Topic: Bitcoin XT - Officially #REKT (also goes for BIP101 fraud) - page 177. (Read 378996 times)

Yes. As you wrote: There's a reason Revalin's quote is famous: "Bitcoin is the Devil's way of teaching geeks economics."

Be careful not to mischaracterize what I believe I defined well enough.

What you are proposing is that consumers, merchants and maybe a few odd miners fork into their own altcoin. Not "the market".

I would suggest this would be one hell of a gamble to take considering they will not have the support from the economic majority.

More explicitely: without the investors, they don't have the value, without the nodes they don't have decentralization and finally without value they have little to no miner support, hence no security.  

Except the market doesn't require consensus to fork the code and make a majority split. There is nothing to stop this to happen.

The Bitcoin market is a curious one full of very different actors whose incentives are not all particularly aligned. Assuming I play along with your characterization, then I shall specify that the demand you speak of does not currently comes from "the market" but mainly from consumers & merchants.

Consider that the Bitcoin market is also comprised of investors, nodes, miners & developers. You might suggest that miners also desire more transactions but this is again a tricky situation because miners are a group of individuals with very different expectations and resources.

Returning to our existing situation: consumers & merchants are clamouring for more space in blocks. Unfortunately for them they tend to have little power or leverage over Bitcoin's governance. The reason for that is a majority of them are not peers in the network (nodes) and they also tend to own only little amounts of Bitcoin (it makes sense right? they enjoy spending them!). So what we've observed in the recent months is that being fully aware of the little control they have over the system they've resorted to politics and all kinds of fallacious arguments to justify their demands.

Unfortunately for them, the rest of the market actors are not buying it. Hence, status quo prevails.

Of course, if this market of actors would be to consensually decide that more space in blocks is acceptable or desirable then it is indeed reasonable to expect them to modify the consensus rules, but only by making changes which everyone agrees on.

I think we can agree we are not quite there yet.

You could have a committee with the dual mandate of balancing "decentralization" with the cost of "Blockchain access."  The committee would adjust the price for block space to maintain the appropriate balance.  

On top of this, you'd also need some higher-level of governance structure to prevent the economic majority from forking away from the protocol rule decisions made by the committee.  

/ I'm not suggesting this would be a good idea.

Oh but a market it serves young padawan. We didn't get here without one!

Luckily Bitcoin holders in general are a stubborn bunch who recognize the benefits of delayed gratification and do not consider Bitcoin as another tool to facilitate mainstream consumerism. They are not much concerned by transaction throughput as they understand the value of scarcity and exclusivity. Real Bitcoiners are intelligent enough to anticipate the healthy ecosystem that shall be built on top of Bitcoin and enable their frivolous spending. Of course none of them would be foolish enough to part ways with their Bitcoin at this stage of the game. This is a marathon, not a run!

All of this to say that you will be hard pressed to convince the economic majority that there is a pressing need to accomodate more transactions of the blockchain because as they look around their peers and other economically-able relatives all they see is dormant bitcoins resting in cold storage and apparently not close to get out of hibernation.

Just read this http://www.contravex.com/2014/02/25/matters-of-bitcoin-merchant-adoption/ and this http://www.truthcoin.info/blog/measuring-decentralization/ until your head hurt and maybe, one day, the force shall also awaken inside you!

You don't get my point. Let's say to the protocol that growth should be relative to node cost. Let's say node cost is 1000. 1000 what? USD? CYN? EUR? Does it takes inflation into considaration? How does the protocol take the node cost input from merchants just for the hardware cost? Which merchants? Which part of the world?

How do you enforce and measure such things into the protocol?

Good; I sort of agree.  Bitcoin is indeed governed by the code that people run.  But is it not these same people who choose which code to run?  And are not these the same people who, in aggregate, become "the market"?  

I would argue then, that in the final analysis, it is the will of the market that controls the code and thus it is the will of the market that governs Bitcoin.

It is painfully clear you haven't read the blog post and I linked you to and I cannot continue this conversation with you until you do but just to entertain your ignorance: you are correct, the costs are not a mere number.

How soon we forget the peer-to-peer network is useless and worthless if it doesn't serve a market...

The code Peter, the code!

Bitcoin is not governed by the market! It's governed by its peers. How soon we forget this is a peer-to peer network...

I have repeatedly stated so but your question pretends that the market has no other alternative to transact on than the Bitcoin blockchain, this is obviously wrong!

If there is market demand for transactions that cannot be satisfied by or pay for block space on the Bitcoin network because of a quota enforced by its peers then this demand will simply pivot toward another alternative that can satisfy it.

These alternatives could be fiat, payment channels, off-chain platforms or even alt-coins.

Again, it doesn't matter what "the market" wants, Bitcoin is not governed by free-market but by rules enforced by a consensus of its peers so as to keep every network actors' incentives aligned.

You are mistaken, cost is relative to A LOT of factors. Just a cost (number) is irrelevant. What matters is the purchasing power of those numbers which I see no way for the protocol to evaluate. The same reason why Satoshi choose a fixed supply because it can't be adjusted to the demand.

Both are external factors the protocol can't evaluate. Secondly, are you also suggesting the protocol should be dependent of governments  fiat?

I'm not asking what scaling solution is best.  I'm asking the question: if the market wants to be at Q* but the production quota forces it to be at Qmax, who exactly will enforce the quota (especially over the long term as forking pressure builds)?  

Normally, the answer is "the government" (or some powerful organization).  But something like Bitcoin is governed by the market itself, is it not?  How can the market enforce a quota that the market itself does not want?  Well, I don't think it can.    

There's a subtlety here: is the "thing" that will enforce the quota necessarily the same "thing" that wants to break the quota?  The answer is not completely clear to me...

"Nigga what?"

Cost is cost. Let's call it a price if you fancy it doesn't matter.

Of course it is possible. Satoshi did it for the monetary supply, the block interval and the space in blocks. All of these are enforced today by what of the Nakamoto consensus protocol. None of these rules will change unless the economic majority agrees to it.

Cost is relative. It might be cheap for you but not for me. I also don't think it would be possible to enforce it into the protocol.

The number of nodes is irrelevant.

The block size limit should be a measure of the cost of the option to create a full node

http://www.truthcoin.info/blog/measuring-decentralization

What Peter propose makes a lot of sense economically as the market will want that deadweight loss regardless of the nodes but I get your point that it does not take security into consideration.

Are you suggesting the anti spam measure should take into consideration the number of nodes in the network? It might make sense to make a rule that enforce the market to have a minimum number of nodes in order to let the blocksize grow. The market will have an economic incentive to have a minimum amount of nodes in order to get that deadweight loss.
However, what's the minimum of node should realistically be enough to consider bitcoin secure enough? How much blocksize growth should it let if the conditions are met? How do you get the balance between the acceptable amount of deadweight loss VS the acceptable amount of nodes?

Peter, your economic analysis is flawed, as it simply wishes away the external costs that the market may choose to impose on the users running their own node. The scaling solution needs to take account of this, and your proposed solutions as well as your analysis does not. Stop promoting faulty ideas (economic and technical alike).  

It will be fascinating to watch the process unfold.  I'm not sure exactly how it will happen, but somehow the market will find a way to get bigger blocks.  

There real question is, how the free market will succeed at getting what it wants if Core devs are standing on its way?

I think a possible scenario could be an aggressive fork by major economic players leading the way and hoping for the best...