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>Bitcoin's narrative has had to morph from "digital currency" to "digital gold" The narrative around bitcoin has always been "It is digital currency. It works

>Bitcoin's narrative has had to morph from "digital currency" to "digital gold" The narrative around bitcoin has always been "It is digital currency. It works like gold". Hence the notion of "mining". EDIT: downvote me if you want but you are flat wrong Section 6 in the bitcoin whitepaper explicitly likens bitcoin to gold [0] >The steady addition of a constant of amount of new coins is analogous to gold miners expending resources to add gold to circulation [0]: https://bitcoin.org/bitcoin.pdf https://bitcoin.org/bitcoin.pdf

samvher 6y ago
That may be true but there is definitely a difference between the way people talked about it earlier ("later we will all be paying with bitcoin") to how it is now ("it's a store of value and maybe there is potential for bitcoin-backed currencies").
- gruez 6y ago
  I think the scaling limitations were well known at the beginning. If Bitcoin were to get as large as visa/mastercard the blockchain would be growing at a rate of a few gigabytes per day, which would kill decentralization.
  - shuntress 6y ago
    As far as I was aware, this problem was mostly ignored. It was expected (again, as stated in the whitepaper) that truncating transactions (in order to shrink blocks that are "old enough") would be able to manage block size well enough to stay reasonable. In my experience (circa ~2011,) this expectation seemed to be generally accepted without much question by anyone talking about bitcoin. If it was acknowledged as a flaw it was usually hand-waved as only likely to be a problem 10+ in the the future. edit: Or that a new network would learn from the bitcoin experiment and implement a protocol that works better at large scale.
    - DennisP 6y ago
      As far as new networks go, that appears to be happening.
      - zepolen 6y ago
        Has already happened, Nano is feeless, currently supports 250tx/s on main net and requires the energy of one windmill for the entire network. It's also more secure than Bitcoin due to a higher decentralization coefficient.
  - dylkil 6y ago
    the limitations have been researched extensively outside of the echo chamber of bitcoin development. It is possible to scale a utxo system like bitcoins to hundreds of millions of txs per day. Xthinner[1] can compress blocksizes by 99%, but bitcoin devs have ignored this with handywavy arguments. [1]https://github.com/jtoomim/xthinner-spec https://github.com/jtoomim/xthinner-spec
    - gruez 6y ago
      >but bitcoin devs have ignored this with handywavy arguments. Can you provide links to these discussions? I searched around on google and all the results are relating to bitcoin cash. I also searched the usual places that bitcoin (non cash) people congregate and turned up nothing.
      - nullc 6y ago
        Sad that you're going to get no reply here, but not surprising.
    - deleted 6y ago
      [deleted]
    - ryani 6y ago
      That page claims it can compress a single transaction down to 12-16 bits. Unless the vast majority of btc transactions are between the same few wallet addresses, this seems impossible? Even if you assume that the transaction is an instance of a common known script, you still need from-address, to-address, and amount, all of which are >16 bit quantities and in general are cryptographically random. The only explanation I can think of is that they are relying on a sidechannel to communicate the actual transactions, which makes sense in the miner case (the utxo pool) but not in the general node case. Beyond that, I run a BTC node occasionally and the bottleneck is validating blocks, not downloading them. Transactions are complicated enough right now that I'm only able to catch up at about 350x real-time (that is, it takes around a full cpu-day to validate a year of blocks/transactions).
    - nullc 6y ago
      A bitcoiner pinged me and asked for my comment here. It really sucks that people are so easily bamboozled by dishonest scammers. In the original bitcoin software a node would receive every transaction made while it was online twice: once when the transaction was first relayed, once when it was placed into blocks. This was obviously wasteful, so we created and deployed a reconciliation scheme that exploits the fact that normally all, or almost all the included transactions are already known. https://github.com/bitcoin/bips/blob/master/bip-0152.mediawiki https://github.com/bitcoin/bips/blob/master/bip-0152.mediawi... But because Bitcoin developers are not dishonest scammers they didn't run around putting out (no kidding) press releases claiming "98.6% compression"-- though that's what you get if you compare the size of the BIP152 message to the size of the block. In reality, since it depends on the transaction being known in advance the unachievable limit for this class of approaches is a 50% bandwidth reduction for a node compared to the original behaviour. BIP152 achieves 49.3% out of that 50%, as measured on the latest block. Even before compact blocks was created back in December 2015, we knew even smaller could be achieved. E.g. we published a scheme that requires asymptotically 0 bytes per transaction, only requiring data proportional to size of the difference between the block and the recipients guess at the next block. But what we found is that the simpler scheme actually propagated blocks much faster because once the block is down to just a few thousand bytes other factors (like CPU time) dominate. Expending a lot of additional code and cpu time to take 49.3% closer to 50% isn't a win in actual usage. [And for considerations other than block propagation, saving a few extra bytes per block is extremely irrelevant.] It's also the case that some of these dishonestly hyped supposed improvements beyond what Bitcoin has done for years are actually totally brain-damaged and wouldn't work in practice because they're not robust against attack-- but there isn't much reason to dive into technical minutia because what they _claim to achieve_, once you strip off the dishonest marketing, isn't all that interesting.
  - CyberDildonics 6y ago
    Not this again. The entire bitcoin blockchain fits in $6 of hard drive space. The average transaction right now is more than $11.50. The AVERAGE transaction costs almost double what it costs to store the ENTIRE blockchain. Stop with the storage space nonsense. The only people even storing the entire chain are enthusiasts, servers and miners. Saying "what if it gets a thousand times as many transactions" is ridiculous, but it still wouldn't be a problem. A few gigabytes a day? A $300 dollar hard drive would still take a decade to fill up. I think the few that sync the entire chain handle that.
  - DennisP 6y ago
    It doesn't google anymore and might be gone now, but back in the day there was an article on a bitcoin website which went through some math, arguing that Bitcoin could achieve 4000 transactions per second. People used to link to it on a regular basis. Aside from that, people figured Moore's Law would continue at its historical pace, and Bitcoin could grow indefinitely at the same pace.
Born_Again 6y ago
>>Bitcoin's narrative has had to morph from "digital currency" to "digital gold" I wholeheartedly agree with this. Let's look at some Reddit /r/bitcoin posts in January 2014: https://redditsearch.io/?term=&dataviz=false&aggs=false&subreddits=bitcoin&searchtype=posts&search=true&start=1388556000&end=1391234400&size=100 https://redditsearch.io/?term=&dataviz=false&aggs=false&subr... People were discussing bitcoin being used as a digital currency. There was talk of bitcoin being accepted on Overstock.com, TigerDirect, and using bitcoin apps on phones as a digital wallet. I would argue the majority of people in the bitcoin community at the time were genuinely interested in the technology and its use as an everyday currency. Now let's look at some Reddit /r/bitcoin posts in January 2020. I picked this date because there weren't any recent significant price fluctuations. https://redditsearch.io/?term=&dataviz=false&aggs=false&subreddits=bitcoin&searchtype=posts&search=true&start=1577858400&end=1580536800&size=100 https://redditsearch.io/?term=&dataviz=false&aggs=false&subr... There was practically zero discussion on using bitcoin as a currency. People were only interested in the price and treated it as a commodity, just like a digital gold. > EDIT: downvote me if you want but you are flat wrong Do people treat bitcoin as a currency or a commodity today?
- shuntress 6y ago
  *The narrative around bitcoin has always been "It is digital currency. It works like gold".* I don't think we need to get into whether or not gold is a currency or a commodity but you are fooling yourself if you think that the price of gold is driven by jewelers and PCB fabs.
  - tim333 6y ago
    You'd be surprised how much does go to jewelry https://www.statista.com/statistics/274684/global-demand-for-gold-by-purpose-quarterly-figures/ https://www.statista.com/statistics/274684/global-demand-for... Long term the price is driven by the mining cost.
- SilasX 6y ago
  I would say it’s now more promoted as an uncorrelated asset class.
deegles 6y ago
My understanding is that the problem is not with Bitcoin, but with people buying Bitcoin with "money printed," (or unconfirmed-peg) Tether. The same issue would arise if the USA started printing dollars and buying physical gold with it. Is that right?
gizmo686 6y ago
I think people are using "gold" in 2 different ways. In the olden days, gold was actually a currency. The supply of coins you could produce was limited by the precious metals you had. The amount of paper money you could issue was limited by the amount of gold bars you had. In this system, gold is still acting like a currency; but a currency with very real limitations on the ability of any institution to manage it. [0]. This was the original meaning of digital gold. In contrast, modern gold is not used as a currency. It is used as a commodity and store of value; and a hedge against inflation. [0] Unlike gold though; bitcoin actually has a predictable issuance schedule. There is no sudden spike in Bitcoin supplies because prospective suddenly discovered a rich vein.
lawn 6y ago
The whitepaper only likens Bitcoin to gold in regards to the emission rate, not to it's supposed usage as "digital gold". In fact the whitepaper even opens with describing Bitcoin's usage for commerce. The very first paragraph in the introduction! The narrative has indeed changed to "digital gold" after it's made abundantly clear that Bitcoin is no longer suitable for commerce.
- shuntress 6y ago
  It is not a coincidence that gold mining was chosen as the analogy for new coins. The emission of new bit coins following the "mining" of new blocks is like the minting of new gold coins following the mining of raw gold. Because bitcoins are like gold coins. I agree that neither gold nor bitcoin are suitable for commerce. But the narrative around and apparent intent behind bitcoin from in the beginning was "It is digital currency. It works like gold".
birdyrooster 6y ago
It’s digital gold you can use to magically transport any drug to your doorstep. That’s an amazing killer app.
- j0ba 6y ago
  Meh, USD is much better for that. Lots more drug dealers accept it.
  - birdyrooster 6y ago
    Not near you, and not safely.
user-the-name 6y ago
> The narrative around bitcoin has always been "It is digital currency. It works like gold". It has not been that for years. It failed miserably as a currency, and the current narrative is that it is a "store of value".

samvher 6y ago

That may be true but there is definitely a difference between the way people talked about it earlier ("later we will all be paying with bitcoin") to how it is now ("it's a store of value and maybe there is potential for bitcoin-backed currencies").

gruez 6y ago
I think the scaling limitations were well known at the beginning. If Bitcoin were to get as large as visa/mastercard the blockchain would be growing at a rate of a few gigabytes per day, which would kill decentralization.
- shuntress 6y ago
  As far as I was aware, this problem was mostly ignored. It was expected (again, as stated in the whitepaper) that truncating transactions (in order to shrink blocks that are "old enough") would be able to manage block size well enough to stay reasonable. In my experience (circa ~2011,) this expectation seemed to be generally accepted without much question by anyone talking about bitcoin. If it was acknowledged as a flaw it was usually hand-waved as only likely to be a problem 10+ in the the future. edit: Or that a new network would learn from the bitcoin experiment and implement a protocol that works better at large scale.
  - DennisP 6y ago
    As far as new networks go, that appears to be happening.
    - zepolen 6y ago
      Has already happened, Nano is feeless, currently supports 250tx/s on main net and requires the energy of one windmill for the entire network. It's also more secure than Bitcoin due to a higher decentralization coefficient.
- dylkil 6y ago
  the limitations have been researched extensively outside of the echo chamber of bitcoin development. It is possible to scale a utxo system like bitcoins to hundreds of millions of txs per day. Xthinner[1] can compress blocksizes by 99%, but bitcoin devs have ignored this with handywavy arguments. [1]https://github.com/jtoomim/xthinner-spec https://github.com/jtoomim/xthinner-spec
  - gruez 6y ago
    >but bitcoin devs have ignored this with handywavy arguments. Can you provide links to these discussions? I searched around on google and all the results are relating to bitcoin cash. I also searched the usual places that bitcoin (non cash) people congregate and turned up nothing.
    - nullc 6y ago
      Sad that you're going to get no reply here, but not surprising.
  - deleted 6y ago
    [deleted]
  - ryani 6y ago
    That page claims it can compress a single transaction down to 12-16 bits. Unless the vast majority of btc transactions are between the same few wallet addresses, this seems impossible? Even if you assume that the transaction is an instance of a common known script, you still need from-address, to-address, and amount, all of which are >16 bit quantities and in general are cryptographically random. The only explanation I can think of is that they are relying on a sidechannel to communicate the actual transactions, which makes sense in the miner case (the utxo pool) but not in the general node case. Beyond that, I run a BTC node occasionally and the bottleneck is validating blocks, not downloading them. Transactions are complicated enough right now that I'm only able to catch up at about 350x real-time (that is, it takes around a full cpu-day to validate a year of blocks/transactions).
  - nullc 6y ago
    A bitcoiner pinged me and asked for my comment here. It really sucks that people are so easily bamboozled by dishonest scammers. In the original bitcoin software a node would receive every transaction made while it was online twice: once when the transaction was first relayed, once when it was placed into blocks. This was obviously wasteful, so we created and deployed a reconciliation scheme that exploits the fact that normally all, or almost all the included transactions are already known. https://github.com/bitcoin/bips/blob/master/bip-0152.mediawiki https://github.com/bitcoin/bips/blob/master/bip-0152.mediawi... But because Bitcoin developers are not dishonest scammers they didn't run around putting out (no kidding) press releases claiming "98.6% compression"-- though that's what you get if you compare the size of the BIP152 message to the size of the block. In reality, since it depends on the transaction being known in advance the unachievable limit for this class of approaches is a 50% bandwidth reduction for a node compared to the original behaviour. BIP152 achieves 49.3% out of that 50%, as measured on the latest block. Even before compact blocks was created back in December 2015, we knew even smaller could be achieved. E.g. we published a scheme that requires asymptotically 0 bytes per transaction, only requiring data proportional to size of the difference between the block and the recipients guess at the next block. But what we found is that the simpler scheme actually propagated blocks much faster because once the block is down to just a few thousand bytes other factors (like CPU time) dominate. Expending a lot of additional code and cpu time to take 49.3% closer to 50% isn't a win in actual usage. [And for considerations other than block propagation, saving a few extra bytes per block is extremely irrelevant.] It's also the case that some of these dishonestly hyped supposed improvements beyond what Bitcoin has done for years are actually totally brain-damaged and wouldn't work in practice because they're not robust against attack-- but there isn't much reason to dive into technical minutia because what they _claim to achieve_, once you strip off the dishonest marketing, isn't all that interesting.
- CyberDildonics 6y ago
  Not this again. The entire bitcoin blockchain fits in $6 of hard drive space. The average transaction right now is more than $11.50. The AVERAGE transaction costs almost double what it costs to store the ENTIRE blockchain. Stop with the storage space nonsense. The only people even storing the entire chain are enthusiasts, servers and miners. Saying "what if it gets a thousand times as many transactions" is ridiculous, but it still wouldn't be a problem. A few gigabytes a day? A $300 dollar hard drive would still take a decade to fill up. I think the few that sync the entire chain handle that.
- DennisP 6y ago
  It doesn't google anymore and might be gone now, but back in the day there was an article on a bitcoin website which went through some math, arguing that Bitcoin could achieve 4000 transactions per second. People used to link to it on a regular basis. Aside from that, people figured Moore's Law would continue at its historical pace, and Bitcoin could grow indefinitely at the same pace.

Born_Again 6y ago

>>Bitcoin's narrative has had to morph from "digital currency" to "digital gold" I wholeheartedly agree with this. Let's look at some Reddit /r/bitcoin posts in January 2014: https://redditsearch.io/?term=&dataviz=false&aggs=false&subreddits=bitcoin&searchtype=posts&search=true&start=1388556000&end=1391234400&size=100 https://redditsearch.io/?term=&dataviz=false&aggs=false&subr... People were discussing bitcoin being used as a digital currency. There was talk of bitcoin being accepted on Overstock.com, TigerDirect, and using bitcoin apps on phones as a digital wallet. I would argue the majority of people in the bitcoin community at the time were genuinely interested in the technology and its use as an everyday currency. Now let's look at some Reddit /r/bitcoin posts in January 2020. I picked this date because there weren't any recent significant price fluctuations. https://redditsearch.io/?term=&dataviz=false&aggs=false&subreddits=bitcoin&searchtype=posts&search=true&start=1577858400&end=1580536800&size=100 https://redditsearch.io/?term=&dataviz=false&aggs=false&subr... There was practically zero discussion on using bitcoin as a currency. People were only interested in the price and treated it as a commodity, just like a digital gold. > EDIT: downvote me if you want but you are flat wrong Do people treat bitcoin as a currency or a commodity today?

shuntress 6y ago
*The narrative around bitcoin has always been "It is digital currency. It works like gold".* I don't think we need to get into whether or not gold is a currency or a commodity but you are fooling yourself if you think that the price of gold is driven by jewelers and PCB fabs.
- tim333 6y ago
  You'd be surprised how much does go to jewelry https://www.statista.com/statistics/274684/global-demand-for-gold-by-purpose-quarterly-figures/ https://www.statista.com/statistics/274684/global-demand-for... Long term the price is driven by the mining cost.
SilasX 6y ago
I would say it’s now more promoted as an uncorrelated asset class.

deegles 6y ago

My understanding is that the problem is not with Bitcoin, but with people buying Bitcoin with "money printed," (or unconfirmed-peg) Tether. The same issue would arise if the USA started printing dollars and buying physical gold with it. Is that right?

gizmo686 6y ago

I think people are using "gold" in 2 different ways. In the olden days, gold was actually a currency. The supply of coins you could produce was limited by the precious metals you had. The amount of paper money you could issue was limited by the amount of gold bars you had. In this system, gold is still acting like a currency; but a currency with very real limitations on the ability of any institution to manage it. [0]. This was the original meaning of digital gold. In contrast, modern gold is not used as a currency. It is used as a commodity and store of value; and a hedge against inflation. [0] Unlike gold though; bitcoin actually has a predictable issuance schedule. There is no sudden spike in Bitcoin supplies because prospective suddenly discovered a rich vein.

lawn 6y ago

The whitepaper only likens Bitcoin to gold in regards to the emission rate, not to it's supposed usage as "digital gold". In fact the whitepaper even opens with describing Bitcoin's usage for commerce. The very first paragraph in the introduction! The narrative has indeed changed to "digital gold" after it's made abundantly clear that Bitcoin is no longer suitable for commerce.

shuntress 6y ago
It is not a coincidence that gold mining was chosen as the analogy for new coins. The emission of new bit coins following the "mining" of new blocks is like the minting of new gold coins following the mining of raw gold. Because bitcoins are like gold coins. I agree that neither gold nor bitcoin are suitable for commerce. But the narrative around and apparent intent behind bitcoin from in the beginning was "It is digital currency. It works like gold".

birdyrooster 6y ago

It’s digital gold you can use to magically transport any drug to your doorstep. That’s an amazing killer app.

j0ba 6y ago
Meh, USD is much better for that. Lots more drug dealers accept it.
- birdyrooster 6y ago
  Not near you, and not safely.

user-the-name 6y ago

> The narrative around bitcoin has always been "It is digital currency. It works like gold". It has not been that for years. It failed miserably as a currency, and the current narrative is that it is a "store of value".