Topic: I predict a lot of strain on the Bitcoin network soon due to Mastercoin - page 2. (Read 8716 times)

weve already discussed this as well.

if you use an altchain, then you can redesign the TX formats.  No need for special Mastercoin or even Color Coin stuff, and certainly no need to invest in MSC.

Not sure if this is related to the Scalability Issue of Bitcoin you have been discussing,
but I happen to come across this article title:

"Bitcoin Needing to Scale by a factor of 1000 to compete with Visa, here's how to do it..."

Link: http://www.washingtonpost.com/blogs/the-switch/wp/2013/11/12/bitcoin-needs-to-scale-by-a-factor-of-1000-to-compete-with-visa-heres-how-to-do-it/

Talks about how Bitcoins needs to be faster for future transaction volume, and how that is being worked on.

Stew

Agreed -- and probably we will see that soon enough.

Sounds like a self correcting problem.   The solution is a merge mined separate chain. If MC does implode under its own created tx "spam" then hopefully the outcome will encourage others that follow to a better solution.

My thoughts are that Mastercoin will likely destroy itself by pushing the network fees for transactions up until no one wishes to make any Mastercoin related transactions due to the price associated with them.

This will be an especially big problem as soon as people begin forking Mastercoin en masse.

The unfortunate fact is that as more and more actual transactions to exchange bitcoins go on, eventually there's going to be less and less room on the blockchain for Mastercoin.  It's a system with planned obsolescence.

I have to apologize for my very brief response ... I've been getting an average 4 hours of sleep a night for 10-14 days.
I will get some of our devs to kick in.

I also have to apologize that these ideas are a bit extreme.
I must say that thus far the board has a general agreement on our goals, but not yet on the degree of the network effects in play here and thus on our speed. I'm the most optimistic one there, the scale I predict can come a bit later than sooner.

In the meantime, I'll summarize why I believe MSCs are going balistically up in value:

• I have a certain vision for Mastercoin, inspired originally by Invictus Innovations (I won't go into comparing us on here). I believe that Mastercoin is not a "Forex Exchange" equivalent. Instead, we are an Autonomous Application that has the goal of producing infrastructure components required for Autonomous Application. David Johnston will soon release a detailed whitepaper exploring AAs.
  
• I believe we have a lot of factors that cause us to increase our first, second, third derivatives of our momentum. Meaning we have a big momentum, but I'm directing that momentum towards features that will increase our momentum, and will cause a self-feeding loop of acceleration
• I believe that our stock price and thus available resources will increase due to the above acceleration loop / self perpetuating prophecy, just like Bitcoin is a self-perpetuating prophechy. I am actively seeking people to take money away from us and spend it wisely for the betterment of Mastercoin. I also believe there are opportunities for people to start a variety of different business (centralized or AAs) on top of our platform, and that any such business that relies on Mastercoin in turn will increase the value of Mastercoins.
  
• In the end - I think we do not yet have the tools to explain or understand why MSC will rise in value and attract capital. I have my vision, we're trying to codify that up in documentation, videos, etc. If we do continue attracting captial and human resources, then of course we'll increase the number of transactions because there will be a lot more types of transactions.
  
• We would be happy and willing to sponsor resesarch that investigates Bitcoin scalability, both in general, and specific to Mastercoin. We really are trying to interoperate with Bitcoin, and believe that a higher MSC price means a higher BTC price. If you have a concrete research proposal, please send it to [email protected]
  
• Of course I might be delusional and/or wrong. We are working on defining and validating this ... I expect we'll have much more to add on this in a month. FYI I will be presenting in the Vegas conference in the December. The Israeli Mastercoin Foundation also has a meetup for this Thursday. The meetup will be conducted in English, videotaped, and perhaps even turned into a live webinar. It takes place on 5 PM GMT on Nov 22

I'll follow up on this in a day or two.

Thanks for everyone's serious attention.

Hi Adam,

  There was a thread about this on this forum: https://bitcointalksearch.org/topic/boycott-all-businesses-associated-to-alex-waters-matt-mellon-and-yifu-guo-332918

  Clearly the 'Bitcoin Business' wants to move this thing in this direction.  At best, we'll be left with something like SWIFT or ABA.  If transaction costs rise to or above the general costs of using eg. Paypal, you will see a drastic reassessment of Bitcoin's business case, and BTC exchange rate.

  It's really about the way this business sector is constructed.  It's not really about vending software per se, because the systems vendors are in bed with the banks and they dont simply deliver technology, they deliver privilege and part of that tactic is making sure that most people do not have access to the basic tools of finance.  Most people never realize how much money banks make off transaction fees.  If you want to build a financial exchange there are really only one or two companies you can go to.  I used to be a infrastructure consultant for AIG on Wall St. btw. 

  Confidence Chains aims to change all this.  You can run full fledged exchanges on them, and intend to deliver this functionality as open source.


Im not sure its based on misunderstands.  Probably a better term is 'based on a undermining of Bitcoin's value proposition'.  This subversion of Bitcoin's values has been going on for some time now.


Thanks for the comments.  I'll respond to the Confidence Chains points in the other thread just to keep things readable.  This isn't a Confidence Chains thread and I try to be respectful on this forum.  You make some salient points.

go here to follow this discussion:  https://bitcointalk.org/index.php?topic=317114.new;topicseen#new

thanks Adam,

-bm

Other than the committed tx defense, if they try to centralize it, and introduce dispute resolution, taint tracing as an analog of credit scoring, they will damage fungibility, increase transaction costs via the credit scoring management tax they extract, and the payment repudiation they may seek to introduce.  Eg take a look at this

http://www.forbes.com/sites/kashmirhill/2013/11/13/sanitizing-bitcoin-coin-validation/

Its based on significant misunderstands about bitcoins value proposition - destroy its fungibility and the costs float up to meet credit cards and paypal.

If they want to certify users, they should do that as optional KYC, AML certificates that regulated merchants in respective jurisdictions can request, which are attached to wallets/identities, not to fully fungible coins.  The certificates should be non-transistive they attest to the identity of the funds.  They should be optionally sent - if the recipient does not request it, it is privacy destructive and a security risk to send identifying information to unregulated businesses and individuals.


I put some comments about confidence chains idea on the thread about it:

https://bitcointalksearch.org/topic/m.3581752

I think it has the same problems as other consensus systems like ripple, and the existing banking infrastructure in terms of sybil attack (identity theft), reputation management (equivfax etc) and fraud (when people prove unworthy of their default reputation, succeed in committing identity theft, or commit fraud).

These are issues bitcoin mining is intended to defend against.  Most attempts to save the cost of mining reinvent ripple and come to the realization that mining is performing a critical security function.  Mixed PoW/PoS of PPCoin maybe an exception.

Adam

So long as this is maintained, the mining market can fix itself and compete for mastercoin txs.

I have long been a proponent of a merge-mined "data chain" which is specifically designed for smart property, colored coins, and mastercoin metadata.

Even did a tiny bit of work creating an (unseen to the public) "DataNet" codebase, whose work is both obvious and long since outdated.

The keys are

• Emphasize tech neutrality, and engage other projects outside MasterCoin to use the data chain.  Even up to and including patch contributions to third party projects.
• Approach pool operators, request merged mining of this chain.  Point out how it's a community chain.
• Do not premine, or other scamcoin traits.
• Be very explicit about intended chain uses, and aggressively work with pool ops to de-spam.

If distributed markets are implemented, I would predict more, as there would not be only transactions for transfers of currency, but also transactions for posting trading offers and executing these trades.

I'm unsure if these order books are supposed to end up in the blockchain (e.g. in Ripple they do, but the ledger there is constantly pruned because of that) or not, in any case it might cause strain if they use the network to message each other about offers and the memory pool explodes.

 and keep in mind that the so called 'big names' in Bitcoin actually favor this route because it's a scenario that can be capitalized on.  Thus we repeatedly hear solutions of this sort from those looking to commercialize various aspects of Bitcoin.  Even IBM has been hanging around lately.  Bitcoin is quickly morphing into a traditional payment network.


 my system solves all these problems by eliminating PoW and instead granting the ownership of the chain to new kind of layout.  Any kind of assets can be traded and other financial features can be employed with no problems of scalability or cost of computing equipment.  You lose the so-called 'zero trust', gain performance, and keep the distributed nature of the block chain.  You don't have to do transactions 'off chain', everything gets fully committed very quickly.

 all these problems were entirely visible to me months ago, which led to the development of Confidence Chains.

 -bm

You could consider a merge mined side-chain (for security), or an existing altcoin.  If interested in alt-coin route perhaps protoshares/bitshare have some synergy in being a bearer asset related alt.

But if you're going to do it an an alt you dont need to coloring, just directly represent the color.  No need to encode your messages on top of a network that doesnt understand your semantics, if you can extend the protocol.  You can technologically win an arms race with hypothetical anti-color rules, via steganographic arguments, but it doesnt change the network cost, so its zero sum for the anti-coloring and the pro-coloring.

About native color representation freimarkets have done an excellent job of thinking through the minimum new script features necessary for smart-contracts.  I proposed a couple of extensions, and I saw they had the exact same, plus more as they have explored the full set of required features with the minimal, simple and elegant protocol bitcoin script extensions.  (Freimarkets is completely unrelated to freicoin other than name).  Bitshare itself has its own (unpublished?) direct encoded from scratch implementation in the works.


Well this is another solution.  Make bitcoin so scalable that it doesnt matter.  However that is really hard.  Zero-trust offchain is one avenue, but its not clear how or if it can work; there maybe some 'crypto/computation physics' limits.  Unknown so far, but lots of people are interested to see if it could be done.  The existence of satoshi-dice didnt help as a catalyst - the scalability problem is known recognized and very hard, it didnt progress because we're at a technology limit unless and until someone can overcome it.

The problem as I see it is bitcoin has a scaling limit, like transactions per second, which it can support in full p2p bearer form.  It can be scaled but only at the cost of reducing its decentralization.  eg if block sizes go to 1GB, that counts me out of running a full node.  Its an issue because if you can only be a full node, with an OC3 line, most people will be pool mining without validating what they're mining, and then defacto control remains unavoidably central.  These will grow into large companies, be acquired etc.  And then become defacto policy points and they'd just as well sign contracts and stop mining.  OK so committed transactions can till prevent policy by making transactions opaque to miners, but it is not quite ideal itelf.

The other direction is that the minimum transaction value (implied by minimum fee) goes up, and the minimum bandwidth to be a full node stays p2p compatible.  But that implies bitcoin turns into a clearing network.  If its for large transactions its less interesting to users and will either disappear from lack of interest (remain as a whale speculator network?) or be co-opted and shaped by companies with a use for end-of-day clearing transactions - large exchanges, big payment processors.  All user traffic anyway would end up off-chain.  As the off-chain technology does not exist (and we dont know how to do it not for lack of trying), that means the off-chain technology will offer weak semantics: it will have need for central trust in offchain transaction servers, it will have risks of value seizure/account freezes, risks of the transaction server going out of business.  Probably 1 of 3 properties could be fixed, or maybe 2 of 3 (pick any two features conundrum style) if the business even care to try.  Many are "pragmatic" which is an ugly word.

And then where is bitcoin?  In this environment a smart contract is not smart.  Smartness requires final settlement which means strong fungibility (cryptographic blinding/hiding, or defacto).  Without those guarantees, disputes will arise, transactions will be undone by court order, and the usual costs will creep back in and we're back to the status quo of credit card transactions, and not transacting without reputation research, reputation rating of the business world, which is where their high costs of existing revocable payment systems come from.  I dont think most people understand this unfortunately.

As close as I got was committed tx (aka hidden tx), where you can transact with peer level policy decisions even if 99% of the miners were hostile to your transaction completing.  https://bitcointalk.org/index.php?topic=206303.0  

A new idea even triggered by your question is that I think you can reveal without miner censorship of the reveal, which was previously a UTXO compaction limitation.  The reason is peers can broadcast old keys for revealing without fees because they are validatable against previously published data which was already paid for.

(The reason to reveal at all, and not re-spend in hidden form, which is supported is that it increases the UTXO set size because only people receiving the payment know what the transactions mean, it is in fact fully private and anonymous against anyone except people in the transaction path.  The limitation is the velocity of money means that there will over time be many people in the path and they all need to see the full history.  The actual payment is very compact as it is just a key allowing the recipient to identify and decrypt/validate the input transactions.)

Adam

being that Mastercoin is a profit scheme, you could actually charge Ron tolls to relay his transactions.

still think the block chain is 'free', chaverim?

then why is Ron acting like this is a startling revelation?

Because everyone else knew it was obvious, and didn't need to be pointed out?

Maybe it's time to be able to have an interface to add custom filters without changing the source code. Thank you for the heads-up - my network support clients (500-1000 connections) will no longer relay TX with inputs or outputs to the 1ExoDus address.

or decide which ones they like and which ones they don't, creating an entirely new vista of mining incentives.  All these things were discussed by myself on the BitcoinX list, but they were not addressed because the people driving the conversation weren't interested in how this technology damages the network, they were only interested in how to get it done for their own glorification.

the problem is when you create new 'colors'.  Generally its Num Transactions ^ Num Colors = unusable network.

In general I think the notion of making accommodations for a for-proft project is a serious violation of Bitcoin principles.  Honestly at this point it wouldn't suprise me.


if it was so 'obvious' why was I the only one on record to point this out?

I'm sure there's a thread you can argue this in, but that's not the topic here.
Frankly, that coloured coins have this problem is obvious, so arguing over who "predicted" it first is a complete waste of time.
I expect Ron will probably delete your trolling (and my responses to it) when he gets back, so save your time and make a new thread.

First, I think you are vastly overestimating how much use mastercoin is going to get.

Second, Luke's first point is the important one here.  Mastercoin isn't much worse than bitcoin, so if every bitcoin user switched to it, load would only increase by a small multiple, which is bad, but not cataclysmic.

Third, mastercoin transactions are easy to spot.  Miners can easily reject them, or insist on larger fees.