The resolution of the Bitcoin experiment
medium.com
medium.com
I've been fascinated and appalled in equal measure at the fanboy community, at the intolerance of criticism that sprang up very quickly, and how strong feelings ran (likely because of financial investment in the tech).
It's also been interesting watching it go from simple CPU mining, to multiple GPU rigs in dorm rooms, all the way through FPGA and then to massive installations of custom ASIC miners.
But I've always hoped it wouldn't go mainstream for two reasons - limited supply with weighting in favour of early adopters, and the massive electricity costs of the 'mining' and transaction validation process. Scalable, competitive proof of work systems for a widespread currency are an ecological disaster in the making, and deflationary currency with a handful of early users controlling a huge proportion of the total currency supply... these aren't "features".
I'll be very interested in what happens next, and for the reasons given I hope it's not just a BTC clone with better governance.
The existence of high frequency trading already proved this. All that technology built and maintained, all that electricity wasted, merely so that one company's bots could play a zero-sum game nanoseconds faster than another company's bots, undermining them.
This isn't something newly discovered, I hope.
>Isn't Bitcoin mining a waste of energy?
>Spending energy to secure and operate a payment system is hardly a waste. Like any other payment service, the use of Bitcoin entails processing costs. Services necessary for the operation of currently widespread monetary systems, such as banks, credit cards, and armored vehicles, also use a lot of energy. Although unlike Bitcoin, their total energy consumption is not transparent and cannot be as easily measured. Bitcoin mining has been designed to become more optimized over time with specialized hardware consuming less energy, and the operating costs of mining should continue to be proportional to demand. When Bitcoin mining becomes too competitive and less profitable, some miners choose to stop their activities. Furthermore, all energy expended mining is eventually transformed into heat, and the most profitable miners will be those who have put this heat to good use. An optimally efficient mining network is one that isn't actually consuming any extra energy. While this is an ideal, the economics of mining are such that miners individually strive toward it.
That's not the question. The question is if more energy is being spent than is necessary to achieve the goals of a well-secured, well-operated a payment system, and I think there are very strong reasons to believe the answer is yes. (Among many other things, Ripple and Stellar are existence proofs of being able to get something with comparable security and much lower energy usage.)
> Furthermore, all energy expended mining is eventually transformed into heat, and the most profitable miners will be those who have put this heat to good use.
what
> While this is an ideal, the economics of mining are such that miners individually strive toward it.
And it is equally valid to say that the economics of cloud computing are that cloud hosts should individually strive towards it, too, but is AWS so much as keeping a single pizza warm?
Is there any previous case in human history where "Negative externalities could be turned into profitable positive externalities with cleverness" has worked?
I understand that this is the way BitCoin protects itself. I want to be clear that I am saying I think this is a bad way of doing things. As someone that understands a bit about crypto - most crypto schemes that are hard to break are not hard to break because the encrypting device has worked so hard at encrypting them. They're hard to break because they have been designed in a mathematically sound way.
I hope this endless grind is not something inherent to the idea of decentralised crypto-currency, but if it is I don't think the decentralisation aspect is worth it, and as we see in this article it can be illusory anyway and the amounts of energy involved are pretty huge.
>> Furthermore, all energy expended mining is eventually transformed into heat
This is just such a cop-out!
Back before spam filters got good, one of the proposed solutions to the spam problem was to require everyone to compute an easy to verify, difficult to produce hash for their email message and bounce everything which didn't come with an attached hash. The idea was that a regular user could spend 1 or 10 seconds hashing each email, but a spammer couldn't spend the time hashing millions of spam messages.
Now I suspect that we would have just ended up with data centers full of highly efficient hashing hardware cranking out signatures for spam messages.
People disagree about the reality of global warming. Does that mean we throw out the entire system of laws of the United States and other world powers because it hasn't yet addressed this problem?
This is exactly why I never bought the concept of BitCoin as a 'libertarian' currency. There's always politics, there's always governance. It becomes political as soon as more than one person is involved. And as soon as it's political, institutions, processes, procedures, and laws become necessary - also known as "government."
I still believe in BitCoin, however. Ultimately, there's a way out of this tangle, and like with most political problems, it's a political solution. BitCoin will either adapt and scale up or stay the same and scale (way) down.
edit: To clarify, I'm not trying to say I agree or disagree with the author, as I don't know anywhere near enough about the bitcoin community to say either way. I'm merely pointing out that the OP was talking past the author's points, not addressing them. (In particular, they built a strawman against governance and political solutions.)
And yes, I did read it.
Step A is realizing that the political processes aren't working, and Step B is figuring out a way to make them work. Step B is not throwing up your hands and quitting.
It may be helpful in evaluating the above to note that I'm an open and notorious critic of Bitcoin and believe efforts to save it are poorly advised, but I'll happily function as a world-readable notary to say "Yep he really did try doing that; I watched it happen."
Really? Were they actually usable/used? How/when/where?
Bitcoin doesn't move fast and break things-- and that's one of its strengths, not a weakness.
Also, its inherently democratic- those with the hashing power , and thus the most on the line, determine its future. IT's in their best interests to find solutions-- in a considered way.
I don't see that this system has broken down at this point.
It's Bitcoin or bitcoin.
[1] https://bitcoin.org/bitcoin.pdf
Not just directing this at you as numerous people have pointed this out, but it seems awfully pedantic to quibble over my capitalization of a letter than to address the substance of the point which is that the technical issue here is quite fixable and that the political will to fix it is not impossible.
It seems like he makes some cogent criticisms, for which the best solution seems to be to fork the project, or begin developing for any of the other *coins that were so popular a couple of years ago. But BitCoin has the dominant brand and the people who control the mining and the source code can do whatever they want. Something tells me that bitcoin itself isn't dead because there's been too much invested in it by too many people, whatever the problems. But it's dead in the eyes of the author and maybe for several others, and that's all that matters in the context of his blog.
When the BTC community has become so hostile to literally attack those who criticize it, it becomes hopeless to resist. The best you can do is walk away until the community stops being so hostile.
Fixing Bitcoin would be the best solution, but the politics and governance structure aren't letting this happen. Aside: As I age I'm understanding more and more how critical leadership is. All of the pieces are there for Bitcoin to succeed, but they aren't organized correctly.
The second option is the community choosing to change to a different client, so that by a grassroots movement, eventually the blockchain moved in the right direction. It would likely be a rough transition for uneducated people, companies, and software for businesses that use Bitcoin, but if it can't be official, it would have to be something done similarly to XT.
The last solution is to switch to another cryptocoin and blockchain entirely. I don't keep up with news, so hopefully some of the smaller coins have implemented fixes. This would set back blockchain-based cryptocurrency a few years, though. If the whole community abandoned Bitcoin and moved to Vertcoin or Dogecoin, companies that went out of their way to support Bitcoin might be reluctant to follow.
So in other words, too big to fail? I don't necessarily disagree with you, but that sure seems to support the argument that the Bitcoin ecosystem as a whole isn't in a very healthy place.
What -exactly- does this mean?
Additionally, what does it say about the managers of the project when the Bitcoin Core people decide that (because ever-shrinking available capacity means ever-more unpredictable [and gradually-upward-trending] transaction fees) it's better to allow a transaction partner to silently reverse a transaction they made, rather than increasing the maximum block size to keep up with the ever-growing (due to Bitcoin's increasing popularity) transaction volume?
Hmm. That's one way to interpret it.
Is it true that that -without a max block size increase-, Bitcoin can't process a higher volume of transactions than it processes now? [0] That -in fact- the unpredictable -and generally increasing- transaction fees are a feature of the network designed to shed load -by discouraging "less important" transactions- when the network is at or near capacity?
[0] Which is -apparently- somewhat less than three transactions per second. [1]
[1] Seriously, think about that for a second. :)
I don't know anything about Bitcoin but the promise seemed to be to invent a technical form of money, with limited supply, that would be free of politics and interference from governments.
To quote the beginning of the article:
> What was meant to be a new, decentralised form of money that lacked “systemically important institutions” and “too big to fail” has become something even worse: a system completely controlled by just a handful of people.
Bitcoin became valuable enough to attract people with a lot of real money on the wrong side of the Chinese capital controls, who've taken it over as their major use case.
You have a bunch of down-votes, but you're right. Taxes are the best driver of demand since they force the currency to be the unit of account in a country. In essence, any bitcoin transactions in the US will need to be accounted in USD in order to taxes to be paid. Thus, bitcoin is, as you say, commodity money.
Bitcoin can only operate as a stand-alone medium of exchange in regions without taxes (or in transactions where taxes are ignored).
Precisely. I find amusing how every time there is a trend up in the price, there is a flood of doom sayers, as though they want to force the price down...
I think the bitcoin network is fine. These issues will eventually be resolved, although not likely to OP's satisfaction or the way he wants to solve them.
In the conclusion he states: "<i>Even if a new team was built to replace Bitcoin Core, the problem of mining power being concentrated behind the Great Firewall would remain.</i>"
Bitcoin's decentralized nature encourages power pool formation by promoting economies of scale. It is not surprising that like the production of electronics, clothing, toys, etc. the lowest cost center is in China.
They have the trifecta of a majority of mining power, two of the largest exchanges, and several key developers on board. More importantly the miners supporting the project are in agreement on increasing the block size. It goes a long way to addressing most of the things Mike brings up in this post.
Mike's done a lot of Bitocin particularly by bringing to light the issues with Bitcoin core. At the same time this post strikes me as alarmist. It seems more like a rationalization of his decision than anything else.
When we were preparing for XT, we also went and talked to the Chinese miners. They told us that the original 20mb limit Gavin proposed was too high, but that they could accept 8mb. So we compromised and went with 8 + a growth function. Then after XT was launched they changed their mind and said any growth after 8 at all was totally unacceptable. Now they're telling the Classic guys that 2 is the most they could handle. Did the Chinese internet border really get 4x worse in the span of 3 months? I doubt it.
Western miners aren't much better. One told me quite clearly they'd start voting for BIP101 back in November (though: voting in such a way that it wouldn't actually activate!). But they didn't. When I followed up, they again said it was on their todo list and they'd start really soon. But they didn't.
The miners have proven over and over again that what they say they will accept and what they actually do accept is not aligned. So right now I'm seeing some excitement (maybe more like desperate hope) that Bitcoin Classic will solve anything. Maybe now the "Scaling Bitcoin" conferences have come and gone and Core's reputation is much worse, they'll have better luck, but even then the best case scenario is that Bitcoin gets a 2mb limit. That isn't nearly enough and big backlogs will still occur.
More to the point, even in the best case scenario, the community will essentially accept that Bitcoin is controlled by the Chinese government and grows or shrinks at their whim.
I supported BIP101, but your unwillingness to compromise - they offered 4mb doubling every 4 years I believe - played a great part in it's eventual failure.
The situation now is very much different with almost 100% of miners saying they will support 2mb and some 50% already supporting bitcoin classic with more to come.
So, I share your concerns, but unfortunately mistakes were made, some of them grave mistakes, mistakes from which we learned, and are thus now well placed to move forward.
On your point about the current dominance of China in mining. Two years ago people were flipping out that Ghash.io might have the ability to perform a 51% attack and now they barely register a whole number percentage share of the hashrate. Things change.
https://www.reddit.com/user/anarchystar as a random example that comes to mind.
like, yay it fixes a technical issue, but I'm doubtful that a group that acts like children in forums has any long-term sustainability.
This is exactly why I went from being a great champion of Bitcoin in 2011 (came on board late 2010, right after Mike if I recall) to totally disengaging with the project today.
For the record, I deeply and vehemently disagreed with Mike about the direction of the project on numerous occasions (e.g., coin "redlists"), but I'd much, much rather spent my time around Mike (an all-around nice guy, by the way) than the idiots and know-nothings than presently have come to form the Bitcoin "community". Things were far, far different back in 2011-2012, before the first big price jumps led the current crown on board. Ironically, their "participation" in the project (mostly screaming, censoring, and belly-aching on Reddit) will only cause the thing their fear most: a Bitcoin bus-plunge and loss of most of their assets.
Mike, if you read this, I was only a minor player in Bitcoin core (< 5 commits) but I appreciated your work and particularly your talks about Bitcoin, as well as your work on Bitcoinj, an extremely well-led open source project. I look forward to seeing your next endeavors.
The lowest cost center for mining bitcoin is absolutely not China. The reason mining power is currently centered in China is because producing the latest-generation ASICs is cheapest and quickest in China and for various reasons the companies involved prefer to just bring them online in China quickly.
Soon ASICs will stabilize on the most modern production processes and commoditize and Bitcoin mining will shift to where the marginal cost of mining is low -- Iceland or other cold countries with extraordinarily cheap energy.
The other major reason that Bitcoin mining is big in China is that it's far and away the biggest source of capital looking to escape government controls. You put in yuan at one end, turning it into ASICs and electricity, and you take bitcoin out at the other end. Say what you want about bitcoin, but it's a whole lot easier than your yuan deposits at the Industrial & Commercial Bank of China to get across the border.
Some day these things will change. But for now, Bitcoin is stuck with Chinese miners.
In other words, the lack of people mining at a loss makes mining profitable and hence subject to forces of centralization.
There are several reasons why mining as a lottery substitute is rare, a major one being that commodity hardware is inefficient by many orders of magnitude, making even a botnet next to useless.
Perhaps, if a proof of work, whose efficiency gap (with custom hardware) is at most an order of magnitude, were adopted (or slowly phased in), enough lottery players would arise to make mining unprofitable at scale.
Botnets should then just be welcomed as a modest increase in decentralization.
You can see here many alternative coins and an estimated market cap:
A lot of altcoins came up as mere clones of another, pump-and-dump schemes, or with irrelevant or plain bad changes; but there were quite a few valid innovations. Bitcoin has barely changed in it's core protocol. I hope other projects get more exposure in the future (or Bitcoin becomes less afraid of change).
"You can't possibly get a good technology going without an enormous number of failures. It's a universal rule. If you look at bicycles, there were thousands of weird models built and tried before they found the one that really worked. You could never design a bicycle theoretically. Even now, after we've been building them for 100 years, it's very difficult to understand just why a bicycle works – it's even difficult to formulate it as a mathematical problem. But just by trial and error, we found out how to do it, and the error was essential." -- Freeman Dyson
[0] http://www.coindesk.com/bitfury-details-100-million-georgia-...
1) Mining power is still decentralized. It's not evenly distributed, true, but it is decentralized.
2) Just because some significant percentage of it is in China, doesn't mean it's controlled by one single entity like you're trying to present it here. It's still distributed across thousands of independent miners.
> ...the block chain is controlled by Chinese miners, just two of whom control more than 50% of the hash power.
That's a pretty unique situation.
If a predominant amount of hash power were concentrated in China, but distributed among some large (100+ to 1000+) number of miners, that would be fine. But a system of any kind is no longer decentralized the moment more than 49% of that network is entirely controlled by a small [enough] group of people.
https://blockchain.info/pools?show_adv=no
A pool is not a single entity, it's composed of hundreds, thousands of miners.
To do some evil thing they will have to convince all of their miners to participate, and stay quiet at the same time. And all for what? So they can perform a >50% attack, crash the value, and ruin their investment?
I would worry more about things like BitFury's ASIC datacenter, which is a true singular entity.
Second, there are economies of scale to be exploited. Over time, it will become more profitable for the largest miners to increase capacity vs the smaller miners. The largest miners will get cheaper power contracts. That alone gives them an advantage that will allow them to take market share from the smaller miners.
The end result is fewer, but larger, miners doing more work.
http://bravenewcoin.com/news/30-top-banks-and-mike-hearn-hav...
Read the article, he was clearly laying the groundwork for this move back in Thanksgiving.
“The current Bitcoin system, I mean the system we actually use today with the block chain, isn't going to change the world at all due to the 1mb limit. … So if I have a choice between helping the existing financial system build something better than what they have today that resembles Bitcoin, or helping the Bitcoin community build something worse than what they have today that resembles banking, then I may as well go where the users are and work with the banks."
"The use cases they are looking at and requirements they have cannot be met with the Bitcoin protocol, it just doesn't have the things they need. They are actually spending a lot more time looking at Ethereum than Bitcoin, as it's more obvious how to apply it to their use cases."
The quote is absolutely in line with the article; actually including the quote in the article would have rendered the headline 'Bitcoin dev thinks blockchains for banks are way cooler, has thought so for months, and is reluctantly moving on'; that might be a fun article to read, but it's not frontpaging HN.
If you read the entire article, you would not describe it as click-bait.
Additionally, I agree with kevinwang's assessment that the statement by Hearn that you quoted is 100% in line with what Hearn is saying in his Medium article. The key quote is "...the system we actually use today with the block chain, isn't going to change the world at all due to the 1mb limit.". Hearn's Medium article is -actually- ~50-> ~75% about this 1MB limit. (Spoiler alert: it's not a limit of the Bitcoin protocol, but rather a political decision made by many of the Bitcoin Core developers.)
People want to protect their investments. But because we are talking about money, don't confuse this for meaning that the investments are just about money.
Investments in code contributions, investments in all the articles read, investments in community, friends, social networking, investments in belief systems, investment in the justification for choosing one thing rather than another.
It's simply not consistent to say "oh you only have 20BTC, so you've nothing to lose" or "oh, you made no code contributions, so why are you complaining" as both ignore the potential for massive psychological and personal investments.
All these investments act as a barrier to change. It hurts, it hurts physically to lose big investments.
There is a cost benefit analysis that humans perform internally. Is the hurt of losing this investment now worse than the pain by keeping the investment later.
If we go back to the article, we see Mike repeatedly tell us that Bitcoin is an experiment. He is saying to us now "look, don't invest your time, effort and money into it" - and he is telling himself "I have made the change, I have accepted a loss by investing so much of my time and effort into this, and am moving on".
By the time independent implementations did begin to develop, it was too late to introduce diversity into the ecosystem.
The result is what we are now seeing.
Fully agreed. The largest failure of the so-called "developers" (pretenders after Satoshi) of Bitcoin have failed to concentrate their efforts on understanding and specifying Satoshi's code.
The original Satoshi bitcoin implementation is a mess of Boost-y C++ that was clearly written by a bright guy who was steeped in mediocre C++ programming (probably on Windows). Studying the code and writing a proper specification is job number one. Adding random new features onto Bitcoin without first understanding the codebase is simply juvenile.
A political entity -- not necessary a sovereign government, but perhaps a bank or financial institution -- will offer a currency swap to existing blockchain holders to adopt their crypto currency. The inducement will be a limited time window to put in your claim, with all unclaimed but mined numbers going to the financial entity to reward their followers or stakeholders.
In the real world, this is called escheat and it is a power of the crown. Bitcoin is essentially a system for recording deeds to digital land. They aren't making more numbers, so the problem is the political resolution of competing claims to the same resource. This sort of claim comes, in the end, to a network consensus of who is the sovereign.
They aren't making more numbers
"We can conveniently restrict the supply of numbers" is one of the fundamental failures of the imagination among Bitcoin enthusiasts. "There's only 21 million. Trust us. We counted." "But couldn't I make a new 21 million with a one character code change?" "Well yeah but they'd be so much less cool than our 21 million and you'd have to convince people to use them." "But wouldn't I be able to use the Satoshi adoption strategy -- give them away for cheap to bootstrap a distributed boiler room then gradually make them more expensive, enriching early participants in the scheme at the expense of later participants?" "But that's crazy, it will never work. Nobody wants worthless currency units tied to a transaction network that provides absolutely no value. They want spendable money." "Of course people want worthless currency units tied to a transaction network that provides absolutely no value, if they have the expectation that they will not be the last people to want those currency units. That describes why you invested in Bitcoin!"
https://coinmarketcap.com/ lists 650 alternate value storages which take up 650 million dollars. Bitcoin alone takes six billion.
Bitcoin will be more interesting to me once the mining pool is exhausted. At that point, we'll see how much of Bitcoin's value is in use instead of speculation.
First, the marginal utility of additional units drops for the hoarders, and marginal utility is a well established economic fact.
Second is the time preference of goods. People's lives are finite and they don't want money for money's sake, they want to exchange it for useful things. If you're really hungry, you will buy your sandwich today, not tomorrow even if it's going to be cheaper. Real world examples are electronics and the price of oil. Electronics get better and cheaper with time, and yet, people still buy today. Oil has depreciated hugely in the last months, and yet, people are buying gasoline and heating oil right now, even though signs point to it being even cheaper.
Taken together, you have the desire to hoard counterbalanced by these two factors, which creates a balance of hoarding and spending. This does an economy make.
In either case, you're obfuscating the consumer's real demand due to 2nd order speculation. Using some particular good as a unit of account fundamentally introduces a distortion into the way that people elect to spend / save. And many people have different takeaways from this fact. If you're a goldbug or a Bitcoin enthusiast, you think that inflationary pressure is evil and deflationary pressure is good. If you're really into Keynesianism, you might think that consumption is good and saving is counterproductive. If you're the Federal Reserve, you think there is a right amount of spending that expert economists should target by tinkering with the money supply.
For anyone interested, I personally think the real answer is to look for ways to design a system that removes the distortion entirely by introducing a currency that cannot be held. In other words, a financial system in which the unit of account, the grease in the gears of the economy, only exists in the brief context of a transaction. The actual holding of wealth would all be done using electronic "shares" of real material goods, sort of like what you're buying at a commodities exchange. In this world, people's personal savings would be electronic, hyper-diversified stock portfolios. The "currency" of this system, if you could even call it that, simply acts as a yardstick for understanding relative costs, rather than needing to understand the N^2 different exchange rates of a typical barter system. You would hold micro shares in thousands of different products thanks to automatic software tools that blended expedience with your desire to personally elect what goods you wanted a long position on. In this way, the appreciation / depreciation of your personal savings would rely quite transparently on current values of the goods it represented. Crucially, removing this layer of abstraction would make it much harder for your fortune to evaporate purely on perception of value (see: Zimbabwe) since you would never give it away for less than what the underlying goods were worth to you personally.
(I'm not the kind of person to complain about being downvoted, because I literally don't care, but I'd like to know what's wrong in what I said. I always thought printing money is something no sane government would do.)
If the amount of currency is fixed, but the economy grows, then the bread becomes cheaper. This has multiple effects, but one is to value work yesterday more than work today (work today will be compensated more poorly). Another is that it favours people who hold currency already over those that are actually producing useful economic output right now.
So in a growing economy, the currency supply probably should increase. It's arguable that tilting things the other way - favouring work today over work yesterday (or ten years ago) and favouring economic activity over holding cash - is desirable, so most developed economies aim for low but positive inflation.
This is my very simplistic understanding of why completely limited currencies are not a great plan.
Nothing can be further from the truth. You don't have to go too far for the example. Cigarettes in prisons are used as money. People use all sorts of things as money. State wants to control it because it wants to collect some of the value produced by other people. That is all. Bitcoin is about not giving states these powers.
No. That's barter. Money has very specific characteristics. Cigarettes in prison fail these three: divisibility, durability and uniformity.
https://www.stlouisfed.org/education/economic-lowdown-podcas...
Mackerel was chosen since it's cost was closest to $1USD, and nobody wants to eat it. It also has unique markings so they can track down theft from each other.
If it were truly the case that no one wanted it, it could not be used as money, as another good would quickly replace it.
Mackerel would be worse than cigarettes as they are not divisible. It would also be a good source of Vitamin D if you were incarcerated in northern latitudes
All other decentralized money had demand other than for its currency purposes. Cigs in jail are in demand so they became a way to store value.
Bitcoin is the opposite. It has value because people are saying it's a currency. But it's monopoly money.
In most countries AFAIK it is illegal to mint your own "currency" and call it as such, hence artifact of the state.
Bitcoin lets non-state actors create currency.. incidentally, those most equipped to fund the processing power, are state actors, hence artifact of the state.
http://mentalfloss.com/article/55414/7-cities-have-their-own...
You can make your own currency all you want. You just can't make currency and pass it off as state sponsored currency without permission from the state.
This is patently false. Money has existed before states, and it has existed without states.
Money (specie: often in the form of coinage but not limited to such) was invented when a warlord or monarch captures riches (mines, cities), strikes coins with his visage, uses the coins to pay his soldiers (who are otherwise awful credit risks), then demands taxes from the free peasantry, creating a market economy in the process. States create markets. Markets require states. If for no other reason than to provide protection over the transaction with the threat of coercion.
Before money existed, the free peasantry used credit. The historical evidence shows that first came credit, then came money, then came barter. The exact opposite of what Adam Smith and most economists believe.
The historical evidence shows that first came credit, then came money, then came barter.
I don't know if livestock domestication would be said to be a precursor to gold in some places.
I would suggest "money is an artefact of societies" would be a better way of expressing this - people will otherwise get hung up on whether complex societies, with currencies, that don't look like modern nation-states, disprove this statement.
This seems to be a mistake repeated routinely throughout the tech world. You see it today's Netflix announcement about proxies. You see it with the software/media industries reliance on DRM. You see it with people trying to halt the NSA with stronger forms of encryption (or with the NSA's mass surveillance in the first place). Technology is not a cure-all and unloading an army of computer scientists on a problem isn't usually the answer.
Money is an artifact of the state; always has been, always will.
Abraham listened to Ephron, and Abraham weighed out for Ephron
the silver that he had named in the hearing of the Hittites,
four hundred shekels of silver, according to the weights current
among the merchants.
Gen 23:16[1]
> "The folly of BitCoin is to believe that technical problems are somehow orthogonal to social problems."
This. Or, to restate it, to mistake social solutions to 'money' as technical problems that need fixing.
Here's an article from what remains of one such pre-colonial state detailing how wampum formed the basis of their international treaty laws: http://www.onondaganation.org/culture/wampum/
Money is an artifact of the state because you have to pay taxes in the state's money. If you could pay state and local taxes in bitcoin it would be possible to use bitcoin exclusively for all transactions.
I am aware of plenty of people saying it about the internet now - both that information has become an artifact of the internet and that the internet has become an artifact of the state (specifically, of American cultural and political hegemony.)
Some of these allow you to develop altcoins that are backed by Bitcoin, called sidechains (see Elements Alpha for an example [1]). There's other clever ways to use the scripting system to do fancy things that could help lower the cost of transactions, like the Lightning network [2].
[1] https://www.blocktrail.com/BTC (scroll to "Pool Distribution", today more than half the mining capacity is in two pools)
[2] https://en.wikipedia.org/wiki/Rank-size_distribution:
"The rank-size rule (or law), describes the remarkable regularity in many phenomena, including the distribution of city sizes, the sizes of businesses, the sizes of particles (such as sand), the lengths of rivers, the frequencies of word usage, and wealth among individuals. All are real-world observations that follow power laws"
Why would switching to a cryptocurrency that is better designed be a bad thing?
Additionally, admins at most major bitcoin news sites censored or banned users discussing it.
Switching to another cryptocurrency is a whole different can of worms - remember, btc right now costs around $420 a coin, and all that value is because of the total sum of people invested in it. No other cryptocurrency has anything close to the btc market cap, so capital fleeing the bitcoin blockchain may not trust alternative ones that are much smaller. The problem with bitcoin right now is that mining power is majority controlled by a very small group of people, and any other competitive cryptocurrency is much more at risk for whales taking control.
what can change to make this better? Because it seems the root of the problem is that some small group of people managed to amass a large amount of hardware.
In theory, Litecoin would not have the same pandemic ASIC runaway market control problem. GPUs would still moderately competitive, and act as a counterbalance that normal users have available to them to mine. There would be custom scrypt hardware, certainly, but it would most likely not have the insane performance advantage over general purpose computers that SHA algorithms have.p
To fix bitcoin itself, you need to commoditize the hashing hardware used by the best in the industry. If everyone had access to the ASIC's bitfury were using at reasonable prices normal people could afford, people could distribute the mining more, but as it is most of these vendors are using in house solutions that dramatically outperform off the shelf bitcoin mining hardware.
Something that's really confusing is that the word "fork" actually means at least two different things in the block-size debate context. The first is forking the bitcoin software, and the second is forking of the bitcoin blockchain/network. Bitcoin XT, Hearn's project, was the former, a software fork, that would cause a "hard-fork" in the blockchain. Hard-forks in Bitcoin are very dangerous. There has never been an intentional hard-fork of the Bitcoin blockchain since its inception 7 years ago.
There's a very difficult question of just simply, "how do hard-fork?" A hard-fork would separate the p2p network into two different networks with incompatible rules. A hasty hard-fork could very easily destroy people's money and bitcoin all together. Many, including myself, strongly disagree with Bitcoin XT's hard-fork procedure.
It's also not clear that this particular software fork, Bitcoin XT, is better. I'm not going to go into that issue here as it's extremely complicated. We have an alternative solution, segregated witness, which is effectively equivalent to Bitcoin XT's short-term plan implemented as a blockchain soft-fork. Soft-forks are significantly less dangerous as they do not segregate the network.
[1] https://bitcoin.org/en/bitcoin-core/capacity-increases-faq
The idea that hard forks are dangerous or irresponsible is a belief that is not well supported. However it's a rather good piece of Bitcoin Core propaganda to scare people away from doing what's necessary.
bip99 - https://github.com/bitcoin/bips/blob/master/bip-0099.mediawi...
https://www.reddit.com/r/bitcoinxt/comments/3t21dh/dangerous...
https://www.reddit.com/r/Bitcoin/comments/3griiv/on_consensu...
> scare people away from doing what's necessary
Most block size hard-forks can be deployed as a soft-fork. "It's necessary" is highly contentious and you have failed to cite any of the arguments you disagree with- you're wasting everyone's time.
An accidental hard-fork is a completely different animal from an intentional contentious hard-fork where half of the network goes one way and the other half the other way for the foreseeable future.
Could a cryptocurrency not be controlled by those who can afford to spend the most in CPU power (like governments)?
Could consensus occur by human power?
> What is needed is an electronic payment system based on cryptographic proof instead of trust, allowing any two willing parties to transact directly with each other without the need for a trusted third party.
The thing that jumps out to me the most at this point is that Nakomoto also wrote:
> The system is secure as long as honest nodes collectively control more CPU power than any cooperating group of attacker nodes.
And with Heard's article, presuming that the facts are true, which seems to very much be the case, this seems to me the most serious risk to the system.
If the block size becomes a problem, it will change. It is not yet a problem. If the transition is painful, people will be more open to this kind of warning in the future. If it's painless this will all have been moot.
That's a controversial premise that the article repeatedly addresses.
You may not be convinced, but there is a lot of stuff cited in there on that exact point.[1] Those links lead to other resources fleshing this out pretty quickly.[2, 3]
I found this bit persuasive:
> "Some customers contacted Chris earlier today asking why our bitcoin payouts didn’t execute ... The issue is that it’s now officially impossible to depend upon the bitcoin network anymore to know when or if your payment will be transacted, because the congestion is so bad that even minor spikes in volume create dramatic changes in network conditions. To whom is it acceptable that one could wait either 60 minutes or 14 hours, chosen at random? It’s ludicrous that people are actually writing posts on reddit claiming that there is no crisis. People were criticizing my post yesterday on the grounds that I somehow overstated the seriousness of the situation. Do these people actually use the bitcoin network to send money everyday?"[original article, citing [4]]
I'm an outsider here, and don't have a stake in this. So maybe people who have followed this debate more closely can recognize that as a total fabrication, but to me it sounded like a plausible business concern.
[1] http://gavinandresen.ninja/why-increasing-the-max-block-size...
[2] http://gavinandresen.ninja/the-myth-of-not-full-blocks
[3] http://hashingit.com/analysis/44-bitcoin-traffic-bulletin-re...
The original Medium post disagrees with this premise.
This might simply mean that bitcoin is too immature and isn't quite ready for the mainstream.
So we're at what, 0.9 Exahash?[1]
Say you want to force the change. You'd need to add three times that, or 2.7 EHash/s.[1]
Let's say you buy a ton of AntMiners to cover that, at 3.3 GHash/s/$.[2]
So that's a paltry, what... $820 Million?
Less if you just buy the factory in Shenzhen.
Basically just one winning Powerball ticket though.
[2] https://en.bitcoin.it/wiki/Mining_hardware_comparison#cite_n...
Caveat emptor: my ability to eyeball math in the peta-exa-yotta range is spotty at best. These results may be off by a factor of... any factor.
Because if so, it sounds like you can buy your way to raised thresholds.
EDIT:
Oh, I see... Can you really call it a main branch if you just added all the capacity that is immediately forked? Or is it really just an independent unrelated project at that point?
Let me lay those semantic issues to rest by noting that my original post was not in any way a serious proposal. I was just thinking through the implications of a few individuals with fiat over the voting.
[1] https://github.com/bitcoin/bips/blob/master/bip-0050.mediawi...
(We plan to build something to aggregate URLs so this will become less of an issue.)
There was no way in hell a normal, non-tech guy could ever understand it enough to use it everyday.
This was a case of tech folks missing the woods for the trees. Even this article will go way over the heads of 99% of people on the planet.
Why would you go through all that pain when cash is everywhere, easy to access, and easy to understand?
Asking someone in their 20s or 30s to learn a completely new monetary system, one built on things as "obscure" (to the lay person) as bits and bytes - well, that's asking a bit too much.
The current monetary system might be confusing if you dig in, but its implementation is ridiculously simple.
The same can be said of Bitcoin though. Everyday usage is simple.
This means for me as punter that I can't pay with cash anymore and for me the same thing applies. All my money can be checked.
I still want to be able to spend money without anybody tracking me. You know because there are privacy concerns. Maybe governments in the future ban buying ice cream and I need to be able to buy my ice cream fix?
All kinds of famous/important people predict Bitcoin's death every week, but it just keeps going.
Disclaimer: I raised bitcoin to work on open-source anticancer R&D
It seems like the quotation, "One of the great things about Bitcoin is its lack of democracy" is grossly out of context. In the original comment, by the person that @octskyward is talking about, it seems to be referring to the fact that it is not a majority rules democracy.
edit: grammar
"Simple sabotage is more than malicious mischlef,and it should always consist ,of acts whose results will be detrimental to the materials and man- power or the enemy"
https://www.cia.gov/news-information/featured-story-archive/...
What "feature" was recently added? This has always been a problem with BTC.
(Replace by fee in a nutshell: All Bitcoin transactions are unstable for a period of time, generally believed to be "approximately 60 minutes." Exploiting this instability to retroactively invalidate a transaction was possible but beyond the ken of casual attackers. Replace by fee lets you reverse any transaction you made younger than N minutes by simply saying "I'm willing to outbid the fee I offered on that transaction. The new transaction does this new thing, for example replacing the $100 transaction 'pay from my left pocket to restaurant for dinner' into 'pay from my left pocket to my right pocket.'")
"Opt-in RBF" is generally viewed as a good thing unlike "RBF". Even Jeff Garzik who is against RBF approved opt-in RBF: https://twitter.com/jgarzik/status/671271910634889216
I mentioned this in a comment at medium.com.
Hearn's post may be technically accurate in terms of the data he's collected. But the conclusions he draws are not correct. Usually in any entrepreneurial project, the fact that the service is over-subscribed and increasingly valuable is a sign of success. If one views bitcoin as an open-source project which should have some ideal technical implementation, then yes Hearn has failed to convince everyone to run his preferred implementation of bitcoin, or to agree on exclusively running a different protocol that is not bitcoin while calling it bitcoin.
There is plenty of room for Hearn to run a bitcoinXT altcoin. The only failure here is one of logic, forced by the concept that there can be only one successful network based on nakamoto consensus protocol, and that that network must either be bitcoin or a replacement bitcoin which supplants the original.
For events to have taken place like described in the article, several parties would have been required to work together with the common goal of keeping the blocksize restriction in place:
The Chinese miners who hold the majority of the hashing power, the developers of Bitcoin Core, the admins of bitcoin.org and the as of now unidentified operators of the DDOS attacks.
If you assume it's not a conspiracy, then each party must have reasons why such a decision would be desirable. But as the author describes it, there are no reasons. This goal wouldn't just push Bitcoin into a questionable direction, it would be downright suicidal: Over time, Bitcoin would become unusable for any kind of transaction. Not even the greedy miners could want a cryptocurrency that no one uses.
So I think there has to be some upside to the blocksize restriction. If anyone has more info on that, I'd be happy to know.
In open source communities, impactful contributions yield influence. Here are the top 100 bitcoin contributors: https://github.com/bitcoin/bitcoin/graphs/contributors
Guys like Wladimir, Pieter, Gavin, Cory Fields, Gregory Maxwell and Luke Jr have a voice because they’ve contributed many thousands of lines of code. (Lines of code are only a proxy for impact).
You may have noticed Mike Hearn isn’t in the top 100 contributors list. He is the primary author of the Java implementation of a bitcoin library: https://github.com/bitcoinj/bitcoinj
He started it in 2011, definitely early. But a substantial amount of bitcoin core work had already set the path. There are also similar implementations in many different languages but they are not the primary reference implementation for full nodes.
According to Hearn’s blog post: “I’ve talked about Bitcoin on Sky TV and BBC News. I have been repeatedly cited by the Economist as a Bitcoin expert and prominent developer. I have explained Bitcoin to the SEC, to bankers and to ordinary people I met at cafes.”
Being cited by journalists is not the same as being a primary contributor.
The disagreement between Hearn and the other developers isn’t about whether to increase capacity, it’s about how. Many of the primary full-node contributors believe a hard-blockchain-fork is a risky approach. Lots of work is being done to explore better options, like segregated witness (http://gavinandresen.ninja/segregated-witness-is-cool).
Mike Hearn tried to (very aggressively) push the idea of increasing the block size with a hard fork. In fact the patch allows node operators to vote and 75% adoption is needed. When it looked like that wasn’t going to pan out, he created Bitcoin XT where “Decisions are made through agreement between Mike and Gavin, with Mike making the final call if a serious dispute were to arise.”
So the claim that Hearn not being able to take over decision making power for the bitcoin community is evidence that bitcoin has failed seems to show something slightly different. It shows that open source software methodology of forking and adoption lets the best implementation win and prevents hostile takeovers.
Mike Hearn is not as impactful to bitcoin development as he or recent news would indicate. Mike leaving the bitcoin community has little impact on the future success or failure of bitcoin.
I've also noticed, there are no any Satoshi Nakomotos in the list of contributors. Does that mean he (Satoshi) was "not impactful to the development"?
P.S.: I'm not following the Bitcoin news. Is Satoshi a nickname of one of those top contributors or the initial author just didn't use version control system? Or am I missing something?
I'm not a bitcoind contributor and this is more of a generic observation about how open source projects are controlled in general.
And by community I mean "Users, miners, wallets, and exchanges".
Also a great exhibit of some stereotypical programmer social problems; we don't get a lot of middle ground, most programmers are either openly hostile and combative or so deathly afraid of confrontation and responsibility that they give away their authority so that they don't have to handle the pressure. Gavin should've kept control. Bitcoin is learning exactly why a strong central authority is so desirable in money exchange: it keeps the value of the currency stable by preventing panic and confusion over issues like this.
Many discussions of Bitcoin claim that this power is transferred to "the network" to make the final decision, which sounds very egalitarian and democratic, but Bitcoin failed to provide the controls that would prevent power hoarding and ensure that the people who depend on bitcoin were fairly represented. This is one reason why modern democracies are structured within the framework of a republic. This is probably one of bitcon's hardest to solve problems, since the hardware to get respectable hashrates is unobtainable for quite literally everyone who doesn't have access to their own microfabrication facilities. Even if one of the specialty bitcoin hardware makers had a really good, cheap chip, why would they share it? They'd hoard all the hashpower for themselves. Litecoin attempts to address this by hasing with scrypt, under the belief that it's harder to hoard power with custom hardware if the algorithm uses a lot of processing power and memory instead of just a lot of processing power.
Mike failed to mention one incentive that exists to prevent increasing the block size: miners get the transaction fees attached to each block they mine. If the block size is large, there is little contention for space in the blocks, and ergo there is not much reason to incentivize miners to include your transaction in the next block. By keeping the artificial constraint on the block size, people who own a lot of hash power will be gaining a lot more bitcoin for themselves.
I don't think this crisis is insurmountable. So much money has been sunk into bitcoin that I can't believe people are just going to let this cabal take it out. BitcoinXT will gain notoriety through the mainstream press and the resultant sell off among casual investors will freak the big players out and force them into running XT nodes.
If the blocks are bigger, doesn't that mean they can hold more transactions and thus get more fees total? Or are you assuming the relative scarcity of transaction space would push fees high enough to overcome that?
Yes.
The blocks always contain approximately 10 minutes' worth of transactions because the network periodically adjusts mining difficulty to approximate that target.
Right now, the issue is that there are times when 10 minutes' worth of bitcoin transactions are occupying more than 1MB of space in the completed blocks, which means a processing backlog is formed. Miners prioritize transactions by their attached transaction fee, since they get that fee if they find the block. Thus, users are effectively placing a bid for the network hash power to verify their transaction.
When a backlog forms, customers that want their transaction processed quickly have to outbid others to get a miner to start working on it. If there's not a backlog, their transaction will be included with only a token fee attached because something is better than nothing. Going from 1MB to 8MB means that bitcoin would need 8x more transaction volume per 10 minute block to get back into a transaction backlog, which is the only time that users will attach a meaningful transaction fee to their transactions.
So if the block size goes up from 1MB to 8MB today, there will still be a block every ten minutes, but since transaction volume will presumably remain nearly the same, space in each block won't be scarce and the bidding war won't take off. It'd be a long time before we got back into the same predicament, meaning miners would have to wait a lot longer to start collecting meaningful transaction fees. That's why some people with heavy investments in mining want to keep the block size artificially low: they're trying to instigate a bidding war for their hash power.
It should be noted that this eventuality was always part of bitcoin's design. Bitcoin is programmed to stop "minting" around 22 million coins. At that time, the network will not issue any reward to the miners that find a block (the reward will cut itself down until that number is reached, targeted for approximately 2022 iirc). The solution to this has always been "users will have to incentivize miners with transaction fees".
It's just that the assumption was always that we wouldn't have to deal with that until the network itself stopped attaching rewards to mining. In practice, however, we're in that situation now due to the artificial constraint on the size of a block (which, afaik, is mostly accidental and was never intended to be permanent). The debate is over whether bitcoin should remove the artificial block size constraint and keep its fees negligibly low or whether it should keep the constraint and "allow" miners to start charging more for processing transactions.
The author is complaining that Bitcoin is working exactly as designed.
From Satoshi's paper: "Proof-of-work is essentially one-CPU-one-vote. The majority decision is represented by the longest chain, which has the greatest proof-of-work effort invested in it."
If you want to raise the block size, out-vote the Chinese miners.
The economic majority on Bitcoin has basically said "We're terrified of what happens if we de-throne Bitcoin Core, which is the lineal descendant of the Satoshi client. Accordingly, we'll go along with whatever that project decides." The problems with Bitcoin Core's decisionmaking process are in the post. Worth noting, since I don't recall seeing it: Bitcoin Core is operated by "consensus" with respect to this issue and any of five devs can blackball a change; three of the devs work for a company whose economic justification for existing is "the Bitcoin network is inadequate to do the things that many users want Bitcoin to do." Fixing Bitcoin Core would harm their economic interests at the new company they founded.
Why be terrified of de-throning Bitcoin Core? Isn't it a protocol with multiple competing implementations? NO, because the "Bitcoin protocol" does not exist -- Bitcoin is a network of nodes running one C++ codebase and that is essentially the entire ballgame. Bitcoin's requirement for distributed consensus means that if you are not bug-for-bug compatible with Bitcoin Core, which runs a supermajority of the network, you risk being catastrophically forked from the network at any time of an attacker's choosing.
Also, the scenario where some economic players remain on Bitcoin Core and some economic players migrate to Bitcoin Better, followed by a hard fork (irreconcilable split of the blockchains regarded as authoritative by these two incompatible software ecosystems), results in loss of the global non-technical consensus in what a "Bitcoin" actually is. You'll find that your "Bitcoins" might not be actually useable at a merchant who accepts "Bitcoins." You might find a payment made to you in "Bitcoins", which your wallet says happened, has not actually happened according to your payment processor. Cats and dogs living together; catastrophe happens; the price of Bitcoin Core coins and Bitcoin Better coins both approaches the natural value of Bitcoin, which is zero.
This is not the case. You could run XT for example and remain compatible, which was precisely its adoption strategy? It just simply did not reach consensus (aka CPU power).
> By mining with Bitcoin XT you will produce blocks with a new version number. This indicates to the rest of the network that you support larger blocks. When 75% of the blocks are new-version blocks, a decision has been reached to start building larger blocks that will be rejected by Bitcoin Core nodes.
(from https://bitcoinxt.software/)
This "people problem," as Mike calls it, is undoubtedly a result of the mechanics of the blockchain. Slightly different rules may lead to dramatically different (and less insurmountable) people problems.
- Gotta say, even if bitcoin "fails" I don't feel it will be a "failure". The community and people have learnt so much, I mean, Bitcoin became...big and it's the first cryptocurrency to reach this level.
To have made a perfect system would be unrealistic really.
When enough people are using it it will end up being the official block chain and the versions that don't support these larger blocks will filter away as they become useless.
There are two problems with this approach. First, as mentioned in the article, people applied outside pressure such as DDOSes to force people to not use the alternate software.
Second is simple confidence. While the fork is an unsettled question you can end up with two diverging blockchains. This makes it uncertain whether someone has successfully made a payment or not, and introduces the possibility of double spending. All that uncertainty is likely to hurt the adoption of bitcoin, possibly causing irreparable damage to its reputation.
At least, my understanding is that he recently began working for a group that competes with Bitcoin in trying to connect traditional banks and (non-Bitcoin) blockchain technology. He has an incentive to scare people away from Bitcoin.
Not saying there are no scaling/social/whatever issues in Bitcoin. But the author seems to be conflicted.
Disclaimer: I own a few Bitcoins, and thus hold the opposite conflict of interest.
Typical template of building up hype linkbait case - start with a couple of puffed up credentials, pose yourself like a well wishing visionary and then shed few crocodile tears of sadness over "it failed" statements which of course conveying an absolute truth.
Nothing helps to share links better than controversy.
Although is it true that if there are 2 large network which are separated (by the great firewall), does that mean the ledger could be split in 2 ?
Guys like Wladimir, Pieter, Gavin, Cory Fields, Gregory Maxwell and Luke Jr have a voice because they’ve contributed many thousands of lines of code. (Lines of code are only a proxy for impact).
You may have noticed Mike Hearn isn’t in the top 100 contributors list. He is the primary author of the Java implementation of a bitcoin library: https://github.com/bitcoinj/bitcoinj
He started it in 2011, definitely early. But a substantial amount of bitcoin core work had already set the path. There are also similar implementations in many different languages but they are not the primary reference implementation for full nodes.
According to Hearn’s blog post: “I’ve talked about Bitcoin on Sky TV and BBC News. I have been repeatedly cited by the Economist as a Bitcoin expert and prominent developer. I have explained Bitcoin to the SEC, to bankers and to ordinary people I met at cafes.”
Being cited by journalists is not the same as being a primary contributor.
The disagreement between Hearn and the other developers isn’t about whether to increase capacity, it’s about how. Many of the primary full-node contributors believe a hard-blockchain-fork is a risky approach. Lots of work is being done to explore better options, like segregated witness (http://gavinandresen.ninja/segregated-witness-is-cool).
Mike Hearn tried to (very aggressively) push the idea of increasing the block size with a hard fork. In fact the patch allows node operators to vote and 75% adoption is needed. When it looked like that wasn’t going to pan out, he created Bitcoin XT where “Decisions are made through agreement between Mike and Gavin, with Mike making the final call if a serious dispute were to arise.”
So the claim that Hearn not being able to take over decision making power for the bitcoin community is evidence that bitcoin has failed seems to show something slightly different. It shows that open source software methodology of forking and adoption lets the best implementation win and prevents hostile takeovers.
Mike Hearn is not as impactful to bitcoin development as he or recent news would indicate. Mike leaving the bitcoin community has little impact on the future success or failure of bitcoin.
This changes when most of the hash power agree. If the 74% agree then the chances are 24% ( http://www.wolframalpha.com/input/?i=binomial+distribution+n... ). The calculation is more complicated because the intervals may overlap, but this would take less than a year.
So, when more than 70% of the hash power agree, it's time to upgrade, but 70% is a clear majority.
(Just for curiosity: With 75% hash power you get a 52% chance. With 76% hash power you get a 78% chance.)
I was astonished when I read this 'consensus' code in the Bitcoin repository. I recommend removing it or deploying an old version of the Bitcoin server. It is a reckless and deceitful (how many users actually understand the tacit consent they are granting by running this code?)
> conflicting versions of the transaction history for a substantial length of time.
Indeed if a new block size is 'forced' with a fork, it essentially creates a new currency. I doubt the new big-block Bitcoin will stand on its own.
================================================
There are three types of people who are into Bitcoin:
1. People who are in it out of sheer curiosity.
2. People who are in it to get rich quick.
3. People who have been scammed into it.
The people who are in it out of curiosity are the people I don't take issue with. At its beginnings, I found Bitcoin to be a curious thing because it was a novel and new idea. However, as things progressed and I learnt more about how it all worked, I saw it as a cumbersome idea that wouldn't effectively replace anything and as a result now I'd rather make jokes about it than take anything about it seriously. I've never spent more than $20 CAD on Bitcoin and I have gotten it all back for that matter too.
People who get scammed into Bitcoin typically get scammed either one of two ways: they're either being coerced into using it because they've gotten something like malware on their machines (CryptoWall and its variants) or they see it as an investment alternative. The only times I've ever seen non-technical people experience Bitcoin is when I have to tell them that the malware on their computers will only release their unbacked-up data requires a payment using the cryptocurrency to get it all back. And that is really what a non-technical person's experience with Bitcoin is going to be: it's a way to pay thieves.
As for the get rich quick people, they tend to fall into the third category or they themselves are scammers.
Right now there are two forces dominating the Bitcoin community: the miners and those who are holding out on whatever magical unicorn rainbows makes the coins have value. The miners don't want to see changes to the software because it'll hurt their bottom line and the people holding and exchanging it want to see these changes so they can benefit. So as a result, Bitcoin has entered a war of attrition and is starting to show its problems. Mike Hearn's leaving is definitely a consequence of this problem.
Earlier yesterday [1], I made a quip about how it's insulting to suggest that we get those who are "unbanked" as a result of living at no-fixed-address (ie: "homeless") should eventually move on to Bitcoin as an alternative to mainstream financial institutions. It's really for the reasons that Hearn made: would you want to wait a random period of time ranging from maybe a few minutes to a few hours for your transaction to go through? It's already insulting enough that they're living at the bottom of society, so why would we want to get them to use a bottom-tier financial system? Why not instead suggest making it easier for them to participate within mainstream banking schemes?
I anticipate based on my last remarks that the responses to this post will consist of feckless anecdotes and pointless accusations that I and others have a "problem" with Bitcoin. I guess to a certain extent the statement of me having a problem is true, but at the end of the day Hearn is right.
Bitcoin is a failure and if you invested into it then you're getting what you deserve. If you think that it isn't a failure then you obviously didn't comprehend Hearn's writing.
4. People who need to circumvent capital controls and want to move money out of countries like China and Venezuela.
6. Online businesses with business models that generate frequent chargebacks, so can benefit from an irreversible payment method.
Clearly, anyone who disagrees with you just doesn't get it. No room for disagreement here, I see.
As someone who has been robbed by PayPal I find bitcoin to be quite useful.
So I buy a service with Bitcoin and it ends up being fraudulent, how do I get my Bitcoins back?
If I buy a service with my credit card and it ends up being fraudulent, how difficult is for me to get the charges reversed?
One of them relies on the fraudster having a change in heart and the other may not necessarily be fun but is more than likely to happen.
Both methods of payment have their uses, but a pull-based system isn't the default model I want for 99% of my payments.
Until I can generate credit card numbers on the fly with one-time-use amounts of money, Bitcoin helps solve the problem by giving me push payments.
Bitcoin is literally working right now. I order food with it, avoid currency conversions with it, buy blankets with it...
When people say it has failed it is pretty obvious they have some sort of emotional investment and are not objective.
What about Africans who have no access to a bank but have access to a cellular device?
http://qz.com/462044/the-battle-between-africas-mobile-phone...
Credit cards take 180 days for the transaction to confirm. Paypal is able to be clawed-back for up to almost the same amount of time. Cash can be counterfeited. Even some bank wires can be clawed back. Bitcoin works as a payment mechanism.
On average, an electronic transaction on your credit card will not be visible to the consumer for one or two days, depending on the merchant. This can be delayed if the merchant and all other parties are taking in a large volume of transactions, but it will show up. Other reasons include allowing for modifications to the transaction (such as merchants who wish to include tips which is a manual process), but if the transaction is electronic, it will appear visible to you within a day or two.
With EMV being in place in the majority of the world and also ignoring some of its security problems, merchants don't have to be concerned about a fake credit card being used as much as they once had to.
With Bitcoin, the merchant won't be able to tell if the transaction is approved without having to wait an onerous and unpredictable amount of time. If this is a restaurant, are we to expect that the person who's paying with Bitcoin will wait for the transaction to be received on the other end?
Credit card transactions run in the realm of 100,000,000,000 transactions per year globally [1], or 274,000,000 per day, or 3,200 per second. At best as of this current writing, Bitcoin can handle anywhere between one to three transactions per second. A delay of one or two days of a transaction on my Visa card to show a meal I had a restaurant is acceptable considering the volume per day, but being that Bitcoin takes anywhere between a few minutes to a half-day to just process the transaction when it operates at <1% the speed is just pathetic.
You cannot tell me with a straight face that compared to credit cards Bitcoin is able to scale and act as a "[workable] payment mechanism".
I've worked on batch settlement software and never heard of this. The payment processor has very strict timelines that must be followed for each phase (auth, submission, clearing, settlement). Funds usually appear in bulk the next business day after settlement.
> Cash can be counterfeited.
And easily spotted (in the US). This is more an issue for people than retailers because the banks will almost certainly notice it.
> Even some bank wires can be clawed back.
This is really fucking hard and easily mitigated by immediately wiring the money to another account at a different bank.
https://en.wikipedia.org/wiki/Homomorphic_encryption#The_2nd...
Simply have 5 servers running that as a network server and you won't need proof of work, nor will you need a blockchain. Homomorphically encrypt a basic ledger with an encrypted backend, and throw away the key. Done/done.
One might say encrypting 52 integers in 36 hours is somewhat less than acceptable performance, but how does it really compare to bitcoin in total effort ? This is certainly good enough that anyone with a decent pc could run it. Hell, you might even reward them for running it just like bitcoin does. And it ought to be a lot cheaper to run than bitcoin.
https://lobste.rs/s/82pz7r/curated_links_to_understand_dange...
(This has nothing to with any opinion on Bitcoin.)
We detached this subthread from https://news.ycombinator.com/item?id=10905126 and marked it off-topic.
Could you maybe delete that comment and make it a top-level comment instead? Then I'll delete this one, and the thread will be cleaner.
Is it a problem for the rest of the world?
And I wasn't talking about Bitcoin in particular.
I just really hope that the banks either don't figure out how to make everything go in their favor, or that the hands they play work out for the good of everyone.
Why would this be? Are they hoping for increasing transaction fees and therefore increasing mining profits?
In any case increasing the block size seems like a no brainer from a technical point of view, at least if your interest is in Bitcoin itself and its growth and future.
Edit: oh, that. Not much of an explanation. I was asking if there is a deeper underlying reason.
Larger blocks mean longer propagation time, during which time another pool with more bandwidth could hash and propagate their own block, causing the Chinese block to be orphaned.
Since the major miners are out in the boondocks and they don't like losing $11,000 (the proceeds from a block), they would prefer a smaller block size.
Of course, the miners could simply refuse to accept transactions. There is nothing stopping them from creating empty blocks, or ones with few transactions, which would zip around the network faster (besides the loss of transaction fees, which is at the current time, very small).
Why they don't do this is that it is a delicate power play. If they upset the market too much by doing controversial stuff such as this, the market may turn on them. Therefore, it's in their best interest to lobby for the rules in their favor rather than acting contrary to the utility of the bitcoin network.
So they are incentivized to be extremely risk-averse to anything that could affect the Bitcoin exchange rate, and will only be excited about code changes when not changing would be clearly worse.
It has some of the shape of an unincorporated association, though. There's a lot of caselaw dealing with disputes arising in those, usually from reluctant courts that were dragged into particularly petty and poisonous disputes.
Given the amount of actual money involved, people might start asking courts to settle some of these questions before too long.
(But don't ask me to do it, I'm not a lawyer and this isn't legal advice).
Well, that and "Bitcoin has become garbage, avoid at all costs".