The Schism Over Bitcoin Is How Bitcoin Is Supposed to Work
wired.com
wired.com
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But he raises a good point—denial-of-service attacks and death threats notwithstanding.
[...]
This is pretty much how things are supposed to work. Sure, [...] the election tactics got out of hand at times. But, well, this is the internet."
This is a hell of a thing to yadda yadda. Calling DDOSes and death threats "election tactics" is ridiculous. If running X version of bitcoin is voting, then it's not a (free) election if you interrupt people on the way to the polls and intimidate them when they're not backing your candidate.
Let's say alternative Bitcoin software causes a hard-fork in the blockchain: you now how two currencies. The parties involved on each side of the chain might decide that it's worth it to keep two competing currencies going, or they may reconcile the fork and return to running compatible software. In the end, the voluntary choices of the parties determine where they go (informed by economic incentives, of course).
Democracy is a system in which some group of people hold coercive power over the rest of the population. If the rules change (income tax, imminent domain), there is no opt-out short of leaving your property, family, career and moving to another country. Your compliance with the new rules of the game is ensured at the end of a gun.
Second: Are you saying that if Bitcoin had as many users as democracies that there would be no remaining distinction between the two systems?
As if those people have any intention whatsoever to listen to the opinions of billions of poor people when making technical protocol decisions. They don't want real democracy - they want their democracy where they're in control. And for anyone wondering what that control looks like, here are some direct quotes from the "democracy" crew:
Gavin Andresen: "there will be big companies spending lots of engineering dollars on their own highly optimized versions of bitcoin. I bet there will be alternative, secure-and-trusted, very-high-speed network connections between major bitcoin transaction processors. Maybe it will just be bitcoin transactions flying across the existing Visa/MasterCard/etc networks" [1]
Gavin Andresen: "I think long-term the chain will not be secured purely by proof-of-work. I think when the Bitcoin network was tiny running solely on people's home computers proof-of-work was the right way to secure the chain" [2]
Gavin Andresen: "bitcoin is already more decentralised than it needs to be" [3]
Mike Hearn: "probably 2 or 3 racks of machines" [4]
Gavin Andresen: No, it's completely distributed at the moment. That will begin to change as we scale up. I don't want to oversell BitCoin. As we scale up there will be bumps along the way. I'm confident of it. Why? For example, as the volume of transactions come up--right now, I can run BitCoin on my personal computer and communicate over my DSL line; and I get every single transaction that's happening everywhere in the world. As we scale up, that won't be possible any more. If there are millions of bitcoin transactions happening every second, that will be a great problem for BitCoin to have--means it is very popular, very trusted--but obviously I won't be able to run it on my own personal computer. It will take dedicated fleets of computers with high-speed network interfaces, and that kind of big iron to actually do all that transaction processing. I'm confident that will happen and that will evolve. But right now all the people trying to generate bitcoins on their own computers and who like the fact that they can be a self-contained unit, I think they may not be so happy if BitCoin gets really big and they can no longer do that.
[1]: https://bitcointalk.org/?topic=3118.0
[2]: https://lists.linuxfoundation.org/pipermail/bitcoin-dev/2015...
[3]: http://www.bitcoin.kn/2015/09/adam-back-gavin-andresen-block...
[4]: https://en.bitcoin.it/w/index.php?title=Scalability&oldid=35...
IOW, the goal of their democracy is to usurp control of full nodes from individual hands and make that into a Corporate-dominated service. It would basically turn Bitcoin into an enterprise database that most people are stuck accessing as a proprietary SaaS.
That's why the opposition is called "classic" not "bitcoin democracy". Their position is they are getting back to what bitcoin should have been.
And bitcoin originally had larger than 2mb blocks. The 1mb block limit was a short term solution to a problem that existed back then... that was never lifted.
> After simulating the creation of blocks up to 32 MB in size, we have arrived at some interesting conclusions:
- a 32 MB block, when filled with simple P2PKH transactions, can hold approximately 167,000 transactions, which, assuming a block is mined every 10 minutes, translates to approximately 270 tps
- a single machine acting as a full node takes approximately 10 minutes to verify and process a 32 MB block, meaning that a 32 MB block size is near the maximum one could expect to handle with 1 machine acting as a full node
- a CPU profile of the time spent processing a 32 MB block by a full node is dominated by ECDSA signature verification, meaning that with the current infrastructure and computer hardware, scaling above 300 tps would require a clustered full node where ECDSA signature checking is load balanced across multiple machines.
In addition:
> Aside from the obvious network and storage constraints of running a full Bitcoin node at large block sizes, it appears the Bitcoin network is capable of handling a substantially higher transaction volume than it does currently. The CPU time being dominated by ECDSA signature checks at high transaction rates suggests a clustered full node architecture could process credit-card-like transaction rates by using a load balancing / offload approach to ECDSA signature checking, e.g. a full node with a 10 machine cluster would top out at >2,000 tps.
> The resources and know-how required to run a clustered node like this may impose a significant centralizing force on Bitcoin. Backpressure against the centralization of Bitcoin may well drive alternative solutions to having all transactions on-chain. Alternatively, it may end up that Bitcoin adoption grows slowly enough that the computing power of a single node grows quickly enough to avoid requiring a clustered full node architecture.
Under Gavin Andresen's original plan, the 32MB limit could've been crossed in Jan 2018 when the size doubled to 40MB. Importantly, Gavin has since dropped the idea for a block size of 2MB. Hence you really can't claim that your own preferred plan for block size won't result in "a high-fee, low-transaction network". It's 2MB - that's a very far cry from VISA and it's only 0.4MB more than the scaling roadmap - that's a difference of at worst 3 tps out of VISA's 56,000.
Unless your intent is to quite literally put 100% of Bitcoin full nodes in datacenters, it's as clear as day that raising and re-raising block size ad infinitum doesn't work, as it usurps control of full nodes from individuals. It effectively turns Bitcoin into an enterprise database only accessible to the rest of us through garbage proprietary SaaS platforms. Clearly this isn't a benefit and we should be pulling out every possible stop to avoid it from happening. Look, if your vision for Bitcoin is that it should be like Parse.com for credit cards, I'm sorry but we're just going to have to agree to disagree.
It is a fallacy to think that unless people can run nodes on dial-up in basements, the Bitcoin network has failed in its mission.
Thousands of nodes running in data centers all over the world can provide a scalable, fault-tolerant, censorship-resistant, decentralized relay network.
Then if later on the two forks want to merge, what would be the technical mechanism for this?
Having said that, with sufficient consensus on the hard form, it's likely that the other side would have so few blocks mined as to be worthless and useless; one or the biggest disagreements between the Classic devs and the Core devs is the latter generally advocate much higher miner support thresholds, e.g. my own 99% support vs Gavin's 75% support.
Newer blockchains are already learning from these problems and are innovating. Bitshares for example has the goverment structure built in, most of the paramaters can be chainged by voting.
Now that does not make it democracy as we know it, because the power of the vote is based on how much stack you have. Its essentially a company with stack holders.
Doing a democracy as we have it in real live will be hard because of the identity problem.
Bitcoin need some way to resolve these conflicts and if possible root the choices in the blockchain itself.
This issue really forces you to think about how we make choices in groupes, and what is "fair".
Their is a lot of research on this in political economics. James Buchanen had interesting things to say about the Economic of Club and the Economics of Constitution.
I also recommend,"Choosing in Groups: Analytical Politics Revisited"
Bitcoin depends entirely on the self-interest of the involved parties to not destroy the system they have invested so much in. That's how much of the real world works too.
It's true that the recent hard fork proposals have keyed off miner voting, but they wouldn't have to - they could just activate at a certain time, block height, strawpoll vote API, or whatever.
All of this has been covered/talked about ad nauseam, as far as I'm concerned what this comes down to is 2 basic facts:
1. There's a core development team (with it's fair share of internal politics and power struggles) who is supposedly looking out for potential issues affecting Bitcoin's operational health. Once they agree on the change and implement it, there's no "voting" by any other players in the Bitcoin ecosystem. They just do what they think is best.
2. There's a disproportionate amount of hashing power concentrated in large mining pools. This would be bad enough but what makes it even worse is the heaviest hitters are in China and are unified against the biggest proposed change SOME of the core team members like Mike were/are advocating.
So now how this standstill will resolve - remains to be seen. There are multiple factors at play but as of right now the situation isn't pretty. To claim that "this is how bitcoin is supposed to work" is to agree with Mike in saying that it is messed up beyond recognition :)
This could be chaotic so the debate is really how to avoid two co-existing chains in hard fork situation.
But bitcoin itself is, every 10 minutes, voting for what the "right" chain is, which is defined as the longest.
Right now today if you're mining on a block and find out that there is a longer chain, the node switches.
Not if the longer chain is invalid under your node's consensus rules. The rule is "most-work valid chain."
"voting" I'm referring to (which there's none) is telling the core team which changes to implement. who's to tell them not to implement segwit for example?
And no such thing exists, as it turns out. How can this not be bitcoin's practical death?
It really isn't a democracy - there is no method to force the minority into the majority's will. If a controversial chain fork happens, there will now be two Bitcoin currencies. Those on the original chain won't be forced to switch.
Will be really interesting if any exchanges support this concept of two bitcoin chains coexisting. I bet they don't.
If the exchanges don't support the concept, it'll still at least be up to the user to figure out which chain the exchange is on.
Is it? That's really what this is all about.
Unlike a constitutional political system, Bitcoin has no explicit meta-rules that govern how to change its basic rules. On one side of the present "civil war" over the size of transaction blocks is a group that wants to make a minor technical change to the protocol to allow it to support a higher volume of transactions; and on the other side is a group that doesn't want that to happen.
But these groups really represent two sides of a more substantial debate. One side is advocating for the first deliberate change to the protocol's basic rules, and the other side is saying, no, you can't do that. Michael Marquardt (aka theymos), who controls bitcoin.org, bitcointalk.org, and /r/Bitcoin, and who is a vehement proponent of the status quo, has made plain his position in this meta-debate: "Bitcoin is not a democracy."
And that's the position taken by several Core developers, who insist that the block-size is a "technical issue" over which users and stakeholders should have no say. Gregory Maxwell, a vocal Core developer on the status-quo side of the debate, and many others, object to changing the protocol in ways that could cause a fork in the blockchain, with clients following one set of rules going one way and clients following other rules going another. It's an objection in principle as much as a practical concern: nobody should be coerced into submitting to a new set of rules by the risk of being separated from the mainstream of the Bitcoin community, and that means we have to stick with the present rules. (Its exponents call this philosophy "consensus".)
So it's the newest setting for the oldest and most basic conundrum of politics: bad rules are bad, but so is changing the rules of the game halfway through. Artificially constrained blocks are driving up the cost of transacting in bitcoin and hampering the currency's adoption; but rules are rules, say people like Maxwell and his colleagues at Blockstream, who have carefully arranged their lives and built their businesses on the assumption that the present rules will be the future rules. (Blockstream is a company that employs several Core developers and is building a mechanism for transacting in bitcoin off the blockchain, i.e., a mechanism for providing more transaction capacity to an artificially limited protocol.)
And Maxwell and his colleagues have a point. We are, after all, talking about the rules of a currency that was created in part to take away from central bankers, politicians, and the masses the ability to change the rules of the game halfway through. If the block-size limit can be changed, what's to prevent people from changing more important rules, like the one that keeps bitcoin's money supply from growing without bound?
Still, as the saying goes, rules are made to be broken—and the peasants do tend to revolt.
Edit: I edited my comment to properly attribute to Marquardt words that I mistakenly recalled coming from Maxwell. I also tried to clarify a couple of points.
http://szabo.best.vwh.net/securetitle.html
If one follows Core's line the question becomes: who if not nodes make decision in Bitcoin? Their answer - the core developers. A future system will have to address this corruption of power.
Blockstream has no position on the block size debate, other than supporting the consensus building process (whatever the outcome might be). Blockstream's business model does not depend in any way shape or form on small blocks. That is pure FUD. In fact, small blocks are a hindrance to things like sidechains, which generally use much larger transactions for the two-way peg smart contracts. Some of the risks called out in the sidechains whitepaper are that Bitcoin blocks might be too small to contain a return peg, or that full blocks will make it difficult to get a fraud proof on chain before the expiry.
Everyone stands to benefit from larger blocks, but only so long as the network remains decentralized. The debate is over where to draw that line.
(Disclaimer: I'm a co-founder of Blockstream.)
First, only one core developer with commit access, Pieter Wuille, is affiliated with Blockstream. Yes - the fact that founders of Blockstream are PhDs in distributed systems and cryptography, and the fact that many of them have authored essential elements of the Bitcoin system like libsecp256k1 gives them a purely meritocratic sway over developer mindshare, and for good reason.
Second, according to your words here you've done the impossible - you've finally figured out how to handle all money issues in open source projects. Gosh, that's really something. Don't just leave us hanging like that, do divulge what you think is the optimum way to ensure highly skilled developers and researchers work on open source projects for free.
There is 6B$ in Bitcoin wealth floating around, surely there are means for funding a few salaries. And that's what is going to happen in the future. Funding will take place through on-blockchain methods, some Cryptocurrency projects do this already. Money and opensource is now tightly connected, but Bitcoiners generally haven't figured this out yet. For more innovative ways checkout Ethereum, Bitshares, Nxt, etc.
But no, I'm afraid you'll have to do a bit more than merely allude to (non-)solutions, or point out how paper gains are enough motivation to keep experts who could otherwise be earning 6 figure incomes, to instead work full time on difficult solutions for free.
That you've taken absolutely no effort to spell out any of this magic success formula and instead chosen to allude to altcoins is sadly typical.
Bottom line: nobody has figured out how to sustainably support open source projects with money, period. In the best case, it's the blind leading the blind. You do what works. And whose to say what works? It's ridiculously subjective.
Said the GP:
> There is 6B$ in Bitcoin wealth floating around, surely there are means for funding a few salaries.
Isn't that exactly what Blockstream is doing?
Please don't conflate Bitcoin Core and Blockstream.
> Should users be able to make decisions? Should core developers be able to over-ride those decisions? Bitcoin is a system with majority decision making.
Bitcoin is not a majority-rule system. The only point in which a majority rule applies is a tie-breaking strategy for resolving valid ledger branching. And that vote doesn't enfranchise users!
Bitcoin is a system that explicitly rejects majority rule. It replaces user determination with fixed, inflexible machine arbitration. It is from this fact that Bitcoin is not a democracy that it derives all of its user-protecting properties like irrevocable payments and inflationary protections.
> Making Side-chains the major cornerstone of the Bitcoin ecosystem will turn out to be a mistake. Side-chains don't make much sense if you understand incentives and risk. The same applies to Lightning which will equally be a failure.
You are welcome to your own opinions. Thankfully your permission is not required to new, innovative use of scripting features that were built into bitcoin from day 1.
People who've primarily invested in the mining infrastructure obviously want the fees to go up now. People who've invested in more customer-facing elements of the bitcoin ecosystem want the fees to stay low as long as possible so that adoption isn't deterred by the necessity of including a substantial fee whenever you send a bitcoin transaction.
The technicalities of the bitcoin platform have played out such that those who don't want the size of blocks to grow have a disproportionate number of votes. Most users and most bitcoin companies want BIP 101, but they've been outvoted by the interest group that wants to start collecting rents on their mining power ASAP. In human terms, it's like land owners finding a loophole that allows them to vote 10x more than non-owners. I don't believe that was ever part of the intention of Satoshi, but the way Bitcoin's difficulty mechanism works has entrenched it as a very real problem that probably can't be circumvented.
Incidentally, it's a shame that you've gotten some negative reactions to this -- I, for one, thank you for offering some more insight into the Bitcoin developers. I'm sure you have your own biases, but I doubt you set out to misrepresent things, as a few commenters grumpily allege.
Ah, no we are not. The last part, about "the masses", was tacked on later by the people who fear democracy. That was never a part of the original vision. Quoting the white paper:
"The proof-of-work also solves the problem of determining representation in majority decision making."
Indeed, it'd have been a nonsensical goal to try and stop "the masses" changing Bitcoin, because "the masses" are the only thing that give a currency its value and attempting to produce a currency that literally nobody can change, even if the vast majority of people decide to change it, is simply not possible to do with software. That's why we call it soft-ware.
Unfortunately, the Bitcoin community has been completely wrecked by people who truly, deeply believe that "decentralised" money means "money controlled by a tiny cabal of developers" rather than the more obvious interpretation of "money controlled by its users".
Additionally, none of the zero knowledge proof systems on the market are fast/flexible enough to do it well. Perhaps if SGX were to be one day liberalised, it could work better. So it's not easily implementable today.
However, given that PoW definitely hasn't worked, people should have open minds to alternatives.
Even with the best protocol in the world though, you would still encounter this:
http://www.forbes.com/sites/laurashin/2016/02/12/chinas-role...
(the last sentence is especially telling)
Votes can change a lot of the parameters in the system, and you can vote on where the "profit" goes. So you can vote on how many positions get a share in that profit and who should hold these positions.
Right. The miners rule Bitcoin. That's the way it was set up. The big miners are[1]:
F2pool 28%
AntPool 22%
BitFury 16%
BTCCpool 12%
all others 22%
What bugs Gavin and the "core Bitcoin developers" is that they're not in charge. The "Bitcoin Foundation" is broke and irrelevant.[3]
The original idea of Bitcoin was that mining would be something done as an idle activity on user's PCs. Today, Bitcoin mining is done in big sheds holding thousands of racks of special-purpose machines, located in cold climates and near power stations.
[1] https://blockchain.info/pools [2] http://imgur.com/JUnQcue [3] http://www.bloomberg.com/news/articles/2015-12-30/the-final-...
Anyone is free to set up a larger mining operation if they are so inclined. Until then, the bitcoin community can't be anything but extremely pleased with how much processing power the Chinese miners are contributing to the system.
> The original idea of Bitcoin was that mining would be something done as an idle activity on user's PCs.
I don't have a quote handy, but as far as I know that is not true. Satoshi expected mining to eventually be run out of large data centers.
Sure, all they need are the tens of millions necessary not only to buy the equipment but also to develop their own competitive custom ASICs.
The biggest problem with btc mining is that it's no longer feasible to make an impact with commodity hardware. I think to the extent that Satoshi may or may not have foreseen that, he assumed that the specialized hardware would become commoditized and that users would still have the power to make a meaningful vote. This didn't happen because the Bitcoin network punishes a faster network with increased difficulty, so as soon as you release your ASIC to the masses, the network raises the difficulty to neuter the effects. However, if you keep your hardware private, you can profit from the hardware without making such a large impact that the network edges you out. This allows the biggest miners to find several blocks per day (which is 25 "new" bitcoins + any attached as fees).
Given those incentives, it's only logical that the best hardware would be used privately and that the vote of the everyday bitcoin user (who was also supposed to be a miner) is irrelevant.
"It is a global distributed database, with additions to the database by consent of the majority, based on a set of rules they follow"
Link: http://p2pfoundation.ning.com/forum/topics/bitcoin-open-sour...
The USD doesn't compete against VISA. Gold doesn't compete against VISA. BTC doesn't compete against VISA.
Please, will someone inform these poor journalists that it's sheer folly to pit a currency or a commodity against a Corporation? American Express isn't competing against gold bullion, and VISA isn't competing against BTC. VISA is competing against Coinbase and Xapo.
Bram wrote about the manufacturing of this ‘fake crisis’ back in June of last year [1]. He wrote a subsequent post after Mike Hearn's big ragequit in January [2]. And he's written another short post just today [3]. I'd suggest reading these if you want to get some balance to this highly one-sided and simplistic article by Cade Metz in Wired.
[1] https://medium.com/@bramcohen/bitcoin-s-ironic-crisis-32226a...
[2] https://medium.com/@bramcohen/whiny-ragequitting-cab164b1e88...
[3] https://medium.com/@bramcohen/double-billing-is-not-healthy-...
Not going to disagree that it's hard to take bitcoin seriously, but I don't think that one has ever been much of an issue.
"Powerful" perhaps. "Reliable" even.
But disdain for big banks and credit card companies is very widespread, and people do want a system that is more... well, responsible.
A lot of bitcoin's complexity is rather thinly veiled by the current generation of clients and platforms, but it's basically just a question of time (maybe a lot of time), learnings and improvements until this gets better. Whether bitcoin will survive this period of time is a separate question, but that the complexity can be successfully abstracted away from eventually is inevitable.
It's testament to the quality of the abstractions that cash and credit cards provide that we do trust them and use them without thinking, and wonder how we could ever switch to an alternative system that doesn't offer the same. But there's nothing intrinsically less complex about them, and there's no reason why bitcoin can't get to that point too. Always keep in mind, bitcoin's only been going for a few years - it's an incredibly young technology and ecosystem!
Most people understand that when they swipe their card, dollars are taken out of their account. It's a fairly simple process and pretty easy to understand.
Bitcoin is much more complicated. You need to have files on a hard drive, a wallet, and to send bitcoin, it's non-trivial.
Not to mention all of the crappy insecure websites getting hacked left and right. I know of at least 3 people that bought Bitcoin and lost it all because it was deleted accidentally.
There is also trust there. I run a business using business credit cards and I need to file disputes occasionally. 99.9% of the time, I get my money back with a few phone calls.
This will never happen with Bitcoin.
To make it as easy as a credit card, there needs to be a central authority..which is against the whole premise of Bitcoin.
B. The swings are not 'massive' as you are imagining. The floor at $370 has held through multiple selloffs now. If you look at the Rate of Change per day, it doesn't look much different from the DJIA.
C. The average dollar user doesn't understand how the fed works.
However, I find value in bitcoin because it is relatively independent of inflation and market cycles. Notably, it seems to have an inverse relationship with oppressive currency controls (e.g. greece, venezuela). I suppose, in that way, you could consider it an investment in personal sovereignty.
I typically don't find wired.com headlines interesting and typically don't follow their links. However, this headline did pique my interest ...
... and I didn't follow it because I am not interested in the "deal" that wired.com offered the other day. I have neither a dollar I want to pay them nor do I intend to disable any adblocking.
Or whatever the deal was. Who cares. The bottom line is, I didn't read it.