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The whitepaper is why I view bitcoin’s value proposition as a gold-like store of value. Can you say more about why you think the whitepaper discourages that vie

by mlthoughts2018 6y ago

The whitepaper is why I view bitcoin’s value proposition as a gold-like store of value. Can you say more about why you think the whitepaper discourages that view?

Scoundreller 6y ago
The whitepaper didn’t expect/predict most hashing power being controlled by very few actors. Edit: I’d say the whitepaper did expect this and basically said it could be a problem: From the abstract: > As long as a majority of CPU power is controlled by nodes that are not cooperating to attack the network, they'll generate the longest chain and outpace attacker.
- tylersmith 6y ago
  That's a fundamental security assumption made by Nakamoto consensus. It's like assuming the discrete log problem is hard. If/when the assumption doesn't hold the security is gone.
  - Scoundreller 6y ago
    That’s a better way of putting it. It’s a good argument for ASIC resistance and CPU dependence because it’s a lot harder to control General-Purpose CPU supply than ASIC supply. Meanwhile my regular joe laptop can earn double its electricity cost in Monero (before it thermally locks up).
  - sedeki 6y ago
    I am not a hardcore bitcoiner, but the price would fall quickly if these few controlling nodes would do something malicious. Which is against their own interest.
    - Scoundreller 6y ago
      Probably. But a core aspect of decentralization is that you shouldn’t need to trust a few others at all.
      - codehalo 6y ago
        I think it's more like limits: Trust minimization, not trust elimination.
      - GoblinSlayer 6y ago
        Who cares about technicalities, the point was to let people hold the system in their own hands.
      - ChainOfFools 6y ago
        In Trust we trust!
- 153791098c 6y ago
  Satoshi did predict just that, even before he launched the network (in 2008). “At first, most users would run network nodes, but as the network grows beyond a certain point, it would be left more and more to specialists with server farms of specialized hardware.” – 2008. “At equilibrium size, many nodes will be server farms with one or two network nodes that feed the rest of the farm over a LAN.” – 2010. “The design supports letting users just be users. The more burden it is to run a node, the fewer nodes there will be. Those few nodes will be big server farms. The rest will be client nodes that only do transactions and don’t generate.” – 2010.
deleted 6y ago
[deleted]
mdoms 6y ago
You only need to read the first couple of sentences of the whitepaper to understand that it was primarily designed as a digital currency with a focus on spending/transacting.
- toolz 6y ago
  Are those two concepts mutually exclusive? A liquid currency that holds value in unstable economies would seem to serve both the purpose of being spendable as well as a stable investment like gold. Maybe I'm misunderstanding what it means to be "gold like" though.
  - lawn 6y ago
    No they aren't mutually exclusive. In fact sound money should be both a good store of value and a medium of exchange (in other words work well for payments). The problem is that Bitcoin's high fees has made it unsuitable for regular payments, so proponents only have the store of value explanation left.
    - __blockcipher__ 6y ago
      Exactly this. To me it was proof that 99% of the Bitcoin community (such as the Bitcoin subreddit which had an absurd amount of influence, thus why taking it over and censoring discussion was so effective) didn't care about Bitcoin as a currency and had never once used it as a currency. They just bought it on Coinbase and never even transferred to their own wallet. Meanwhile people like me who actually cared about using the damn thing, would be paying a $60 transaction fee on a $20 purchase simply because the powers that be decided that increasing the blocksize, (aka increasing the arbitrary global transaction throughput cap) was somehow antithetical to bitcoin's decentralized design.
      - Melting_Harps 6y ago
        > Meanwhile people like me who actually cared about using the damn thing, would be paying a $60 transaction fee on a $20 purchase simply because the powers that be decided that increasing the blocksize, (aka increasing the arbitrary global transaction throughput cap) was somehow antithetical to bitcoin's decentralized design. Big blocks would have never solved this issue, and you're still free to use Bcash, but you won't as no one does... because that wasn't the issue. Second layer solutions are the crux of that story, and people who didn't or wouldn't understand that were vocal non-tech people (like Roger Ver) who don't understand basic network protocol topology and why things need to run on secondary, tertiary etc... layers on Bitcoin (the Network) that uses bitcoin (the token) to validate your $20 tx on the blockchain, which by the way if you paid $60 for goes to show you never understood Bitcoin the network. No one would sacrifice that much to miners instead of just opting for fiat at that point unless there was an absolute imperative need to do so, which at $20 is clearly not the case. I should know I did it. I've been in this for a long time and the only time tx fees were above $20 was when the Bcash fork happened and Ver/Jihan spammed the network. I paid $25 tx fee on behalf of a new customer (merchant I just on-boarded) that was panicking because they didn't understand mining fee priority (I did explain it to them) and thought they lost they money, when in reality the 5 sat/byte tx cleared in a weeks time and I just recovered my funds then. I discussed it and felt absolved of responsibility but rather than lose a potential client I just begrudgingly paid the mining fee, to Antminer/Jihan no less, which added insult to injury. This is far from ideal, and I have a stuck tx as we speak (2sat/byte were clearing without a problem until then) for a over a week now, but it just goes to show that these new billionaire class investors (Saylor) don't understand this tech at all and that they need to use their new found fortune to help flesh out LN to get it to function to its full potential without all this mempool bloat they've help create. Mainchain (layer 1) is doing EXACTLY what we would think would happen under these conditions even after Segwit, its purposely this way as this is the trade off for security, which makes it less than ideal as a settlement network for small, low cost, individual transactions. That's what LN is for and I wish these instituinal investment firms would understand that, to date only Jack Dorsey (an actual technologist/developer) has funded Lightening labs, while the Winklevoss, Saylors of the World just keep trying to compete for more headline grabbing media attention and ignoring this vital issue as they do not understand or care to take the time to learn this very obvious fact. As for me, I want them to keep doing this as it gives me a better buy-in position so I'm all for it. PS: Keep downvoting, but a 2.58 tx fee cleared in less than an hour with 5+ confirmations, thus proving my point. I think we're far from the bloat we saw back then proving Segwit worked as expected and block sizes weren't a viable option nor tenable a solution to our problem, which I sincerely remains one of LN progress .
xiphias2 6y ago
Satoshi couldn't have thought of a solution of the scaling issues, just like Mark Zuckerberg didn't design Facebook for billions of people originally. From the paper it's clear that he would have liked if all people could have access to P2P layer, but it's just technically impossible.
- toomim 6y ago
  That's not entirely accurate. His solution was to increase the block limit [1], and use faster computers [2]. Note that Bitcoin Cash is currently implementing this, and succeeding at scaling to 1,100 tx/sec on testnet. (Bitcoin Core supports 3 to 7 tx/sec.) [1] "It can be phased in, like: if (blocknumber > 115000) maxblocksize = largerlimit It can start being in versions way ahead, so by the time it reaches that block number and goes into effect, the older versions that don't have it are already obsolete. When we're near the cutoff block number, I can put an alert to old versions to make sure they know they have to upgrade." ~ Satoshi Nakamoto, on bitcointalk.org, October 04, 2010, 07:48:40 PM [2] "Hi Mike, I'm glad to answer any questions you have. If I get time, I ought to write a FAQ to supplement the paper. There is only one global chain. The existing Visa credit card network processes about 15 million Internet purchases per day worldwide. Bitcoin can already scale much larger than that with existing hardware for a fraction of the cost. It never really hits a scale ceiling. If you're interested, I can go over the ways it would cope with extreme size. By Moore's Law, we can expect hardware speed to be 10 times faster in 5 years and 100 times faster in 10. Even if Bitcoin grows at crazy adoption rates, I think computer speeds will stay ahead of the number of transactions. I don't anticipate that fees will be needed anytime soon, but if it becomes too burdensome to run a node, it is possible to run a node that only processes transactions that include a transaction fee. The owner of the node would decide the minimum fee they'll accept. Right now, such a node would get nothing, because nobody includes a fee, but if enough nodes did that, then users would get faster acceptance if they include a fee, or slower if they don't. The fee the market would settle on should be minimal. If a node requires a higher fee, that node would be passing up all transactions with lower fees. It could do more volume and probably make more money by processing as many paying transactions as it can. The transition is not controlled by some human in charge of the system though, just individuals reacting on their own to market forces. Eventually, most nodes may be run by specialists with multiple GPU cards. For now, it's nice that anyone with a PC can play without worrying about what video card they have, and hopefully it'll stay that way for a while. More computers are shipping with fairly decent GPUs these days, so maybe later we'll transition to that." ~ Satoshi Nakamoto in correspondence with Mike Hearn

The whitepaper is why I view bitcoin’s value proposition as a gold-like store of value. Can you say more about why you think the whitepaper discourages that view?

Scoundreller 6y ago

The whitepaper didn’t expect/predict most hashing power being controlled by very few actors. Edit: I’d say the whitepaper did expect this and basically said it could be a problem: From the abstract: > As long as a majority of CPU power is controlled by nodes that are not cooperating to attack the network, they'll generate the longest chain and outpace attacker.

tylersmith 6y ago
That's a fundamental security assumption made by Nakamoto consensus. It's like assuming the discrete log problem is hard. If/when the assumption doesn't hold the security is gone.
- Scoundreller 6y ago
  That’s a better way of putting it. It’s a good argument for ASIC resistance and CPU dependence because it’s a lot harder to control General-Purpose CPU supply than ASIC supply. Meanwhile my regular joe laptop can earn double its electricity cost in Monero (before it thermally locks up).
- sedeki 6y ago
  I am not a hardcore bitcoiner, but the price would fall quickly if these few controlling nodes would do something malicious. Which is against their own interest.
  - Scoundreller 6y ago
    Probably. But a core aspect of decentralization is that you shouldn’t need to trust a few others at all.
    - codehalo 6y ago
      I think it's more like limits: Trust minimization, not trust elimination.
    - GoblinSlayer 6y ago
      Who cares about technicalities, the point was to let people hold the system in their own hands.
    - ChainOfFools 6y ago
      In Trust we trust!
153791098c 6y ago
Satoshi did predict just that, even before he launched the network (in 2008). “At first, most users would run network nodes, but as the network grows beyond a certain point, it would be left more and more to specialists with server farms of specialized hardware.” – 2008. “At equilibrium size, many nodes will be server farms with one or two network nodes that feed the rest of the farm over a LAN.” – 2010. “The design supports letting users just be users. The more burden it is to run a node, the fewer nodes there will be. Those few nodes will be big server farms. The rest will be client nodes that only do transactions and don’t generate.” – 2010.

deleted 6y ago

[deleted]

mdoms 6y ago

You only need to read the first couple of sentences of the whitepaper to understand that it was primarily designed as a digital currency with a focus on spending/transacting.

toolz 6y ago
Are those two concepts mutually exclusive? A liquid currency that holds value in unstable economies would seem to serve both the purpose of being spendable as well as a stable investment like gold. Maybe I'm misunderstanding what it means to be "gold like" though.
- lawn 6y ago
  No they aren't mutually exclusive. In fact sound money should be both a good store of value and a medium of exchange (in other words work well for payments). The problem is that Bitcoin's high fees has made it unsuitable for regular payments, so proponents only have the store of value explanation left.
  - __blockcipher__ 6y ago
    Exactly this. To me it was proof that 99% of the Bitcoin community (such as the Bitcoin subreddit which had an absurd amount of influence, thus why taking it over and censoring discussion was so effective) didn't care about Bitcoin as a currency and had never once used it as a currency. They just bought it on Coinbase and never even transferred to their own wallet. Meanwhile people like me who actually cared about using the damn thing, would be paying a $60 transaction fee on a $20 purchase simply because the powers that be decided that increasing the blocksize, (aka increasing the arbitrary global transaction throughput cap) was somehow antithetical to bitcoin's decentralized design.
    - Melting_Harps 6y ago
      > Meanwhile people like me who actually cared about using the damn thing, would be paying a $60 transaction fee on a $20 purchase simply because the powers that be decided that increasing the blocksize, (aka increasing the arbitrary global transaction throughput cap) was somehow antithetical to bitcoin's decentralized design. Big blocks would have never solved this issue, and you're still free to use Bcash, but you won't as no one does... because that wasn't the issue. Second layer solutions are the crux of that story, and people who didn't or wouldn't understand that were vocal non-tech people (like Roger Ver) who don't understand basic network protocol topology and why things need to run on secondary, tertiary etc... layers on Bitcoin (the Network) that uses bitcoin (the token) to validate your $20 tx on the blockchain, which by the way if you paid $60 for goes to show you never understood Bitcoin the network. No one would sacrifice that much to miners instead of just opting for fiat at that point unless there was an absolute imperative need to do so, which at $20 is clearly not the case. I should know I did it. I've been in this for a long time and the only time tx fees were above $20 was when the Bcash fork happened and Ver/Jihan spammed the network. I paid $25 tx fee on behalf of a new customer (merchant I just on-boarded) that was panicking because they didn't understand mining fee priority (I did explain it to them) and thought they lost they money, when in reality the 5 sat/byte tx cleared in a weeks time and I just recovered my funds then. I discussed it and felt absolved of responsibility but rather than lose a potential client I just begrudgingly paid the mining fee, to Antminer/Jihan no less, which added insult to injury. This is far from ideal, and I have a stuck tx as we speak (2sat/byte were clearing without a problem until then) for a over a week now, but it just goes to show that these new billionaire class investors (Saylor) don't understand this tech at all and that they need to use their new found fortune to help flesh out LN to get it to function to its full potential without all this mempool bloat they've help create. Mainchain (layer 1) is doing EXACTLY what we would think would happen under these conditions even after Segwit, its purposely this way as this is the trade off for security, which makes it less than ideal as a settlement network for small, low cost, individual transactions. That's what LN is for and I wish these instituinal investment firms would understand that, to date only Jack Dorsey (an actual technologist/developer) has funded Lightening labs, while the Winklevoss, Saylors of the World just keep trying to compete for more headline grabbing media attention and ignoring this vital issue as they do not understand or care to take the time to learn this very obvious fact. As for me, I want them to keep doing this as it gives me a better buy-in position so I'm all for it. PS: Keep downvoting, but a 2.58 tx fee cleared in less than an hour with 5+ confirmations, thus proving my point. I think we're far from the bloat we saw back then proving Segwit worked as expected and block sizes weren't a viable option nor tenable a solution to our problem, which I sincerely remains one of LN progress .

xiphias2 6y ago

Satoshi couldn't have thought of a solution of the scaling issues, just like Mark Zuckerberg didn't design Facebook for billions of people originally. From the paper it's clear that he would have liked if all people could have access to P2P layer, but it's just technically impossible.

toomim 6y ago
That's not entirely accurate. His solution was to increase the block limit [1], and use faster computers [2]. Note that Bitcoin Cash is currently implementing this, and succeeding at scaling to 1,100 tx/sec on testnet. (Bitcoin Core supports 3 to 7 tx/sec.) [1] "It can be phased in, like: if (blocknumber > 115000) maxblocksize = largerlimit It can start being in versions way ahead, so by the time it reaches that block number and goes into effect, the older versions that don't have it are already obsolete. When we're near the cutoff block number, I can put an alert to old versions to make sure they know they have to upgrade." ~ Satoshi Nakamoto, on bitcointalk.org, October 04, 2010, 07:48:40 PM [2] "Hi Mike, I'm glad to answer any questions you have. If I get time, I ought to write a FAQ to supplement the paper. There is only one global chain. The existing Visa credit card network processes about 15 million Internet purchases per day worldwide. Bitcoin can already scale much larger than that with existing hardware for a fraction of the cost. It never really hits a scale ceiling. If you're interested, I can go over the ways it would cope with extreme size. By Moore's Law, we can expect hardware speed to be 10 times faster in 5 years and 100 times faster in 10. Even if Bitcoin grows at crazy adoption rates, I think computer speeds will stay ahead of the number of transactions. I don't anticipate that fees will be needed anytime soon, but if it becomes too burdensome to run a node, it is possible to run a node that only processes transactions that include a transaction fee. The owner of the node would decide the minimum fee they'll accept. Right now, such a node would get nothing, because nobody includes a fee, but if enough nodes did that, then users would get faster acceptance if they include a fee, or slower if they don't. The fee the market would settle on should be minimal. If a node requires a higher fee, that node would be passing up all transactions with lower fees. It could do more volume and probably make more money by processing as many paying transactions as it can. The transition is not controlled by some human in charge of the system though, just individuals reacting on their own to market forces. Eventually, most nodes may be run by specialists with multiple GPU cards. For now, it's nice that anyone with a PC can play without worrying about what video card they have, and hopefully it'll stay that way for a while. More computers are shipping with fairly decent GPUs these days, so maybe later we'll transition to that." ~ Satoshi Nakamoto in correspondence with Mike Hearn