What Happened at the Satoshi Roundtable
medium.com
medium.com
1. Some of them show very poor communication skills or a lack of maturity — this has hurt bitcoin’s ability to bring new protocol developers into the space.
2. They prefer ‘perfect’ solutions to ‘good enough’. And if no perfect solution exists they seem ok with inaction, even if that puts bitcoin at risk.
I get this bad feeling that someone (author of the article) is planning a takeover and for all the wrong reasons. I've seen this "yeah they are smart guys, but they are introverts and our business needs to be extravert and agile and adaptive and fast moving and all other buzz words", then you introduce some of thous extrovert super agile people who just want to "bang out a solution, since any change is better than no change". Next thing you notice is that the old core team members are leaving after their protests about future of the product fell on deaf ears and these new guys are just pushing their own agenda/vision. Fast forward few years and just 1-2 or most likely none of the original team members are there anymore and cracks start to appear and these cracks are because the "better than nothing" solutions back in the day are found after all flawed, but now you have a lot of work build on top of rotten foundation and since your team now consists only of short sighted: "just fix it" people they are going to try to fix the problem at the top instead of at it's core "because we can't hold bringing in new features".
The dynamics don't work the same way as a traditonal FOSS fork. Perhaps getting mindshare first is the way.
Bitcoin Classic is the attempt to change the reference implementation from the Core code to their code, by only changing as little as possible (that is, raising the 1 MB blocksize to 2 MB).
The current problem is not being more open to other developers but to get a different reference implementation installed on full nodes and miners.
(It's worth noting that Bitcoin Core supporters have been DDOSing people running the various attempts at a "LibreOffice" that've been tried).
Bitcoin nodes get DDOSed from time to time-- e.g. people incorrectly believe they're the node for some service they think they can extort. Sometimes users on bufferbloat afflicted connections mistake other users fetching the chain from them as a DOS attack.
That said, since these claims that people are DDOSing "Bitcoin classic" were first made, I've had someone running a classic node-- in the hope of identifying the attacker-- which has received no attacks. I don't believe the claimed attacks are widespread if they're even happening at all.
I'm skeptical that the FOSS philosophy is the correct philosophy for anything which becomes harder to replace as it becomes more established.
In an ideal world, you'd split these up:
1. there'd be a currency steering committee (with some structure whose ideal form is above my pay-grade) that produces a machine-readable validity ruleset (sort of like a DTD or XML Schema);
2. and then there'd be a proliferation of competing clients that all know how to parse those rulesets, and use them to validate blocks; but which otherwise go about their business of being Bitcoin clients in entirely separate ways.
With such a split, issues with the management of "BitcoinCore the FOSS reference client implementation" wouldn't overlap with issues with "Bitcoin, the ruleset that, in being instantiated in a majority of nodes, gives them a consensus chain." Instead, the first would just be a regular code project, no longer at-all critical; and the second would be something more like the project of defining a new version of e.g. the ePub standard, or of drafting an RFC.
Now, many open source projects don't add new people to the core, decision-making team, but few open source projects are run by people who are acting in direct opposition to the [financial] interests of their userbase.
Just pointing out that that would still be an order of magnitude better than my current non-bitcoin options for forex/remittance ($100s, days).
If things are really so bad and Bitcoin is FOSS, why don't you (or whoever cares about rising the limit most) just fork the project and create Bitcoin 2.0. If this is truly best thing for the currency then everyone is bound to jump the ship and use your new currency.
HN discussion: https://news.ycombinator.com/item?id=10905118
Austin Hill, CEO of Blockstream, admits to committing fraud to scam people:
http://betakit.com/montreal-angel-austin-hill-failed-spectac...
Greg Maxwell, CTO of Blockstream, vandalizes pages on Wikipedia for fun:
https://en.wikipedia.org/w/index.php?title=Wikipedia:Adminis...
Patrick Strateman, co-founder of Blockstream, has been accused of fraud/theft:
https://bitcointalk.org/index.php?topic=159071.0
Luke-Jr, consultant to Blockstream claims the sun orbits the earth, slavery is okay, sodomy should be punished by death and that gay marriage is a logical impossibility.
http://forums3.armagetronad.net/viewtopic.php?p=203850#p2038...
https://np.reddit.com/r/bitcoin_uncensored/comments/492ztl/l...
https://www.reddit.com/r/Christianity/comments/48avz0/inform...
E.g. the Austin Hill example is from when the man was 16, and comes from a talk he gave about how he learned an important moral lesson from that moral failure that changed the course of the rest of his life.
Luke-JR seems to have --- special --- views of the world. Not sure if I would trust him with anything at all.
Also, poor communication skills and "immaturity" have also been a "traditional" problems in FLOSS too. Being unwelcoming to new devs is especially a big problem for a project that _is already_ losing the old trusted devs.
A welcoming community doesn't need to coddle everyone who might send a patch, because that's a lot of people. If they want to succeed, they should document enough to get started, and review unfinished patches.
The comment I replied to does not challenge the assumptions, but the conclusions. Whether the assumptions are true or not, I do not know.
https://github.com/bitcoin-dot-org/bitcoin.org/commits/maste...
As long as the core coders can associate and work well with good communicators, it's all good as far as I'm concerned.
> It is worth noting that bitcoin core’s response to scaling has been to propose a solution called segregated witness. While it is a well done piece of technology, I believe it would be quite risky
SegWit is not a compression technique, it is a bandwidth redundancy reduction technique. It simply makes it so that some nodes doesn't need to fetch all of the transaction data.
Only compression or merging can increase the transaction count per block without becoming incompatible with old full nodes.
But sure, it is a backwards compatible way to reduce overhead for old nodes. But if they want to remain full nodes then they must upgrade and take on larger storage and bandwidth requirements anyway.
Can you clarify what you mean by the majority hash rate needs to enforce the new rules?
If someone blindly accepts non-standard zero confs they've got bigger problems.
It also addresses some of problems with validation costs that are quadratic in transaction size.
It's also, by far, not the only tool in the Increased-capacity-without-harming-decentralization tool belt, for example I recently described a new approach for signature aggregation which, if applied to the current transaction load would decrease transaction sizes around 30% while making verification somewhat faster.
>2. They prefer ‘perfect’ solutions to ‘good enough’. And if no perfect solution exists they seem ok with inaction, even if that puts bitcoin at risk.
I mean the kind of 'good enough' thinking got us into the router mess we are currently in.
The key thing to realise is this. Whilst the remaining Bitcoin Core developers (really: Blockstream) like to present their alternative plans like Lightning as tradeoff-free "solutions", the reality is that their proposed alternatives to the Bitcoin block chain are not launched or even close to launching, are developing extremely slowly, are missing huge chunks from their basic design and even if we assume they find answers to those problems and do actually launch something - the design itself is in no way "perfection" and has very serious unanswered critiques. It is very likely, in my view and the views of others, that their new system would actually be worse than Bitcoin, not better.
Thus driving Bitcoin into a brick wall at high speed because they prefer to believe in vapourware is not perfectionism, it's just idiocy. You don't need to be a businessman to understand that.
In short, they're in the grip of the nirvana fallacy:
> The number of lines of code that need to be written for this across the entire industry will be several orders of magnitude more than a scaling solution of changing 1MB blocks to 2MB blocks. This was explained to core developers at the conference and it didn’t seem to change their opinion of what the best short term solution was to scaling.
Aka, the author knows the day to day challenges of writing core better than the core developers. I believe reading the piece only validated my original heuristic.
You mean the problem caused by everyone using the system? Certainly, if you don't have a system, you won't have problems with the system.
The author of the article is the CEO of Coinbase. They want Bitcoin retail-sized transactions to clear fast, so their exposure to Bitcoin price variations is low. Coinbase guarantees the price of Bitcoin for several minutes when merchants use their service. The longer they have to hold those Bitcoins, the more risk they take.
Please transfer your money back under your control. That's the whole point of bitcoin. You won't be able to do this when problems happen.
I mean, if it's only a few hundred dollars in BTC, it doesn't matter much. But it's a terrible feeling to lose way more than that.
Here's a recap of Coinbase's problems over the years, in case it matters: https://news.ycombinator.com/item?id=8947926
https://bitcoin.org/bitcoin.pdf
Also check the discussion about this on reddit:
https://www.reddit.com/r/technology/comments/48zggz/a_behind...
Building second-layer solutions such as LN is the only sensible way to grow Bitcoin in the long-term. It'll allow tx capacity to grow by several orders of magnitude with minimal load on the Bitcoin network.
> Most (all?) of them are organized in a company called "Blockstream"
That's simply not true. Out of tens of developers who contribute on an ongoing basis and hundreds who contributed during the lifetime of the project, there are about 6-7 developers associated with Blockstream. Out of the 6 maintainers with commit access on GitHub, only a single developer is associated with Blockstream.
It's also worth mentioning that Blockstream was founded by several prominent Bitcoin developers that have been around for years and have a very strong track record. It's not some company that popped out of nowhere and started hiring Core devs. One of Blockstream's primary goals was to fund development on low-level Bitcoin infrastructure code, which is blessed in my view.
Here's what one of their investors, Reid Hoffman (co-founder at LinkedIn), has to say about that:
> And that’s why I’m participating in this first-round financing as an individual investor, and why Blockstream itself will function similarly to the Mozilla Corporation. Here, our first interest is maintaining and enhancing Bitcoin’s strong open ecosystem. And the structure we’ve chosen will give us the freedom and flexibility to prioritize public good over returns to investors.
https://www.linkedin.com/pulse/20141117154558-1213-the-futur...
A layer for transaction merging built using Zero-knowledge proofs which can preserve the full capabilities of individual scripts would be the ideal solution, and could become fully server independent.
Please don't be so naive.
Greg Maxwell gave up his commit access for "optics" - to make BlockStream look better.
Meanwhile, Wladimir van der Laan, the project maintainer, says he won't accept any code contributions which are "controversial". That is, he wants 100% consensus for larger blocks. Yet he blindly accepts anything from Blockstream employees such as RBF and segregated witness fee discounts which are controversial.
Also, Blockstream burnt through $10m+ in 12 months, how much of that went into paying consultants and "supporters" such as Peter Todd, Luke-Jr, and even Bram Cohen who laughed at Bitcoin until suddenly in 2015 he loved everything Blockstream was doing?
Finally, investors? Investors will say and do anything if it helps them make money!
Unfortunately I have to agree - Blockstream is a mess. Adam Back and Austin Hill have 0 commits to the project and established them as power brokers.
My reduction in involvement was not related to blockstream and wasn't discussed in the company in advance. I can't personally take the toxic environment created by people like you and it has been adversely impacting my health.
Unfortunately, even when I have nothing at all to do with Bitcoin for long spans of time people continued attacking and threatening me and my family.
> Blockstream burnt through $10m+ in 12 months
No we didn't. We have most of our seed money funds available after two years of operation.
Blockstream has never paid Peter Todd or Bram Cohen (but sure, Luke-jr has been a contractor, a publicly known fact all along).
Bram Cohen followed the same path as many other technical experts-- he considered it implausible, and then after understanding it better considered it implausible but super interesting. There is no sin in thinking that Bitcoin is a long shot: it's a fantastic, exciting, potentially world changing long shot.
> from Blockstream such as RBF
No one at Blockstream had anything to do with opt-in RBF.
But the functionality-- user selectable replacement for unconfirmed transactions, something that the original releases of Bitcoin had until it was disabled for DOS reasons-- was discussed for months without a _single_ person speaking out in opposition while it was proposed. Only after it it was merged and slated for release did a number of throw away accounts begin a misinformation campaign about it (conveniently arguing that it was a reason to switch to "Bitcoin Classic"). Subsequently, many others in the industry like Stephen Pair at Bitpay have spoken up in support of it.
> segregated witness fee discounts which are controversial
I'm not aware of any controversy there. There appears to be universal agreement in the technical community that UTXO bloat is one of the larger problems the system has which would be exacerbated by bigger blocksizes. At scaling Bitcoin Montreal there was widespread agreement that new costing mechanisms were needed to make fees better reflect UTXO carrying costs. The way segwitness costing works achieves that; by making removing UTXO entries more equal in cost to creating them.
Or was he speaking as an "individual" rather than an employee of Blockstream? Are we to believe that multiple employees of Blockstream fly to Hong Kong, stay in hotels, but are there acting in an individual capacity?
https://www.reddit.com/r/btc/comments/46s54r/why_has_blockst...
Source?
Why not?
I mean bill gates said 64kb is enough for everyone, now some bitcoin developers are saying 1mb is enough for everyone. History proved Bill Gates wrong. I'm sure it will prove whoever wishes to speculate as if they have a crystal ball wrong too.
Core (a group of people who presently control the code of the only software that matters on the Bitcoin network) has an argument for miners which goes like this: "We believe the space on the blockchain should be scarce. If space is scarce, people will a) conduct transactions offchain, which is conducive to our interests and b) bid up the price of onchain transactions, which is conducive to your interests. You'll shortly receive a counterproposal from another development group which wants space on the blockchain to be abundant. In this case, the price of transactions will go back to ~0 and, with it, your revenue. Make the right choice."
The "economic majority" [+] of Bitcoin has an argument for miners which goes like this: "You presently have been given, literally, a license to make money -- substantial CapEx and OpEx, granted, but making money is what you do every day. If you attempt to make the Bitcoin network unreliable to increase fees generated by it, the tokens you are creating daily become not-money. You should prefer your license to make money to the planned future license to make not-money."
The economic majority is hoping that miners are long-term thinking entrepreneurs and not, to pick an example totally randomly, slash-and-grab operators taking advantage of a ponzi scheme.
[+] Jargon from the Bitcoin community. The Bitcoin "protocol" allows miners to essentially vote with hashpower. The "economic majority" phrasing is an attempt to recenter the notion of votes away from hashpower, by saying that exchanges/retailers/customers/etc are substantial stakeholders in the network even if they do not control a meaningful number of ASICs. In practice, the economic majority is Coinbase, Bitpay, and "the loosely affiliated ecosystem which turns cash to Bitcoins to drugs to Bitcoins to cash."
The demand for a free replicated database is virtually infinite. Space on blockchain would not be abundant at any blocksize.
> Miners presently have been given, a license to make money
This is a license anyone took up on themselves & nobody is doing anyone any favors; everyone(users as well as miners) is looking at their own advantages. Rather this "economic majority" (debatable) desires something that is not-money in future because in short-term greed of the insatiable desire for golden egg that is the blockchain-space they will kill the bitcoin goose by centralizing it even further.
but "blockchain" is not (only) bitcoin's blockchain, anyone can make one and can validate and replicate it with any group of collaborators or adversaries.
I can't understand the second point, it would help me if you could explain what you mean for a simple person like me :)
1. The median propagation time is comparable for various locations[0] & mostly a factor of blocksize. Article[1]. Or you could watch the scaling bitcoin conference videos on youtube.
2. Mining variance[3]
[0]https://research.tradeblock.com/wp-content/uploads/2015/06/P... [1]https://tradeblock.com/blog/bitcoin-network-capacity-analysi... [3]https://medium.com/@lmgoodman/why-mining-variance-matters-80...
This is a misunderstanding. Yes, anyone can launch any blockchain, but those blockchains would not be secure from attack and are thus untrustable. The "only" blockchain that can be trusted is bitcoins and that's precisely the point, there can be only one winner due to network effects as size of the network is where the security of the network comes from.
A blockchains primary feature is decentralized trustless transactions and that only works when the network is large enough that no single player or group of players can control more than half the network. There is quite literally no point in using any blockchain other than bitcoins as it's the only one with enough scale for the trust to exist.
And assuming unlimited block limits will lead to no fees paid is ridiculous and senseless. Why would miners willingly use up more and more bandwidth as the subsidy keeps falling through accepting more and more fee-less transactions? They'd be losing money!
First of all, the miners should be requiring that the total level of fees reaches to a certain minimum level which exceeds what a plausible coalition of adversaries might try to gather, so that the mining efforts they can pay for will exceed that level.
Then you require that the minimum fee per transaction is that minimum divided by the largest number of transactions that the network reasonably can handle per block. Then miners prioritize transactions with larger fees and publishes estimates for how fast people can anticipate transactions to be processed based on fee density, in order to incentivize keeping the total transactions fees to a reasonable level. Fee densities so low that they given the network capacity makes it easier for attackers would then be discouraged.
A fake "grass roots" campaign was started on Reddit, where numerous sock puppet accounts were used to bombard the /r/bitcoin subreddit with calls to change Bitcoin's "block size limit" to a much larger number.
This would allow more transactions per second, at the cost of hurting Bitcoin's P2P decentralization (the main thing it is good at). These posters claimed there was a dire, urgent need to do this immediately, and used spam transaction attacks on the network to make it look necessary.
They also used downvoting/upvoting scripts to push their posts to the top, and to censor the developer's responses (reddit hides posts with a -5 score; any post by developers instantly would be downvoted to that level).
They harassed the developers with constant personal attacks, to the point that it became impossible for them to engage the community. They also flooded the development mailing list, and many developers unsubscribed.
As for the "block size increase", an absurd number was picked (20x increase), and knowing that the developers would not go along with it, the "solution" proposed was a fork of the both the software and the network itself called "Bitcoin XT".
All but 2 of the 90+ Bitcoin developers thought this was a terrible idea, especially since they have come up with much safer and better solutions to achieve the same goal (scaling up the transactions per second).
Yet when this fork attempt failed to gain any support, a better funded, even more aggressive second attempt (oddly named "Bitcoin Classic") started being promoted.
It is being pushed by the CEO of Coinbase (the author of this blog post) and backed by some of the other bitcoin exchange's CEOs.
I think the creator of bittorrent, Bram Cohen, sums up what developers and the larger technical community are thinking about these takeover attempts- https://twitter.com/bramcohen/status/697705876337995776
Just to make sure we are on the same page:
"Libertarianism (Latin: liber, "free") is a political philosophy that upholds liberty as its principal objective. Libertarians seek to maximize autonomy and freedom of choice, emphasizing political freedom, voluntary association, and the primacy of individual judgment."
I do not see here to support of trolls who were running a campaign against bitcoin on a platform that lacks of basic functionality to have a useful discussion about technical subjects.
Perhaps the lesson here is that libertarian promises are, at best, temporary.
If that essay were written today another great example for it would be Occupy Wall Street. I saw first hand at OccupyDC how structurelessness led to tyranny of the least shameful, the most bullying, and the loudest.
Also your history forgot "Bitcoin Unlimited", a fork which had a brief stint of popularity between Bitcoin XT and Bitcoin Classic. IMO it's the worst technical design of the three - it simply fails to enforce the block size limit, which would lead to very high orphan rates if miners started to adopt it. The other two had miner voting systems to avoid this problem.
The best technical discussion tends to happen on IRC, for those who want to ask questions and not deal with Reddit.
If Bitcoin Core did the sensible thing and started to increase blocks and working towards that goal, no takeover would happen. Quite the opposite, Bitcoin Core is now taken over by developers from Blockstream company, pushing their own (vaporware) product and doing changes to Bitcoin that will help them. And also adding, with little (non-censored) discussion, controversial features like Replace-By-Fee.
How can you talk about decentralization when the few important people, who can decide about the future, can literally sit to one table and decide. How can you talk about decentralization when there is one person controlling all discussions and actively censoring all negativity against him, or against current bitcoin core.
There is no long-term solution for scaling than resizing the blocks right now. SegWit is great, but only a one-time thing.
The only thing that is missing from your comment is that there is conspiracy by Big Banks and Evil Statists to silently destroy bitcoin (by making it more usable).
"@brian_armstrong Fuck you"
Excellent argument.
I mean, your post is psyop, otherwise called a "mind fuck", just a number of statements with zero evidence to discredit valid opinions by not in any way engaging them.
While you of course use outright censorship, banning, ddosing of nodes, secret conferences, and other dark black hat social engineering techniques you should be ashamed of.
"Being high IQ is not enough for a team to succeed. You need to make reasonable trade offs, collaborate, be welcoming, communicate, and be easy to work with."
The assumption slipped in here is that the writer is, in fact, reasonable with good communication skills - and that those he is addressing are not. He evades evenhandedly discussing their concerns with his proposal or their proposed solution. That's a mark of trickery, not good, honest communication.
I don't know about the team in question, and I don't know who's right on this issue, but I am considering leaving Coinbase after reading this article.
Of course, I'm a more casual observer on the sidelines, and maybe my take is wrong as others with closer observations may tell me. But I never heard some of these things being issues until just now... bitcoin is clearly not for casual users.
And yet, all of that crazy, deranged infrastructure is orders of magnitude safer for consumers. It's unfortunate to watch reality bear this out.
It's the basic reality of human existence that we have to get by without having pretty much any control of the complex world around us. Bitcoin may fail any time and as a casual user you cannot help it and cannot predict it. But you can go buy some drugs with it right now without having to roam shady streets and it's all that really matters.
What is this based on? My own personal experience is quite opposite - the development community is very welcoming, has a diverse set of participants, and conducts its discussions and decision-making process out in the open.
Also see my other comment here: https://news.ycombinator.com/item?id=11229435
For a currency which purports to be open, transparent, and free from institutional control, this seems like a huge deficiency. Consider that the Federal Reserve's Board of Governors has seven members, all of whom possess decades of experience in fiscal policy, are nominated by the President, and are confirmed by the Senate. These are experts in the field who are selected by a nominally democratic process.
And Bitcoin wants to replace this with five random devs that most of us have never heard of?
I'm hardly a fan of the Federal Reserve or the US monetary system. But how exactly is Bitcoin offering a more transparent, open, and democratic currency when it can be hijacked by five people?
The decision making process is based on an IETF-like[0] consensus-driven approach, where a very high threshold of rough consensus within the technical community is required for making changes to the protocol. This hardens the protocol rules and helps protect the development process from hasty decisions, political forces and tyranny of the majority situations - with the price of a slower development process and reduced innovation. Overall, I personally think that stability and resistant to change are good things, and prefer to be wrong on the side of defaulting to no-op when there's no consensus, rather than be wrong on the side of making harmful changes.
[0] "We reject kings, presidents and voting. We believe in rough consensus and running code" -- David Clark, The Tao of IETF https://www.ietf.org/tao.html
The people who have the power to merge patches have de-facto veto power over any community.
You have to remember that at the end of the day, Bitcoin Core is only able to write code and propose it for adoption by the wider ecosystem. The only code that matters in practice is the one being ran by network nodes. As we're seeing with Classic/XT/Unlimited today, competing teams can indeed emerge and try to build community support to alternative protocols.
It's almost like we need some sort of mechanism or formal protocol for reaching consensus among a group of geographically distributed people. A kind of.. distributed consensus protocol.
Bitcoin is not a voting substitute. No such protocol exists yet because sybil attack is unsolved yet without identity.
http://bitcoinocracy.com/arguments/if-non-core-hard-fork-win...
(the oppose side of that was up to about 4500 BTC at peak but the party providing those coins has since moved them).
It's hard to say what it means; I know a lot of people around Bitcoin Core whom won't use it because of the privacy problems with it-- in particular, people on the Bitcoin XT subreddit were previously threatening to retaliate by dishonoring the funds of people that didn't agree with them.
But I do think it's quite interesting that opinions seem to swing 179 degree when you switch between very sockpuppetry vulnerable venues and ones which are not.
The Bitcoin block chain is an explicit distributed consensus algorithm.
The Bitcoin community is an implicit consensus-based human system.
The two are inextricably linked because humans put hard-earned dollars into the algorithm. A lot of dollars...
We're watching the two systems try to cooperate to evolve, and it looks pretty messy.
When looking at it through this lens, I'm even more confident in my decision to not put money into Bitcoin.
I can't think of any software systems that are successful without granting specific individuals near total authority so they don't have to rule everything by consensus.
The most successful businesses follow the CEO model. Apple is Steve's vision and execution.
The most successful open source software projects follow the benevolent dictator model. Linus runs Linux, Guido runs Python.
Other protocols like HTTP have a pretty broad set of people that make up a standards board. But at the end of the day we have all given Google, Apple, Mozilla and Microsoft executive authority over the protocol through unanimously adopting their clients.
With Bitcoin, the core development team is already starting from a weak position, since anyone else can start up nodes that speak the protocol differently. The miners are granted most of the power and authority by the algorithm, but anyone can participate in mining. Wallet software needs to cooperate. Businesses and end users that operate on Bitcoin have their own wants and needs.
It's a miracle anyone bought into this system in the first place, and will be a miracle if they figure out how to cooperate to evolve.
* Double billing is not healthy competition https://medium.com/@bramcohen/double-billing-is-not-healthy-...
* Lesser known reasons to keep blocks small in the words of Bitcoin Core developers https://medium.com/@elliotolds/lesser-known-reasons-to-keep-...
* The state of the Bitcoin union is strong https://medium.com/@muneeb/the-state-of-the-bitcoin-union-is...
> The next block reward halving is coming up in July. Let’s say that miners on average are able to mine a coin for $250 (I don’t know the exact number, so this is a guess). After the halving in July their cost to mine a coin will double to $500. If the bitcoin price stays around $425, it will be unprofitable for a number of miners to continue mining.
You can't just guess about these things! You have to do the math! There are two components to mining costs: The sunk costs (the actual price of the mining equipment), and the oncoming costs (electricity). Once you've already paid the sunk costs, and the miners have, tautologically so, to get to the current network hashrate, you won't turn your miners off unless their yield falls below the cost of electricity.
I've done some calculations and, with the current most-efficient generation of ASIC Bitcoin miners, you generate around $0.25 per kWh. So with the halvening, you'll be generating around $0.12 per kWh. But guess what most miners are currently paying for electricity? Around $0.02 per kWh (yes, they're locating their mining operations like Google locates data centers). So while some inefficient miners on the fringes may turn on, the halvening isn't going to come close to causing the majority of miners to become unprofitable. So you're unlikely to see a big drop in hashrate.
The most ridiculous part of the catastrophist argument is that we already had a halvening from 50 BTC to 25 BTC, and nothing changed! The hashrate didn't go down appreciably and block finding time didn't suddenly jump up. There was nothing different about that time than now; both are governed by the simple economics of mining profitability, which tends to stay at around the same level above cost -- that is to say there are economic self-balancing forces at work that cause miners to enter/leave the system to keep the hashrate adjusted relative to the mining returns over the long term.
So anyone proposing a catastrophe over this halvening has an uphill battle to climb of explaining why it's different than the last one when nothing happened, and that hasn't been done so far.
That doesn't sound like much margin to me. What about all the people still using GPUs or residential power? They certainly seem to be a decent chunk of the mining community, but maybe that's wrong. What if we see another 50% crash in BTC value? That too would take us right down to the edge of failure, right?
Like I said, I'm not a miner, own no coins, and am just watching this mess out of macabre voyeurism really. But the concerns certainly sound legitimate to me, and what you posted honestly seems like apologism.
Residential power is the same thing. Yes, there are some people who are mining out of their homes (and in the past I was one), but they are completely swamped out by the people harvesting economies of scale who are running datacenter-scale mining operations. Losing all miners on residential power will not have a meaningful effect on the network hashrate.
> the best-situated miners using the "most efficient" hardware is a factor of 6. The halvening would make that 3.
At which point it would rise again over time to find its natural economic equilibrium. So long as it doesn't go below one you will not find a huge crash occurring.
> That doesn't sound like much margin to me.
3X over seems like a huge margin to me. You don't see that much margin often in your everyday life.
> What if we see another 50% crash in BTC value? That too would take us right down to the edge of failure, right?
We have seen huge crashes in the price of Bitcoin before, and what happened is that the network hashrate stopped most of its short term growth, which is fine. It has occasionally actually gone down as people switched off their miners temporarily. Certainly never catastrophic. You can look up nice charts showing the entire history of Bitcoin's price, overlaid with network hashrate and mining efficiency -- it's interesting.
> But the concerns certainly sound legitimate to me, and what you posted honestly seems like apologism.
No offense intended, but if you didn't even know that GPU mining is years obsoleted, you need to go learn more before attempting to make judgments on what is valid critique and what is apologism. All the information on hashrates of current mining rigs and power efficiency is out there. Go spend a few minutes looking them up and running your own calculations rather than arguing from a base of zero information. You're falling victim to arguments that are phrased in a way that is seemingly persuasive, but that fall apart when you actually look at the history of the network hashrate and how it reacts to price changes.
Keep in mind that the halvening can be modeled exactly as a doubling of difficulty, which isn't that bad, and has occurred many times over short timeframes over the past. A halvening isn't nearly as bad as, say, a collapse by half in the price of Bitcoin (which affects all of your holdings as well, not just your future earnings), and that too has happened several times before. And a halvening has ALREADY HAPPENED BEFORE, and nothing catastrophic whatsoever happened. The network didn't even blink. You need to have credible arguments as to why the next one will be different from the previous one, and I haven't seen a single one. I mentioned that in the post you responded to and you completely ignored it.
ASIC miners have been great but they cannot scale indefinitely. Currently even the larger pools have electricity costs somewhere between 30% to 50% percent of their average payout. Previous halfing are handled more gracefully because they occured when the value of BTC was going up, and it won't be the case in July. And it's not like we can somehow manage to make miners with 100% more performance per watt either.
The true charlatans will be exposed and may make out like bandits, while the fools who defended them so vigorously will suddenly become dead quiet.
Wash, rinse, repeat.
I also don't see many parallels to the MtGox implosion. There is no outright fraud or staggering incompetency here, just differing visions of the future that are being advocated for by different sides. If the weight of numbers accumulates on the 2 MB side and that eventually ends up happening due to sheer inertia, I don't see how that will expose the 1 MB faction as "true charlatans". Merely losing a policy debate does not make you a charlatan.
In other words, you're over-dramatizing the situation.
As for overdramatizing: the DDOS's, foundational people disavowing Bitcoin, and general political intrigue prior to this post, make the stakes not insignificant. It's a policy debate... at the core of Bitcoin. There's been plenty of deceit, ill-will, stubbornness, and machinations to make up for the lack of outright financial fraud as witnessed in Mt. Gox.
I don't know what you should do but reddit (or no other forum) represents the bitcoin community fairly.
Similarly, if you follow HN, Twitter and Reddit, you can only see a subset of the news and events happening. Because conflicts are more interresting, they are the only BTC news that gets pushed into your visibility.
Elements of a genius ponzi scheme mixed with psychology of the limited edition beanie baby craze and enough allure of "technology is magic" created a "valuable" cyber diamond to send hordes of processing power to "mine" and sell off like hot potato stocks.
As we begin seeing more viable altcoin systems with practical improvements, "investors" and processing power will jump ship to the improved cryptocoin protocols. Bitcoin and the bandwaggon of investing in a BTC as a currency which inherently encourages not spending that currency (deflation as a fundamental design) is such a paradoxical mind fuck it's one of the most brilliant pieces of art I could imagine.
Inflation is incredibly healthy for an economy because it creates an incentive to invest money into new businesses and real goods and services instead of being buried outside of the system where it does no good. The trick is to prevent hyper inflation - and in BTC or other arbitrarily produced currency systems, there should be mechanisms in place to avoid the abuse of the fabrication of the money tokens.
The effect of people holding BTC on a given economy's inflationary tendency would, I'd think, be about the same as the effect that people holding EFT funds or gold or permanent stamps has on inflationary tendency—which is to say, negligible.
To rebut this, you could measure the inflationary tendency of a made-up virtual market like that of the "deep web"... but we measure inflation to know about things like affordability and livability and nGDP—things that affect the places people live in, and through those, affect people's lives. People don't move their money into investments because Internet marijuanas are inflating in price; they move money to investments because core CPI is going up, and so it's costing more to buy bread and to pay their utility bills. And, unless a nation adopts BTC as its national currency, BTC's fixed monetary policy will never correlate with any core CPI anywhere.
You're imagining a gradual adoption of BTC for everything everywhere, while BTC itself remains constant, which would never happen. Any nation that wanted to adopt BTC for its sole currency would have enough force to change BTC to make it no longer deflationary. Or, more simply, just create "BTC but not deflationary" and start using it—it'd immediately become the primary cryptocurrency from the sheer number of users it would gain in that country (even if the country is tiny!) and then any other country that wanted to participate would adopt that currency, not deflationary-BTC.
BTC is art.
Fortunately the free market of ideas has spawned innumerable competitors and many of them (etherium etc.) look to be very promising.
Although I don't think it was intended to be a 'genius ponzi scheme'. It just turned out that way.
>Inflation is incredibly healthy for an economy because it creates an incentive to invest money
in a system when you generate currency from nothing, this is true. But if you use currency as an actual IOUs, you would need to generate value to generate currency, and thus, if you were to hoard currency, you are providing value to the economy for nothing in return, which is a good thing.
in a system when you generate currency from nothing, this
is true. But if you use currency as an actual IOUs, you
would need to generate value to generate currency, and
thus, if you were to hoard currency, you are providing
value to the economy for nothing in return, which is a
good thing.
Edit: Also: http://www.gridcoin.us/
If you allow anyone to create currency by creating IOUs to buy stuff (which sellers can choose to accept), and you mean that the sellers create and accept that currency, then yes, hoarding is not much problem for overall society, until and unless the day when past hoarders rush to market at the same time (when they run out of durable goods or other income) causing sudden inflation.
This is fixed by removing the central authority monopoly over the printing of money and/or make them actually print the money.
>until and unless the day when past hoarders rush to market at the same time
This is no different than the status quo. Bill Gates could try to 'cash in' all his 50 billions into rice. Would that be 'causing sudden inflation'?
This is fixed by removing the central authority monopoly
over the printing of money and/or make them actually
print the money.
Why would I want to buy a loaf of bread from you today for 200 BTC when I assume next year I should be able to buy that loaf of bread for 0.01 BTC?
If monetary inflation was beneficial then a crypto-currency with those features would already exist. Only currency systems where there is no choice have come to the conclusion that inflation is good.
Over time, there is always going to be some level of inflation, if there is more money than value. A stable annual rate (US Fed targets 2%/yr) is better than 0,0,0,0,100%,1000%.
If your currency is deflating, usually that comes with a significant lack of confidence in markets. It takes an incredible amount of deflation to make investing a worse idea than hoarding - your currency would have to have become so incredibly scarce that the increasing demand for it outpaces real value of business productivity - but in the general case you are always making an informed choice between your money being secure - and the safest it can be varies by country. In the US, it is probably safest in an FDIC insured account, because you are more likely to have a safe in your house stolen and broken into than the bank and US government collapse in a way where FDIC insurance fails. But that is only 200k per account. There must be a threshold in any system where you stop insuring money - where you stop guaranteeing its safety - and you have to take that safety into your own hands.
In general, the least safe store of money is investment. Your investments could gain or lose all their value overnight, so it is risky. Next up is mutual funds, investment accounts, etc - ones that use the same risky pool but sample the whole thing to try to normalize the risk across the entire market. But entire markets can, and do, tank. Then you can put it in a bank - barring insurance, you are then trusting the bank not to go insolvent (through fractional reserve, which has the same investment connotations shares do), like they did in the great depression. If you don't have state insurance, bonds are often safer than banks because you are hedging against a countries solvency. And finally, you can keep it on your person - as long as you can keep yourself safe and secure, you can hopefully keep your money safe and secure.
In deflation, the fear is that the first three metrics of money storage lose their profitability potential sufficient to drive wealth holders to instead take money out of the economy and into their own safes. This drops the real money supply, and causes a deflationary spiral and more money leaves, money becomes scarcer, and people hoard more money. The endgame is that the currency stops working, because people start treating it like gold rather than a means of exchange - you hoard it because it is worth a lot, but you do not want to spend it because it will probably be worth more tomorrow.
The inverse problem is an inflationary spiral, where a money supply is seeing such an extreme glut of money entering markets that people are selling all of it off to try to offset its lost value, which perpetuates the drop in value. Unless it is backed by material goods (fiat moneys are not) inflationary spirals, uninterrupted, end at a worthless currency - nobody wants any of it because nobody thinks it is worth anything.
Governments create inflation to offset deficits, surely, but they also create inflation to avoid either scenario. But in general, inflation increases monetary velocity - the more inflation you have, the more value holding the currency you lose day over day, and thus the more pressure for you to get rid of it as fast as possible before you lose more value. You want to walk a tightrope between where people do not want to keep it and where people do not want to receive it, but usually low amounts of inflation are sufficient to get almost all money moving without compromising much confidence in its buying power, hence why every modern economy targets similar 1%ish inflation levels.
Deflation, on the other hand, slows down the economy by driving the desire to not spend money. Even 0% inflation - when the currency is simply stagnant - can be disastrous for an economy because it suddenly changes the game from "I have money and its worth less every second" to "I have money and it will be worth the same / more tomorrow than it is today". That can cripple economic cycles necessary to sustain countries.
You would be hard pressed to ever make a cryptocurrency where you could match monetary base inflation against adoption. You would basically need to tie the payout to the change in the number of wallets in existence, which is an exploitable vector.
I'd also argue pegging monetary base growth to popularity is a terrible idea. I would much rather peg it to monetary velocity - if the movement of coins is high, you print less. If coins slow down (ie, deflation) you increase generation to push spending. That would not outright stop deflation whenever adoption increases, but those are usually isolated spurts of growth - in the general case, you would inflate the currency.
It is also worth considering that I personally (as a holder of several btc, not much, but it is fun to buy stuff with) do not see bitcoin as a replacement for daily currency. It is a replacement gold - an arbitrary store of value that, as people want more of - only for the sake of other people having it, wanting it, and it being rare - deflates over time to act as a store of value outside traditional investment.
>>As we begin seeing more viable altcoin systems with practical improvements, "investors" and processing power will jump ship to the improved cryptocoin protocols. Bitcoin and the bandwaggon of investing in a BTC
All cryptocoins today encourage hoarding and speculation.
Cutting edge ideas will survive and thrive, cutting edge products not so often.
I mean I haven't seen any legitimate use of bitcoin advertised for consumers. So who is using bitcoins for transactions?
Is this like with torrenting where people keep telling "there are legitimate uses for it like downloading linux iso:s" but in reality 99% of the traffic is illegal.
I'm thinking that bitcoin is used mainly for money transfer for illegal stuff (drugs etc.), because I haven't read or heard about any legitimate large scale use of it (exept maybe speculation, so does the money for this come from somekind of ponzi scheme then? Or maybe investors really believe that some day this will be a large legal enterprise?)
The more I look into it (and I may not be looking at it clearly), the more bitcoin seems like a digitized version of what we currently have in MeatSpace: An unbacked inflationary currency.
I think worrying about scaling in mining activity is a problem in search of an audience.
If miners hit the wall, and are not able to put more coins into circulation, there is an opportunity to stabilize coin value by having demand tempered by supply. Also, with bitcoin (or any other digital currency) there is the capacity for psuedo-infinite fractionalization of coins.
Maybe, but the problem is defining the protocol, not building the client.
This article is pretty detailed and does a good job of depicting the events of the roundtable - but as someone who didn't attend, I'd be curious to see how a Bitcoin Core member would choose to describe things. I imagine their perspective would be very different. On the other hand, the history of this whole controversy seems to suggest that the Core crew are as bad at communication as Mr. Armstrong suggests, so I doubt we'll ever see that alternate perspective :(
The risk of miners dropping out en masse once the difficulty goes up isn't something I've seen mentioned before, and it seems pretty scary. I would have assumed that difficulty adjustment would happen more often, so if it continues to have such a long interval, that seems like a threat to the long-term health of the currency. I can imagine some other event knocking miners out of the network, like a sudden spike in the cost of electricity for large mining operations - so even if the immediate risk is addressed it seems like this is still a threat going forward.
Ultimately, it's really sad that what seems to have happened with Bitcoin is that Satoshi put together some really stellar technology and completely overlooked the human component. Handing the project off to a random group of contributors seems reckless under any circumstances, and then it turned out that the random group of maintainers got along poorly. Now the de-facto control of the currency is in the hands of a small group of people with an obvious profit motive, because they have control over the central bitcoin forum and central subreddit. Hindsight is powerful, but it feels like it should have been obvious that the human risks needed to be addressed if Satoshi was serious about constructing a new currency.
That's unfair: Satoshi got the incentives for Bitcoin brilliantly right, in such a fashion such that "Satoshi scheme" should replace "ponzi scheme" because it is better in every conceivable way.
Ponzi schemes rely on a central operator who has to do their marketing, and who generally can't tell participants "Hey I'm running a Ponzi scheme so bring all your friends because that's the only way you make money." Satoshi schemes use the Internet to set up self-organizing distributed boiler rooms. (Also, mediocre payment networks, but the payment network is not the interesting part of Bitcoin.)
They can be totally upfront with participants on exactly what is happening -- early adopters (arbitrarily large number, arbitrarily geographically distributed) get enriched by convincing later adopters that the things the early adopters got for free are a) in fact actually money and b) going to be worth even more in the future. And this empirically works on intelligent people! Very well, in fact! You can even attach it to a memeplex which suggests that you are doing the later adopters a favor by creating a Satoshi scheme!
If so, okay. I mean, I don't find that especially implausible? But if so, that's also really depressing.
Do I think Satoshi knew what he was doing with regards to incentive compatibility of making tokens widely distributed and essentially free early with the implicit promise of them being highly valuable later if adoption occurred? Yes, absolutely. He told people that that was the plan. He asked them to avoid actions (such as GPU-compatible mining applications) which he was worried would kill the goldrush phase before it had attracted sufficient cryptocurrency evangelists to gain traction [+].
Should any evil person use a ponzi scheme when Satoshi schemes are now a technology which exist? Surely not. Satoshi schemes strictly dominate ponzi schemes.
That's exactly what MMM says and people happily participate.
Wondering why one didn't pick any interest, and the other picked 160+ comments.
I did trim the strange hash off of the medium.com URL, because I thought it was a tracker from when I got referred. Perhaps that is why more people eventually found this submission. The de-duping logic on HN is pretty bad.
At present, a big part of the resistance to the 2MB blocksize is that the Core people have convinced Chinese miners that they will be unable to cope with the increased bandwidth requirements, IIRC.
This is a difference of opinion between the Core and Classic teams, and both sides have money at stake. That doesn't have to mean that one side is lying and cheating.
Naive people who do not understand bitcoin, use services that take away ownership of coins, like coinbase, circle, etc. because they achieve a few advantages over traditional bank accounts - its fast, no downtime & without limits. Banks are moving towards digitalization all over the world and these advantages will no longer remain so in future if banks decide on getting their game sorted. Then people who see value in using services like coinbase will go away because banks can provide all advantages of coinbase even today if they decide to, but much better.
However, what they can't provide is decentralization & privacy. But people who use coinbase, by virtue of them using it, do not desire decentralization & privacy. Thus, the bitcoin community should not pay attention to these companies or their users (though they might be large in numbers & even be current majority of users) unless decentralization & privacy is no longer desirable in bitcoin.
Ethereum has no solutions for this 'drama' of decentralization & governance either.
Ignore the speculation and build cool stuff.
Money is inherently political. The ease of creating viable competing currencies will constrain the politics, but it can never eliminate it.