Topic: rpietila Wall Observer - the Quality TA Thread ;) - page 133. (Read 907229 times)

I have met buyers (2 hedge funds) who contract with industrial-scale miners for virgin blocks (and one of them also does altcoins).  I was not privy to contractual details.  I acted as an SME and quantitative analyst consulting for the funds.  I suspect one of the funds is sourcing a substantial quantity.  The fund that also does alts was probably not sourcing very much btc (and even less alts), in comparison.  This isn't enough data to form any strong conclusion, but it is leading.  I find it hard to imagine that my experiences were unique.  I can't identify them in any way without violating contracts.  They were not names familiar from crypto news (of which five spring to mind).

The number of desks doing btc is proliferating like commodity futures in the 80s, but very much on the down-low.  I can't imagine they can be accumulating much yet, or the dam would already have broken.

Of course some sort of centralized (as in central or "Main", not closed source) computer having realtime date of worldwide resources. I don't see any other solution. The core of what dictates if something can be manufactured or not is judging by the dictatorship that is nature (nature is only true dictatorship, we must align to it, to whatever resources are available) and also to the well being of everyone. If what you are requesting, whatever that is, compromises the basic needs of a person a continent away, then you deal with it and not get said thing until this equilibrum of resources and global well being + your specific not basic need demand not compromising any of the former is meet.

It's possible to test the "large actors buying OTC" theory. Have you or whales you know been recently contacted with a big OTC offer?

Yes this is a problem, but it can be solved by the market by increasing fees to cover the propagation risk to the miners. Furthermore it also creates an incentive to run full nodes as users compete to get their transactions confirmed. This has the overall effect of reducing the latency of the network, thereby mitigating the propagation risk to the miners. In short there are built in economic incentives already to address this problem. The problem with the 1 MB limit is that it is arbitrary and not related the costs incurred by the miners or the rest of the network, so no amount of fee increases or reduction of risk by adding full nodes will address the fact that a certain number of transactions will not get any confirmations.

The block size limit in the protocol will not become an issue until transaction fees become a more substantial portion of mining revenue. As it stands at the moment, there is a market-based soft block size limit that results due to the economic incentives that miners face due to block propagation races. Since transaction fees are eclipsed by the block reward, miners are incentivized to publish smaller blocks with fewer transactions.

Thank you. It is good to be reminded of these realities every once in a while

Market share will be a future result of current changes. And the departure of Peter Todd for Via signifies everything that is stagnent about BTC dev right now.  Sidechains & tree chains were a no brainer innovation for BTC to knock the stuffing out of the entire alt coin market. The opportunity has hung in the air for months. Nothing happened. And now the brains are leaving to go where the action & innovation can happen. This is a red flag for any entity - creativity and energy going elsewhere because the conditions for creative growth are not there.

I don't think it will be replaced.I thin it will remain as the mothership, if you will, which dovetails nicely with the store of value role.   As for confidence in replacements, apply that logic to any investment heavy technology:  if it were true, people would never build factories, large ships, etc.

This may well turn out to be the case, although I am not so sure that the next change, after a temporary fix, would implement a floating blocksize limit. This is because of human nature. We must also keep in mind that the 256K to 1 MB blocksize limit change in 2013 in the end became a hard fork, so in reality this coming change is the "next" change.

Increasing the hard-coded blocksize limit as a temporary fix is trivial from the software perspective, but it is a hard fork.  In pseudo code:

   if (blocknumber > 350,000) blocksize_limit = 4 MB

   else blocksize_limit = 1 MB

I expect that we will implement a temporary fix like this ^^ when we get closer to the limit.  There will also be a strong commitment at this point that the next change will implement a floating blocksize limit.  The algorithm used to calculate this limit must be chosen very carefully and shouldn't be rushed.    

Although I agree that alt-cryptocoins can be a place for innovation, Based on the market, your conclusion about the stagnant state of BTC seems incorrect.  BTC's share of the market cap continues to grow, while all of the others put together are NOT really taking any meaningful market share from BTC.  This may show more of the demise of LTC rather than the demise of BTC.  In conclusion, BTC seems to continue to hold its own, pretty well, and so far.

If Bitcoin can be replaced by a competitor, then it will almost certainly have failed to act as a store of value.  At that point, why would anyone have confidence in the replacement coin not to be itself replaced in time.  If this scenario were to play out, I think it would damage confidence in cryptocurrencies for the foreseeable future.

thanks Peter. a simple and effective graph.

i also think we're going to need to get close to limit before really focus on the issue. (human nature i suppose...)

is there a significant consequence to 2x, 4x, 10x -ing the block size as a temp fix?

Yes I agree. This combined with the threat of an alt-coin, not encumbered by a static blocksize limit, rising up the charts should focus the debate and could lead to a consensus in the Bitcoin community. I am of the belief that Bitcoin will weather this and make the necessary hard fork but it may well take reaching the limit and a good "kick in the pants" from an alt-coin to achieve the necessary consensus. As for which alt-coin I have to agree with aminorex that XMR (Monero) as the leading CryptoNote coin is a good candidate to deliver the necessary "kick in the pants".

Many people cite 7 transactions per second (tps) as the limit for 1 MB blocks, but 3 tps is probably more accurate.  

Here's a chart that uses extrapolation to estimate the dates when the bitcoin network would reach the blocksize limit (3 tps or 7 tps) if historical growth rates hold.  If we witness another "growth spurt," I expect we will approach 3 tps on several days and the discussions with regards to increasing the blocksize will become more focussed.  

Do you think blockchain analysis can defeat any sort of coin mixing? How about some sort of continuous mixing scheme?

If it is not enforceable by other means, it is certainly enforceable at the interface with fiat, in any AML/KYC-compliant context.  If the BTC economy were severed from the fiat economy, it would become irrelevant to most of the purposes for which bitcoin is currently and/or potentially important.

OK, thanks for that. But the case remains that seizure of BTC, even within compliant jurisdictions, even in a world in which "we tortured some folks", is largely unenforceable. No?

In the U.S. at least, any property gained as a result of a crime, and any benefits derived from that property, as well as any property employed instrumental to a crime, are subject to forfeiture.  It does not matter how many hands the property has passed through in the interim.  Any bitcoin which was ever stolen from Mt. Gox, any bitcoin which was ever used to buy smack on SR/TMP/SR2/BMR, is always and forever tainted until it has been seized by the state, whereupon it is again cleansed of all unrighteousness, as e.g. in the Marshall's sale.  Running it through coinjoin just means the seize-able coins are pervasive.  They remain seize-able.  Eventually, a court can use the sword to compel forfeiture.  U.S. courts claim global jurisdiction in many matters.  In fact, U.S. courts often seem to perceive that the over-riding rationale for the armed power of the state, is to enforce the rulings of the courts.  International agreements often imply cooperative enforcement, in fact.  I could easily imagine, for example, a scenario in which a court orders holders to yield tainted coins.  With a stretch I can imagine a court ordering performance of code changes to effect seizure globally, and blacklisting non-compliant miners, ordering the blockade of network traffic pursuant to a non-compliant blockchain.

So far it is not a practical issue.  However, this will eventually be the largest issue in crypto, for a period of time, until the technology routes around the damage caused by the legal system.  Presently the easiest, cheapest, safest way to route around it is to use XMR.

I have been paying attention to much of what you've been saying, and yet I am not sure I understand what the purported BTC fungibility crisis is, and why, e.g., the recent FBI auction does not set a strong precedent for fungibility.  Time permitting, could you please explain a bit?

Also, just for fun, in case those interested have not read this nice paper on the history of fungibility: 'Banknotes and Their Vindication in Eighteenth-Century Scotland'.  http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2260952