Topic: Do you really believe in bitcoin as a currency? (Read 8284 times)

I attempted to value the bitcoin currency based on Money Supply and velocity trying to come up with a real value. I came up with $60-120/ btc.

The problem with this method is that the user base of bitcoin is constantly expanding creating a higher intrinsic value. It will eventually stabilize when non-speculative use peaks and stabalizes. Then there will be a crash down to its intrinsic value.

That's hot.
I love it.
Waste heat isn't,
unless you waste it.

Or the heat trace cable asic miner, so that institutions can freeze protect their plumbing assets while also protecting their bitcoin assets.  No, really, I'm not joking here.

By itself, no.  However this is simply leveraging the merkle tree to reduce bandwith redundency.  There is nothing that requires that all nodes, even all mining nodes, store a complete blockchain.  Locally set pruning rules will permit any nodes that choose to prune to maintain a fairly stable blockchain size, as each new transaction confirmed permits at least one older transaction to be pruned, after a point.

Build the water heater / miner.
Then you can get one in every home that needs hot water.

Right.  The plan as I understand it is that miners will announce the blocks with a list of tx, and then the rest of the network (who already have most of these tx in their memory pool) will assemble the blocks to store in the local blockchains themselves.  

That reduces the size of blocks (for propagation purposes only) by 90%, making inclusion of a particular tx only about 10% as expensive in orphan costs as it is now.  It has no effect on the size of the stored blockchain, unfortunately.

And it was a straight-up waste of bandwidth to fix:  as matters are every client is downloading every transaction twice (once when it's made and once when it's included in a block) so something like 40% of bandwidth is wasted. Kudos to Gavin for working on fixing that, but he can only fix it once.


3.3 millibitcoins per kilobyte:  https://bitcointalksearch.org/topic/m.3648359  He estimates that it ought to be easy to get a factor of 10 or 20 by optimizing the protocol.  But that won't change the way it scales.  That will only change the ratio of scale to performance.  And we need more than one order of magnitude in performance to get where we need to be, so that's critical.

This is the cost to them of the increased chance of losing the 25BTC mining award.  Reduce the award by half, and that reduces their lost opportunity by half.  As Moonshadow said, it's based on a lot of assumptions - but the assumptions amount to "a typical miner today."  

Changing the scaling means redesigning.  If bandwidth, storage, and compute requirements grow linearly at *EVERY* client with the growth of the network, the scaling will fail.  And with every node checking every transaction, that's what's happening now.  We need a different design where the growth of bandwidth, storage, and compute requirements at each client are either constant, or grow at a sublinear rate like logN, with growth of the network.  Right now that is fundamentally impossible unless bitcoin changes its operation completely.


Nope.  The size of the blockchain on local storage would remain the same.  We're only talking about eliminating some wasted bandwidth in the protocol.

The 7TPS limit *is* there mainly to keep people from abusing the blockchain for data storage and transport layers for other protocols.  But they're doing it anyway.  Further, the 7tps limit cannot just be "switched off" allowing scaling to VISA levels. Lifting that limit involves changing the blocksize, changing the rate at which the blockchain grows eating local storage and bandwidth, and convincing miners that it won't reduce their profits to include these transactions in blocks.  


Yes, and that's a good idea too.  It enables people to check the blockchain from most recent back, rather than from the genesis block forward.  It doesn't change the size of the locally stored blockchain, nor the bandwidth it requires to download it.  It greatly enhances convenience but doesn't address the way the underlying limits limits scale.


All true, and all good, and will make a much faster, better-behaved client. And so will pruning transactions after all their txout are spent.  But unless we can get it down to where it's under the curve of Moore's Law, it's going to continue getting harder instead of easier.  


And in the long term, I think that both mining and running a full node needs to be easy and provide no-one any reason to not do it.

Well, it's not really parallel blocks.  It's just that the blocks will be "naked"; in the sense that a block is really just the 80 byte header, the 'reward' transaction and the merkle tree.  The transactions can be included, or not, by any node.  However, as a matter of simplicity of the early network, blocks are still published with all of the transactions included.  This has never been the end goal.  It was intended from the start that blocks be published naked, which will reduce the network's overall bandwidth because transactions won't have to propogate twice.

This figure is based upon a rising risk of orphan blocks, and includes a great many assumptions about how the "average" miner is connected.  The figure varies based upon the current exchange rate, the current block reward, the average rate of orphans and the difference between the average rate and the rate that adding the extra transactions provide.  In short, the figure is a very well educated guess, but it's still a guess.  The fact that it exists, can be calculated based upon a lot of changing variables, and is higher than the minimum transaction fee only establishes that a market rate for transactions will always exist. If you need your transaction processed faster, provide a fee that exceeds whatever Gavin's Cost is at any given moment.  If you don't need your transaction included immediatly, then lower your fee and you can still expect it to process at some point.  This is not an issue at the moment, and with the decreasing block reward, isn't likely to be a limiting factor in the future.


Are you taling about the plan to permit blocks to be published as only the header and merkle tree?  And letting the netowrk nodes aquire the transactions that fit into those merkle trees from their peers "loose", in a manner similar to how the Stratum network functions?  This would do that, but this isn't the primary motive for doing this.  Right now, blocks are published complete, which means that the network bears the burden of propogating all transactions twice, which is just inefficient since most nodes already have all of these transactions in their own queues by the time any block is published.


We haven't given up on that, such solutions are simply off network/ out of band; take a look at the Stratum overlay netowrk, which does some things similar, and then imagine what happens when wallet services/bitcoin banks agree to link together over a similar overlay network.  They can simply agree to accept the word of their institutional peers that a member of theirs has issued a payment of such-n-such to a member of the receiveing institution.  Would work much like Ripple is intended to work with individuals, but can't really because individuals don't really know enough about each other to really develop the credit trust.  While there would have to be an imbalance limit, to be settled up periodically over the main bitcoin network, most of the time major instituions' interlinked balances would simply cancel each other out.  Micropayments of arbitrarily small amounts of bitcoin then become possible.

GAvin's Cost will naturally decrease over time, as it's primarily the block reward (and the market price) and the risks of losing all of one that imposses this theoretical costs of including transactions.  If the market rate remains steady, Gavin's Cost cuts in half the next time the block reward drops.  Eventually the transaction fees become the primary finacing method of professional miners, and Gavin's Cost only sets a theoretical price floor over time.


There is a method of mining that does not require a full blockchain, that was noted by Satoshi in the white paper.  Also, rapid bootstrapping of a fresh node is also possible out-of-band, simply by downloading a recent snapshot of the blockchain from a trusted source and letting the new client scan it.  Neither method is yet implimented, simply because it's not really an issue.


It wold reduce to less than that by simply instituting block pruning, which was described in the white paper as well, and is the real reason that the merkel trees were included in the protocol from the start.  You can hack your node to prune your own client now, if you like.  It's just not a standard feature in the reference cleint yet.


Again, take a look at Stratum.


Maybe, but I'm still willing to bet that hardware will outpace Bitcoin network demand growth.

The best expert quote I have heard (and I wish I remembered who it was by) is

Bitcoin doesn't work in theory. Only in practice.

I have been told by experts that bitcoin is not money because...
Bitcoin is a ponzi, money laundering, a bubble, drug money, etc.
It's not backed by anything!
It can't be money because only a government can make money!
Bitcoins can't have value because they are just numbers!
Bitcoin can't work because they now cost to much!
On and on...

Luckily, I don't listen to people who call themselves experts.  A financial expert who just discovered bitcoin is as useful as a 19th century fisherman who has just been handed a sonar fish finder.

Woah, that's new. Source? From what I understood, miners will have to take the fees they are given, and if the fees don't pay their bills, shut down until difficulty decreases to make it worthwhile to mine again.


Sounds like I need to hang on the dev forum more often. I thought Gavin was working on improving security, the merchant protocol, and multi-signature based two-factor authentication. When did this new project come up, and can you describe, or point me, to how he plans to reduce the block size? (I thought it was mostly raw, uncompressible data already). Regarding the 7 per second limit, from what I understand, that is there ONLY to keep hard drive storage requirements in check. Reducing the size of a block by a factor of 10 should allow to increase transaction limit by a factor of 10, too.


I know they are working on two parallel blockchains, one consisting of headers, the other of actual blocks, so a new full node will essentially start working the same way as Multibit, being ready for use within a minute or two once it downloads the headers, and then downloading the rest of the blockchain in the background. Even better, right now you are forced to download and verify blocks sequentially, one by one, but with the new system, you will download the tiny-by-comparisoon headers, verify them, and then download the blocks themselves asynchronously from many sources at the same time like a torrent file, making it download MUCH faster (likely in an hour or two). After that, they will probably focus on pruning, where we only keep records of unspent transactions. My guestimate is that would make the total blockchain only take up maybe 400 megs in size.
In the long term, though, I agree, full nodes will be rare specialty, same as mining. I don't think that will necessarily make bitcoin any less secure, since nodes can still be verified against each other by SPV clients. Are there any issues you are aware of regarding bandwidth and storage with SPV clients? Or any blockchain optimization plans and methods I'm not aware of (haven't listed above)?

Okay, the limits I'm talking about are this.   Currently there's a maximum block size that won't allow more than 8 transactions per second.  And in practice blocks are mostly limited to about 250k by the miners.  They're limiting size because bigger blocks are more likely to be orphaned, so they'd lose the block reward. It's not worth it to them to include tx above that limit without fees of $3.30 per tx according to Gavin's figures.

So he's working on a plan to reduce block size by 90% which ought to reduce the miners disincentive to include tx in a block.  That would reduce the risk of an orphaned block by 90% but it wouldn't change the tx per second limit.

We've already given up on doing micropayments.  That's a huge opportunity lost. But there's no way the current protocol can do it cheaply enough.

And it wouldn't eliminate the disincentive.  It would just reduce the fee level needed to overcome it.  To about ten times what people are paying now.

The block chain is already a barrier to entry for running a full node. It's huge. Downloading it takes a week with the current protocol.  You might get lucky and get a high bandwidth peer to download from but most people don't.

The block chain can come down to a tenth of that time by optimizing the protocol but that's still too long. And the block chain is growing faster and faster.

The client eats a lot of upstream bandwidth and currently allows no way to throttle it,  so nodes drop out of the network and catch up every so often.  That turns them into a drag on the network rather than an asset.

The client can be made better behaved, but bandwidth will continue to scale with the number of transactions.  Even a better behaved client will still crumble under a transaction volume that justifies Bitcoin's current price.

I'm seeing all of these things as protocol design problems.  People are optimizing but optimization won't fix design issues.

Can you explain why Bitcoin won''t just implement those scalability designs itself, once they are proven to work?

I believe in the idea of a cryptocurrency. 

But the more I think, the more I think it probably isn't bitcoin.

Bitcoin has and more or less isn't fixing its problems with scalability and speed.  If it fails to do so for another three months, it's going to die a horrible death.

There will be other cryptocurrencies with a more scalable design, after it does.

Funny how that works, huh 

This forum is mostly composed of delusional people who think they are logical.

I am not trying to get a hearing, nor am I trying to convince any one. I am actually trying to push the delusional Bitcoiners further into their delusion, as this will be the perfect outcome. Delusional people always get defensive and harden their position. Try to tell a drug addict they are addicted and observe the reaction.

I would love to take a long break from posting. I am only replying now to people are challenging me. If they stop, I go quiet.

As noted in another thread, this forum is mostly composed of INTJ's and INTP's. We are not emotion-driven fanatics, we are very logic driven thinkers. As such, it should be very easy to get your arguments a fair hearing. All you have to do is come up with a logical, coherent argument, and when faced with a counterargument, try to defend your origina, position, or learn something new and change your position. In AnonyMint's case, though, he presents an incoherent argument that is based on incorrect logical and bitcoin-operational assumptions, and calls those who post counter arguments "too stupid to understand his higher intellect" claims, because


is a perfect description of AnonyMint's modus operandi.

With regard to AnonyMint...

I can't help but respect those who are confident enough to go against the grain and think through things themselves. Nevertheless, spamming the forum faster than anyone can keep up with or counter, with both quantity of posts and number of notions posited per post, is an unwelcome tactic.

As a highly unconventional and independent thinker myself, disagreeing with the mainstream on many key aspects of just about every field (economics, physics, mathematics, psychology, linguistics, nutrition, and even some of the "mainstream" Bitcoin analysis), I'm well aware of the difficulty in getting your arguments a fair hearing in an unsympathetic forum. The only way to do it is find one or more pivotal concepts to focus on and relentlessly debate those. Resist the urge to wander off track or be diverted, or else no one but those susceptible to raw propaganda and information overload will be convinced. Once you've established that you can change minds and do it somewhat succinctly you can parlay that into discussing the ancillary points.  

And if you happen to be wrong on those key concepts (and for the record I think you are, though right about some other things), the focused debate should help you realize that. In any case it is far more efficient for both parties.

Yes.

Huge part of my believe doesn't actually come from the bitcoin itself, but the disbelief of the current fiat-money and especially the banking system.

Banking system itself has so many negative things that are straightforwardly harming people and their usage of currency.

Just to mention a few:

• Slow as hell when transfering from one bank to another, at least one day in my country (+weekends)
• Your assets can be frozen at will
• The value of money is on hands of people I don't trust, such as politicians and officers of central banks

Those are just from top of my head and good enough reasons to want something better.

I do believe in bitcoin as a currency, but even more because it also works like a commodity. Most of all because of the potential that it holds. It's constantly evolving.

Not to mention the huge momentum around it: more and more people are learning about it, it's got extremely dedicated community and merchants are adapting it daily.

I do however consider the possibility of bitcoin failing in one way or another, but I firmly believe that cryptocurrencies will spawn some innovations that will in one way or another change the current, shitty system of money and banking.

AnonyMint, you neither understand of what you speak, nor know of whom you speak.