Topic: rpietila Wall Observer - the Quality TA Thread ;) - page 251. (Read 907227 times)

The Bitcoin Wiki has a good article and discussion on scalabiity that addresses the issue to my satisfaction.

https://en.bitcoin.it/wiki/Talk:Scalability
https://en.bitcoin.it/wiki/Scalability

I make some money by creating option strategies around news events on stocks like that. Basically I sell premium (which is high in biotechs) and create a strategy that puts the odds in my favour. If you do this over and over again you should be profitable.

edit: I'm desperately waiting for bitcoin option markets to become live

This is actually a very solid argument in a binary scenario. I have encountered this before in biotech stocks where small companies meander in single digits until they either zero out OR strike "gold" and appreciate 1000%. Because market has essentially no information it can rely on, these companies undergo incredible volatility UNTIL the pivotal event and the trick is to accumulate shares regardless of price. After the binary even, you can either sigh/cry or collect the spoils/leave some for future growth.

That's years off and we haven't nearly exhausted all the possible optimizations to reduce the required bandwidth for a full node, much less an SPV node.  Not to mention the improvements in hardware between now and then.

Which requires more trust, running an SPV node or accepting off-chain transactions?  Hint: off-chain.

I think it's silly that people are fully expecting fractional reserve.  If that happens, bitcoin has completely failed, IMO.  The whole reason we started issuing notes for gold centuries ago does not make any sense with bitcoin.  Bitcoin is already easy to carry and divisible.

This scalability issue is mostly bullshit FUD.  It may be a practical problem, temporarily, but we haven't exactly spent a lot of time optimizing it yet, and worst case, hardware improvements will solve it permanently.  Hardware speed is increasing exponentially and it's not going to stop anytime soon.  The number of transactions all earthlings need to do per day is not going to increase exponentially unless cryptocurrency specifically facilitates it.  And even then it would level off pretty soon.

That's not to say off-chain transactions don't have their place.  I'd be fine with, for example, an OpenTransactions issuer who proves his reserves and uses voting pools.  

Edit: just because the possibility of fractional reserve exists, doesn't mean we should accept it.

Open Transactions?

I believe it is because off chain transactions are going to have to become a reality if bitcoin is ever going to reach the speed/scaling required by mass adoption.  And off chain transactions, by nature, open up the possibility of fractional reserves.

Selectively choosing to only accept bitcoin does nothing to prevent this as no one would would know which coins were being fractionally traded off of.  Only "real" bitcoins could ever be broadcast over the actual bitcoin network, but this does nothing to the supply of bitcoins being moved around the market (off chain) in general.

And even if they had a list of addresses associated with off chain systems to "blacklist", that would lead us right back to the original problem.  That the blockchain itself can not handle the scaling required for mass adoption and must allow some sort of off chain system to exist.

Can someone explain why we can't safely discount this?  

Whether people are using bitcoin notes or dollar notes doesn't seem (at first blush) to make much difference in the demand for actual bitcoin.  They are the same category - people who haven't adopted bitcoin.  Yes, there is a small amount of bitcoin backing the notes, but seems like we can safely discount the vast majority of the "adoption" because it didn't actually happen.  

People who only accept bitcoin (and not the notes), will just go on as if the notes don't exist. I would hope that the community that exists today would not be so stupid as to see the value in bitcoin to begin with, and then start accepting promises to pay.  

So the debasement of bitcoins in the future is an interesting idea.  My question is, how do you see this playing out?  What kind of timeframe are we looking at in your opinion?

On that note, how would a cpu only coin like you suggest is needed prevent a fractional system from emerging?

Anonymint, is there a thread in which you discuss this aspect?

I don't want to disrupt the flow of conversation here but I am very curious about this.

What you are saying *may* happen, I'm not saying it won't.  I'm saying it doesn't need to happen, and that there's a much better alternative outcome.

There is return in making free software that helps people do business, it makes bitcoin more valuable, and since you already hold some, you profit.

It may take decades for people to realize that trusting their money to third parties is no longer necessary and ill advised.  The implosions and thefts by third parties may not continue at the scale of mtgox, but they will continue.  If that's what we end up with, then bitcoin is just paypal reloaded.  It doesn't have to be that way.

I hope that bitcoin millionaires will start investing in things like Open Transactions, hardware wallets, autonomous services, etc so that people don't *have* to trust their money and business to third parties who ultimately have no direct interest in them.  That's the problem I thought we were trying to solve here.

Silicon Valley I'm sure will continue to do what they do, they can't do anything else.  What I'm talking about is a competitor to SV (at least in trust models).

Clearly the government and its agencies is too dumb to invent bitcoin. But what about the "entity" that controls the government ? Do you think that entity reveals all its plans to the government which is only one of its tools ?
The government is not an expression of some malign will but its main tool. The true masters are 100% in the shadows. It is well known that most western high rank politicians are part of one or another satanist "secret society".

It is obvious that straight government support would create a revolution against such system that would be seen as abusing privacy etc... The malign power above governments is smarter than that. I don't say it is behind the launch of bitcoin, I don't know. But if I wanted to launch it in an intelligent way so that people see it as good and actually choose to adopt it, I would have launched it exactly as it has been done - and not with outright initial government support.

The investors continue to invest in the middlemen because at the moment they see the ability expressed by Anonymint above to build the centralized offchain "banks" or clearing houses that will enable the transaction levels and the instantaneous "risk free" transactions necessary for widespread adoption.

Coinbase/bitpay/circle will become offchain repositories which offer instantaneous btc transfer between their members and their members fiat accounts.  They will make bitcoin easy to buy and easy to use, ideally managing to reduce the cost of acquiring bitcoin to below the benefits gained by transacting online with bitcoin, and thus being able to offer an incentive to their users (both consumers and merchants) to transact online in bitcoin rather than fiat, ie:  enabling merchants to offer goods online for bitcoin at a discount to fiat currency prices (including the cost of bitcoin acquisition).
This is a necessary requirement to push mass adoption of bitcoin, the price for it will be off chain transactions, centralisation, the potential for government control and hence the ability to recreate the fiat system using bitcoin.

The software solution is to address these issues within bitcoin's code or through the creation of an alt-coin which addresses these issues. The financing for this will not come from venture capital, as there is no return in it -much easier to free-ride.

Sorry, but I stand by "nutcase".  These people are clearly not stupid.  They just have some areas of important belief, where they cannot think clearly.

I don't give this label to everyone I disagree with, just the conspiracy theory folks who, no matter how much evidence you present to the contrary, respond by increasing the size of the conspiracy to include that evidence.

Ok, I am guilty of personifying "the government", it is a gross oversimplification.  Yes, the IRS and FinCEN are separate entities who don't apparently agree on what bitcoin is.  But I there is still an overall trend of the response to bitcoin, that can be attributed to "the government".  (in this case the US government).

The $500 millionaire doesn't need to grow his capital very fast. He needs to manage his capital safely. Getting involved in "anti-government" activities or anything not mainstream is risking his entire fortune.

Much safer to buy the NYSE and watch his capital double between now and end of 2015. That is a sanctioned activity.

If he wants to invest in Bitcoin, do like Peter Thiel and reverse buyout the Bitcoin ecosystem. The super rich understand not to step outside their sphere of expertise. They understand someone like Thiel will end up owning Bitcoin, just as he did with Facebook.

They don't believe our decentralization delusions.

These are probably all valid points. But does it mean a 500 millionnaire should not invest anything at all in BTC ? Sure it comes with many risks, but investing at least 0.x% of their net worth should be tempting - maybe not as a very long term investment but short-medium term diversification.

Even if some rich people don't know what bitcoin is, there are plenty of Silicon Valley billionaires that do. What about them? Surely they are not waiting for some investment expert to explain the whys and hows - they can make an informed decision themselves because they know the field. But then again having computer knowledge doesn't make you a financial expert - and it has been recorded that many geeks were laughing at the idea that they can sell their bitcoins for fiat, thinking they got the better end of the bargain when they sold their stash.


I think by 2030 -possibly far earlier- a new solution will be applied on how to run a cryptocurrency network. Neither proof of stake or proof of work that eats up energy resources. Rather it'll be an artificial intelligence entity with intelligence levels that exceed human intelligence, which will be the objective and neutral trusted party to conduct every transaction of the network. Thus no mining will be necessary, nor a 51% attack will be possible. It will all be conducted by the AI which will be fair and neutral, uninfluenced by politics just like an if-then-else code, yet intelligent in handling things like spam transactions, transaction queuing/speed etc. It may also be able to eliminate the need for a massive blockchain or even distribute it over the network/cloud, thus requiring minimal size. The pros are many for intelligent networks compared to if-then-else mechanisms. The only problem worthy of consideration is how to run such an intelligence in a decentralized manner.

Allowing myself one more OT comment, simply because I participated in a discussion of this topic earlier in this thread:


Smearing those with whom you disagree as nutcases is deeply pernicious.  At least give them the decent respect of calling them stupid.  The former is defamatory and irrefutable.  The latter is defamatory but refutable.

Yours is a conspiracy theory beyond credibility:  The idea that "the government" is the expression of some malign, monolithic will.  It's a demon of imagination.  The evils of government stem from other, more fundamental, sources.

Clearly, some prosecutors are motivated to prosecute.  They are generally more motivated to prosecute interlopers than to prosecute their power base.  Do you honestly believe that James Clapper would call up Preet Bharja and tell him to drop a case because bitcoin?

I don't personally think that bitcoin was designed by deep state factions, although I allow the distinct possibility.  The scale of the foresight required to craft that strategy beggars belief, but when enough plans are made, some will be surprisingly successful, in all likelihood.  The reason for my skepticism is not dissimilar from your own:  Such a project would almost certainly involve a committee, and that would essentially doom it.  My allowance is the converse:  A genius actor could be sponsored by a well-heeled patron (or in the most unlikely case, be capable of successful self-sponsorship) within the deep state to play the Nakamoto role no less (or little less) than could one outside the deep state.  The reason that the allowance is small is that the population from which the deep state selects is smaller than the population which is denied it.

This is because investors just don't get it.

The future is software, not some rent-seeking paid service.  People will increasingly do business directly, with the help of software they control.  Middlemen are increasingly being cut out.  And yet these investors continue to invest in middlemen.

The way to get to this future is not through investment in making bitcoin exactly like the existing financial world.  A corporation's service cannot compete with an community-produced autonomous service.  You know why?  Because autonomous software doesn't need to profit.  It works for cost.

The way to this future is to buy bitcoin, and then after a few years use some of the proceeds to develop software that serves people, not some corporation.  That makes bitcoin even more desirable, and that's how get paid for your effort.

The fact that this has not happened at all yet is one of my greatest disappointments.  Stop thinking that corporations and VC funding are the answer to everything.  We already have enough bitcoin millionaires to begin this revolution but I don't know of any who are going this route.

On the subject of why $500 millionaires should not buy Bitcoin and why I disagree with Risto's claim that the only thing that matters is how many BTC you own...

1. A bitcoin is not an heirloom. The chances that it will hold its value long-term are very slim. Gold is a much better heirloom.

2. The 21 million supply limit is a lie. This WILL be violated and there are numerous ways it can happen. The most likely way is Bitcoin is obviously moving towards offchain storage and services. In fact, Bitcoin can't have instant transactions without offchain fractional reserves (technically the exchange has to be fractional for it to happen instantly). Also the government could today regulate the few pools who have 51% and the few ASIC miners who have large datacenters, and produce as many coins per coinbase as they wanted. Later when the masses are all using government regulated offchain Coinbase.com and Bitpay.com, etc, then government can do what ever it wants to the mining and the masses won't care.

3. For the reason I stated in #2, the government can easily confiscate your coins by blacklisting them in the future. They can surely make you pay any tax they want. And they could simply blacklist every onchain coin that can't present a certificate of tax compliance from the G20. And worse you can't hide your onchain coin from the government control. Gold is much better for that. So the government can replace your onchain coins with offchain and give them to the masses to pay for this upcoming financial crisis. And I think that is a very likely outcome.

4. Altcoins will proliferate the # of coins in the ecosystem.

5. There are zillions of other investments in the world. The audacious claim that BTC is the only good investment in the world is unadulterated delirium or snake oil salesmanship.

6. There are many more reasons I can give, but I am growing tired of typing.... for now...

The more competitive it becomes, the more miners will use renewable sources.  Bitcoin mining might actually save the world by creating funding incentives for advances in renewable technologies.  Or we might all die of cadmium poisoning because of renewable manufacturers despoiling the commons.  Reducing consumption is one useful tool in reducing the ancillary impact of consumption.  A more fundamental approach, which does not rely upon fascism or create inefficiencies of corruption, is to innovate, such that consumption is decoupled from adverse ancillary consequences.  The latter is much more effective, because you reduce the consequences by order of magnitude at one blow, instead of imposing a death of a thousand cuts on your neighbors.

And here I am despoiling the qTA commons with my own effluent.