16 ms·

Bitcoin Is Dead, Long Live Bitcoin

221 points by gist 11y ago

manyoso 11y ago
This is interesting to me because it presents the blockchain size dispute in a way that seems much more sympathetic to the "no, we shouldn't increase the blockchain size" crowd than Mike Hearn's essay. Is it really true that the people who are objecting to increasing the blockchain size see Bitcoin turning into a reserve "currency" to hold wealth instead of a liquid currency used to make real time transactions? Is that really the debate? Because I didn't get that from Mike Hearn's essay at all...
- forthefuture 11y ago
  I think this touches upon an even bigger problem in the Bitcoin community. Very few people actually know what they want other than the price to go up. And those who do are all at odds with eachother because Bitcoin can't do everything at once.
  - unexpand 11y ago
    The very people who want the value to go up will keep the Bitcoin alive. It is too early to proclaim it dead.
    - al2o3cr 11y ago
      LOL, that works until it doesn't. There's a name for that sort of financial scheme...
  - manyoso 11y ago
    I have no history with Bitcoin, but if people want the value of Bitcoin to go up I think it'd behoove them to make Bitcoin useful to people as a solution to a problem. I'm not sure the idea of a decentralized reserve currency with unknown/random time-to-liquidity is a very useful solution to any problem. Bitcoin obviously has value right now as demonstrated by the fact that people can go out and exchange coins for things people regard as valuable, but current value is not a perfect indicator of future value and I'd argue that the current value is at least somewhat predicated on the belief that Bitcoin will eventually become a useful replacement for today's highly-liquid real-time transactional currencies. I am probably naive, but can't a solution be found by simply increasing the block chain size and then creating software that makes the verification of transactions more distributed by making the process more fine grained in terms of CPU and memory resources? In other words, split current "nodes" into a more fine grained distributed virtual node that low end computers can run?
    - zanny 11y ago
      It isn't about computational difficulty. Larger block sizes simply mean larger blockchains and more network use to transfer them around. The verification of transactions in bitcoin is central to its protocol. Its the whole reason its novel and relevant. You would have to change the proof of work system from sha256 hashing to something else to make it anything but optimal for computation on specialized ASIC hardware. If you do that, now you have another cryptocurrency - litecoin, peercoin, etc. And when you use a hashing algorithm meant to be hard for general computers (cpu or gpu) to do, and can manufacture hardware that does them much more efficiently, you end up where we are now where big miners and a handful of people represent most of bitcoins mining power.
      - Anonobread 11y ago
        No matter what crazy optimized-for-decentralization algorithm you come up with to mine cryptocurrency, large investors are going to buy a ton of it and put it in datacenters in China. Newbies and people invested in alternative attempts at Proof of Work often complain about this longstanding issue while utterly failing to solve it themselves.
        zanny 11y ago
        Is it an issue? Of course you could spend millions to buy mining hardware. The issue in bitcoin is more that you spend millions on novel mining hardware nobody else has. If your hashing function is CPU or GPU friendly, suddenly everyone in the economy has hardware capable of potentially mining your crytocurrency. The problem with bitcoin is that those hundred million dollar datacenters are the only places top of the line SHA256 hashing hardware is found. If they were just GPU cluster datacenters, despite their scale, they still would not compete with the distributed power of millions of home users desktops to as much a ludicrous degree as modern ASIC miners are in the bitcoin space.
        Anonobread 11y ago
        > Is it an issue? Conundrum? Regardless, it's unsolvable, and I do empathize with the people who complain or offer their own (non)solutions. > If they were just GPU cluster datacenters, despite their scale, they still would not compete with the distributed power of millions of home users desktops to as much a ludicrous degree as modern ASIC miners are in the Bitcoin space. Do you suggest efficiencies of scale don't apply to GPU clusters in datacenters, or CPU clusters in datacenters? As it pertains to mining centralization, do you suggest efficiences of scale only apply to sha256 ASICs? The idea that this can be "solved" with clever code is utterly naive. The bottom line is investors in any cryptocurrency, regardless of its hashing algo, will buy up the majority of the hashing rate with high efficiency rigs in well-connected datacenters with low priced electricity. Tell me how to fix that with code. You can't do it - although I've certainly seen more than my fair share of altcoin investors try in vain to do just that.
- TD-Linux 11y ago
  The opinion, of course, widely varies. Mike's piece was Mike's opinion, so of course it's not going to be very sympathetic to Core developers. The limits on transaction size have been known since the beginning of Bitcoin. VISA level transaction rates require insanely high block sizes, much larger than those proposed so far. People have come up with many, many different solutions to this problem. One thrown around a lot is the lightning network [1], but it's not really a "reserve currency" in this case - it's a way to prevent a bunch of intermediate transactions from entering the blockchain forever, but it's based around advanced Bitcoin scripting usage, so it's using Bitcoin for much more than just a backing value. Keep in mind that Bitcoin currently has a $6 billion USD market cap. Breaking Bitcoin would reduce that to $0. Many people have strong motivations to be conservative with changes... [1] https://lightning.network/ https://lightning.network/
  - woah 11y ago
    The Lightning network is not based on advanced Bitcoin scripting, in the sense that Bitcoin script makes it possible or something. Bitcoin script is, rather, an impediment which has added a huge amount of complexity to Lightning. The same principle expressed without Bitcoin script can be explained in a few minutes[1] 1. http://altheamesh.com/blog/universal-payment-channels/ http://altheamesh.com/blog/universal-payment-channels/
    - josephpoon 11y ago
      You are wrong. Lightning works by using smart contract logic. For Bitcoin in particular, that involves using Bitcoin scripting using real Bitcoin transactions. That blogpost is basically describing lightning. Lightning Network has explicitly described instant cross-chain swaps privately, and publicly for many months.
      - woah 11y ago
        Yes, and on a platform that allows for arbitrary logic, like a Turing-complete blockchain, or just a regular server, Lightning-like transactions are trivial. They can be described in minutes, and implemented in weeks. Due to the limitations of Bitcoin script, Lightning takes 60 pages to describe and is still not implemented. It's a revolutionary concept, hobbled by an antiquated platform.
- swang 11y ago
  I would say if one read's Mike's essay and assumed a few things, his opinion would be that it's a moot point. There are already people who think bitcoin is a liquid asset where trading x bitcoins can buy something of value. Those people are having a bad user experience buying stuff with bitcoin, and thus are less encouraged to use bitcoin in the future, which hurts bitcoin as a whole.
- wmf 11y ago
  I would put it in a slightly different way: Everyone wants "Visa" functionality, but there is a debate about whether the solution is a one-layer system where base Bitcoin provides transaction throughput or a two-layer system where transaction throughput is provided by a separate layer on top of Bitcoin.
  - aurelius12 11y ago
    The trouble is that Visa functionality already exists and it already works really, really well for both consumers and merchants.
    - supster 11y ago
      The Visa fee of 1-3% is too expensive in the internet era. It made sense 50 years ago when cost of moving information was high, but now it's just rent seeking.
      - dragontamer 11y ago
        Yeah, except BTC transaction costs are skyrocketing due to the blockchain size being too small. So basically, Visa will continue being Visa, and BTC will refuse to compete against it. Honestly, the proper competition vs Visa is ACH-based transactions like Dwolla.
      - xorcist 11y ago
        It's not just the fees, but the payment processors. You need a contract with them and you need to integrate with their systems at high cost. This is something you normally solve with yet another middleman, like a bank or Stripe. In contrast, Bitcoin is permissionless. Just install the software and receive payments just like anyone else. That's what something born in the Internet age looks like.
        yc1010 11y ago
        This, we went with Stripe before but apparently hosting is too high risk and (they claim) their banking partners did not want to do business with our little Irish startup. No such issues with bitcoin
- kvnn 11y ago
  The people who would very likely sway a decision on the block size are currently opposed to increasing the block size because (1) there is no immediate need to do so and (2) there is risk that there can be unintended consequences (one of which is making the network more centralized). Some people, including Hearn (who is more vitriolic than the average) believe that #1 is false and #2 is a necessary risk. If you are coming at this from reading Hearn's words, you are coming at this from an extreme perspective that would be balanced by reading Gregory Maxwell's words. I recommend http://www.truthcoin.info/blog/blocksize-conversation/ http://www.truthcoin.info/blog/blocksize-conversation/ for a critical, outside and rational perspective.
- sroerick 11y ago
  I think Mike Hearn's essay was pretty disingenuous. Most of the people I know who have issues with XT have issues that go far beyond forking. For example, some of the code included in XT includes blacklisting code. It also would break anonymity. I don't know if the camps is quite divided along the lines put forth in this article, but it's certainly true that XT wants to become/replace Visa. Many people have been frustrated at the XT team, because whenever these concerns are aired they are ignored. Then, arguments like Hearn's are put forward, which imply that the only thing XT does is increase scalability, and opponents just have their heads in the sand. It doesn't help that nearly every Bitcoin discussion forum has been seized by one side of the other, and moderated to all hell.
  - Obi_Juan_Kenobi 11y ago
    Yeah, it'll be interesting to see how Classic does. It definitely puts some pressure on Core.
- Obi_Juan_Kenobi 11y ago
  The debate is very complex, with many people discussing orthogonal issues. Some are the cypherpunks that want security at all costs. They see Bitcoin as a failure unless just about anyone can operate the network. They already see mining as a failure because it's too centralized, and are staunchly opposed to anything that might increase that centralization. Ironically, I think increasing the block size would provide advantages to miners outside of the China firewall, which may have the effect of decentralizing mining a little. That's a very simple take on it, though, and only one of many factors. Interestingly, many who hold this view argue that changes can only be made to the network through strict consensus, ultimately relying on very centralized development. Others see Bitcoin as a currency that should be used at the consumer level, like cash. They want a network that grows and is predictable for investors. The possibility of expensive transactions is dangerous to business models and will stall adoption. There are some focused on the technology, and what can be built on top of bitcoin. Recognizing the network effect (more users, more value), they see using Bitcoin as a settlement layer for the various implementations on top of that. Some of these require some changes to the Bitcoin protocol, and there's much controversy in what is permissible. Lightning Network, side chains, etc. could all operate at different frequencies of Bitcoin settlement transactions. Other services would like to store information on the blockchain, using a small transaction fee to pay for immutable information storage. This could be used for contracts of all sorts. Some would see this is spam on the network, and others a huge innovation and source of value. Some will look to the early development for guidance. Satoshi wrote a lot about how the network might evolve, and it's quite clear that he thought network capacity would improve with technology. Basically, some use the argument that the 1MB limit was a stopgap, temporary limit that has passed its usefulness. The 'Bitcoin people signed up for' is one with a growing block size. You can add to that concerns about many of the core developers working at Blockstream, so might have perverse incentives to cripple Bitcoin to generate demand for their products. It's ... a little complex.
brighton36 11y ago
The actual story here is that the attempt to fork Bitcoin (Bitcoin XT) is dead. Hearn tried to do so, failed, and left. Anyone who doesn't run XT should be celebrating their victory.
- geofft 11y ago
  But there's Bitcoin Classic now, right? Which is emphatically an attempt to fork Bitcoin (just an attempt to fork it even more aggressively than XT to the point where Core is the actual fork). Would Classic have happened without XT? It seems to share some developers.
brudgers 11y ago
Even when Bitcoin was riding high, Wilson was investing in something he believed was likely to fail. It's what he does: invest in startups, I mean. I don't see any reason to believe that his position on Bitcoin should be read in any other terms than his investment in Bitcoin companies is not appreciably worse or more risky than other companies in his fund. That his personal asset portfolio holds less Bitcoin than wine illustrates the distinction he's making. His message is for people invested in Bitcoin companies. It is don't panic, these companies were always risky.
mabbo 11y ago
The problem with bitcoin, as I see it, is that discussion of problems that may exist can lower the value of bitcoin- whether the problem is real or not. If you're heavily invested emotionally with bitcoins, you need to discuss these problems so that they can be solved. If you're heavily invested financially, you need to make sure no one talks about these problems, at least until you have a plan for how you're not going to lose your fortune. Those invested financially have very good reasons to believe in solutions that will retain their investment, and dismiss solutions that put them at risk.
- TeMPOraL 11y ago
  Isn't this also how the stock market works?
  - geofft 11y ago
    Issues internal to a company are usually kept very confidential until they're able to be addressed in a managed press release/conference, and this is so respected that the state's monopoly on violence will come after you if you breach that confidentiality and trade on the result. For a currency, the US Federal Reserve works the same way; there's only limited speculation (based on public data) until they make an announcement about monetary policy, and the discussions leading up to that announcement are also kept very secret to avoid disruption to the market.
- yc1010 11y ago
  Well the problem is THAT DISCUSSION OF SOLUTIONS to bitcoin issues are being censored, with key people being banned from the usual discussion forums A decentralized currency where the development, mining and discussion is controlled by less than a dozen people which is a joke
  - kang 11y ago
    It is irrational to complain about censorship in a private location.
maaku 11y ago
> At the core of the debate is whether the Bitcoin blockchain should be a settlement layer that supports a number of new blockchains that can be scaled to achieve various goals or whether the Bitcoin blockchain itself should evolve in a way that it can scale to achieve those various goals. No, among the developers actually working on Bitcoin that is not what the debate is about at all. Bitcoin is a decentralized ledger, and indeed it can be argued that this is the only property about Bitcoin which is interesting/useful. Why? Because all properties we care about (availability, uncensorability, unseizability, etc.) derive from decentralization[0]. And at the end of the day we can do everything Bitcoin does faster, better, and cheaper on some alternative consensus system (see: Stellar, Open-Transactions, Liquid) that does not have this decentralization property. Decentralization is expensive. It requires a dynamic membership, multi-party block signing algorithm, which at the moment means proof of work. And proof of work costs hundreds of millions of dollars per year to maintain, and throttles the available bandwidth due to the adversarial assumption and the existence of selfish mining[1]. The question is not whether Bitcoin should be a store of value or a medium of exchange. That implies we have some choice in the matter. The question is what level of on-chain utility does Bitcoin actually support under untrusted, adversarial conditions, without losing all properties derived from decentralization. This is an empirical question. The available bandwidth is something that can be determined from the performance of the code in the real world extrapolated to various adversarial simulations. We had two Scaling Bitcoin workshops last year that gave us a data-driven answer: 3-4MB per block, tops. There are potentially ways that this number can be improved (see: weak blocks), and those are being worked on but are still some time from showing results. There are also some assumptions underlying this number, e.g. that we change the validation cost metric, which none of the existing proposals do in a smart way. But the scientific process is telling us right now that with the tools available to us we can increase the worst-case block size to 3-4MB with a better metric without the decentralization story becoming unacceptably worse off. That is the plan of Bitcoin Core. The deployment of segregated witness will allow up to 2MB blocks under typical conditions, and 3-4MB under worst-case adversarial conditions. It will exhaust the available capacity for growth in the Bitcoin network at this time. Meanwhile, work progresses on IBLT, weak blocks, Bitcoin-NG, fraud proofs and probabilistic validation, and other related technologies that might provide an answer for the next increase a year or two later. I'm hopeful we may even be able to get an order of magnitude improvement from that one, but we'll see. No one I'm aware of is pushing for smaller blocks because Bitcoin should be a store of value and a settlement layer. If I had magic pixie dust I'd want 1GB blocks and everything on-chain too. But we live in the real world and are stuck in a situation where Bitcoin loses all of its unique properties if we scale much further than where we are at now. And so we must ask the question: what will Bitcoin become, since it can't scale on-chain? How can we live with that outcome? The idea of a settlement layer and off-chain but trustless payment networks like Lightning naturally arise from that thinking. The Lightning Network[2] is a way that we can have our cake and eat it too: Bitcoin remains small and decentralized, but everyone still has access to bitcoin payments. Lightning can potentially scale to global usage with a small-block chain as the settlement layer. [0]: http://bluematt.bitcoin.ninja/2015/01/14/decentralization/ http://bluematt.bitcoin.ninja/2015/01/14/decentralization/ [1]: http://hackingdistributed.com/2013/11/04/bitcoin-is-broken/ http://hackingdistributed.com/2013/11/04/bitcoin-is-broken/ [2]: http://lightning.network/ http://lightning.network/
tomasien 11y ago
Love the Bitcoin/VISA analogy. Wrote about it here: https://medium.com/shekel-magazine/odd-bedfellows-the-strange-history-of-visa-and-how-it-relates-bitcoin-101a93507c17 https://medium.com/shekel-magazine/odd-bedfellows-the-strang... Can 100% understand why some people may hate that future for Bitcoin, but I think the parallels are serious and it's probably what will happen.
gtrubetskoy 11y ago
Correct me if I'm wrong, but if this was a stock or some other security, and I somehow had influence over how it is managed thus what I said could affect its value, declaring it "dead" (or soon to be worthless) AND holding interest in it (long or short) - would be criminal in most countries.
- witty_username 11y ago
  Then this would be illegal (the website owners have a short in Herbalife). http://www.factsaboutherbalife.com/ http://www.factsaboutherbalife.com/ I think as long as you disclose your position in the stock/security, you can say whatever you want.
  - shawn-furyan 11y ago
    Indeed. People who specialize in shorting stocks, bonds, etc. live on the cycle of finding dirt through thorough private research, shorting the stock, and then publicizing the dirt. This is actually one of the mechanisms that Efficient Market Theory relies upon for disseminating market information. If you could only benefit from assets increasing in value, then there would mostly be negative incentive for anyone to try to expose companies that are weaker than the market assumes them to be.
kang 11y ago
It is a traditional view that in order to increase throughput we need to increase the bandwidth. This is true but we also know that throughput can be increased by abstracting the existing bandwidth to hold more information. Increasing the blocksize will increase throughput, but is it the only way? Definitely not. The very recently improvement by Dr.Peter Wuille to segregate the witness (cryptography used to validate transactions) from the data (transactions) increases the capacity by around 66%, even if block's max size is unchanged. This is already in the testing phase. There is a whole bitcoin scaling roadmap & a lot of work going on.[0] Practically, the death scenario being painted by XT hasn't realised and transactions are still going through normally.[1] The bitcoin developer community comprises of very capable hackers many of whom are not only PHDs but have also invented new cryptographic techniques and also are robust security coders.[2][3] [0]https://bitcoin.org/en/bitcoin-core/capacity-increases-faq https://bitcoin.org/en/bitcoin-core/capacity-increases-faq [1]http://statoshi.info/dashboard/db/transactions?panelId=4&fullscreen&from=1435768112971&to=1452875394268 http://statoshi.info/dashboard/db/transactions?panelId=4&ful... [2]https://people.xiph.org/~greg/confidential_values.txt https://people.xiph.org/~greg/confidential_values.txt [3]https://blockstream.com/2015/08/24/treesignatures/ https://blockstream.com/2015/08/24/treesignatures/
magicmu 11y ago
It seems like the potential fork in bitcoin is already happening to some degree with Elements and the sidechain (https://github.com/ElementsProject/elements https://github.com/ElementsProject/elements) -- a super interesting project that I just found out about yesterday! I can't help but feel, to a certain degree, like forking bitcoin is re-arranging deck chairs on the titanic though. There already seem to be more viable alternative cryptocurrencies.
- zanny 11y ago
  The problem is for almost everyone technical features are trumped by market cap when it comes to cryptocurrencies. Viability for almost everyone comes down to which economy commands the most investment into it.
- kang 11y ago
  This is not necessarily a fork. You can have a new blockchain & exchange it tokens for bitcoin using atomic swap protocol. To implicitly implement the two-way-peg would a fork be needed.
- kang 11y ago
  I have an edit to make. Even two-way pegs don't need a hard fork
phaet0n 11y ago
Bitcoin is simply going through a discontinuity brought on by a fixed blocksize. Personally, I feel uncertainty is the real issue. The "community" should either accept this, or opt for a potentially unlimited ceiling (limited by physics and network size and topology). If you choose to remain with the fixed blocksize, then you're betting the system will reach another equilibrium (which may be total collapse). This equilibrium will revolve a natural evolution in the pricing of transactions. Either way, at some other point in the future another source of discontinuity will be the circulation limit. Again, which may or may not kill the system. Bitcoin is simply evolving, as it necessarily needs to. It's definitely interesting to watch as an outsider.
glossyscr 11y ago
> I read his entire post a couple times. because some blockchain investments might be in danger
AndrewKemendo 11y ago
Back in 2009 when I was getting into bitcoin, it was widely described as a "stateless currency" and not just an alternative to Visa or credit cards. Having a background in economics, bitcoin looked to me like a truly revolutionary technology and if it was adopted en masse would change politics forever. The problem however is that a nation's currency is arguably the primary source of it's sovereignty. Whomever controls the currency primarily used in a nation, controls the nation. So it's safe to say that no nation is going to let bitcoin or any other currency take hold for widespread commercial use in lieu of it's sovereign currency - that's a hallmark of a failed state. In fact that's why when regulators declared bitcoin as a commodity it was such a big deal. The US doesn't really care because we haven't had commodity money since the 1970s, but the idea that if enough people decided that they wanted commodity money, they would arguably have a medium with which to do it with that wasn't tied to any state. So as with every product, unless a massive number of people decide to stop using their home currency and start using bitcoin, then bitcoin will "fail." Whether it pivots to some kind of credit system or not is largely immaterial because of the potential it had. It's like if we created Artificial General Intelligence and it decided to just write movie reviews forever.
- deleted 11y ago
  [deleted]
- valarauca1 11y ago
  The problem however is that a nation's currency is arguably the primary source of it's sovereignty. Whomever controls the currency primarily used in a nation, controls the nation How does Canadian Tire Money work then? :^)
- steve19 11y ago
  > nation's currency is arguably the primary source of it's sovereignty Not really. Many countries do not mint their own currency, and other mint currency but peg its value to another. https://en.wikipedia.org/wiki/Currency_substitution https://en.wikipedia.org/wiki/Currency_substitution What constitutes sovereignty is complex. It mostly comes down either legal recognition of sovereignty (de jure) or physical/guns on the ground control (de facto). https://en.wikipedia.org/wiki/Sovereignty https://en.wikipedia.org/wiki/Sovereignty
deleted 11y ago
[deleted]
Anonobread 11y ago
Block size isn't a free parameter. The team behind btcd, a Bitcoin full node written in Go, made the following observations about block size [1]: 1. a 32 MB block, when filled with simple P2PKH transactions, can hold approximately 167,000 transactions, which, assuming a block is mined every 10 minutes, translates to approximately 270 tps 2. a single machine acting as a full node takes approximately 10 minutes to verify and process a 32 MB block, meaning that a 32 MB block size is near the maximum one could expect to handle with 1 machine acting as a full node 3. a CPU profile of the time spent processing a 32 MB block by a full node is dominated by ECDSA signature verification, meaning that with the current infrastructure and computer hardware, scaling above 300 tps would require a clustered full node where ECDSA signature checking is load balanced across multiple machines. For context, a meager 300 tps is less than 10% of what VISA does - hence this solves no long standing problems in Bitcoin, yet it condemns all the nodes to run in compute clusters in datacenters. Naturally, "small blockists" as we're called, point out that this isn't how Bitcoin works today at all. Forcing nodes into compute clusters in remote datacenters is a major, sweeping departure from nodes running on home networks with consequences both forseeable and unforseeable. [1]: https://blog.conformal.com/btcsim-simulating-the-rise-of-bitcoin/ https://blog.conformal.com/btcsim-simulating-the-rise-of-bit...
- wmf 11y ago
  Hasn't signature verification speed been improved significantly since 2014? And what year would 32MB blocks be needed in and what processors would be available in that year?
  - Anonobread 11y ago
    > Hasn't signature verification speed been improved significantly since 2014 Pieter Wuille's work in libsecp256k1 promises to improve verification speeds on 64-bit CPUs by as much as 700%, and it's set to be deployed on the network as early as February. This will hopefully be enough of a boost to reasonably process 2MB blocks on a desktop PC. This desktop processing goes very underappreciated by most onlookers. Imagine if you couldn't run a BitTorrent client on a home PC? To put it mildly, I would have an issue calling BitTorrent "peer-to-peer" in that case. For example, it would be absurd to out-and-out need a remote compute cluster to seed or leech torrents. > And what year would 32MB blocks be needed in and what processors would be available in that year? The "big blockist" proponents actually contended Bitcoin dies without 20MB blocks starting this month, January 2016, and doubling every two years. Going by their original propositions, we would have >32MB block capacity by around this time in 2018. How much do you think desktop PC performance will have improved by then? And this is to say nothing of the bandwidth costs [1]. [1]: http://statoshi.info/dashboard/db/bandwidth-usage http://statoshi.info/dashboard/db/bandwidth-usage
pbreit 11y ago
I'm worried (about myself) that I easily shift between these 2 camps: this thing is outrageously ingenious and this thing is outrageously preposterous.
RealityVoid 11y ago
Yeah, well,that's just like... your oppinion, man.
pcmaffey 11y ago
1. I have no idea how to get Bitcoin. A quick search takes me to several exchanges that look like torrent sites for pirating shit. 2. Nor has anyone presented me a compelling reason to get bitcoin (other than the future). Off the top of my head, if a company offered me an account that would take care of my online transactions in a secure way using Bitcoin, I might be interested. Maybe I'd put a few hundred in it each month and use it for random expenditures, and hopefully get access to some cool micro-services. But I have zero awareness anything like that exists. 3. If it's to succeed as capital, it will be a daring bank that creates their own bitcoin equivalent... followed by one of the norwedish countries making their own national bitcoin. Then the floodgates will open.
- mabbo 11y ago
  The only real compelling reason anyone has these days to buy a bitcoin seems to be for use on darknet markets, mostly to buy drugs. The merits of those markets are wonderful to discuss, but as I don't really have a use for drugs in my life right now, I have no need for bitcoins.
  - StavrosK 11y ago
    I don't know, have you tried to buy plane tickets with a credit card? It takes me a solid half hour every time, between the "verified by Visa" crap, the merchant not accepting the card and some failure on their system. With Bitcoin, you tap the link and press "confirm". It's miles ahead of any other payment system I know, including cash (because you don't have to be in proximity of the recipient).
    - bduerst 11y ago
      >have you tried to buy plane tickets with a credit card? It takes me a solid half hour every time Who exactly are you buying plane tickets from? The last time I bought tickets, it took less than a minute to pay with a credit card. I spent more time searching for a flight with wifi.
      - 11y ago
nikolay 11y ago
Bitcoin is long dead; the blockchain - not so much, but it won't survive in its present form as it's highly inefficient.
- krupan 11y ago
  How do you have one without the other?
  - nikolay 11y ago
    The blockchain as a technology, not necessarily an operating service.
  - im_down_w_otp 11y ago
    "Blockchain" is just a brand name given to a particular form of using Merkle trees, and Merkle trees have no correlation or dependency whatsoever on Bitcoin.
markbnj 11y ago
I have never understood the bitcoin protocol very well, and I did not have time to read the entire posted article and its linked supporting pieces. That said, I did pick up that one of the major issues is that a few miners in China control a huge portion of the hash power and have an incentive not to allow growth. Given that computing power is so affordable, is it really not possible for some competing group to decide to save the protocol by creating some large resource pools? In other words, can miners not be evicted once in control?
- outworlder 11y ago
  The problem is one of scale. Bitcoin is heavy resource-intensive. So much so, that your Core i7 can't really do anything. These days, not even the latest GPUs can compete. You really need specialized hardware, and a ton of it. And so, money. It's not enough to spin a thousand VMs in AWS and call it a day.
  - markbnj 11y ago
    Yes, certainly. I wasn't assuming that a couple of programmers could pull it off. But if a group of people with the funding wanted to take control of the network away from these problematic miners could they?
    - wmf 11y ago
      Sure, but they'd lose $10M+ to do it.
compcoin 11y ago
Bitcoin will one day be known as 'the grandaddy of them all' just like the Rose Bowl. Bitcoin suffers from centralization, the very thing it was designed to circumvent The Bitcoin cultist are emotionally wrapped up with the idea that it has to be everything for everyone. Money has a way of making us emotional. Bitcoin has to be a payment machine for payment processors, It has to be a store of wealth for investors, It has to be a currency for libertarians. It is so caught up in trying to be everything that it does none well. Bitcoin developers dont be afraid to go your own way. They should branch out into new areas and create new coins, applications and opportunities. Why does it have to be Bitcoin or bust. Proponents attack new ideas. They wake up at night in terror that something new might emerge that meet needs in better ways. What would the Stockmarket be like if there was but one issue to trade. It is no wonder that Bitcoin companies struggle to make money. The market is being restrained from growing by those that seek to control the golden goose and make certain that there is no other options. Yes, new things are coming and new financial markets will come into being whether Bitcoin changes its protocol or not. Centralization leads to waste fraud and abuse even with the best of intentions Bitcoin
anon4this1 11y ago
if chinese miners are indeed trying to limit blocksize in order to increase transaction costs, then the necessary chain of events which needs to occur is: 1) faith in bitcoin as a currency/payment system drops causing price crash 2) miners realise that the marginal increase in money made via transaction costs is massively outweighed by what they have lost in block rewards by limiting growth of the system 3) the miners get their act together and everyone upgrades to a new whizzy high capacity bitcoin. This should continue to work until block reward becomes negligible in 2035.
Animats 11y ago
The article asks "is Bitcoin gold" or "is Bitcoin Visa". Bitcoin's first killer app was drugs. Then Silk Road I and Silk Road II were taken down. That put a dent in the price. Currently, Bitcoin is a way to get yuan out of China and convert it to dollars or euros, despite China's exchange controls. Most of the mining and the exchange volume are in China. Buying Bitcoin with yuan and selling it outside China is technically prohibited by the People's Bank of China, but they haven't cracked down hard on it. Yet. Mining is also a way to convert yuan to dollars. Miners in China can also qualify for the loans and subsidies the government of China gives businesses. Bitcoin as a general currency for transactions just isn't happening. The real transaction costs are too high. There's volatility risk. There are exchange costs getting in, and exchange costs getting out. (At the retail level, those are high; Robocoin ATMs have a buy/sell spread of about 15%) There's also the substantial risk that the exchange will fail or steal your money. (This got better in 2015, but until then, more than half of Bitcoin exchanges went bust. It wasn't just Mt. Gox.) Paying 1% - 3% to Visa looks good compared to that, especially since buyers get protection against merchant fraud. Bitcoin as a speculation looks good some years, and bad in others. It's like a penny stock, except that Bitcoin is zero-sum. There's no intrinsic value, and no fundamentals. It's all greater-fool speculation. The impressive thing about Bitcoin is that the system is well behaved in the presence of a very high level of criminality. Few, if any, other distributed computer based systems can make that claim. It would be nice if DNS or BGP or SS7 worked that well.
nikolay 11y ago
The big drawback to the consumer is the speculative price. Of course, this attracts the scum of the Earth, but that's another r story. Bitcoin can be saved by applying the concept of a Currency Board [0]. All speculator will leave and only the serious players will stay and then regular folk can jump in. Of course, you can't make a million dollars from a single bitcoin you bought at $400, but you won't make it anyway if things go the way they've been going! Well, I know you can't apply the concept to Bitcoin, but just wanted to give some food for thought. [0] https://en.wikipedia.org/wiki/Currency_board https://en.wikipedia.org/wiki/Currency_board

221 points by gist 11y ago

This is interesting to me because it presents the blockchain size dispute in a way that seems much more sympathetic to the "no, we shouldn't increase the blockchain size" crowd than Mike Hearn's essay. Is it really true that the people who are objecting to increasing the blockchain size see Bitcoin turning into a reserve "currency" to hold wealth instead of a liquid currency used to make real time transactions? Is that really the debate? Because I didn't get that from Mike Hearn's essay at all...

forthefuture 11y ago
I think this touches upon an even bigger problem in the Bitcoin community. Very few people actually know what they want other than the price to go up. And those who do are all at odds with eachother because Bitcoin can't do everything at once.
- unexpand 11y ago
  The very people who want the value to go up will keep the Bitcoin alive. It is too early to proclaim it dead.
  - al2o3cr 11y ago
    LOL, that works until it doesn't. There's a name for that sort of financial scheme...
- manyoso 11y ago
  I have no history with Bitcoin, but if people want the value of Bitcoin to go up I think it'd behoove them to make Bitcoin useful to people as a solution to a problem. I'm not sure the idea of a decentralized reserve currency with unknown/random time-to-liquidity is a very useful solution to any problem. Bitcoin obviously has value right now as demonstrated by the fact that people can go out and exchange coins for things people regard as valuable, but current value is not a perfect indicator of future value and I'd argue that the current value is at least somewhat predicated on the belief that Bitcoin will eventually become a useful replacement for today's highly-liquid real-time transactional currencies. I am probably naive, but can't a solution be found by simply increasing the block chain size and then creating software that makes the verification of transactions more distributed by making the process more fine grained in terms of CPU and memory resources? In other words, split current "nodes" into a more fine grained distributed virtual node that low end computers can run?
  - zanny 11y ago
    It isn't about computational difficulty. Larger block sizes simply mean larger blockchains and more network use to transfer them around. The verification of transactions in bitcoin is central to its protocol. Its the whole reason its novel and relevant. You would have to change the proof of work system from sha256 hashing to something else to make it anything but optimal for computation on specialized ASIC hardware. If you do that, now you have another cryptocurrency - litecoin, peercoin, etc. And when you use a hashing algorithm meant to be hard for general computers (cpu or gpu) to do, and can manufacture hardware that does them much more efficiently, you end up where we are now where big miners and a handful of people represent most of bitcoins mining power.
    - Anonobread 11y ago
      No matter what crazy optimized-for-decentralization algorithm you come up with to mine cryptocurrency, large investors are going to buy a ton of it and put it in datacenters in China. Newbies and people invested in alternative attempts at Proof of Work often complain about this longstanding issue while utterly failing to solve it themselves.
      - zanny 11y ago
        Is it an issue? Of course you could spend millions to buy mining hardware. The issue in bitcoin is more that you spend millions on novel mining hardware nobody else has. If your hashing function is CPU or GPU friendly, suddenly everyone in the economy has hardware capable of potentially mining your crytocurrency. The problem with bitcoin is that those hundred million dollar datacenters are the only places top of the line SHA256 hashing hardware is found. If they were just GPU cluster datacenters, despite their scale, they still would not compete with the distributed power of millions of home users desktops to as much a ludicrous degree as modern ASIC miners are in the bitcoin space.
        Anonobread 11y ago
        > Is it an issue? Conundrum? Regardless, it's unsolvable, and I do empathize with the people who complain or offer their own (non)solutions. > If they were just GPU cluster datacenters, despite their scale, they still would not compete with the distributed power of millions of home users desktops to as much a ludicrous degree as modern ASIC miners are in the Bitcoin space. Do you suggest efficiencies of scale don't apply to GPU clusters in datacenters, or CPU clusters in datacenters? As it pertains to mining centralization, do you suggest efficiences of scale only apply to sha256 ASICs? The idea that this can be "solved" with clever code is utterly naive. The bottom line is investors in any cryptocurrency, regardless of its hashing algo, will buy up the majority of the hashing rate with high efficiency rigs in well-connected datacenters with low priced electricity. Tell me how to fix that with code. You can't do it - although I've certainly seen more than my fair share of altcoin investors try in vain to do just that.
TD-Linux 11y ago
The opinion, of course, widely varies. Mike's piece was Mike's opinion, so of course it's not going to be very sympathetic to Core developers. The limits on transaction size have been known since the beginning of Bitcoin. VISA level transaction rates require insanely high block sizes, much larger than those proposed so far. People have come up with many, many different solutions to this problem. One thrown around a lot is the lightning network [1], but it's not really a "reserve currency" in this case - it's a way to prevent a bunch of intermediate transactions from entering the blockchain forever, but it's based around advanced Bitcoin scripting usage, so it's using Bitcoin for much more than just a backing value. Keep in mind that Bitcoin currently has a $6 billion USD market cap. Breaking Bitcoin would reduce that to $0. Many people have strong motivations to be conservative with changes... [1] https://lightning.network/ https://lightning.network/
- woah 11y ago
  The Lightning network is not based on advanced Bitcoin scripting, in the sense that Bitcoin script makes it possible or something. Bitcoin script is, rather, an impediment which has added a huge amount of complexity to Lightning. The same principle expressed without Bitcoin script can be explained in a few minutes[1] 1. http://altheamesh.com/blog/universal-payment-channels/ http://altheamesh.com/blog/universal-payment-channels/
  - josephpoon 11y ago
    You are wrong. Lightning works by using smart contract logic. For Bitcoin in particular, that involves using Bitcoin scripting using real Bitcoin transactions. That blogpost is basically describing lightning. Lightning Network has explicitly described instant cross-chain swaps privately, and publicly for many months.
    - woah 11y ago
      Yes, and on a platform that allows for arbitrary logic, like a Turing-complete blockchain, or just a regular server, Lightning-like transactions are trivial. They can be described in minutes, and implemented in weeks. Due to the limitations of Bitcoin script, Lightning takes 60 pages to describe and is still not implemented. It's a revolutionary concept, hobbled by an antiquated platform.
swang 11y ago
I would say if one read's Mike's essay and assumed a few things, his opinion would be that it's a moot point. There are already people who think bitcoin is a liquid asset where trading x bitcoins can buy something of value. Those people are having a bad user experience buying stuff with bitcoin, and thus are less encouraged to use bitcoin in the future, which hurts bitcoin as a whole.
wmf 11y ago
I would put it in a slightly different way: Everyone wants "Visa" functionality, but there is a debate about whether the solution is a one-layer system where base Bitcoin provides transaction throughput or a two-layer system where transaction throughput is provided by a separate layer on top of Bitcoin.
- aurelius12 11y ago
  The trouble is that Visa functionality already exists and it already works really, really well for both consumers and merchants.
  - supster 11y ago
    The Visa fee of 1-3% is too expensive in the internet era. It made sense 50 years ago when cost of moving information was high, but now it's just rent seeking.
    - dragontamer 11y ago
      Yeah, except BTC transaction costs are skyrocketing due to the blockchain size being too small. So basically, Visa will continue being Visa, and BTC will refuse to compete against it. Honestly, the proper competition vs Visa is ACH-based transactions like Dwolla.
    - xorcist 11y ago
      It's not just the fees, but the payment processors. You need a contract with them and you need to integrate with their systems at high cost. This is something you normally solve with yet another middleman, like a bank or Stripe. In contrast, Bitcoin is permissionless. Just install the software and receive payments just like anyone else. That's what something born in the Internet age looks like.
      - yc1010 11y ago
        This, we went with Stripe before but apparently hosting is too high risk and (they claim) their banking partners did not want to do business with our little Irish startup. No such issues with bitcoin
kvnn 11y ago
The people who would very likely sway a decision on the block size are currently opposed to increasing the block size because (1) there is no immediate need to do so and (2) there is risk that there can be unintended consequences (one of which is making the network more centralized). Some people, including Hearn (who is more vitriolic than the average) believe that #1 is false and #2 is a necessary risk. If you are coming at this from reading Hearn's words, you are coming at this from an extreme perspective that would be balanced by reading Gregory Maxwell's words. I recommend http://www.truthcoin.info/blog/blocksize-conversation/ http://www.truthcoin.info/blog/blocksize-conversation/ for a critical, outside and rational perspective.
sroerick 11y ago
I think Mike Hearn's essay was pretty disingenuous. Most of the people I know who have issues with XT have issues that go far beyond forking. For example, some of the code included in XT includes blacklisting code. It also would break anonymity. I don't know if the camps is quite divided along the lines put forth in this article, but it's certainly true that XT wants to become/replace Visa. Many people have been frustrated at the XT team, because whenever these concerns are aired they are ignored. Then, arguments like Hearn's are put forward, which imply that the only thing XT does is increase scalability, and opponents just have their heads in the sand. It doesn't help that nearly every Bitcoin discussion forum has been seized by one side of the other, and moderated to all hell.
- Obi_Juan_Kenobi 11y ago
  Yeah, it'll be interesting to see how Classic does. It definitely puts some pressure on Core.
Obi_Juan_Kenobi 11y ago
The debate is very complex, with many people discussing orthogonal issues. Some are the cypherpunks that want security at all costs. They see Bitcoin as a failure unless just about anyone can operate the network. They already see mining as a failure because it's too centralized, and are staunchly opposed to anything that might increase that centralization. Ironically, I think increasing the block size would provide advantages to miners outside of the China firewall, which may have the effect of decentralizing mining a little. That's a very simple take on it, though, and only one of many factors. Interestingly, many who hold this view argue that changes can only be made to the network through strict consensus, ultimately relying on very centralized development. Others see Bitcoin as a currency that should be used at the consumer level, like cash. They want a network that grows and is predictable for investors. The possibility of expensive transactions is dangerous to business models and will stall adoption. There are some focused on the technology, and what can be built on top of bitcoin. Recognizing the network effect (more users, more value), they see using Bitcoin as a settlement layer for the various implementations on top of that. Some of these require some changes to the Bitcoin protocol, and there's much controversy in what is permissible. Lightning Network, side chains, etc. could all operate at different frequencies of Bitcoin settlement transactions. Other services would like to store information on the blockchain, using a small transaction fee to pay for immutable information storage. This could be used for contracts of all sorts. Some would see this is spam on the network, and others a huge innovation and source of value. Some will look to the early development for guidance. Satoshi wrote a lot about how the network might evolve, and it's quite clear that he thought network capacity would improve with technology. Basically, some use the argument that the 1MB limit was a stopgap, temporary limit that has passed its usefulness. The 'Bitcoin people signed up for' is one with a growing block size. You can add to that concerns about many of the core developers working at Blockstream, so might have perverse incentives to cripple Bitcoin to generate demand for their products. It's ... a little complex.

brighton36 11y ago

The actual story here is that the attempt to fork Bitcoin (Bitcoin XT) is dead. Hearn tried to do so, failed, and left. Anyone who doesn't run XT should be celebrating their victory.

geofft 11y ago
But there's Bitcoin Classic now, right? Which is emphatically an attempt to fork Bitcoin (just an attempt to fork it even more aggressively than XT to the point where Core is the actual fork). Would Classic have happened without XT? It seems to share some developers.

brudgers 11y ago

Even when Bitcoin was riding high, Wilson was investing in something he believed was likely to fail. It's what he does: invest in startups, I mean. I don't see any reason to believe that his position on Bitcoin should be read in any other terms than his investment in Bitcoin companies is not appreciably worse or more risky than other companies in his fund. That his personal asset portfolio holds less Bitcoin than wine illustrates the distinction he's making. His message is for people invested in Bitcoin companies. It is don't panic, these companies were always risky.

mabbo 11y ago

The problem with bitcoin, as I see it, is that discussion of problems that may exist can lower the value of bitcoin- whether the problem is real or not. If you're heavily invested emotionally with bitcoins, you need to discuss these problems so that they can be solved. If you're heavily invested financially, you need to make sure no one talks about these problems, at least until you have a plan for how you're not going to lose your fortune. Those invested financially have very good reasons to believe in solutions that will retain their investment, and dismiss solutions that put them at risk.

TeMPOraL 11y ago
Isn't this also how the stock market works?
- geofft 11y ago
  Issues internal to a company are usually kept very confidential until they're able to be addressed in a managed press release/conference, and this is so respected that the state's monopoly on violence will come after you if you breach that confidentiality and trade on the result. For a currency, the US Federal Reserve works the same way; there's only limited speculation (based on public data) until they make an announcement about monetary policy, and the discussions leading up to that announcement are also kept very secret to avoid disruption to the market.
yc1010 11y ago
Well the problem is THAT DISCUSSION OF SOLUTIONS to bitcoin issues are being censored, with key people being banned from the usual discussion forums A decentralized currency where the development, mining and discussion is controlled by less than a dozen people which is a joke
- kang 11y ago
  It is irrational to complain about censorship in a private location.

maaku 11y ago

> At the core of the debate is whether the Bitcoin blockchain should be a settlement layer that supports a number of new blockchains that can be scaled to achieve various goals or whether the Bitcoin blockchain itself should evolve in a way that it can scale to achieve those various goals. No, among the developers actually working on Bitcoin that is not what the debate is about at all. Bitcoin is a decentralized ledger, and indeed it can be argued that this is the only property about Bitcoin which is interesting/useful. Why? Because all properties we care about (availability, uncensorability, unseizability, etc.) derive from decentralization[0]. And at the end of the day we can do everything Bitcoin does faster, better, and cheaper on some alternative consensus system (see: Stellar, Open-Transactions, Liquid) that does not have this decentralization property. Decentralization is expensive. It requires a dynamic membership, multi-party block signing algorithm, which at the moment means proof of work. And proof of work costs hundreds of millions of dollars per year to maintain, and throttles the available bandwidth due to the adversarial assumption and the existence of selfish mining[1]. The question is not whether Bitcoin should be a store of value or a medium of exchange. That implies we have some choice in the matter. The question is what level of on-chain utility does Bitcoin actually support under untrusted, adversarial conditions, without losing all properties derived from decentralization. This is an empirical question. The available bandwidth is something that can be determined from the performance of the code in the real world extrapolated to various adversarial simulations. We had two Scaling Bitcoin workshops last year that gave us a data-driven answer: 3-4MB per block, tops. There are potentially ways that this number can be improved (see: weak blocks), and those are being worked on but are still some time from showing results. There are also some assumptions underlying this number, e.g. that we change the validation cost metric, which none of the existing proposals do in a smart way. But the scientific process is telling us right now that with the tools available to us we can increase the worst-case block size to 3-4MB with a better metric without the decentralization story becoming unacceptably worse off. That is the plan of Bitcoin Core. The deployment of segregated witness will allow up to 2MB blocks under typical conditions, and 3-4MB under worst-case adversarial conditions. It will exhaust the available capacity for growth in the Bitcoin network at this time. Meanwhile, work progresses on IBLT, weak blocks, Bitcoin-NG, fraud proofs and probabilistic validation, and other related technologies that might provide an answer for the next increase a year or two later. I'm hopeful we may even be able to get an order of magnitude improvement from that one, but we'll see. No one I'm aware of is pushing for smaller blocks because Bitcoin should be a store of value and a settlement layer. If I had magic pixie dust I'd want 1GB blocks and everything on-chain too. But we live in the real world and are stuck in a situation where Bitcoin loses all of its unique properties if we scale much further than where we are at now. And so we must ask the question: what will Bitcoin become, since it can't scale on-chain? How can we live with that outcome? The idea of a settlement layer and off-chain but trustless payment networks like Lightning naturally arise from that thinking. The Lightning Network[2] is a way that we can have our cake and eat it too: Bitcoin remains small and decentralized, but everyone still has access to bitcoin payments. Lightning can potentially scale to global usage with a small-block chain as the settlement layer. [0]: http://bluematt.bitcoin.ninja/2015/01/14/decentralization/ http://bluematt.bitcoin.ninja/2015/01/14/decentralization/ [1]: http://hackingdistributed.com/2013/11/04/bitcoin-is-broken/ http://hackingdistributed.com/2013/11/04/bitcoin-is-broken/ [2]: http://lightning.network/ http://lightning.network/

tomasien 11y ago

Love the Bitcoin/VISA analogy. Wrote about it here: https://medium.com/shekel-magazine/odd-bedfellows-the-strange-history-of-visa-and-how-it-relates-bitcoin-101a93507c17 https://medium.com/shekel-magazine/odd-bedfellows-the-strang... Can 100% understand why some people may hate that future for Bitcoin, but I think the parallels are serious and it's probably what will happen.

gtrubetskoy 11y ago

Correct me if I'm wrong, but if this was a stock or some other security, and I somehow had influence over how it is managed thus what I said could affect its value, declaring it "dead" (or soon to be worthless) AND holding interest in it (long or short) - would be criminal in most countries.

witty_username 11y ago
Then this would be illegal (the website owners have a short in Herbalife). http://www.factsaboutherbalife.com/ http://www.factsaboutherbalife.com/ I think as long as you disclose your position in the stock/security, you can say whatever you want.
- shawn-furyan 11y ago
  Indeed. People who specialize in shorting stocks, bonds, etc. live on the cycle of finding dirt through thorough private research, shorting the stock, and then publicizing the dirt. This is actually one of the mechanisms that Efficient Market Theory relies upon for disseminating market information. If you could only benefit from assets increasing in value, then there would mostly be negative incentive for anyone to try to expose companies that are weaker than the market assumes them to be.

kang 11y ago

It is a traditional view that in order to increase throughput we need to increase the bandwidth. This is true but we also know that throughput can be increased by abstracting the existing bandwidth to hold more information. Increasing the blocksize will increase throughput, but is it the only way? Definitely not. The very recently improvement by Dr.Peter Wuille to segregate the witness (cryptography used to validate transactions) from the data (transactions) increases the capacity by around 66%, even if block's max size is unchanged. This is already in the testing phase. There is a whole bitcoin scaling roadmap & a lot of work going on.[0] Practically, the death scenario being painted by XT hasn't realised and transactions are still going through normally.[1] The bitcoin developer community comprises of very capable hackers many of whom are not only PHDs but have also invented new cryptographic techniques and also are robust security coders.[2][3] [0]https://bitcoin.org/en/bitcoin-core/capacity-increases-faq https://bitcoin.org/en/bitcoin-core/capacity-increases-faq [1]http://statoshi.info/dashboard/db/transactions?panelId=4&fullscreen&from=1435768112971&to=1452875394268 http://statoshi.info/dashboard/db/transactions?panelId=4&ful... [2]https://people.xiph.org/~greg/confidential_values.txt https://people.xiph.org/~greg/confidential_values.txt [3]https://blockstream.com/2015/08/24/treesignatures/ https://blockstream.com/2015/08/24/treesignatures/

magicmu 11y ago

It seems like the potential fork in bitcoin is already happening to some degree with Elements and the sidechain (https://github.com/ElementsProject/elements https://github.com/ElementsProject/elements) -- a super interesting project that I just found out about yesterday! I can't help but feel, to a certain degree, like forking bitcoin is re-arranging deck chairs on the titanic though. There already seem to be more viable alternative cryptocurrencies.

zanny 11y ago
The problem is for almost everyone technical features are trumped by market cap when it comes to cryptocurrencies. Viability for almost everyone comes down to which economy commands the most investment into it.
kang 11y ago
This is not necessarily a fork. You can have a new blockchain & exchange it tokens for bitcoin using atomic swap protocol. To implicitly implement the two-way-peg would a fork be needed.
kang 11y ago
I have an edit to make. Even two-way pegs don't need a hard fork

phaet0n 11y ago

Bitcoin is simply going through a discontinuity brought on by a fixed blocksize. Personally, I feel uncertainty is the real issue. The "community" should either accept this, or opt for a potentially unlimited ceiling (limited by physics and network size and topology). If you choose to remain with the fixed blocksize, then you're betting the system will reach another equilibrium (which may be total collapse). This equilibrium will revolve a natural evolution in the pricing of transactions. Either way, at some other point in the future another source of discontinuity will be the circulation limit. Again, which may or may not kill the system. Bitcoin is simply evolving, as it necessarily needs to. It's definitely interesting to watch as an outsider.

glossyscr 11y ago

> I read his entire post a couple times. because some blockchain investments might be in danger

AndrewKemendo 11y ago

Back in 2009 when I was getting into bitcoin, it was widely described as a "stateless currency" and not just an alternative to Visa or credit cards. Having a background in economics, bitcoin looked to me like a truly revolutionary technology and if it was adopted en masse would change politics forever. The problem however is that a nation's currency is arguably the primary source of it's sovereignty. Whomever controls the currency primarily used in a nation, controls the nation. So it's safe to say that no nation is going to let bitcoin or any other currency take hold for widespread commercial use in lieu of it's sovereign currency - that's a hallmark of a failed state. In fact that's why when regulators declared bitcoin as a commodity it was such a big deal. The US doesn't really care because we haven't had commodity money since the 1970s, but the idea that if enough people decided that they wanted commodity money, they would arguably have a medium with which to do it with that wasn't tied to any state. So as with every product, unless a massive number of people decide to stop using their home currency and start using bitcoin, then bitcoin will "fail." Whether it pivots to some kind of credit system or not is largely immaterial because of the potential it had. It's like if we created Artificial General Intelligence and it decided to just write movie reviews forever.

deleted 11y ago
[deleted]
valarauca1 11y ago
The problem however is that a nation's currency is arguably the primary source of it's sovereignty. Whomever controls the currency primarily used in a nation, controls the nation How does Canadian Tire Money work then? :^)
steve19 11y ago
> nation's currency is arguably the primary source of it's sovereignty Not really. Many countries do not mint their own currency, and other mint currency but peg its value to another. https://en.wikipedia.org/wiki/Currency_substitution https://en.wikipedia.org/wiki/Currency_substitution What constitutes sovereignty is complex. It mostly comes down either legal recognition of sovereignty (de jure) or physical/guns on the ground control (de facto). https://en.wikipedia.org/wiki/Sovereignty https://en.wikipedia.org/wiki/Sovereignty

deleted 11y ago

[deleted]

Anonobread 11y ago

Block size isn't a free parameter. The team behind btcd, a Bitcoin full node written in Go, made the following observations about block size [1]: 1. a 32 MB block, when filled with simple P2PKH transactions, can hold approximately 167,000 transactions, which, assuming a block is mined every 10 minutes, translates to approximately 270 tps 2. a single machine acting as a full node takes approximately 10 minutes to verify and process a 32 MB block, meaning that a 32 MB block size is near the maximum one could expect to handle with 1 machine acting as a full node 3. a CPU profile of the time spent processing a 32 MB block by a full node is dominated by ECDSA signature verification, meaning that with the current infrastructure and computer hardware, scaling above 300 tps would require a clustered full node where ECDSA signature checking is load balanced across multiple machines. For context, a meager 300 tps is less than 10% of what VISA does - hence this solves no long standing problems in Bitcoin, yet it condemns all the nodes to run in compute clusters in datacenters. Naturally, "small blockists" as we're called, point out that this isn't how Bitcoin works today at all. Forcing nodes into compute clusters in remote datacenters is a major, sweeping departure from nodes running on home networks with consequences both forseeable and unforseeable. [1]: https://blog.conformal.com/btcsim-simulating-the-rise-of-bitcoin/ https://blog.conformal.com/btcsim-simulating-the-rise-of-bit...

wmf 11y ago
Hasn't signature verification speed been improved significantly since 2014? And what year would 32MB blocks be needed in and what processors would be available in that year?
- Anonobread 11y ago
  > Hasn't signature verification speed been improved significantly since 2014 Pieter Wuille's work in libsecp256k1 promises to improve verification speeds on 64-bit CPUs by as much as 700%, and it's set to be deployed on the network as early as February. This will hopefully be enough of a boost to reasonably process 2MB blocks on a desktop PC. This desktop processing goes very underappreciated by most onlookers. Imagine if you couldn't run a BitTorrent client on a home PC? To put it mildly, I would have an issue calling BitTorrent "peer-to-peer" in that case. For example, it would be absurd to out-and-out need a remote compute cluster to seed or leech torrents. > And what year would 32MB blocks be needed in and what processors would be available in that year? The "big blockist" proponents actually contended Bitcoin dies without 20MB blocks starting this month, January 2016, and doubling every two years. Going by their original propositions, we would have >32MB block capacity by around this time in 2018. How much do you think desktop PC performance will have improved by then? And this is to say nothing of the bandwidth costs [1]. [1]: http://statoshi.info/dashboard/db/bandwidth-usage http://statoshi.info/dashboard/db/bandwidth-usage

pbreit 11y ago

I'm worried (about myself) that I easily shift between these 2 camps: this thing is outrageously ingenious and this thing is outrageously preposterous.

RealityVoid 11y ago

Yeah, well,that's just like... your oppinion, man.

pcmaffey 11y ago

1. I have no idea how to get Bitcoin. A quick search takes me to several exchanges that look like torrent sites for pirating shit. 2. Nor has anyone presented me a compelling reason to get bitcoin (other than the future). Off the top of my head, if a company offered me an account that would take care of my online transactions in a secure way using Bitcoin, I might be interested. Maybe I'd put a few hundred in it each month and use it for random expenditures, and hopefully get access to some cool micro-services. But I have zero awareness anything like that exists. 3. If it's to succeed as capital, it will be a daring bank that creates their own bitcoin equivalent... followed by one of the norwedish countries making their own national bitcoin. Then the floodgates will open.

mabbo 11y ago
The only real compelling reason anyone has these days to buy a bitcoin seems to be for use on darknet markets, mostly to buy drugs. The merits of those markets are wonderful to discuss, but as I don't really have a use for drugs in my life right now, I have no need for bitcoins.
- StavrosK 11y ago
  I don't know, have you tried to buy plane tickets with a credit card? It takes me a solid half hour every time, between the "verified by Visa" crap, the merchant not accepting the card and some failure on their system. With Bitcoin, you tap the link and press "confirm". It's miles ahead of any other payment system I know, including cash (because you don't have to be in proximity of the recipient).
  - bduerst 11y ago
    >have you tried to buy plane tickets with a credit card? It takes me a solid half hour every time Who exactly are you buying plane tickets from? The last time I bought tickets, it took less than a minute to pay with a credit card. I spent more time searching for a flight with wifi.
    - 11y ago

nikolay 11y ago

Bitcoin is long dead; the blockchain - not so much, but it won't survive in its present form as it's highly inefficient.

krupan 11y ago
How do you have one without the other?
- nikolay 11y ago
  The blockchain as a technology, not necessarily an operating service.
- im_down_w_otp 11y ago
  "Blockchain" is just a brand name given to a particular form of using Merkle trees, and Merkle trees have no correlation or dependency whatsoever on Bitcoin.

markbnj 11y ago

I have never understood the bitcoin protocol very well, and I did not have time to read the entire posted article and its linked supporting pieces. That said, I did pick up that one of the major issues is that a few miners in China control a huge portion of the hash power and have an incentive not to allow growth. Given that computing power is so affordable, is it really not possible for some competing group to decide to save the protocol by creating some large resource pools? In other words, can miners not be evicted once in control?

outworlder 11y ago
The problem is one of scale. Bitcoin is heavy resource-intensive. So much so, that your Core i7 can't really do anything. These days, not even the latest GPUs can compete. You really need specialized hardware, and a ton of it. And so, money. It's not enough to spin a thousand VMs in AWS and call it a day.
- markbnj 11y ago
  Yes, certainly. I wasn't assuming that a couple of programmers could pull it off. But if a group of people with the funding wanted to take control of the network away from these problematic miners could they?
  - wmf 11y ago
    Sure, but they'd lose $10M+ to do it.

compcoin 11y ago

Bitcoin will one day be known as 'the grandaddy of them all' just like the Rose Bowl. Bitcoin suffers from centralization, the very thing it was designed to circumvent The Bitcoin cultist are emotionally wrapped up with the idea that it has to be everything for everyone. Money has a way of making us emotional. Bitcoin has to be a payment machine for payment processors, It has to be a store of wealth for investors, It has to be a currency for libertarians. It is so caught up in trying to be everything that it does none well. Bitcoin developers dont be afraid to go your own way. They should branch out into new areas and create new coins, applications and opportunities. Why does it have to be Bitcoin or bust. Proponents attack new ideas. They wake up at night in terror that something new might emerge that meet needs in better ways. What would the Stockmarket be like if there was but one issue to trade. It is no wonder that Bitcoin companies struggle to make money. The market is being restrained from growing by those that seek to control the golden goose and make certain that there is no other options. Yes, new things are coming and new financial markets will come into being whether Bitcoin changes its protocol or not. Centralization leads to waste fraud and abuse even with the best of intentions Bitcoin

anon4this1 11y ago

if chinese miners are indeed trying to limit blocksize in order to increase transaction costs, then the necessary chain of events which needs to occur is: 1) faith in bitcoin as a currency/payment system drops causing price crash 2) miners realise that the marginal increase in money made via transaction costs is massively outweighed by what they have lost in block rewards by limiting growth of the system 3) the miners get their act together and everyone upgrades to a new whizzy high capacity bitcoin. This should continue to work until block reward becomes negligible in 2035.

Animats 11y ago

The article asks "is Bitcoin gold" or "is Bitcoin Visa". Bitcoin's first killer app was drugs. Then Silk Road I and Silk Road II were taken down. That put a dent in the price. Currently, Bitcoin is a way to get yuan out of China and convert it to dollars or euros, despite China's exchange controls. Most of the mining and the exchange volume are in China. Buying Bitcoin with yuan and selling it outside China is technically prohibited by the People's Bank of China, but they haven't cracked down hard on it. Yet. Mining is also a way to convert yuan to dollars. Miners in China can also qualify for the loans and subsidies the government of China gives businesses. Bitcoin as a general currency for transactions just isn't happening. The real transaction costs are too high. There's volatility risk. There are exchange costs getting in, and exchange costs getting out. (At the retail level, those are high; Robocoin ATMs have a buy/sell spread of about 15%) There's also the substantial risk that the exchange will fail or steal your money. (This got better in 2015, but until then, more than half of Bitcoin exchanges went bust. It wasn't just Mt. Gox.) Paying 1% - 3% to Visa looks good compared to that, especially since buyers get protection against merchant fraud. Bitcoin as a speculation looks good some years, and bad in others. It's like a penny stock, except that Bitcoin is zero-sum. There's no intrinsic value, and no fundamentals. It's all greater-fool speculation. The impressive thing about Bitcoin is that the system is well behaved in the presence of a very high level of criminality. Few, if any, other distributed computer based systems can make that claim. It would be nice if DNS or BGP or SS7 worked that well.

nikolay 11y ago

The big drawback to the consumer is the speculative price. Of course, this attracts the scum of the Earth, but that's another r story. Bitcoin can be saved by applying the concept of a Currency Board [0]. All speculator will leave and only the serious players will stay and then regular folk can jump in. Of course, you can't make a million dollars from a single bitcoin you bought at $400, but you won't make it anyway if things go the way they've been going! Well, I know you can't apply the concept to Bitcoin, but just wanted to give some food for thought. [0] https://en.wikipedia.org/wiki/Currency_board https://en.wikipedia.org/wiki/Currency_board