And there comes BU, offering the perfect solution, calming miner's worries while allowing the businesses to survive, grow and thrive.

Some spanner was thrown into the works however by what can be called ideologues who care not about our imperfect world but about some utopian deluded ideal. They have no self interest and can be considered to be drones. They care not of anything but their delusions and are willing to go to all lengths. Hence the DDoss, the censoring, etc. while at all times social engineering the debate so that their actual aims are not questioned. This, coupled with the isolation of the devs and their escape from light, thus making them highly vulnerable to manipulation, did not provide the opportunity for their premises to be questioned ad initio, rationally debated, and thus dismissed.

Instead a political situation of extremes was created which led to what in a healthy situation should not happen. The economic majority 100% in favour of XT and the miners almost 100% against it. Now that we have unanimous agreement however and the question proposed is whether to raise the blocksize to 2mb, it hopefully will become apparent to all what has been going on because they will be forced to argue their true postion which does not stand light for 2 seconds, but hopefully we all learn our lessons.

The businesses are hurting. The miners do not want to hurt the businesses, hence BTCC and even before that, the miners letter for 8mb. BU bridges all these interests and the BU approach can not persuasively be questioned.

So hopefully we can manage to bring light to the blocksize question, and so show that there was never really any division, but what was manufactured.
There are great observations here, one thing that I do disagree with however is your assessment of BIP101, I do not think we can say it has been rejected by the miners, this might be true in the moment but this can still change quickly. I think that many miners will not touch BIP101 because of the controversy and extreme polarization that has taken place. Big miners tend to be conservative, for good reasons. Even though we have a better option now in the form of BU, I do think that BIP101 is still very much in play.
 

VeritasSapere

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Nov 16, 2015
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To understand the decision making power of miners over users, we only need to look at Bitcoin's design.

The only action miners perform in Bitcoin is to determine the order of transactions. That is it. If a transaction is located earlier in a chain, then that transaction happened first and there can be no disagreement. However they do not specify specify anything else including Bitcoin's consensus rules.

The rules are defined by the users in the form of which blocks/chains they accept as valid. Miners have to operate within those rules, or no one accepts the blocks they produce. Miners are completely constrained by what rules users decide to accept as valid rules.

For example, even if 90% of miners started to issue blocks with 50BTC coinbase rewards, they still could not change Bitcoin's reward schedule simply because users would reject those blocks, no matter how long of a chain the miners produce. A 51% attack can ONLY change transaction ordering, it can not change anything else.

If users tomorrow decided to only accept BIP101 blocks, then miners have zero say over that decision. Even if 90% of the hash power stayed with non-BIP101 blocks it wouldn't matter, the users would follow the shorter chain produced by the 10% supporting miners because the other blocks would be rejected as invalid.

This is why all the arguments saying Chinese miners want this or that is absurd. Miners perform a transaction ordering service only, they do not get to dictate anything else to users. If a majority of miners refuse to mine larger blocks, the users can simply decide to ignore the laggards holding the network back.
I think that you are correct in stating that ultimately the users or the economic majority decides which chain has the most value and that therefore it is the economic majority that rules Bitcoin. However I do think the miners still play an important role in this. Proof of work is the best way to determine consensus because it can not be spoofed or Sybil attacked. The incentive mechanism also acts the strongest on the miners. Therefore it does make sense that the miners decide on these major issues as long as the presumption that the miners will follow the economic majority holds true, which I believe it does. Which brings me back to my theory on Bitcoin governance.

VeritasSapere said:
Consensus is an emergent property which flows from the will of the economic majority. Proof of work is the best way to measure this consensus. The pools act as proxy for the miners, pools behave in a similar way to representatives within a representative democracy. Then in turn the miners act as a proxy for the economic majority. Since the miners are incentivized to follow the economic majority. In effect the economic majority rules Bitcoin, in other words the market rules Bitcoin. Bitcoin relies on the economic self-interest of the masses to govern consensus.
 

freetrader

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Dec 16, 2015
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Putting myself in the position of a miner (which I'm not) I would probably be extremely adverse to risking my investment in hardware, staff etc. It wouldn't matter much that someone assures me that the block size limit <> the actual block size. If I'd see any risk of being left behind, I'd be very worried. XT's exponentially increasing limit didn't soothe that feeling, and BU with emerging consensus might not either.

But that would be ignoring the reality to some extent. Which is that nothing can guarantee that I as a miner will not be kicked out of the race due to some unfortunate circumstances, that's the nature of competition.

However, there is one thing that I as a miner would fear above all:

Bitcoin losing its reputation as an accessible form of payment. This can ruin its value and put me and most other budding Bitcoin enterprises out of business.

Jeff Garzik's predicted Fee Event / Economic Change Event is something that could do that to a large extent.

So while I think BU has the best approach, what miners should care about most of all is to raise the limit by any means before they run into that.
 
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cypherdoc

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Aug 26, 2015
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I think that you are correct in stating that ultimately the users or the economic majority decides which chain has the most value and that therefore it is the economic majority that rules Bitcoin. However I do think the miners still play an important role in this. Proof of work is the best way to determine consensus because it can not be spoofed or Sybil attacked. The incentive mechanism also acts the strongest on the miners. Therefore it does make sense that the miners decide on these major issues as long as the presumption that the miners will follow the economic majority holds true, which I believe it does. Which brings me back to my theory on Bitcoin governance.
I'd modify this just a bit by pointing out that to the degree that miners hold coins, which I think is significant, the miners are a significant part of the economic majority.
 

VeritasSapere

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Nov 16, 2015
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I do not think it is as significant as you might think. How many coins the miners hold, I might even go so far as to say that this is not an important precondition for the incentive mechanism to work upon the miners. The reason being is that coins can be sold quickly. Huge mining farms on the other hand can not. It is this lasting investment that provides a much stronger incentive compared to just holding the coins. With continues electrical costs and very expensive equipment that does not have any value if Bitcoin where to lose its value. This is often why proof of stake is criticized, because of the nothing at stake problem. With proof of work mining this stake can not be easily and quickly liquidated, providing a lasting and more definite incentive compared to other types of investors.

I think that most miners do hold a lot of Bitcoin, this does provide a positive incentive, I just do not think it is as important as an incentive when compared to the activity of mining itself.
 

cypherdoc

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Aug 26, 2015
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Putting myself in the position of a miner (which I'm not) I would probably be extremely adverse to risking my investment in hardware, staff etc. It wouldn't matter much that someone assures me that the block size limit <> the actual block size. If I'd see any risk of being left behind, I'd be very worried. XT's exponentially increasing limit didn't soothe that feeling, and BU with emerging consensus might not either.

But that would be ignoring the reality to some extent. Which is that nothing can guarantee that I as a miner will not be kicked out of the race due to some unfortunate circumstances, that's the nature of competition.

However, there is one thing that I as a miner would fear above all:

Bitcoin losing its reputation as an accessible form of payment. This can ruin its value and put me and most other budding Bitcoin enterprises out of business.

Jeff Garzik's predicted Fee Event / Economic Change Event is something that could do that to a large extent.

So while I think BU has the best approach, what miners should care about most of all is to raise the limit by any means before they run into that.
yeah, the dynamics of mining and it's hardware obsolescence place enormous pressure on uptime. no one wants to risk losing blocks or payouts. a clear solution is necessary before major change can take place.
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I do not think it is as significant as you might think. How many coins the miners hold, I might even go so far as to say that this is not an important precondition for the incentive mechanism to work upon the miners. The reason being is that coins can be sold quickly. Huge mining farms on the other hand can not. It is this lasting investment that provides a much stronger incentive compared to just holding the coins. With continues electrical costs and very expensive equipment that does not have any value if Bitcoin where to lose its value. This is often why proof of stake is criticized, because of the nothing at stake problem. With proof of work mining this stake can not be easily and quickly liquidated, providing a lasting and more definite incentive compared to other types of investors.

I think that most miners do hold a lot of Bitcoin, this does provide a positive incentive, I just do not think it is as important as an incentive when compared to the activity of mining itself.
yeah, i'll agree with that. i shouldn't have placed so much emphasis on coin holdings. investing in significant amounts of hardware alone though could still be considered as being part of the economic majority.
[doublepost=1452270461][/doublepost]don't get fooled. Citi breaking down badly:



as is Morgan:



in fact, the whole sector. here's the financial triple short launching:


[doublepost=1452270686,1452269905][/doublepost]real world mining just can't catch a break:



i'm pretty sure we're going to see oil in the $20's before the end of this. the real question is can it get to the teens?:

 

Richy_T

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Dec 27, 2015
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cypherdoc

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Aug 26, 2015
5,257
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bellwether Nordstrom's about to break the June 2012 low: