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Topic: Fundamental bitcoin flaw - revisited - page 2. (Read 9710 times)

member
Activity: 117
Merit: 10
March 04, 2013, 01:57:59 AM
#76
I think you ought to explain your "fundamental flaw" theory to Satoshi Dice as apparently they have completely missed it. Grin



If you read the OP you would know that I've already thought of this.  I explicitly state that it may be a solution to the problem.  However at this stage this the question remains-- can Satoshi Dice grow large enough so that the fees paid keep the hash-rate at a respectable level?

Personally,  I sincerely doubt that by *itself* Satoshi Dice can.  Since as soon as the need for transaction fees kick-in in a big way, less people will be less inclined to gamble since they will be losing too much money.  At the moment most the gamblers are paying very,very small fees.  I could be wrong about this though, time will tell.
member
Activity: 117
Merit: 10
March 04, 2013, 01:44:55 AM
#75

......

This observation about human behaviour would indicate otherwise: http://en.wikipedia.org/wiki/Tragedy_of_the_commons

Absolutely not. "Commons" have an implied limit on usability. Hit that limit and the "commons" degrades. There is no "limit" on the number of off chain (or on chain) transactions. In fact the more it's used the more valuable the system is.

Your argument is not an argument about abuse of "commons". Your argument is that there are a fixed number of transactions and they will all be funneled into off line transactions leaving none on line to pay the miners. That is an absurd argument because as I stated, the only reason  off line has ANY traffic is that the providers balance their book with on line transactions and they will pay whatever it takes to make those secure. (If security fails they loose.) Hence, fees will be high and miners will be healthy.
 

I see your "Absolutely not" and raise you.
Absolotely, Absolutyely not.  The origin of this term actually refered to the commons (communal shared grazing land) to produce an *infinite* amount of resource (the resource being grass in this case) IF it was managed right.  Yes, the land itself was finite, but that's not what the  saying is referring to-- it refers to the production that the land provides which would be ongoing forever if the land was not over-grazed by self interested parties.
ffe
sr. member
Activity: 308
Merit: 250
March 04, 2013, 12:36:43 AM
#74
... My point is that bitcoin as-is with the transaction fees model will not be able to maintain network security due to the fact that you can do of off-chain transactions.  ...

Off chain transactions are only valuable because you can do on chain transactions. If on chain transactions start being less secure then off chain transactions will drop in popularity and the problem self regulates.

This is the same as the fact that checking accounts don't threaten the central bank's monopoly on printing fiat paper. Checking accounts are only valuable if the fiat paper is valuable.

Off chain transactions can be thought of as scaling Bitcoin to the masses. It should be cheap and it should occur by the thousands for every on chain transaction. On chain transactions can be thought of as similar to banks balancing their books against other banks by transferring cash (or the equivalent, transferring between accounts at the central bank.)

The difference, of course, is that the common man is not allowed to have an account at the central bank but anyone can have an on chain Bitcoin balance. In the future we can choose to pay the extra fee that will be required for an on chain transaction for a large transfer or one we want to handle with very high trust. It's ok for on chain transactions to be expensive as long as for common transactions off chain is available and cheap.

The key point is that off chain volume can never get so large that on chain volume disappears. That just won't make sense. The only reason to trust off chain transactions is the user's knowledge that on chain balances are the ultimate balance sheet and that off chain providers have to balance their books against each other using on chain transactions - and they will be willing to pay a good fee to do that.

This observation about human behaviour would indicate otherwise: http://en.wikipedia.org/wiki/Tragedy_of_the_commons

Absolutely not. "Commons" have an implied limit on usability. Hit that limit and the "commons" degrades. There is no "limit" on the number of off chain (or on chain) transactions. In fact the more it's used the more valuable the system is.

Your argument is not an argument about abuse of "commons". Your argument is that there are a fixed number of transactions and they will all be funneled into off line transactions leaving none on line to pay the miners. That is an absurd argument because as I stated, the only reason  off line has ANY traffic is that the providers balance their book with on line transactions and they will pay whatever it takes to make those secure. (If security fails they loose.) Hence, fees will be high and miners will be healthy.
 
legendary
Activity: 1890
Merit: 1086
Ian Knowles - CIYAM Lead Developer
March 04, 2013, 12:28:26 AM
#73
I think you ought to explain your "fundamental flaw" theory to Satoshi Dice as apparently they have completely missed it. Grin
member
Activity: 117
Merit: 10
March 04, 2013, 12:25:50 AM
#72
... My point is that bitcoin as-is with the transaction fees model will not be able to maintain network security due to the fact that you can do of off-chain transactions.  ...

Off chain transactions are only valuable because you can do on chain transactions. If on chain transactions start being less secure then off chain transactions will drop in popularity and the problem self regulates.

This is the same as the fact that checking accounts don't threaten the central bank's monopoly on printing fiat paper. Checking accounts are only valuable if the fiat paper is valuable.

Off chain transactions can be thought of as scaling Bitcoin to the masses. It should be cheap and it should occur by the thousands for every on chain transaction. On chain transactions can be thought of as similar to banks balancing their books against other banks by transferring cash (or the equivalent, transferring between accounts at the central bank.)

The difference, of course, is that the common man is not allowed to have an account at the central bank but anyone can have an on chain Bitcoin balance. In the future we can choose to pay the extra fee that will be required for an on chain transaction for a large transfer or one we want to handle with very high trust. It's ok for on chain transactions to be expensive as long as for common transactions off chain is available and cheap.

The key point is that off chain volume can never get so large that on chain volume disappears. That just won't make sense. The only reason to trust off chain transactions is the user's knowledge that on chain balances are the ultimate balance sheet and that off chain providers have to balance their books against each other using on chain transactions - and they will be willing to pay a good fee to do that.

This observation about human behaviour would indicate otherwise: http://en.wikipedia.org/wiki/Tragedy_of_the_commons
ffe
sr. member
Activity: 308
Merit: 250
March 04, 2013, 12:06:13 AM
#71
... My point is that bitcoin as-is with the transaction fees model will not be able to maintain network security due to the fact that you can do of off-chain transactions.  ...

Off chain transactions are only valuable because you can do on chain transactions. If on chain transactions start being less secure then off chain transactions will drop in popularity and the problem self regulates.

This is the same as the fact that checking accounts don't threaten the central bank's monopoly on printing fiat paper. Checking accounts are only valuable if the fiat paper is valuable.

Off chain transactions can be thought of as scaling Bitcoin to the masses. It should be cheap and it should occur by the thousands for every on chain transaction. On chain transactions can be thought of as similar to banks balancing their books against other banks by transferring cash (or the equivalent, transferring between accounts at the central bank.)

The difference, of course, is that the common man is not allowed to have an account at the central bank but anyone can have an on chain Bitcoin balance. In the future we can choose to pay the extra fee that will be required for an on chain transaction for a large transfer or one we want to handle with very high trust. It's ok for on chain transactions to be expensive as long as for common transactions off chain is available and cheap.

The key point is that off chain volume can never get so large that on chain volume disappears. That just won't make sense. The only reason to trust off chain transactions is the user's knowledge that on chain balances are the ultimate balance sheet and that off chain providers have to balance their books against each other using on chain transactions - and they will be willing to pay a good fee to do that.
hero member
Activity: 546
Merit: 500
March 03, 2013, 11:32:59 PM
#70

One extra thing for you to consider:
Let's say that Bitcoin gets popular and an ecosystem of competing Bitcoin-like electronic cash systems develops.

It has already happened. But nevertheless, I think it is a valid thing to look for in the future.
full member
Activity: 196
Merit: 100
March 03, 2013, 10:41:26 PM
#69
The only real flaw in bitcoin is the number of idiots and scammers that are involved with it.
member
Activity: 117
Merit: 10
March 03, 2013, 10:39:31 PM
#68
Hopefully you people will begin to realise that off-chain transactions are going to be very popular and it is a real threat to bitcoin.

Again, where is your argument, dude?

Why are off-chain transactions necessarily bound to be very propular?? Why is that popularity necessarily and inevitably bound to be a thread to Bitcoin?



I've actually made the argument a few times.  It's just basic human preference.  Off-chain transactions are cheaper than on-chain ones.  They are faster.  Some mechanisms do not leave public trails of previous ownership.
Since they have these advantages over on-chain ones and the fact that these  are commonly wanted properties of a transaction people will choose off-chain in preference to on-chain.  

The only negative that anyone has so far given of off-chain is that it is less secure than on-chain.  However, in the case of DRM coin the truth of the matter is that for majority of day-to-day transactions it is good enough-- this is demonstrated by actual real-life practice today: ie, Consumers do use smart cards to buy stuff and very, very rarely complain about the want of security involved.  Smard cards are secured by the same type of technology has DRM (infact you could use smart cards to implement DRM coin).  In my home city I use a smart card every time I use the local transport system-- and so do 100's of 1000's of people everyday.  This demonstates that for small transactions (say less than $250) smartcard is good enough.  For larger transactions you can use more traditional banking systems (eg: similar to how gold is bought or sold-- the gold stays where it is in a vault but a record of what is bought or sold is recorded by the various banks involved.)  Not many people complain about the security of regulated banks: it is very,very rare for someone to be personally out of pocket due to a breach of bank security. When was the last time you heard of some having their money stolen from/by a bank and not being set-right again by the bank or the Government?  If banks that trade gold/cash etc, can handle their security so well why do you think they wouldn't be able to do the same with bitcoin?  Bank transfers of large amounts of bitcoin in this way would be very cheap, the bitcoin network simply couldn't compete with it!



Up to now you have given us very little to take you seriously.
Your point boils down to criticising Bitcoin for being open and extensible, and able to be connected with other economic structures (like off-chain transactions). You say this is a "flaw" in Bitcoin. And, following your line of thought, to repair this flaw, Bitcoin should be locked down and gated, otherwise it could not withstand the competition of TC, DRM and similar gated systems.


Not quite.  My point is that bitcoin as-is with the transaction fees model will not be able to maintain network security due to the fact that you can do off-chain transactions.  My personal perferred solution to this problem is to change the bitcoin protocol so that miners make money by both transaction fees and by reclaiming old-untouched coin.  I actually like the idea that you can do off-chain transactions and believe it is the best way forward since it reduces block size.  I definitely do not want it locked down and gated.  If you read the OP you would know this.  (In the OP I also give other possible solutions to the problem).

legendary
Activity: 1386
Merit: 1004
March 03, 2013, 09:23:15 PM
#67
Was just looking at the other threads in the Bitcoin Discussion board.  And what do I see:
https://bitcointalksearch.org/topic/sendbitcoinsnet-opening-its-doors-147742
It looks like another off-chain service.  And it sells itself with the fact that it is quick and cheap. 

Hopefully you people will begin to realise that off-chain transactions are going to be very popular and it is a real threat to bitcoin.  Maybe bitcoin will fail even before DRM coin arrives.


So remember people, everytime you transfer money off-chain your not paying fees to the poor miners.  So do the right thing and make a voluntary donation to a miner today! 

(the above is sarcasm if you don't realise)

There have been a few off-chain services before.  They have not taken away many transactions from the chain.  In reality, it seems like many of them go under.  They fail to get business because on chain transactions are properly priced. 

And this goes back to the same issue you have FAILED TO ANSWER in multiple replies.

TRUST

To use a service like them you need to TRUST them to handle your money for you.  Or you can use the blockchain and just trust in MATH.

hero member
Activity: 602
Merit: 500
March 03, 2013, 09:17:38 PM
#66
Hopefully you people will begin to realise that off-chain transactions are going to be very popular and it is a real threat to bitcoin.

Again, where is your argument, dude?


Why are off-chain transactions necessarily bound to be very propular?? Why is that popularity necessarily and inevitably bound to be a thread to Bitcoin?

Several people in this thread tried now since 4 pages to point out the fallacies in your "reasoning" in various way, all from polite to sarcastic. It is not sufficient to spit around various observations and opinions, rather it would be your job to line them up into a chain of conclusions, in order to form an argument.


Up to now you have given us very little to take you seriously.
Your point boils down to criticising Bitcoin for being open and extensible, and able to be connected with other economic structures (like off-chain transactions). You say this is a "flaw" in Bitcoin. And, following your line of thought, to repair this flaw, Bitcoin should be locked down and gated, otherwise it could not withstand the competition of TC, DRM and similar gated systems.



legendary
Activity: 1106
Merit: 1001
March 03, 2013, 09:14:17 PM
#65
Was just looking at the other threads in the Bitcoin Discussion board.  And what do I see:
https://bitcointalksearch.org/topic/sendbitcoinsnet-opening-its-doors-147742
It looks like another off-chain service.  And it sells itself with the fact that it is quick and cheap. 

Hopefully you people will begin to realise that off-chain transactions are going to be very popular and it is a real threat to bitcoin.  Maybe bitcoin will fail even before DRM coin arrives.


So remember people, everytime you transfer money off-chain your not paying fees to the poor miners.  So do the right thing and make a voluntary donation to a miner today! 

(the above is sarcasm if you don't realise)

Yup. Email is a failed technology because people can pass notes to each other. I get it that you have a pet theory, but when confronted with well thought out, evidence based arguments, the grown up thing to do is to acknowledge defeat.
member
Activity: 117
Merit: 10
March 03, 2013, 08:35:15 PM
#64
Was just looking at the other threads in the Bitcoin Discussion board.  And what do I see:
https://bitcointalksearch.org/topic/sendbitcoinsnet-opening-its-doors-147742
It looks like another off-chain service.  And it sells itself with the fact that it is quick and cheap. 

Hopefully you people will begin to realise that off-chain transactions are going to be very popular and it is a real threat to bitcoin.  Maybe bitcoin will fail even before DRM coin arrives.


So remember people, everytime you transfer money off-chain your not paying fees to the poor miners.  So do the right thing and make a voluntary donation to a miner today! 

(the above is sarcasm if you don't realise)
member
Activity: 117
Merit: 10
March 03, 2013, 07:58:52 PM
#63
How can bitcoin compete with that once transfer fees become the main miners revenue?

As if a low fee is Bitcoin's only advantage over a traditional bank.

I'll start with the fact that no one can seize my bitcoins for any reason what-so-ever. While you may never run into that problem with a bank, I don't think there is any argument that it is a very real possibility. Also, the block chain doesn't close during evening hours, weekends, or holidays.

Also, how long did your IMT take?

Under normal circumstances your money should arrive at the overseas bank of the recipient within 2 business days. However, we cannot guarantee this timeframe as there may be delays due to the banking practices of the overseas bank or country.

At the current rate of bitcoin adoption it would have taken a lot longer if I used bitcoin (and cost a lot more).  With bitcoin I would have to transfer the money to an exchange which itself is incurs an IMT (there are no bitcoin exchanges in Australia) and buy the bitcoin (which costs about 1%) then transfer that to another exchange in the destination country over the bitcoin network the sell the bitcoin on that exchange (again more fees) then transfer the money from the exchange to the destination account (possibly more fees).

Ok, before you protest- yes I realise that if the *whole world* was using bitcoin and then the recipient would have been happy with receiving BTC and I wouldn't have had to bought and sold it on the exchanges.  However, right at this moment that is not the case--- indeed I doubt the person I sent it to has ever heard of bitcoin-- so at this point in time Bitcoin does nothing for me in this case.
legendary
Activity: 1106
Merit: 1001
March 03, 2013, 07:43:32 PM
#62


Why on earth would a "big company" use visa or mc for transferring large amounts?  I personally just recently did a $30,000 international money transfer, 1/3 of the way around the world, for just $22.  That's 0.073%, which is not much at all (and it would have been a smaller percentage had I transferred more-- the $22 is a fixed price).  Bitcoin is going to have a very hard time competing with that once fees become the major source of income for miners.


I seriously doubt it.  You can sit back and wait for the collapse, though.  You'd have plenty of company that is already fat with crow.

Which part did you seriously doubt?  Was it the fact that I did a transfer IMT for just $22.  Cause if it is then here is the bank I used: http://www.commbank.com.au/personal/international/transfer-money.html  (I'm Australian- the $22 is $AUD but that is about eqaul to $US these days)

Also, I do BPay with this bank (BPay is a way for paying bills in Australia).  I pay my rent fortnightly $600 and it cost me NOTHING but does cost the real-eastate about $0.50 I believe.  That works out out 0.083%.  

Lastly, I regularly do an interbank transfer (to another Australian bank) into my wife's and my joint savings-  that costs, wait for it-- prepare yourself, this my shock you----, drum roll please---  $0, yep that's right absolutely NOTHING.  How can bitcoin compete with that once transfer fees become the main miners revenue?

Try transferring some of that money of yours to Wikileaks... No? Didn't think so.  Cheesy
member
Activity: 117
Merit: 10
March 03, 2013, 07:42:18 PM
#61
1) Coin creation:
a)Firstly, Sally secure boots her computer.

Stopped reading here: Why would Sally be interested in secure booting her computer, if she later wants to scam Ross?

Well, if you read and understood it then you would know that she *has* to boot securely if she wants to transact with Ross.  Ross's computer demands that Sally's computer proves that it has booted securely (this is known as remote attestation)

The rest of your scheme (okay, I admit, I read it after all) describes a way, which ensures that no 3rd party can tamper with the transaction, but that's not the problem here. The problem is, that Ross has to trust Sally.

No, that's incorrect. Ross doesn't trust Sally.  He trusts Sally's computer and that the computer's TC chip hasn't been compromised.
member
Activity: 71
Merit: 10
March 03, 2013, 07:15:51 PM
#60
In case some people aren't realizing the simple practice of handing off keys is not a safe way to preform bitcoin transactions. The 'sender' can reuse that money any time, a primary way would be to send it to themselves at a new address by making an actual bitcoin transaction.

/thread
member
Activity: 117
Merit: 10
March 03, 2013, 07:14:09 PM
#59


Why on earth would a "big company" use visa or mc for transferring large amounts?  I personally just recently did a $30,000 international money transfer, 1/3 of the way around the world, for just $22.  That's 0.073%, which is not much at all (and it would have been a smaller percentage had I transferred more-- the $22 is a fixed price).  Bitcoin is going to have a very hard time competing with that once fees become the major source of income for miners.


I seriously doubt it.  You can sit back and wait for the collapse, though.  You'd have plenty of company that is already fat with crow.

Which part did you seriously doubt?  Was it the fact that I did a transfer IMT for just $22.  Cause if it is then here is the bank I used: http://www.commbank.com.au/personal/international/transfer-money.html  (I'm Australian- the $22 is $AUD but that is about eqaul to $US these days)

Also, I do BPay with this bank (BPay is a way for paying bills in Australia).  I pay my rent fortnightly $600 and it cost me NOTHING but does cost the real-eastate about $0.50 I believe.  That works out out 0.083%.  

Lastly, I regularly do an interbank transfer (to another Australian bank) into my wife's and my joint savings-  that costs, wait for it-- prepare yourself, this my shock you----, drum roll please---  $0, yep that's right absolutely NOTHING.  How can bitcoin compete with that once transfer fees become the main miners revenue?
legendary
Activity: 1708
Merit: 1010
March 03, 2013, 06:49:32 PM
#58


Why on earth would a "big company" use visa or mc for transferring large amounts?  I personally just recently did a $30,000 international money transfer, 1/3 of the way around the world, for just $22.  That's 0.073%, which is not much at all (and it would have been a smaller percentage had I transferred more-- the $22 is a fixed price).  Bitcoin is going to have a very hard time competing with that once fees become the major source of income for miners.


I seriously doubt it.  You can sit back and wait for the collapse, though.  You'd have plenty of company that is already fat with crow.
legendary
Activity: 1078
Merit: 1006
100 satoshis -> ISO code
March 03, 2013, 04:22:06 PM
#57
cruel, but funny!  Smiley
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