Topic: Wall Observer BTC/USD - Bitcoin price movement tracking & discussion - page 20861. (Read 26608259 times)

Sure, does he necessarily imply that these should take place on the mainchain or did he not envision (and maybe couldn't at this stage) that Bitcoin would spawn an entire ecosystem that would serve all use cases he describes using Bitcoin as the settlement layer?

...Maybe we ought to admit that there are intricacies about Bitcoin that Satoshi had no possible ways to know about when he laid the groundwork? I believe nullc was quick to point out a couple of these to you on reddit the other day. Consider for example the 21 million limit which was not specified (and actually not even enforced in the original code).

I bought into Bitcoin because I thought I WAS buying block space by buying bitcoin.  If I have to include fees, and am limited in my ability to use the block chain for title transfer and recording, timestamps and microtransactions, then it is analogous to buying raw land only to discover I am not allowed to build on or develop the land and also have to pay property taxes.  Have I been duped? Are the haters right when they say this is a scam?  Scarcity means nothing if their is no utility value also. There are only 21 million bitcoins, but a potentially infinite number of cryptocoins.  What makes BTC better than the rest? Network effects did not save Myspace.

It's not.  In fact, Nicolas Houy shows in this paper that a block size limit is economically equivalent to a minimum fee:

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2400519

One criticism of the minimum-fee approach is that it would be possible (albeit awkward) for miners to refund fees out-of-band.

I think this paper was quite helpful, however, one thing it did not consider is the fact that miners may have their blocks orphaned, thereby forfeiting the block reward.  This orphaning risk serves as a production cost for our new economic commodity called block space.  In this paper (which I know you've seen), I build from Nicolas Houy's work to show that if orphaning is included, that a healthy fee market would exist without a block size limit.

Perhaps not as ubiquitous as cash transactions worldwide, but it is crystal clear from the 3rd sentence in the Introduction of the Bitcoin white paper that Satoshi expected Bitcoin to be more useful for small casual online transactions than Visa, PayPal, etc:

It is equally important to recognize the actual utility value of Bitcoin. I wouldn't blame anyone on foregoing transactional use of Bitcoin seeing its very real shortcomings as a payment system. Let us be honest with ourselves this system is absolutely not ready for mainstream consumer acceptance and we shouldn't be concerned about consumers looking the other way.

Give it some time and the necessary infrastructure and tools to abstract the highly technical and generally confusing nature of Bitcoin will be built. We should also admit that these mainstream users looking for an efficient payment system do not care at all about the decentralization or security of the thing. Let's be real here regular joes just want something that works, centralized or not.

The people pouring big money into Bitcoin (I'm talking about buying bitcoins) couldn't care about its transaction capacity at the moment. Most rational investors are in it for the long haul and a majority of the coins are kept in cold storage and paper wallets where they haven't and won't move for years.

There shouldn't be any urgency to cater to a userbase which is inexistent as it stands. Technology will evolve over the next few years and will provide the necessary tools for proper, actual scaling of the system. No amount of block size increase will allow us to serve a mainstream consumer base doing hundreds of thousands of transactions per seconds. Bitcoin is not designed to handle this load while staying secure & decentralized.

Those transactions aren't free for the user even if the miners eat the cost. They STILL have to suffer exchange rate risk while using bitcoin. If they have to pay a fee higher than nominal WHILE BITCOIN IS STILL IN ALPHA, for the vast majority of people, that just isn't worth it. 

Miners have to subsidize transaction costs to bootstrap usage or this baby will die in its crib. That's why you're getting the goddamn block reward. I am the customer. I am the user who buys your fucking coins. What am I getting for my money if I have to take this monster risk and have to pay a fee anyway?  VISA gives me cash back for chrissakes. They are your competition. If you can't beat them, you won't earn their customers.

Don't you small block fuckers know how business works?

Did we ever consider what Satoshi insinuated by "cash"?
...
It makes sense considering his design of the system that Bitcoin can not ever reach the ubiquity of cash in transactions worldwide. This would necessitate such as scale as to effectively centralize Bitcoin and therefore defeats the original attempt to remove trust….

Peer to Peer Electronic Cash System
vs
Peer to Peer Electronic Wealth Storage System

I think we've distilled it down. I also think it can be both, but the former facilitates the latter.


A $5 variation in price for days on end will do that.

We should absolutely avoid the danger of instilling into Bitcoin users some kind of belief that they have a right to free transactions. Nothing in life is free and the costs of security & decentralization cannot forever be externalized to nodes & miners.

In that sense it is perfectly reasonable to suggest we should strive to keep block size limit as close as possible to actual network demand. Flex cap proposals are interesting in this aspect.

I'm just thinking you are hoping to sell 1. the wrong people onto Bitcoin using 2. the wrong "features" of Bitcoin. This necessarily creates a steep obstacle to the "adoption" you are wishing for.

To be quite honest I have been guilty of this in the past and have long maintained this delusion that Bitcoin was somehow this fantastic payment network that would replace credit cards, etc etc. Until I finally came to sense and understood what the true value of it was. Note that you shouldn't forego your dreams of moon because of this. The markets I am suggesting we target are enormously more valuable than replacing simple payment processors!

Every thread seems to be a mixed topic thread recently

I didn't reply with a hope to change your mind. But I do hope we can build a bridge from the middle of the river  

The Blockstream plan is to FORCE a particular capacity, by setting the block size limit in the consensus rules, and then let the fees "naturally" adapt to that artificially constrained capacity.

Why is that better than forcing the fee directly, and ensuring that the capacity is well above the demand?  (I ca think of several reasons why it is much worse.)

Is it possible that the devs do not see that their plan is just as "ideologically impure" as setting the fee directly?

Again you seem to confuse what it is you'd like to or perceive Bitcoin should compete with and what Bitcoin's unique value and properties are.

If we can't agree on this I guess we can never agree on the rest but my opinion is we want Bitcoin to compete with gold, offshore saving accounts, safe havens of all sort , therein lies the value (and the "moon" valuations), not competing with VISA/Mastercard or Square.

I think a fee market that is relative to demand for blockspace is perfectly reasonable... but not today. We're too small to sustain the demand in the face of countless competitors. Bitcoin doesn't have the benefit of the periodic table, if we don't capture share while miners are subsidized and incentivized to secure and process transactions... it becomes like rpietila's castle game, with you and a few thousand others trading pogs back and forth.

Fees need to adapt to the ever changing reality of the system and could not possibly be forced or determined through any algorithm.

The error is in that very first claim.  There need not be a scarcity of capacity for the fees to serve their purpose.  The fees could, and should, be mandatory and set in the 'consensus rules'.

In fact, scarcity of capacity in a network means lousy service, which means loss of users, which means that the fees will not rise as hoped....