Topic: Gold collapsing. Bitcoin UP. - page 531. (Read 2032289 times)

I'm inclined to simply plan on playing cat-n-mouse and retain as much of a potential of playing from a position of strength as possible.

It is faulty to hope that we could give a little and get those who Bitcoin threatens off our backs.  Won't happen.  Control of a monetery system is to important to to many people.  The only way Bitcoin will be accepted by TPTB will be if they own the system.  At that point it is worthless to me (though, as I always say, it could make me a rich guy.)

Back in 2011 there was some thread asking how the govt could neutralize Bitcoin.  My answer, 'embrace it.'  So it is no surprising that I would view TPTB being nice and accommodating with some skepticism.

I'm cool with Bitcoin being used for such transactions.  That's kind of what I've been arguing all along.  I would much rather trust mathematics than the legal system which is increasingly under control of the corporate financial sector for such things.


I'm fine with using my credit and cash for day-in/day-out stuff.  Works great for me and I expect it (almost) always will.  If I want to do something which I cannot do with these (such as support Wikileaks which is why I got interested in Bitcoin in the first place) then I would like Bitcoin to be available, but I have no problem paying what it is worth in transaction fees.  And it's a lot.

I'd rather use sidechains when I can since, to me, that is exactly the same thing as using Bitcoin.  I would anticipate (and verify) that the sidechain I am using is property supporting Bitcoin and would anticipate that my few transactions and thousands of others are bundled up into a single backing store transaction.  In this way I can pay a modest fee for penny-ante stuff but when it hits the native Bitcoin network the transaction fee realized by the infrastructure operators significant while their job remains manageable.

On the other hand, robustness against design and programming errors requires truly redundant data representations, taht is, storing each piece of data in many locations with independent design, implementation, and management.  Backups and multiple copies of a database do not count towards that either.  Thus it is actually good that the same data is kept by different players and by the government.  


A single design failure could render all the account information in the blockchain useless.  A government could break all bitcoin-dependent businesses at once by blocking access to the bitcoin network (by network hacking or by legal threats on users).

And it is undeniable that, for the amount of traffic that it processes, the bitcoin network is terribly more wasteful of computing resources than the existing financial system, by orders of magnitude.

I think you are correct to point out that bitcoin is ultimately going to have to answer to the regulators. Bitcoin enthusiasts (me included) have a tendency to think (hope? dream about?) that bitcoin is just going to bypass the current regulatory framework because it can't be regulated. I think an interesting discussion could be made on this topic, but I will grant you that there is an element of pie-in-the-sky on the part of the enthusiasts.

So let's assume that bitcoin becomes fully regulated. I maintain that this is going to be less difficult for bitcoin system than it is for the mainstream financial system, for the reasons I've outlined in my past few posts: a "normalized database" system (ie crypto, where the blockchain acts as reference point for all transactions) is easier to police than a big messy "un-normalized database" system like we have in the status quo, where any given transaction is recorded in multiple different tables strewn out all over the financial world. The latter system is messier and sloppier and therefore harder and more expensive to police.

There is no doubt that when Satoshi handed his role over to Gavin he demonstrated himself to be a very astute judge of character and ability. Gavin is continuing solidly with the vision that Satoshi had for his project.

I have admiration for Peter Todd's crypocurrency development skills, but was very disappointed when he published his naive, noobie-fooling video. Greg Maxwell takes a thoughtful, conservative and measured approach, but I really wish he would make it clear whether he thinks Bitcoin should at least scale in line with the general level of improvement in computing technology for high-end home users.

In many ways though, bitcoin is a lot faster than the current system. How long does it take for a bitcoin transaction to be fully verified (prudent for large transactions)? If you pick 6-blocks-deep as the standard, it takes about an hour. How long does it take for large transactions to clear in the current system? It varies widely but it is not uncommon for large transactions to take one or more days to clear fully. So far large transactions, we're looking at ~ one hour max (bitcoin) versus a day or days max (legacy system): bitcoin wins.

You may be thinking that credit cards are pretty much instantaneous and therefore faster than bitcoin. Well, not really. Bitcoin transactions can be just as fast if you're willing to forego waiting for the chain to grow by 6 blocks. There is some risk to this, but it is small enough to be acceptable for small transactions. Compare this to using a credit card: there is a risk that my signature won't be valid, or that some other problem may crop up so that the merchant/CC company never get my money, but the merchant and CC company are willing to accept this risk without waiting to make sure my payment actually arrives (which could take months). So far small transactions, where the recipient is willing to accept the small risk of payment not being received: pretty much instantaneous (seconds, less than a minute) for bitcoin and for legacy systems; I call it a tie.

From a CS and engineering point of view, the current financial system is like a massive sprawling database built by someone who doesn't know anything about database normalization. One of the principles of database normalization is that any given piece of data should be stored in only one location rather than duplicated as multiple entries in multiple tables. (Backups or multiple copies of the database, e.g. multiple copies of the blockchain, btw don't count as multiple locations.) The problem with multiple entries is that you end up with discrepancies that you have to fix. Discrepancies happen not just due to honest error, but also due to bad actors.

The problem with the current system is not that it's intractable. It's tractable; it's just takes lots of time and energy to run it, because it's a big sprawling mess. Bitcoin (or crypto in general) takes this big sprawling non-normalized mess of a database and normalizes it. The significance of database normalization should not be underestimated.

System-wise the mainstream financial system is hampered more by regulatory issues.  From a computer science and engineering point of view it's job is not that difficult.  It's still challenging enough that cash (an autonomous token-based system) comes to the rescue, but that won't be strictly speaking an insurmountable problem as system capabilities expand.

Bitcoin has a big technical crutch in that it is not a real-time system.  It only gains security in batch mode (as blocks are mined.)  In spite of the huge advantage (and the corresponding deficiency as a useful exchange currency) it still has had a fair degree of struggles even operating at a tiny tiny fraction of the mainstream systems.

There are two main points here.

1) To hope and expect that Bitcoin will enjoy it's advantage of not needing to comply with the same regulatory issues which mainstream systems do if it becomes more then a pin-point spot on the landscape is utterly pie-in-the-sky.  At that point it will have to bite off the challenges that mainstream systems do, or play a never-ending cat-n-mouse game with the legal system.  Both are going to degrade it's technical operational capabilities a lot and put it out of reach to almost anyone to operate unless they leverage certain services from specialists with a government charter.

2)  People always try to fall back on some argument about gross disk space.  It's generally more due to pure ignorance than malice.  In fact, the entire circulation needs to be indexed in order to work with some modicum of function which is done in RAM.  It works now, sorta, only because Bitcoin has thus far failed as an exchange currency and not blown through it's paltry 7 TPS...and is fairly young...like a disk (with a lame filesystem) which has not yet become fragmented.  Most operators of significance don't use the architecture of a typical PC.  They have effectively as much RAM as he normal use does diskspace and it is available to as many processing nodes as they choose to buy.  These operators will be able to maintain the circulation index even upon some significant growth.  Most others will not.

Gavin gets up in front of a crowd of Silicon Valley VC types for the 'state of the union' thing and the first words out of his mouth are the standard 'need to innovate or die' tripe.

Gavin pulls in $200k/yr from a 'non-profit' that he and Vassenes (who seemed to have popped out of the ether to lead a lot of things) put together.  That group (the Bitcoin Foundation) counts as it's members a whole bunch of people who are almost certainly simple thieves and dopey criminals.  The attrition off it's board of directors from arrests and prosecutions is stunning.

Gavin seems to be the only guy who is paid specifically to do things to Bitcoin.  Garzik is paid by Bitpay, but as near as I can see the work he does on Bitcoin and his philosophies and judgements don't seem to have changed a lot and a lot of the don't seem to align with the interests of his employer.

Maxwell and ~sipa are among the most productive and skilled of the Bitcoin devs, and Back has a long history in the space which pre-dates Bitcoin.  Maxwell is publicly visible and I've never detected anything he's said which indicated that he was in any way non-genuine.  Since I've been watching the commits back in 2011, ~sipa has seemed to be the principle architect of Bitcoin.  Hired by Google long after he became a key part of Bitcoin, worked for them briefly then apparently quit maybe around the time a preponderance of the most important of the core developers formed some sort of a grouping as Blockstream.

I am fairly certain that if Blockstream passed themselves off as a 'non-profit' (which is pretty meaningless as a label these days) people who have some reason to be threatened by their goals for Bitcoin would rail on them for not being sufficiently free-market or some other nonsense.

I'll withhold judgement on Blockstream in operation until I see first hand how transparent they are in their operations and production of code and so forth.  I am as hopeful for them in these regards as I have been of any effort on the basis of who's involved.  It speaks well for the organization that the likes of Maxwell and Back take some time to interact with the community and in the same open and honest manner that they have done before Blockstream was formed.

You are exactly right, and:

Most naysayers and trolls compare blockchain transactions to credit card transactions. That is false, bitcoin transactions are like moving fiat notes from hand to hand. Bitcoins can be compared to fiat notes. We can easily build card systems on top of bitcoins when needed, credit cards and debit cards and gift cards, with cooperating businesses as third parties.

It will probably never be viable to replace all fiat person to person transactions with blockchain transactions, but luckily, we have another option for that: exchanging bitcoin paper wallets with keys directly. Trust needed, but less trust than with fiat notes, because the paper wallet can be checked against the blockchain when desired, and the bitcoins can be moved from the paper wallet back to non physical form at any time.

Banking Culture Encourages Dishonesty

The authors conclude that the prevailing business culture in the banking industry weakens and undermines honesty. Research in moral psychology and behavioral ethics, however, suggests that the dishonesty may be due something more basic: money and number crunching are an important part of the banking industry. When people are focused on money, research shows, they behave in self-interested ways. Even thinking about money leads people to be less helpful and fair in their dealings with others, to be less sensitive to social rejection, and to work harder toward personal goals. In fact, money can make us so focused on our selfish motives that it can even lead to unethical behavior. In my own research, for instance, I find that university students were more likely to cheat after seeing 7,000 dollar bills than after seeing 24. Similarly, study participants across a variety of studies were more likely to cheat when they were primed to think about money.

http://www.scientificamerican.com/article/banking-culture-encourages-dishonesty/

really interesting post by srebin over on Reddit about what's going on in Bulgaria and surrounding regions:

[–]srebrin 5 points an hour ago

I've been a depositor at KTB pyramid, for which i got paid an interest of nearly 9%, paid out in installment of 4 months. The pyramid advertised itself as the bank of the rich which probably was true considering that many from the upper echelons of the ruling parasites had "special" interest arrangements nearing 10-11% interest! I realized that in an economic environment of depressed credit expansion, outflow capitals, collapsing real estate prices (nearly 40% from the top in 2008) there is no way on earth they could possibly sustain this kinds of interest payments and kept my ears and eyes open for the slightest of troubles with the rulers as to move my electronic debt based money promise out of them. That is what i did just 3 days before the pyramid was closed in June 2014 as news was spreading that the pyramid chief - Cvetan Vasilev, was in a row with one of the ruling parties (DPS) which is famous for staying in power ever since the collapse of the previous rulers regime - the red communists turned into newly baked crony-capitalists.

The total assets of the pyramid were over 3 billion euros, of which within the "guaranteed" electronic money was 2 billion. In the so called guarantee fund there were less than 2 billion after 17 years of collecting fees on the bank assets, for which the rulers took on a state debt to be payed by the tax slaves in the next couple of generations as to fulfill the "promise". Bulgaria is in a currency board to the euro since 1997, after the hyper inflationary collapse caused by 17 failed banks (orchestrated of course) that run away with 2.5billion dollars of value at the time, only 7 years after the change of the clothes of the previous rulers to a new kind with fancier ideas like "democracy for the masses". This is to show that in 2014 only one of the nearly 30 banking pyramids operating in the country, stole more than the previous 17 failed banks in 1997. As interest payments were MUCH higher in all banks because of the distorted market place by the bankrupt KTB pyramid, lots of hot money was flowing from depositors speculating by spreading their eggs in higher risk tax farms like bulgaria, ukraine, moldova, mongolia, turkey etc. Now, all this money flow has reversed and I expect that more pyramids are in trouble than most people realize and probably unless the rulers take a lot more debt, there will be a contagion in the months to come as things unravel. The latest big bank to come into the spotlight is FIB (or PIB, first investment bank) for which news is spreading with a huge credit exposure to very few companies and persons with total credits way above the 25% regulatory limit of all assets. FIB is the 3rd biggest bank and already received state liquidity last summer (600million euro) as there was a bank run affecting them and other bulgarian-owned banks, considering how fragile the confidence level is with any of those pyramids. What is funny the KTB owner is now in Serbia, as it is outside the EU empire and can not be extradited as easy as within it upon request. He has put a couple of a hundred million euros in companies in serbia, money stolen from depositors of course, and probably is under the protection of the serbian rulers as they seem to do everything possible to delay any extradition proceedings. Before the pyramid officially was closed, they boosted less than 2% default rate whereas in the other banks it is nearly 20% considering the real estate as collateral has gone down dramatically. Suddenly, after its closure the regulators at the central bank has published that it had over 50% default rate which was masked through new deposits coming in at the promise of high return and issuing new credits to the bad companies to repay bad loans and mask the whole think up! No normal wain person with leave his saved up toilet paper with any of the banks these days as there is in the air talks of overturning the currency board and hyper inflating the bad debt as they did in 1997.

tl.dr: whoever has any brains is getting his money out of any bank in bulgaria as the political uncertainty is too great of a risk

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[–]Byzantine-General 2 points 50 minutes ago

Agree with you that First Investment Bank will be the next to fall.

Several newspapers have been fined for reporting on FIBank's financial troubles based on a recent law

http://en.rsf.org/bulgaria-authorities-ramp-up-pressure-on-21-01-2015,47516.html

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http://www.reddit.com/r/Bitcoin/comments/2tia8f/at_the_same_time_bitstamp_was_robbed_of_6_million/cnzca6d

Peter's fairly neutral, altho radical & boisterous at times.  i used to be more concerned when Mastercoin seemed to be his main project but nowadays, especially since Mastercoin seems pretty dead, he appears to be affiliated to a bunch of diverse and different projects so i'm less concerned and hence value his opinion more.

Ah i missed the point about gmax being involved in blockstream.. 

What about Peter Todd?
Although affiliated to viacoin now, he seemed pretty foreseeing regarding that issue too: https://bitcointalksearch.org/topic/new-video-why-the-blocksize-limit-keeps-bitcoin-free-and-decentralized-208200


https://twitter.com/petertoddbtc/status/557719826748440579

But you have to look at the totality of the situatio.

Imo,  Gavin is working from a much higher level of moral authority than gmax. He's employed  by a non profit. Sure, he may be in the coinbase advisory board or something like that but unlike gmax he isn't CEO of a for profit company funded by a bunch of late comers who previously shunned Bitcoin.

I've got $21M that says I'm right.

Im not saying this is what is happening, nor would i find any evidence about what is going on in one's head.
Just extrapolating that they may be a lot of forces driving or attempting to highjack bitcoin's development.
Capitalistic and private interest are likely playing their card on top of that, considering all the VC cash that has been thrown at bitcoin over the last couple years.
Besides Bitpay, Coinbase and other exchanges are indeed favoring the forking. they dont hide it.

Anyhow, it also seems Gavin is on the edge here with this whole thing, putting his legitimacy and authority as Bitcoin lead dev at risk if people in the end refuses to cope with the forked software.
Interesting times..

The average midsized town probably spends more on brick and mortar banking than the entire Bitcoin network costs to operate.  Good luck finding a cheaper, more secure solution.

"Dollar Power
“If you look at what we call the weaponization of finance,” the Eurasia Group’s Bremmer said Jan. 5 on Bloomberg Television, “the U.S. dollar has been a much stronger lever of American power internationally than our combat forces have been over the course of the past couple of years.”

'Weaponization of Finance’
Financial intelligence has come into its own as the U.S. increasingly turns to sanctions, asset freezes and other financial actions to thwart adversaries from al-Qaeda operatives to Russian President Vladimir Putin. It’s a tactic that Ian Bremmer, the president of New York-based Eurasia Group, recently called the “weaponization of finance.”

http://mobile.bloomberg.com/news/2015-01-20/financial-intelligence-grows-as-u-s-weapon-to-fight-bad-guys-.html

I hear this thrown around a lot, but never seen any evidence for it. How has Bitpay/Coinbase pressured Gavin?

It's not unlikely that Gavin actually thinks this is a good idea and that's why he's working on it.