Forkology 301: The Three Tiers of Investor Control over Bitcoin
DanielKrawisz's article Who Controls Bitcoin is a must-read for anyone wanting to understand how Bitcoin is governed. This post builds on Krawisz's point - that investors hold all the cards - by describing in more detail how Bitcoin investors can exercise their control over Bitcoin through a tiered or layered structure of increasing directness and radicalness. Tier 1: Expression of Intent Investors simply make it known, in a credible way, that they support some change (say a bigger blocksize cap), meaning they intend to buy more BTC if the change is made in good time, and sell BTC if it is not. Then there are three ways the ecosystem can react: (i) Core Capitulates: The Core dev team is pressured to up the blocksize cap in Core and does so in a way that satisfies investors. (ii) Competing Implementations Arise: If Core refuses or raises the cap too slowly, other implementations like BitcoinXT spring up and miners - enticed by the additional gains through a higher BTC price - adopt it. (iii) Bitcoin Unlimited Renders the Previous Two Moot: Bitcoin Unlimited is another implementation in development that attempts to dispense with centralized blocksize planning entirely by allowing each user to set their own blocksize cap through a pulldown menu. Set the cap too low and your node might fail to track consensus as larger blocks get into the chain; set it too high and you might waste resources dealing with blocks that will end up orphaned. Users can also set a block depth after which they will accept a block higher than their set limit only if the block gets deep enough in the chain. This mechanism constitutes a kind of built in fork-tolerant logic. Instead of a preset group of developers opining over the "correct" blocksize cap or an ivory-tower scheme of centrally planned "Flexcaps," the blocksize limit is an emergent property of each individual node and miner's cost/benefit analysis and priorities for their own situation, much like the price of graphite. The concept of consensus becomes more fluid, with nodes sometimes objecting to bigger blocks by refusing to relay them, thereby assuming a risk of temporarily falling out of consensus. Somewhat like the English language, consensus on the rules is emergent rather than consensus rules being handed down from Core dev. Instead of "Concur with Core or go pound sand," Bitcoin Unlimited's consensus on blocksize is an aggregate product of each node and miner positioning themselves favorably in the market due to their own calculations of the trade-offs for their unique circumstances. The result is expected to be a soft blocksize limit that grows dynamically as market forces (orphan rates and other incentives), transaction demand, and technology levels change, in a way that maximizes investor satisfaction and therefore BTC price and miner revenue. Miners will up the size of the blocks they mine as transaction demand grows, and as long as they do so conservatively other miners and nodes (all interested in seeing the BTC price rise) will approvingly build on and propagate these blocks. Blocks over the soft limit will be discouraged by most nodes (by definition of the term "soft limit"), but if they manage to get several blocks deep into the chain most nodes will accept them. Miners a take a risk (orphan risk) in producing these slightly oversized blocks, edging forward carefully when they believe nodes will respond approvingly because investors and users are demanding it. If Bitcoin Unlimited catches on, Core and XT's centralized blocksize plans become relics. Investors announce their intent, ideally through a prediction market or futures market but cruder measures would also have an effect, and miners react (conservatively!) through adjusting blocksize cap (and chain depth at which they'll give in and accept an oversized block) through the pulldown menu to rake in those juicy profits. Nodes also have a voice in what they help propagate, with an interest to aid bigger blocks because of their stake in the BTC price as business owners, holders, etc. Tier 2: Fork Arbitrage on Exchanges This case is more radical, but it is only required if a change is too controversial for something like XT's 75% threshold to be relied upon. Here, several weeks/months before the fork is to occur, Bitcoin exchanges prepare futures contracts for, say, coins in Core and coins in XT, and let investors effectively sell their coins in Core to buy more coins in XT, or vice versa. For example if you have 10 BTC, you would of course have 10 Core bitcoins and 10 XT bitcoins after the fork if you took no action, but if you choose to participate in the arbitrage you might sell your 10 future Core bitcoins and use them to increase your future XT bitcoin count to 15 or 20 BTC. Why would it ever be only 15 BTC? This would be the case where you entered the arbitraging late and Core bitcoin futures had already fallen to half the price of XT bitcoin futures, meaning your 10 Core BTC only buys you 5 XT BTC. [For more technical details, see Meni Rosenfeld's How I learned to stop worrying and love the fork, though he doesn't address the futures contract innovation, which further streamlines the process by giving a very strong indication of the winner before the fork even happens.] In almost all conceivable cases a definitive winner emerges (and if not, no other method is going to do any better at determining the winner), and the other fork either dies or becomes a niche alt-protocol coin (not really an "altcoin," since it shares Bitcoin's ledger). The niche coin would likely only arise and persist if there truly were a key tradeoff being made, as some small block adherents argue. In any case, hodler purchasing power is completely preserved by default if they choose not to bet in the "forkbitrage" process, even in the event of a persistent split. This forkbitrage process represents a more direct expression of investor will than in Tier 1. (Also, it may be possible that this process starting up would kick off Tier 1 effects that would allow the more radical measure of forbitrage to be halted early, with the exchanges returning investors' bets.) Tier 3: Spinoff with New Hashing Algorithm This is the most radical, because it is only required in the scenario where "miners go insane" and do something ridiculous like upping the block reward or refusing to implement obvious necessary changes like blocksize cap increases, despite investor support, and where the miners would threaten to 51% attack the investors' chosen fork in the above forkbitrage process. Of course this can only be a short term threat, since the fork winning the Tier 2 forkbitrage process would soon have far more hashpower thanks to far greater market cap, but short term matters when you could be 51% attacked. Here the Bitcoin ledger is copied over to the investors' chosen protocol, so that all holders have the same number of coins (and same percentage of all outstanding coins) in the "new" coin, say a larger blocksize cap coin. The World Wide Ledger is preserved, which is all that should matter to investors, and the "old" Bitcoin is again sold off to nothing or goes niche. Hodler purchasing power is preserved, of course. This is the very purest expression of investor will. Miners can be called a kind of investor, but with some complications. Spinoffs allow investors to circumvent even the miners - a radical measure for outlandish scenarios. Tier 1 lets investors deal with attempted developer control, Tier 2 lets investors deal with controversy, and Tier 3 lets investors deal with pervasive miner irrationality. This is how investors rule the roost. Previous Forkology posts and discussions: Forkology 101 Forkology 201 (guest post by Peter__R)
A Beginners Guide to Bitcoin, Blockchain & Cryptocurrency
As cryptocurrency, and blockchain technology become more abundant throughout our society, it’s important to understand the inner workings of this technology, especially if you plan to use cryptocurrency as an investment vehicle. If you’re new to the crypto-sphere, learning about Bitcoin makes it much easier to understand other cryptocurrencies as many other altcoins' technologies are borrowed directly from Bitcoin. Bitcoin is one of those things that you look into only to discover you have more questions than answers, and right as you’re starting to wrap your head around the technology; you discover the fact that Bitcoin has six other variants (forks), the amount of politics at hand, or that there are over a thousand different cryptocurrencies just as complex if not even more complex than Bitcoin. We are currently in the infancy of blockchain technology and the effects of this technology will be as profound as the internet. This isn’t something that’s just going to fade away into history as you may have been led to believe. I believe this is something that will become an integral part of our society, eventually embedded within our technology. If you’re a crypto-newbie, be glad that you're relatively early to the industry. I hope this post will put you on the fast-track to understanding Bitcoin, blockchain, and how a large percentage of cryptocurrencies work.
Altcoin: Short for alternative coin. There are over 1,000 different cryptocurrencies. You’re probably most familiar with Bitcoin. Anything that isn’t Bitcoin is generally referred to as an altcoin. HODL: Misspelling of hold. Dank meme accidentally started by this dude. Hodlers are much more interested in long term gains rather than playing the risky game of trying to time the market. TO THE MOON: When a cryptocurrency’s price rapidly increases. A major price spike of over 1,000% can look like it’s blasting off to the moon. Just be sure you’re wearing your seatbelt when it comes crashing down. FUD: Fear. Uncertainty. Doubt. FOMO: Fear of missing out. Bull Run: Financial term used to describe a rising market. Bear Run: Financial term used to describe a falling market.
What Is Bitcoin?
Bitcoin (BTC) is a decentralized digital currency that uses cryptography to secure and ensure validity of transactions within the network. Hence the term crypto-currency. Decentralization is a key aspect of Bitcoin. There is no CEO of Bitcoin or central authoritative government in control of the currency. The currency is ran and operated by the people, for the people. One of the main development teams behind Bitcoin is blockstream. Bitcoin is a product of blockchain technology. Blockchain is what allows for the security and decentralization of Bitcoin. To understand Bitcoin and other cryptocurrencies, you must understand to some degree, blockchain. This can get extremely technical the further down the rabbit hole you go, and because this is technically a beginners guide, I’m going to try and simplify to the best of my ability and provide resources for further technical reading.
A Brief History
Bitcoin was created by Satoshi Nakamoto. The identity of Nakamoto is unknown. The idea of Bitcoin was first introduced in 2008 when Nakamoto released the Bitcoin white paper - Bitcoin: A Peer-to-Peer Electronic Cash System. Later, in January 2009, Nakamoto announced the Bitcoin software and the Bitcoin network officially began. I should also mention that the smallest unit of a Bitcoin is called a Satoshi. 1 BTC = 100,000,000 Satoshis. When purchasing Bitcoin, you don’t actually need to purchase an entire coin. Bitcoin is divisible, so you can purchase any amount greater than 1 Satoshi (0.00000001 BTC).
What Is Blockchain?
Blockchain is a distributed ledger, a distributed collection of accounts. What is being accounted for depends on the use-case of the blockchain itself. In the case of Bitcoin, what is being accounted for is financial transactions. The first block in a blockchain is referred to as the genesis block. A block is an aggregate of data. Blocks are also discovered through a process known as mining (more on this later). Each block is cryptographically signed by the previous block in the chain and visualizing this would look something akin to a chain of blocks, hence the term, blockchain. For more information regarding blockchain I’ve provided more resouces below:
Bitcoin mining is one solution to the double spend problem. Bitcoin mining is how transactions are placed into blocks and added onto the blockchain. This is done to ensure proof of work, where computational power is staked in order to solve what is essentially a puzzle. If you solve the puzzle correctly, you are rewarded Bitcoin in the form of transaction fees, and the predetermined block reward. The Bitcoin given during a block reward is also the only way new Bitcoin can be introduced into the economy. With a halving event occurring roughly every 4 years, it is estimated that the last Bitcoin block will be mined in the year 2,140. (See What is Block Reward below for more info). Mining is one of those aspects of Bitcoin that can get extremely technical and more complicated the further down the rabbit hole you go. An entire website could be created (and many have) dedicated solely to information regarding Bitcoin mining. The small paragraph above is meant to briefly expose you to the function of mining and the role it plays within the ecosystem. It doesn’t even scratch the surface regarding the topic.
How do you Purchase Bitcoin?
The most popular way to purchase Bitcoin through is through an online exchange where you trade fiat (your national currency) for Bitcoin. Popular exchanges include:
There’s tons of different exchanges. Just make sure you find one that supports your national currency.
Bitcoin and cryptocurrencies are EXTREMELY volatile. Swings of 30% or more within a few days is not unheard of. Understand that there is always inherent risks with any investment. Cryptocurrencies especially. Only invest what you’re willing to lose.
Transaction & Network Fees
Transacting on the Bitcoin network is not free. Every purchase or transfer of Bitcoin will cost X amount of BTC depending on how congested the network is. These fees are given to miners as apart of the block reward. Late 2017 when Bitcoin got up to $20,000USD, the average network fee was ~$50. Currently, at the time of writing this, the average network fee is $1.46. This data is available in real-time on BitInfoCharts.
In this new era of money, there is no central bank or government you can go to in need of assistance. This means the responsibility of your money falls 100% into your hands. That being said, the security regarding your cryptocurrency should be impeccable. The anonymity provided by cryptocurrencies alone makes you a valuable target to hackers and scammers. Below I’ve detailed out best practices regarding securing your cryptocurrency.
Two-Factor Authentication (2FA)
Two-factor authentication is a second way of authenticating your identity upon signing in to an account. Most cryptocurrency related software/websites will offer or require some form of 2FA. Upon creation of any crypto-related account find the Security section and enable 2FA.
The most basic form of 2FA which you are probably most familiar with. This form of authentication sends a text message to your smartphone with a special code that will allow access to your account upon entry. Note that this is not the safest form of 2FA as you may still be vulnerable to what is known as a SIM swap attack. SIM swapping is a social engineering method in which an attacker will call up your phone carrier, impersonating you, in attempt to re-activate your SIM card on his/her device. Once the attacker has access to your SIM card he/she now has access to your text messages which can then be used to access your online accounts. You can prevent this by using an authenticator such as Google Authenticator.
The use of an authenticator is the safest form of 2FA. An authenticator is installed on a seperate device and enabling it requires you input an ever changing six digit code in order to access your account. I recommend using Google Authenticator. If a website has the option to enable an authenticator, it will give you a QR code and secret key. Use Google Authenticator to scan the QR code. The secret key consists of a random string of numbers and letters. Write this down on a seperate sheet of paper and do not store it on a digital device. Once Google Authenticator has been enabled, every time you sign into your account, you will have to input a six-digit code that looks similar to this. If you happen to lose or damage the device you have Google Authenticator installed on, you will be locked out of your account UNLESS you have access to the secret key (which you should have written down).
A wallet is what you store Bitcoin and cryptocurrency on. I’ll provide resources on the different type of wallets later but I want to emphasize the use of a hardware wallet (aka cold storage). Hardware wallets are the safest way of storing cryptocurrency because it allows for your crypto to be kept offline in a physical device. After purchasing crypto via an exchange, I recommend transferring it to cold storage. The most popular hardware wallets include the Ledger Nano S, and Trezor. Hardware wallets come with a special key so that if it gets lost or damaged, you can recover your crypto. I recommend keeping your recovery key as well as any other sensitive information in a safety deposit box. I know this all may seem a bit manic, but it is important you take the necessary security precautions in order to ensure the safety & longevity of your cryptocurrency.
Technical Aspects of Bitcoin
Address: What you send Bitcoin to.
Wallet: Where you store your Bitcoin
Max Supply: 21 million
Block Time: ~10 minutes
Block Size: 1-2 MB
Block Reward: BTC reward received from mining.
What is a Bitcoin Address?
A Bitcoin address is what you send Bitcoin to. If you want to receive Bitcoin you’d give someone your Bitcoin address. Think of a Bitcoin address as an email address for money.
What is a Bitcoin Wallet?
As the title implies, a Bitcoin wallet is anything that can store Bitcoin. There are many different types of wallets including paper wallets, software wallets and hardware wallets. It is generally advised NOT to keep cryptocurrency on an exchange, as exchanges are prone to hacks (see Mt. Gox hack). My preferred method of storing cryptocurrency is using a hardware wallet such as the Ledger Nano S or Trezor. These allow you to keep your crypto offline in physical form and as a result, much more safe from hacks. Paper wallets also allow for this but have less functionality in my opinion. After I make crypto purchases, I transfer it to my Ledger Nano S and keep that in a safe at home. Hardware wallets also come with a special key so that if it gets lost or damaged, you can recover your crypto. I recommend keeping your recovery key in a safety deposit box.
What is Bitcoins Max Supply?
The max supply of Bitcoin is 21 million. The only way new Bitcoins can be introduced into the economy are through block rewards which are given after successfully mining a block (more on this later).
What is Bitcoins Block Time?
The average time in which blocks are created is called block time. For Bitcoin, the block time is ~10 minutes, meaning, 10 minutes is the minimum amount of time it will take for a Bitcoin transaction to be processed. Note that transactions on the Bitcoin network can take much longer depending on how congested the network is. Having to wait a few hours or even a few days in some instances for a transaction to clear is not unheard of. Other cryptocurrencies will have different block times. For example, Ethereum has a block time of ~15 seconds. For more information on how block time works, Prabath Siriwardena has a good block post on this subject which can be found here.
What is Bitcoins Block Size?
There is a limit to how large blocks can be. In the early days of Bitcoin, the block size was 36MB, but in 2010 this was reduced to 1 MB in order to prevent distributed denial of service attacks (DDoS), spam, and other malicious use on the blockchain. Nowadays, blocks are routinely in excess of 1MB, with the largest to date being somewhere around 2.1 MB. There is much debate amongst the community on whether or not to increase Bitcoin’s block size limit to account for ever-increasing network demand. A larger block size would allow for more transactions to be processed. The con argument to this is that decentralization would be at risk as mining would become more centralized. As a result of this debate, on August 1, 2017, Bitcoin underwent a hard-fork and Bitcoin Cash was created which has a block size limit of 8 MB. Note that these are two completely different blockchains and sending Bitcoin to a Bitcoin Cash wallet (or vice versa) will result in a failed transaction. Update: As of May 15th, 2018 Bitcoin Cash underwent another hard fork and the block size has increased to 32 MB. On the topic of Bitcoin vs Bitcoin Cash and which cryptocurrency is better, I’ll let you do your own research and make that decision for yourself. It is good to know that this is a debated topic within the community and example of the politics that manifest within the space. Now if you see community members arguing about this topic, you’ll at least have a bit of background to the issue.
What is Block Reward?
Block reward is the BTC you receive after discovering a block. Blocks are discovered through a process called mining. The only way new BTC can be added to the economy is through block rewards and the block reward is halved every 210,000 blocks (approximately every 4 years). Halving events are done to limit the supply of Bitcoin. At the inception of Bitcoin, the block reward was 50BTC. At the time of writing this, the block reward is 12.5BTC. Halving events will continue to occur until the amount of new Bitcoin introduced into the economy becomes less than 1 Satoshi. This is expected to happen around the year 2,140. All 21 million Bitcoins will have been mined. Once all Bitcoins have been mined, the block reward will only consist of transaction fees.
Any computer that connects to the Bitcoin network is called a node. Nodes that fully verify all of the rules of Bitcoin are called full nodes.
In other words, full nodes are what verify the Bitcoin blockchain and they play a crucial role in maintaining the decentralized network. Full nodes store the entirety of the blockchain and validate transactions. Anyone can participate in the Bitcoin network and run a full node. Bitcoin.org has information on how to set up a full node. Running a full node also gives you wallet capabilities and the ability to query the blockchain. For more information on Bitcoin nodes, see Andreas Antonopoulos’s Q&A on the role of nodes.
What is a Fork?
A fork is a divergence in a blockchain. Since Bitcoin is a peer-to-peer network, there’s an overall set of rules (protocol) in which participants within the network must abide by. These rules are put in place to form network consensus. Forks occur when implementations must be made to the blockchain or if there is disagreement amongst the network on how consensus should be achieved.
Soft Fork vs Hard Fork
The difference between soft and hard forks lies in compatibility. Soft forks are backwards compatible, hard forks are not. Think of soft forks as software upgrades to the blockchain, whereas hard forks are a software upgrade that warrant a completely new blockchain. During a soft fork, miners and nodes upgrade their software to support new consensus rules. Nodes that do not upgrade will still accept the new blockchain. Examples of Bitcoin soft forks include:
A hard fork can be thought of as the creation of a new blockchain that X percentage of the community decides to migrate too. During a hard fork, miners and nodes upgrade their software to support new consensus rules, Nodes that do not upgrade are invalid and cannot accept the new blockchain. Examples of Bitcoin hard forks include:
Note that these are completely different blockchains and independent from the Bitcoin blockchain. If you try to send Bitcoin to one of these blockchains, the transaction will fail.
A Case For Bitcoin in a World of Centralization
Our current financial system is centralized, which means the ledger(s) that operate within this centralized system are subjugated to control, manipulation, fraud, and many other negative aspects that come with this system. There are also pros that come with a centralized system, such as the ability to swiftly make decisions. However, at some point, the cons outweigh the pros, and change is needed. What makes Bitcoin so special as opposed to our current financial system is that Bitcoin allows for the decentralized transfer of money. Not one person owns the Bitcoin network, everybody does. Not one person controls Bitcoin, everybody does. A decentralized system in theory removes much of the baggage that comes with a centralized system. Not to say the Bitcoin network doesn’t have its problems (wink wink it does), and there’s much debate amongst the community as to how to go about solving these issues. But even tiny steps are significant steps in the world of blockchain, and I believe Bitcoin will ultimately help to democratize our financial system, whether or not you believe it is here to stay for good.
Well that was a lot of words… Anyways I hope this guide was beneficial, especially to you crypto newbies out there. You may have come into this realm not expecting there to be an abundance of information to learn about. I know I didn’t. Bitcoin is only the tip of the iceberg, but now that you have a fundamental understanding of Bitcoin, learning about other cryptocurrencies such as Litecoin, and Ethereum will come more naturally. Feel free to ask questions below! I’m sure either the community or myself would be happy to answer your questions. Thanks for reading!
dcrd: Several steps towards multipeer downloads completed: an optimization to use in-memory block index and a new 1337 chain view. Maintenance: improved test coverage, upgrading dependency management system and preparing for the upcoming Go 1.11 release. dcrwallet: A big change introducing optional privacy-preserving SPV sync mode was merged. In this mode dcrwallet does not download the full blockchain but only gets the "filters", uses them to determine which blocks it needs and fetches them from random nodes on the network. This has on-disk footprint of 300-400 MB and sync time of minutes, compared to ~3.4 GB and sync time of hours for full sync (these are rough estimates).
jy-p: the server side of SPV (in dcrd) was deployed in v1.2.0, the client side of SPV (in dcrwallet) is in our next release, v1.3.0. Still some minor bugs in SPV that are being worked out. There will be an update to add the latest features from BIP 157/158 in the next few months. SPV will be optional in v1.3.0, but it will become the default after we get a proper header commitment for it (#general)
Decrediton: besides regular bugfixes and design improvements, several components are being developed in parallel like SPV mode, Politeia integration and Trezor support. Politeia: testing started on mainnet, thanks to everyone who is participating. A lot of testing, bugfixing and polishing is happening in preparation for full mainnet launch. There are also a few missing features to be added before launch, e.g. capacity to edit a proposal and versioning for that, discussion to remain open once voting starts. Decrediton integration is moving forward, check out this video for a demo and this meta issue for the full checklist. Trezor: Decrediton integration of initial Trezor support is in progress and there is a demo. Android: app design version 2.0 completed. dcrdata: development of several chart visualizations was completed and is awaiting deployment. Specifically, voting agendas and historic charts are merged while ticket pool visualization is in testing. atomicswap: @glendc is seeking reviews of his Ethereum support pull request. Dev activity stats for July: 252 active PRs, 220 master commits, 34,754 added and 12,847 deleted lines spread across 6 repositories. Contributions came from 6-10 developers per repository. (chart)
Hashrate: the month started at 40.5 and ended at 51.6 PH/s, with a low of 33.3 and a new all time high of 68.4 PH/s. F2Pool is leading with 40-45%, followed by the new BeePool at 15-25% and coinmine.pl at 18-23%. Staking: 30-day average ticket price is 92.6 DCR (-2.1). The price started the month at 94.6 and quickly retreated to month's low of 85 until 1,860 tickets were bought within a single period (versus target 720). This pushed the pool of tickets to 41,970 (2.5% above target), which in turn caused 10 price increases in a row to the month's high of 100.4. This was the highest ticket price seen on the new ticket price algorithm which has been in effect since Jul 2017. Second half of the month there was unusually low volatility between 92 and 94 DCR per ticket. Locked DCR held between 3.75 and 3.87 million or 46.6-48.0% of supply (+0.1% from previous peak). Nodes: there are 212 public listening and 216 normal nodes per dcred.eu. Version distribution: 67% on v1.2.0 (+10%), 24% on v1.1.2 (-1%), 7% on v1.1.0 (-7%). Node count data is not perfect but we can see the steady trend of upgrading to v1.2.0. This version of dcrd is notable for serving compact filters. The increased count of such full nodes allows the developers to test SPV client mode in preparations for the upcoming v1.3.0 release.
Obelisk posted three updates in July. For the most recent daily updates join their Discord. New miner from iBeLink: DSM7T hashes Blake256 at 7 TH/s or Blake2b at 3.5 TH/s, consumes 2,100 W and costs $3,800, shipping Aug 5-10. There were also speculations about the mysterious Pangolin Whatsminer DCR with the speed of 44 TH/s at 2,200 W and the cost of $3,888, shipping November. If you know more about it please share with us in #pow-mining channel.
emiliomann: stakebrasil is one of the pools with the lowest number of missed and expired tickets. It was one of the first and has a smaller percentage than the most recent ones who haven’t had the time to do so. (...) The Brazilian pool should be the one with the more servers spread around the world: 6 to decrease the latency. This is to explain to you why the [pool fee] rate of 5% (currently around 0.06 DCR) on the reward is also one of the highest. girino: 8 voting wallets now. I just finished setting up a new one yesterday. All of them in different datacenters, 3 in europe, 3 in north america, 1 in brazil and one in asia. We also have 3 more servers, 1 for the front end, one for "stats" and one for dcrdata. (#general)
On the mining side, Luxor started a new set of pool servers inside mainland China, while zpool has enabled Decred mining. StatX announced Decred integration into their live dashboard and public chat. Decred was added to Satowallet with BTC and ETH trading pairs. Caution: do your best to understand the security model before using any wallet software.
Marina Silva is the first presidential candidate in Brazil using blockchain to keep all their electoral donations transparent and traceable. VotoLegal uses Decred technology, awesome use case! (reddit)
We continue to see institutional interest in DCR. Large block buyers love the concept of staking as a way to earn additional income and appreciate the stakeholder rights it affords them. Likening a DCR investment to an activist shareholdebondholder gives these institutions some comfort while dipping their toes into a burgeoning new asset class.
Targeted advertising reports released for June and July. As usual, reach @timhebel for full versions.
Big news in June: Facebook reversed their policy on banning crypto ads. ICO ads are still banned, but we should be OK. My team filled out the appeal today, so we should hopefully hear something within a few days. (u/timhebel on reddit)
After couple weeks Facebook finally responded to the appeal and the next step is to verify the domain name via DNS. A pack of Stakey Telegram stickers is now available. Have fun!
Meetup in Berlin, Germany hosted by BlueYard Capital. @jz_bz and @lftherios discussed open source incentivization, the value of governance and their respective projects @decredproject and @oscoin. See @issedjur's feedback here. (photos: 1, 2, 3)
O'Reilly Open Source Convention in Portland, USA. @raedah's talk was "Decentralizing decision-making on the blockchain". Read his report here and see on the photos how the Big Stakey was entertaining the public. (photos: 1, 2, 3)
oregonisaac: many open source devs at OSCON were VERY interested in Politeia and it was probably the #1 hook that resulted in lots of long conversations about what makes Decred unique from the ground up. (#politeia)
Blockchain Meetup in Faro, Portugal. Marco Peereboom gave a talk "Decred 101" and answered questions.
Meetup in Lisbon, Portugal on Aug 2. @moo31337 and @mm will be presenting on Decred with talk "Decred 101 - Governance with skin in the game". Co-hosted by The Block Cafe. Free entrance.
Meetup in Taipei, Taiwan on Aug 5. @morphymore will give a short intro on Decred.
OKEx Global Meetup Tour in Ho Chi Minh City, Vietnam on Aug 9. @joshuam will introduce Decred and on-chain governance and take part in a panel discussion.
Twitter: Ari Paul debates "There can be only one" aka "highlander argument". Reddit and Forum: how ticket pool size influences average vote time; roadmap concerns; why ticket price was volatile; ideas for using Reddit chat for dcrtrader and alternative chat systems; insette's write-up on Andrew Stone's GROUP proposal for miner-validated tokenization that is superior to current OP_RETURN-based schemes; James Liu's paper to extend atomic swaps to financial derivatives; what happens when all DCR are mined, tail emission and incentives for miners. Chats: why tickets don't have 100% chance to vote; ideas for more straightforward marketing; long-running chat about world economy and failure modes; @brandon's thoughts on tokenizing everything, ICOs, securities, sidechains and more; challenges of staking with Trezor; ideas how to use CryptoSteel wallet with Decred; why exchange can't stake your coins, how staking can increase security, why the function to export seed from wallet is bad idea and why dcrwallet doesn't ever store the seed; ticket voting math; discussion about how GitHub workflow forces to depend on modern web browser and possible alternatives; funding marketing and education in developing markets, vetting contractors based on deliverables, "Decred contractor clearance", continued in #governance. #dex channel continues to attract thinkers and host chats about influence of exchanges, regulation, HFT, lot sizes, liquidity, on-chain vs off-chain swaps, to name a few topics. #governance also keeps growing and hosting high quality conversations.
In July DCR was trading in USD 56-76 and BTC 0.0072-0.0109 range. A recovery started after a volume boost of up to $10.5 m on Fex around Jul 13, but once Bitcoin headed towards USD ~8,000 DCR declined along with most altcoins. WalletInvestor posted a prediction on dcrtrader. Decred was noticed in top 10 mineable coins on coinmarketcap.com.
One million PCs in China were infected via browser plugins to mine Decred, Siacoin and Digibyte. In a Unchained podcast episode David Vorick shared why ASICs are better than GPUs even if they tend toward mining centralization and also described Obelisk's new Launchpad service. (missed in June issue) Sia project moved to GitLab. The stated reasons are to avoid the risk of depending on centralized service, to avoid vendor lock-in, better continuous integration and testing, better access control and the general direction to support decentralized and open source projects. Luxor explained why PPS pools are better. @nic__carter published slides from his talk "An Overview of Governance in Blockchains" from Zcon0. This article arguing the importance of governance systems dates back to 2007. Bancor wallet was hacked. This reminds us about the fake feeling of decentralizaion, that custody of funds is dangerous and that smart contracts must have minimum complexity and be verifiable. Circle announced official Poloniex mobile apps for iOS and Android. On Jul 27 Circle announced delisting of 9 coins from Poloniex that led to a loss of 23-81% of their value same day. Sad reminder about how much a project can depend on a single centralized exchange. DCR supply and market cap is now correct on onchainfx.com and finally, on coinmarketcap.com. Thanks to @sumiflow, @jz and others doing the tedious work to reach out the various websites.
About This Issue
Thanks to the year-long stalling by Bitcoin Core, transaction processing is now unreliable. Additionally, we now have higher fees. Users will be driven away starting very soon.
The transaction byte rate is now higher than the capacity byte rate most of the time. You can see this here in the bottom graph: https://bitcoinfees.github.io/#1m This means a constant backlog of transactions is building. Fees are rising as a result, as you can see at the top graph. Now, Core-devs consistently say this is no problem with new wallets that estimate correct fees. But this is a fallacy. You cannot estimate correct fees for a certain confirmation time when the backlog is constantly rising. This is because wallets estimate a fee that might get the transaction included in the next few blocks, but if the fee-floor is rising high enough due to the tx byte-rate being greater than the capacity byte-rate (as is the case now), your transaction may never confirm, rendering the network completely unreliable. RBF is not really a solution for this because there is simply not enough space in blocks for everyone. This means some users will have to leave the network. The bottom line is this: A fee market will directly influence the number of people that are able to use bitcoin by kicking out people. It directly devalues bitcoin because Bitcoin becomes less usable and uninteresting since it is not a reliable currency. My prediction: Very soon we will see the first incidents where average people with "normal" transactions and "normal" fees are priced out with their transactions never confirming. Some of them will have to just give up, since there is simply not enough space for them all in blocks. Or, a major player in the bitcoin space that causes a lot of transactions will have to leave because profits sink due to rising fees. This was predicted years ago and could have been completely prevented by implementing BIP 101 last year. Run Classic/BIP 109 now so that we only have to endure this for 1 month.
My draft for a new /r/btc FAQ explaining the split from /r/Bitcoin to new users
If /btc is going to actually compete with /Bitcoin, it needs to be just as friendly and informative to new users, especially given its position as the “non default” or “breakaway” sub. The current /btc sticky saying "Welcome to the Wiki" doesn't even have any content in it and I feel this is a bit of a wasted opportunity to create an informative resource that new users will see by default and everyone else can link to instead of retyping things over and over about the history and difference between the subs. Here's what I've written as a starting point. I've done my best to keep it as concise and relevant as possible but in all honesty it is a complicated issue and a short but effective explanation is basically impossible. I hope the community can expand/improve on it further. Quick bit about me I got into Bitcoin in October 2013, when /Bitcoin had around 40k subscribers if I remember correctly, so by now I've actually personally experienced a large portion of Bitcoin's history - including the events preceding and since the creation of this sub. I have been an active and popular poster on /Bitcoin for almost all of that time, until the split and my subsequent banning. With the recent censorship fiasco, I'm finding I have to reiterate the same points over and over again to explain to newer users what happened with the /Bitcoin vs /btc split, questions about hard forks, what is likely to happen in the future and so on. So I put a couple of hours into writing this post to save myself the trouble in future.
There is a TL:DR; at the bottom, but it is exactly that. If you skip straight to the TL:DR; then don’t expect sympathy when you post questions that have already been covered in the lengthy and detailed main post.
New to Bitcoin?
I am totally new to Bitcoin. What is it? How does it work? Can/should I mine any? Where can I buy some? How do I get more information? All of these questions are actually really well covered in the /Bitcoin FAQ. Check it out in a new tab here. Once you've got a bit of a handle on the technology as a whole, come back here for the rest of the story.
What's the difference between /btc and /Bitcoin? What happened to create two such strongly opposed communities? Why can't I discuss /btc in /Bitcoin? Historically, the /Bitcoin subreddit was the largest and most active forum for discussing Bitcoin. As Bitcoin grew close to a cap in the number of transactions it could process, known as the 1MB block size limit, the community had differing opinions on the best way to proceed. Note that this upcoming issue was anticipated well ahead of time, with Satoshi's chosen successor to lead the project Gavin Andresen posting about it in mid 2015. Originally, there was quite a broad spread of opinions - some people favoured raising the blocksize to various extents, some people favoured implementing a variety of second layer solutions to Bitcoin, probably most people thought both could be a good idea in one form or another. This topic was unbelievably popular at the time, taking up almost every spot on the front page of /Bitcoin for weeks on end. Unfortunately, the head moderator of /Bitcoin - theymos - felt strongly enough about the issue to use his influence to manipulate the debate. His support was for the proposal of existing software (called Bitcoin Core) NOT to raise the blocksize limit past 1MB and instead rely totally on second layer solutions - especially one called Segregated Witness (or SegWit). With some incredibly convoluted logic, he decided that any different implementations of Bitcoin that could potentially raise the limit were effectively equivalent to separate cryptocurrencies like Litecoin or Ethereum and thus the block size limit or implement other scaling solutions were off-topic and ban-worthy. At the time the most popular alternative was called Bitcoin XT and was supported by experienced developers Gavin Andresen and Mike Hearn, who have since bothleft Bitcoin Core development in frustration at their marginalisation. Theymos claimed that for Bitcoin XT or any other software implementation to be relevant to /Bitcoin required "consensus", which was never well defined, despite it being seemingly impossible for everyone to agree on the merits of a new project if no one was allowed to discuss it in the first place. Anyone who didn't toe the line of his vaguely defined moderation policy was temporarily or permanently banned. There was also manipulation of the community using the following tactics - which can still be seen today:
Default thread sorting changed to "controversial" in selected threads instead of "best" like nearly every other subreddit
Comment/upvote scores hidden by default (combined with the previous point this prevented theymos and other unpopular mods like StarMaged and BashCo from ending up at the bottom of every thread they posted in)
The implementation of a custom CSS sheet that disguises long threads of [removed] comments. This was especially effective at the time as the censorship was obvious since threads were becoming wastelands of hundreds of deleted comments, similar to other Reddit throw downs like GamerGate
This created enormous uproar among users, as even many of those in favour of Bitcoin Core thought it was authoritarian to actively suppress this crucial debate. theymos would receive hundreds of downvotes whenever he posted: for example here where he gets -749 for threatening to ban prominent Bitcoin business Coinbase from the subreddit. In an extraordinary turn of events, Theymos posted a thread which received only 26% upvotes in a sample size of thousands announcing that he did not care if even 90% of users disagreed with his policy, he would not change his opinion or his moderation policy to facilitate the discussion the community wanted to have. His suggested alternative was instead for those users, however many there were, to leave. Here are Theymos' exact words, as he describes how he intends to continue moderating Bitcoin according to his own personal rules rather than the demands of the vast majority of users, who according to him clearly don't have any "real arguments" or "any brains".
Do not violate our rules just because you disagree with them. This will get you banned from /Bitcoin , and evading this ban will get you (and maybe your IP) banned from Reddit entirely. If 90% of /Bitcoin users find these policies to be intolerable, then I want these 90% of /Bitcoin users to leave. Both /Bitcoin and these people will be happier for it. I do not want these people to make threads breaking the rules, demanding change, asking for upvotes, making personal attacks against moderators, etc. Without some real argument, you're not going to convince anyone with any brains -- you're just wasting your time and ours. The temporary rules against blocksize and moderation discussion are in part designed to encourage people who should leave /Bitcoin to actually do so so that /Bitcoin can get back to the business of discussing Bitcoin news in peace.
/btc was therefore born in an environment not of voluntary departure but of forced exile. This forced migration caused two very unfortunate occurrences:
It polarised the debate around Bitcoin scaling. Previously, there was a lot of civil discussion about compromise and people with suggestions from all along the spectrum were working to find the best solution. That was no longer possible when a moderation policy would actively suppress anyone with opinions too different from Theymos. Instead it forced everyone into a "with us or against us" situation, which is why the /btc subreddit has been pushed so far in favour of the idea of a network hard fork (discussed below).
It has distracted Bitcoin from its mission of becoming a useful, global, neutral currency into a war of information. New users often find /Bitcoin and assume it to be the authoritative source of information, only to later discover that a lot of important information or debate has been invisibly removed from their view.
Since then, like any entrenched conflict, things have degenerated somewhat on both sides to name calling and strawman arguments. However, /btc remains committed to permitting free and open debate on all topics and allowing user downvotes to manage any "trolling" (as /Bitcoin used to) instead of automatic shadow-banning or heavy-handed moderator comment deletion (as /Bitcoin does now). Many users in /Bitcoin deny that censorship exists at all (it is difficult to see when anyone pointing out the censorship has their comment automatically hidden by the automoderator) or justify it as necessary removal of "trolls", which at this point now includes thousands upon thousands of current and often long-standing Bitcoin users and community members. Ongoing censorship is still rampant, partially documented in this post by John Blocke For another detailed account of this historical sequence of events, see singularity87 s posts here and here. /btc has a public moderator log as demonstration of its commitment to transparency and the limited use of moderation. /Bitcoin does not. Why is so much of the discussion in /btc about the censorship in /Bitcoin? Isn't a better solution to create a better community rather than constantly complaining? There are two answers to this question.
Over time, as /btc grows, conversation will gradually start to incorporate more information about the Bitcoin ecosystem, technology, price etc. Users are encouraged to aid this process by submitting links to relevant articles and up/downvoting on the /new and /rising tab as appropriate. However, /btc was founded effectively as a refuge for confused and angry users banned from /Bitcoin and it still needs to serve that function so at least some discussion of the censorship will probably always persist (unless there is a sudden change of moderation policy in /Bitcoin).
The single largest issue in Bitcoin right now is the current cap on the number of transactions the network can process, known as the blocksize limit. Due to the censorship in /Bitcoin, open debate of the merits of different methods of addressing this problem is impossible. As a result, the censorship of /Bitcoin (historically the most active and important Bitcoin community forum) has become by proxy the single most important topic in Bitcoin, since only by returning to open discussion would there be any hope of reaching agreement on the solution to the block size limit itself. As a topic of such central importance, there is naturally going to be a lot of threads about this until a solution is found. This is simply how Bitcoin works, that at any one time there is one key issue under discussion for lengthy periods of time (previous examples of community "hot topics" include the demise of the original Bitcoin exchange Mt Gox, the rise to a 51% majority hash rate of mining pool GHash.io and the supposed "unveiling" of Bitcoin's anonymous creator Satoshi Nakamoto).
Bitcoin Network Hard Forks
What is a hard fork? What happens if Bitcoin hard forks? A network hard fork is when a new block of transactions is published under a new set of rules that only some of the network will accept. In this case, Bitcoin diverges from a single blockchain history of transactions to two separate blockchains of the current state of the network. With any luck, the economic incentive for all users to converge quickly brings everyone together on one side of the fork, but this is not guaranteed especially since there is not a lot of historical precedent for such an event. A hard fork is necessary to raise the block size limit above its 1MB cap. Why is /btc generally in favour of a hard fork and /Bitcoin generally against? According to a lot of users on /Bitcoin - a hard fork can be characterised as an “attack” on the network. The confusion and bad press surrounding a hard fork would likely damage Bitcoin’s price and/or reputation (especially in the short term). They point to the ongoing turmoil with Ethereum as an example of the dangers of a hard fork. Most of /Bitcoin sees the stance of /btc as actively reckless, that pushing for a hard fork creates the following problems:
The possibility of an irrevocable community divergence, as has happened in Ethereum (discussed below)
The chance of introducing new code bugs by forcing a network update without totally comprehensive software developer review
The possibility of reducing decentralisation in the network as higher hardware requirements puts greater strain on network nodes and miners
According to a lot of users on /btc - a hard fork is necessary despite these risks. Most of /btc sees the stance of /Bitcoin as passively reckless, that continuing to limit Bitcoin’s blocksize while remaining inactive creates the following problems:
Transaction fees are continuously rising as transactions compete for the limited space in each block
Confirmation times for any given transaction are also increasing, especially ones without a rapidly escalating fee attached
Fee and confirmation times is making BItcoin hostile to new users, who are confused by their difficulties with this “revolutionary” new technology
Restricting Bitcoin’s growth increases the likelihood it will be overtaken by another unrestricted cryptocurrency
Passively validating the stance of /Bitcoin to continue censoring the debate about this important issue
Bitcoiners are encouraged to examine all of the information and reach their own conclusion. However, it is important to remember that Bitcoin is anopen-source projectfounded on the ideal offree market competition (between any/all software projects, currencies, monetary policies, miners, ideas etc.). In one sense, /btc vs /Bitcoin is just another extension of this, although Bitcoiners are also encouraged to keep abreast of the top posts and links on both subreddits. Only those afraid of the truth need to cut off opposing information. What do Bitcoin developers, businesses, users, miners, nodes etc. think? Developers There are developers on both sides of the debate, although it is a common argument in /Bitcoin to claim that the majority supports Bitcoin Core. This is true in the sense that Bitcoin Core is the current default and has 421 listed code contributors but misleading because not only are many of those contributors authors of a single tiny change and nothing else but also many major figures like Gavin Andresen, Mike Hearn and Jeff Garzik have left the project while still being counted as historical contributors. Businesses including exchanges etc. A definite vote of confidence is not available from the vast majority of Bitcoin businesses, and wouldn't be binding in any case. The smart decision for most businesses is to support both chains in the event of a fork until the network resolves the issue (which may only be a day or two). Users Exact user sentiment is impossible to determine, especially given the censorship on /Bitcoin. Miners and Nodes Coin.dance hosts some excellent graphical representations of the current opinion on the network. Node Support Information Miner Support Information What do I do if the network hard forks?* Do we end up with two Bitcoins? Firstly, in the event of a hard fork there is no need to panic. All Bitcoins are copied to both chains in the case of a split, so any Bitcoins you have are safe. HOWEVER, in the event of a fork there will be some period of confusion where it is important to be very careful about how/why you spend your Bitcoins. Hopefully (and most likely) this would not last long - everyone in Bitcoin is motivated to converge into agreement for everyone's benefit as soon as possible - but it's impossible to say for sure. There isn't a lot of historical data about cryptocurrency hard forks, but one example is alternative cryptocurrency Ethereum that forked into two coins after the events of the DAO and currently exists as two separate chains, ETH (Ethereum) and ETC (Ethereum Classic). The Ethereum fork is not a good analogy for Bitcoin because its network difficulty target adjusts every single block, so a massive drop in hash rate does not significantly impede its functioning. Bitcoin’s difficult target adjusts only every 2100 blocks - which under usual circumstances takes two weeks but in the event of a hard fork could be a month or more for the smaller chain. It is almost inconceivable that a minority of miners would willingly spend millions of dollars over a month or more purely on principle to maintain a chain that was less secure and processed transactions far slower than the majority chain - even assuming the Bitcoins on this handicapped chain didn't suffer a market crash to close to worthless. Secondly, a hard fork is less likely to be a traumatic event than it is often portrayed in /Bitcoin:
The Bitcoin Core and /Bitcoin stated policy is to avoid a hard fork at all costs. So there is no risk of a hard fork on that side.
The Bitcoin XT/Classic/Unlimited and /btc side is prepared for a hard fork if necessary, but it will only come to pass if a clear majority of miners (and presumably users, although that's harder to determine) are already signalling that they would be onboard. There is no exact threshold value, but no miner is going to risk publishing a block larger than 1MB until they are very confident the network will follow them.
What Happens Now
How do I check on the current status of opinion? Coin.dance hosts some excellent graphical representations of the current opinion on the network. Node Support Information Miner Support Information Users are also welcome to engage in anecdotal speculation about community opinion based on their impression of the commentary and activity in /btc and /Bitcoin. Haven't past attempts to raise the blocksize failed? There is no time limit or statute of limitations on the number of attempts the community can make to increase the block size and scale Bitcoin. Almost any innovation in the history of mankind required several attempts to get working and this is no different. The initial attempt called Bitcoin XT never got enough support for a fork because key developer Mike Hearn left out of frustration at trying to talk around all the censorship and community blockading. The second major attempt called Bitcoin Classic gained massive community momentum until it was suddenly halted by the drastic implementation of censorship by Theymos described above. The most popular attempt at the moment is called Bitcoin Unlimited. /btc is neutral and welcoming to any and all projects that want to find a solution to scaling Bitcoin - either on-or off-chain. However, many users are suspicious of Bitcoin Core's approach that involves only SegWit, developed by a private corporation called Blockstream and that has already broken its previous promises in a document known as the Hong Kong Agreement to give the network a block size limit raise client along with Segregated Witness (only the latter was delivered) . What if the stalemate is irreconcilable and nothing ever happens? Increasing transaction fees and confirmation times are constantly increasing the pressure to find a scaling solution - leading some to believe that further adoption of Bitcoin Unlimited or a successor scaling client will eventually occur. Bitcoin Core's proposed addition of SegWit is struggling to gain significant support and as it is already the default client (and not censored in /Bitcoin) it is unlikely to suddenly grow any further. If the stalemate is truly irreconcilable, eventually users frustrated by the cost, time and difficulty of Bitcoin will begin migrating to alternative cryptocurrencies. This is obviously not a desirable outcome for long standing Bitcoin supporters and holders, but cannot be ignored as the inevitable free market resort if Bitcoin remains deadlocked for long enough.
Bitcoin is at its transaction capacity and needs to scale to onboard more users
The community was discussing different ways to do this until the biased head moderator of /BitcoinTheymos got involved
Theymos, started an authoritarian censorship rampage which culminated in telling 90% of /Bitcoin users to leave. /btc is where they went. Here is the thread where it all started. Note the 26% upvoted on the original post, the hundreds of upvotes of community outcry in the comments and the graveyard of [removed] posts further down the chain. Highly recommended reading in its entirety.
To this day, /Bitcoin bans all discussion of alternative scaling proposals and /btc
Bitcoin is about freedom, and can’t function effectively with either an artificially restricted transaction cap or a main community forum that is so heavily manipulated. This subreddit is the search for solutions to both problems as well as general Bitcoin discussion.
Debate continues in /btc, and generally doesn't continue in /Bitcoin - although posts referencing /btc or Bitcoin Unlimited regularly sneak past the moderators because it is such a crucial topic
Eventually one side or the other breaks, enough miners/nodes/users get on one side and Bitcoin starts scaling. This may or may not involve a hard fork.
If not, fees and average confirmation times continue to rise until users migrate en masse to an altcoin. This is not an imminent danger, as can be seen by the BTC marketcap dominance at its historical levels of 80+% but could change at any time
An economic majority will ratify a hard fork by dumping coins on the minority chain
Floating an idea on how the economic majority will "vote" on the hardfork. Originally posted as a comment in a small thread. Borrowing the theme from Let's Talk Bitcoin episode 231, there are two species in a symbiotic relationship, miners and users of the currency. Both get their say on any hard fork. Users of the currency need the miners to secure the blockchain so as to avoid 51% attacks/double spends. Miners need the block rewards to have value by way of the economic activities of the users. Adoption/rejection of a hard fork is a three step process:
Miners casts votes in the blockchain on where they'd like to go
If a new chain arises, the users of the currency put their economic might behind their preferred chain.
Miners will mine where it makes economic sense, regardless of what votes they cast in 1
As such, the miners have the first vote, the economic users ratify or reject that decision, and the miners then fall in line where the mining income is to be found. What does economic might entail? Many would prefer that there not be two chains that have economic life by way of economic actors existing on both. There's going to be a lot of pain if bitcoin's market cap is diluted into two chains. To avoid two chains with real economic activity, the economic majority needs the actors on the minority chain to face economic devastation so we can return swiftly to having one and only one Bitcoin. This means, everyone with a strong opinion one way or another needs to pledge themselves to not hold coins on both chains. Playing neutral, choosing to just run your preferred node software and/or simply ignoring the other chain may not be forceful enough to avoid two chains with real economic activity. If you want to see one chain fail and your preferred chain triumph, as soon as both chains exist you should create new keys and make a transfer to yourself. In the case of a blocksize fork, co-ordinate with other users, do all your sends at the top of the hour (or whatever common interval) so that the chain using small blocks ends up with full blocks. Now verify, was your transaction included in the chain with big blocks but excluded on the chain with small blocks? If not, try again at the next timing point. If it worked, create a third keypair, send to yourself again from the original address to this third one. Include a hefty fee. Confirm this transaction is included in the chain with small blocks. (it won't be in the chain with big blocks as it's a double spend from that chain's perspective) Now you control your coins on each chain with different keypairs. Long story short, do whatever it takes to double spend so that you can control your coins with different key pairs on each chain. Use tools to verify, verify, verify. Now comes the fun part. Find the economic actors who are using the chain you don't like. Call their chain deadcoin. Take your deadcoin and dump them for goods, services, and other currencies (perhaps even your fav version of bitcoin) via those economic actors who are allowing deadcoin to have a breath of life. Let somebody else be the deadcoin bagholders and make them give up things of value for them. If there is strong economic majority willing to push its coins around like this as form of economic warfare, the price of deadcoin will fall as hefty supply comes alive. Miners on the deadcoin chain will switch for better mining profits. Economic actors will see the ship sinking and switch. Deadcoin will spiral downward. This is what we need to know before a hardfork, is there a strong economic majority willing to put this kind of forceful weight behind killing the other chain? My idea, set up a website where people can submit a standardized message signed by their bitcoin keys to pledge "these coins will not sit neutral on both chains, I will push them into unique addresses on each chain and dump economically hard against the chain I'm against, and hold on the chain I support". Such a website would make the respective public keys and signed messages available for download so people can verify for themselves that actual bitcoin holders have signed them and how much bitcoin those addresses have in hand, ready to dump on the chain opposed. Snapshots hashes of all votes can be inserted into the blockchain as well. I could potentially work on a website for this. Namecheap is having a sale and I recently bought economymajority.xyz (nothing there yet). Thinking about it. Aside from all the development required, such a site needs two things to take off. First, there needs to be a clear two option question to vote on. Currently there are multiple blocksize proposals . For this to work, the community needs to get to the point where there are only two options. (the status quo need not be one of the options, if pretty much everyone agrees the status quo is bad and some kind of hard fork required, there could be two competing hard forks that everyone chooses between) When there is more than two options, finding a strong majority for one is harder. Collective preferences can be circular, e.g. A beats B, B beat C, C beats A. See: https://en.wikipedia.org/wiki/Voting_paradox http://homes.chass.utoronto.ca/~jheath/Oldch11.pdf I'm tempted to say the binary question should be Gavin's BIP 101 vs the status quo, but I don't have any solid evidence that most of the mindshare is in these two camps and that the two proposals by Jeff Garzic and other proposals (first hard fork to support eventual sidechains, lightning etc) are out of the running. Second, for marketing such a site, someone with a lot of prominence and a lot of bitcoin under their control is going to have to cast a strong vote one way or another to get the vote stampeed started. I could just built it first and hope some big holders come out in support after. Alternatively, it might be nice to have some whales votes lined up first to help launch with a bang. This is a situation where the uneven distribution of bitcoin could be a good thing.
The only reason we're seeing this flurry of cutesy blocksize BIPs now (BIP 202: linear?!? +20 bytes / 10 min?!?) is because Core devs are panicking: Jan. 11, 2016 is around the corner and 8% of the network is quietly running BIP 101 / XT and it can trigger any time thereafter once blocks get full.
The fact that a ridiculous pseudo-proposal like BIP 202 is even being taken seriously now as if it were some kind of realistic "compromise" (linear growth for an exponentially expanding network?!? micro-managed hard-coded bumps of 20 bytes every 10 minutes for a market-driven supply-and-demand parameter which the miners already soft-limit themselves?!?) simply shows how battered and out-of-touch with reality our community has sadly become due to the toxic effects of the past year of censorship and sockpuppetry across so many of our so-called "governance mechanisms" (including github, reddit, and even the Blockstream-censored Hong Kong "scaling conference" where things like a serious blocksize analysis from Peter__R were censored as well). Fortunately there is also a serious, simple, long-term solution which has already been quietly and smoothly running on 8% of the network, developed and tested and released by some of the most professional, transparent and user-oriented Bitcoin devs (BIP 101 / XT from Hearn and Gavin), with a clearly defined and safe 75% consensus-based trigger / activation mechanism. Do you prefer one serious hard-fork now - or an unserious hard-fork now and a bunch more later? Miners and users are aware that a long-term real solution such as BIP 101 / XT and a phoney pseudo-solution such as BIP 202 are both hard forks - both of which would require a certain minimal amount of upgrade hassle. So when blocks get clogged and the price starts crashing and miners and investors and other businesspeople start losing massive amounts of money and people realize they need to do something to get back to making money again, they're not going to want to install some temporary short-term can-kick like BIP 202 (with tiny, micro-managed linear growth totally inappropriate for a network which needs to scale exponentially), because it will only leave them vulnerable to once again hitting the ceiling way too soon and having to go through this whole mess of debating and upgrading all over again. BIP 101 / XT is a simple and safe serious and long-term solution: it lets miners and investors and businesspeople do their long-term capacity planning without the constant micro-managing and bikeshedding from a bunch of power-hungry devs who are clueless about economics. BIP 101 / XT is also in line with the plan originally envisioned by Satoshi Nakamoto (who knew a hell of a lot more about game theory than most of these clowns), leaving a high enough ceiling where volume can continue to grow unimpeded and miners can be free to continue to impose their own soft-limits against orphaning, just as they've already been doing anyways this whole time anyways under the old system. Why all the silly blocksize BIPs now? So it's important to recognize why this flurry of silly pseudo-proposals such as BIP 202 is happening precisely now: January 11, 2016 is just around the corner (and XT can activate at any time thereafter), and Core devs are panicking because they've censored their world so hard that they haven't been able to come up with any serious long-term exponential scaling solutions, and they're desperate to get something out (even a short-term linear can-kick hard-fork) simply as a way to "save face" and maintain their illusion of "control" over Bitcoin - even if it would ultimately hurt users. It will be very interesting to see how this continues to play out.
Dr Peter R. Rizun, managing editor of the first peer-reviewed cryptocurrency journal, is an important Bitcoin researcher. He has also been attacked and censored for months by Core / Blockstream / Theymos. Now, he has now been *suspended* (from *all* subreddits) by some Reddit admin(s). Why?
Dr. Peter R. Rizun is arguably one of the most serious, prominent, and promising new voices in Bitcoin research today. He not only launched the first scientific peer-reviewed cryptocurrency journal - he has also consistently provided high-quality, serious and insightful posts, papers and presentations on reddit (in writing, at conferences, and on YouTube) covering a wide array of important topics ranging from blocksize, scaling and decentralization to networking theory, economics, and fee markets - including:
It was of course probably to be expected that such an important emerging new Bitcoin researcher would be constantly harrassed, attacked and censored by the ancien régime of Core / Blockstream / Theymos. But now, the attacks have risen to a new level, where some Reddit admin(s) have suspended his account Peter__R. This means that now he can't post anywhere on reddit, and people can no longer see his reddit posts simply by clicking on his user name (although his posts - many of them massively upvoted with hundreds of upvotes - are of course still available individually, via the usual search box). Questions:
What Reddit admin(s) are behind this reddit-wide banishing of Peter__R?
What is their real agenda, and why are they aiding and abbeting the censorship imposed by Core / Blockstream / Theymos?
Don't they realize that in the end they will only harm reddit.com itself, by forcing the most important new Bitcoin researchers to publish their work elsewhere?
(Some have suggested that Peter__R may have forgotten to use 'np' instead of 'www' when linking to other posts on reddit - a common error which subs like /btc will conveniently catch for the poster, allowing the post to be fixed and resubmitted. If this indeed was the actual justification of the Reddit admin(s) for banning him reddit-wide, it seems like a silly technical "gotcha" - and one which could easily have been avoided if other subs would catch this error the same way /btc does. At any rate, it certainly seems counterproductive for reddit.com to ban such a prominent and serious Bitcoin contributor.)
Why is reddit.com willing to risk pushing serious discussion off the site, killing its reputation as a decent place to discuss Bitcoin?
Haven't the people attempting to silence him ever heard of the Streisand effect?
Below are some examples of the kinds of outstanding contributions made by Peter__R, which Core / Blockstream / Theymos (and apparently some Reddit admin(s)) have been desperately trying to suppress in the Bitcoin community. Peer-Reviewed Cryptocurrency Journal
In case anyone missed it, Peter__R hit the nail on the head with this: "The reason we can't agree on a compromise is because the choice is binary: the limit is either used as an anti-spam measure, or as a policy tool to control fees."
"It's because most of them are NOT Bitcoin experts--and I hope the community is finally starting to recognize that" -- Peter R on specialists vs. generalists and the aptitudes of Blockstream Core developers
It is time to usher in a new phase of Bitcoin development - based not on crypto & hashing & networking (that stuff's already done), but based on clever refactorings of datastructures in pursuit of massive and perhaps unlimited new forms of scaling
Peter__R on RBF: (1) Easier for scammers on Local Bitcoins (2) Merchants will be scammed, reluctant to accept Bitcoin (3) Extra work for payment processors (4) Could be the proverbial straw that broke Core's back, pushing people into XT, btcd, Unlimited and other clients that don't support RBF
"My response to Pieter Wuille on the Dev-List has once again been censored, perhaps because I spoke favourably of Bitcoin Unlimited and pointed out misunderstandings by Maxwell and Back...here it is for those who are interested" -- Peter R
Endgame fee structure for BIP100 vs unrestricted block size
Hello, Im long time lurker. Im following the blockchain size debate as many of us. At the moment it seems like "consensus" is getting on the side of block size increase and just for the record im in support of that. Current heat is generated around specific implementations. I have a few words to say about BIP 100 and some about BIP101: I absolutely like the dynamic nature of this proposal. However the idea to put deciding power about block size to miners seems a bit dangerous. I think in short term or mid term it is perfectly fine to keep them decide on the size. Their interest in getting bitcoin growing in this time frame is after all not different from all the users of bitcoin. this interest however will start to diverge from interest of users when bitcoin adoption and usage starts to saturate. Consider two options. One in which block size is decided by miners and second one in which the blocks doesnt have size restriction(or is restricted from technical reasons). Fee structure in unrestricted size blocks will develop also according to decisions of miners, however by principle that they include any transaction which is worth the "work" for them. if they dont any other miner can include them if its worthwhile for them. As result at least smaller miners will always try to include them keeping the fees as low as possible which is good for users In the BIP100 "miner-sized block" the game is different. Miners wont be hurt if they vote for lowering the block size. They can vote for any size. if the size of blocks get lower than the size of transaction volume than as we saw during the stress test there is only one thing to get transaction accepted. wait (ultimately till infinity) or higher the transaction fee. And that means for all transactions in the block. If they can change the block size then the most logical thing for them is to optimize the size for highest total block fees. Basically the same way any manufacturer sets prices of their goods. to maximize "item cost" * "# of items sold" which is ideal for manufacturers, not as much for customers. In general i dont think that giving miners any aditional power is wise. My abstract idea about miners is that they are basically employees of blockchain. and not ordinary employees, they are employees that you cant fire. To give them tool which can higher their pay at your expense is not only unwise, it is completely unnecessary. and from the same reason we should not pay that much attention to mining power voting. With BIP 101 i have a little problem that it is not dynamic. There is no reason to keep the size adjusting the way block reward is handled. if the adoption gets ahead of block size increase it will again generate a lot of unnecessary heat. avoid if possible pardon me for not mentioning other BIPS but i dont have better knowledge of them. BIPS 100 and 101 are the most mentioned a the moment and so i thought i would say my thoughts on them. I think that ideal solution about block size for bitcoin users in long term is 1. as much unrestricted as is technically possible 2. dynamic adjusting (similar to difficulty) But if there were no other options then i think in short and mid term BIP 100 is just fine due to dynamic behaviour. TLDR:objections @BIP100 - dont give miners powers which they dont need to have @BIP101 - adoption is too unpredictable for static algorithm
Since this is a pressing and prevalent issue, I thought maybe condensing the essential arguments into one mega thread is better than rehashing everything in new threads all the time. I chose a FAQ format for this so a certain statement can be answered. I don't want to re-post everything here so where appropriate I'm just going to use links. Disclaimer: This is biased towards big blocks (BIP 101 in particular) but still tries to mention the risks, worries and fears. I think this is fair because all other major bitcoin discussion places severely censor and discourage big block discussion.
What is the block size limit?
The block size limit was introduced by Satoshi back in 2010-07-15 as an anti-DoS measure (though this was not stated in the commit message, more info here). Ever since, it has never been touched because historically there was no need and raising the block size limit requires a hard fork. The block size directly limits the number of transactions in a block. Therefore, the capacity of Bitcoin is directly limited by the block size limit.
Why does a raise require a hard fork?
Because larger blocks are seen as invalid by old nodes, a block size increase would fork these nodes off the network. Therefore it is a hard fork. However, it is possible to downsize the block limit with a soft fork since smaller blocks would still be seen as valid from old nodes. It is considerably easier to roll out a soft fork. Therefore, it makes sense to roll out a more ambitious hard fork limit and downsize as needed with soft forks if problems arise.
What is the deal with soft and hard forks anyways?
It is the Chicken and Egg problem applied to future growth of Bitcoin. If companies do not see how Bitcoin can scale long term, they don't invest which in turn slows down adoption and development. See here and here.
Does an increase in block size limit mean that blocks immediately get larger to the point of the new block size limit?
No, blocks are as large as there is demand for transactions on the network. But one can assume that if the limit is lifted, more users and businesses will want to use the blockchain. This means that blocks will get bigger, but they will not automatically jump to the size of the block size limit. Increased usage of the blockchain also means increased adoption, investment and also price appreciation.
Which are the block size increase proposals?
See here. It should be noted that BIP 101 is the only proposal which has been implemented and is ready to go.
What is the long term vision of BIP 101?
BIP 101 tries to be as close to hardware limitations regarding bandwidth as possible so that nodes can continue running at normal home-user grade internet connections to keep the decentralized aspect of Bitcoin alive. It is believed that it is hard to increase the block size limit, so a long term increase is beneficial to planning and investment in the Bitcoin network. Go to this article for further reading and understand what is meant by "designing for success". BIP 101 vs actual transaction growth visualized: http://imgur.com/QoTEOO2 Note that the actual growth in BIP 101 is piece-wise linear and does not grow in steps as suggested in the picture.
What is up with the moderation and censorship on bitcoin.org, bitcointalk.org and /bitcoin?
Proponents of a more conservative approach fear that a block size increase proposal that does not have "developeexpert consensus" should not be implemented via a majority hard fork. Therefore, discussion about the full node clients which implement BIP 101 is not allowed. Since the same individuals have major influence of all the three bitcoin websites (most notably theymos), discussion of Bitcoin XT is censored and/or discouraged on these websites.
Who governs or controls Bitcoin Core anyways? Who governs Bitcoin XT? What is Bitcoin governance?
Bitcoin Core is governed by a consensus mechanism. How it actually works is not clear. It seems that any major developer can "veto" a change. However, there is one head maintainer who pushes releases and otherwise organizes the development effort. It should be noted that the majority of the main contributors to Bitcoin Core are Blockstream employees. BitcoinXT follows a benevolent dictator model (as Bitcoin used to follow when Satoshi and later Gavin Andresen were the lead maintainers). It is a widespread believe that Bitcoin can be separated into protocol and full node development. This means that there can be multiple implementations of Bitcoin that all follow the same protocol and overall consensus mechanism. More reading here. By having multiple implementations of Bitcoin, single Bitcoin implementations can be run following a benevolent dictator model while protocol development would follow an overall consensus model (which is enforced by Bitcoin's fundamental design through full nodes and miners' hash power). It is still unclear how protocol changes should actually be governed in such a model. Bitcoin governance is a research topic and evolving.
What are the arguments against a significant block size increase and against BIP 101 in particular?
The main arguments against a significant increase are related to decentralization and therefore robustness against commercial interests and government regulation and intervention. More here (warning: biased Wiki article). Another main argument is that Bitcoin needs a fee market established by a low block size limit to support miners long term. There is significant evidence and game theory to doubt this claim, as can be seen here. Finally, block propagation and verification times increase with an increased block size. This in turn increases the orphan rate of miners which means reduced profit. Some believe that this is a disadvantage to small miners because they are not as well connected to other big miners. Also, there is currently a large miner centralization in China. Since most of these miners are behind the Great Firewall of China, their bandwidth to the rest of the world is limited. There is a fear that larger block propagation times favor Chinese miners as long as they have a mining majority. However, there are solutions in development that can drastically reduce block propagation times so this problem will be less of an issue long term.
What is up with the fee market and what is the Lightning Network (LN)?
Major Bitcoin Core developers believe that a fee market established by a low block size is needed for future security of the bitcoin network. While many believe fundamentally this is true, there is major dispute if a fee market needs to be forced by a low block size. One of the main LN developers thinks such a fee market through low block size is needed (read here). The Lightning Network is a non-bandwidth scaling solution. It uses payment channels that can be opened and closed using Bitcoin transactions that are settled on the blockchain. By routing transactions through many of these payment channels, in theory it is possible to support a lot more transactions while a user only needs very few payment channels and therefore rarely has to use (settle on) the actual blockchain. More info here.
How does LN and other non-bandwidth scaling solutions relate to Bitcoin Core and its long term scaling vision?
Bitcoin Core is headed towards a future where block sizes are kept low so that a fee market is established long term that secures miner incentives. The main scaling solution propagated by Core is LN and other solutions that only sometimes settle transactions on the main Bitcoin blockchain. Essentially, Bitcoin becomes a settlement layer for solutions that are built on top of Bitcoin's core technology. Many believe that long term this might be inevitable. But forcing this off-chain development already today seems counterproductive to Bitcoin's much needed growth and adoption phase before such solutions can thrive. It should also be noted that no major non-bandwidth scaling solution (such as LN) has been tested or even implemented. It is not even clear if such off-chain solutions are needed long term scaling solutions as it might be possible to scale Bitcoin itself to handle all needed transaction volumes. Some believe that the focus on a forced fee market by major Bitcoin Core developers represents a conflict of interest since their employer is interested in pushing off-chain scaling solutions such as LN (more reading here).
Are there solutions in development that show the block sizes as proposed via BIP 101 are viable and block propagation times in particular are low enough?
Block size: It's economics & user preparation & moral hazard | Jeff Garzik | Dec 16 2015
Jeff Garzik on Dec 16 2015: All, Following the guiding WP principle of Assume Good Faith, I've been trying to boil down the essence of the message following Scaling Bitcoin. There are key bitcoin issues that remain outstanding and pressing, that are* orthogonal to LN & SW*. I create multiple proposals and try multiple angles because of a few, notable systemic economic and analysis issues - multiple tries at solving the same problems. Why do I do what I do -- Why not try to reboot... just list those problems? Definitions: FE - "Fee Event", the condition where main chain MSG_BLOCK is 95+% to hard limit for 7 or more days in row, "blocks generally full" This can also be induced by a miner squeeze (collective soft limit reduction). Service - a view of bitcoin as a decentralized, faceless, multi-celled, amorphous automaton cloud, that provides services in exchange for payment Users - total [current | future] set of economic actors that pay money to the Service, and receive value (figuratively or literally) in return Block Size - This is short hand for MAX_BLOCK_SIZE, the hard limit that requires, today, a hard fork to increase (excl. extension blocks etc.) Guiding Principle: Keep the Service alive, secure, decentralized, and censorship resistant for as many Users as possible. Observations on block size (shorthand for MAX_BLOCK_SIZE as noted above): This is economically modeled as a supply limited resource over time. On average, 1M capacity is available every 10 minutes, with variance. Observations on Users, block size and modern bidding process: A supermajority of hashpower currently evaluates for block inclusion based, first-pass, on tx-fee/KB. Good. The Service is therefore responsive to the free market and some classes of DoS. Good. Recent mempool changes float relay fee, making the Service more responsive to fast moving markets and DoS's. Good progress. Service provided to Users can be modeled at the bandwidth resource level as bidding for position in a virtual priority queue, where up-to-1M bursts are cleared every 10 min (on avg etc.). Not a perfectly fixed supply, definitionally, but constrained within a fixed range. Observations on the state of today's fee market: On average, blocks are not full. Economically, this means that fees trend towards zero, due to theoretically unlimited supply at <1M levels. Of course, fees are not zero. The network relay anti-flood limits serve as an average lower limit for most transactions (excl direct-to-miner). Wallet software also introduces fee variance in interesting ways. All this fee activity is range-bound on the low end. Let the current set of Users + transaction fee market behavior be TFM (today's fee market). Let the post-Fee-Event set of Users + transaction fee market behavior be FFM (future fee market). *Key observation: A Bitcoin Fee Event (see def. at top) is an Economic Change Event.* An Economic Change Event is a period of market chaos, where large changes to prices and sets of economic actors occurs over a short time period. A Fee Event is a notable Economic Change Event, where a realistic projection forsees higher fee/KB on average, pricing some economic actors (bitcoin projects and businesses) out of the system. *It is a major change to how current Users experience and pay for the Service*, state change from TFM to FFM. The game theory bidding behavior is different for a mostly-empty resource versus a usually-full resource. Prices are different. Profitable business models are different. Users (the set of economic actors on the network) are different. Observation: Contentious hard fork is an Economic Change Event. Similarly, a fork that partitions economic actors for an extended period or permanently is also an Economic Change Event, shuffling prices and economic actors as the Service dynamically readjusts on both sides of the partition, and Users-A and Users-B populations change their behavior. Short-Term Problem #1: No-action on block size increase leads to an Economic Change Event. Failure to increase block size is not obviously-conservative, it is a conscious choice, electing for one economic state and set of actors and prices over another. Choosing FFM over TFM. It is rational to reason that maintaining TFM is more conservative than enduring an Economic Change Event from TFM to FFM. *It is rational to reason that maintaining similar prices and economic actors is less disruptive.* Failure to increase block size will lead to a Fee Event sooner rather than later. Failure to plan ahead for a Fee Event will lead to greater market chaos and User pain. Short-Term Problem #2: Some Developers wish to accelerate the Fee Event, and a veto can accomplish that. In the current developer dynamics, 1-2 key developers can and very likely would veto any block size increase. Thus a veto (e.g. no-action) can lead to a Fee Event, which leads to pricing actors out of the system. A block size veto wields outsize economic power, because it can accelerate ECE. *This is an extreme moral hazard: A few Bitcoin Core committers can veto increase and thereby reshape bitcoin economics, price some businesses out of the system. It is less of a moral hazard to keep the current economics [by raising block size] and not exercise such power.* Short-Term Problem #3: User communication and preparation The current trajectory of no-block-size-increase can lead to short time market chaos, actor chaos, businesses no longer viable. In a $6.6B economy, it is criminal to let the Service undergo an ECE without warning users loudly, months in advance: "Dear users, ECE has accelerated potential due to developers preferring a transition from TFM to FFM." As stated, *it is a conscious choice to change bitcoin economics and User experience* if block size is not advanced with a healthy buffer above actual average traffic levels. Raising block size today, at TFM, produces a smaller fee market delta. Further, wallet software User experience is very, very poor in a hyper-competitive fee market. (This can and will be improved; that's just the state of things today) Short-Term Problem #4: UseDev disconnect: Large mass of users wishes to push Fee Event into future Almost all bitcoin businesses, exchanges and miners have stated they want a block size increase. See the many media articles, BIP 101 letter, and wiki e.g. https://en.bitcoin.it/wiki/Block_size_limit_controversy#Entities_positions The current apparent-veto on block size increase runs contra to the desires of many Users. (note language: "many", not claiming "all") *It is a valid and rational economic choice to subsidize the system with lower fees in the beginning*. Many miners, for example, openly state they prefer long term system growth over maximizing tiny amounts of current day income. Vetoing a block size increase has the effect of eliminating that economic choice as an option. It is difficult to measure Users; projecting beyond "businesses and miners" is near impossible. Without exaggeration, I have never seen this much disconnect between user wishes and dev outcomes in 20+ years of open source. Short-Term Problem #5: Higher Service prices can negatively impact system security Bitcoin depends on a virtuous cycle of users boosting and maintaining bitcoin's network effect, incentivizing miners, increasing security. Higher prices that reduce bitcoin's user count and network effect can have the opposite impact. (Obviously this is a dynamic system, users and miners react to higher prices... including actions that then reduce the price) Short-Term Problem #6: Post-Fee-Event market reboot problem + general lack of planning Game it out: Blocks are now full (FFM). Block size kept at 1M. How full is too full - who and what dictates when 1M should be increased? The same question remains, yet now economic governance issues are compounded: In FFM, the fees are very tightly bound to the upper bound of the block size. In TFM, fees are much less sensitive to the upper bound of block size. Changing block size, when blocks are full, has a more dramatic effect on the market - suddenly new supply is magically brought online, and a minor Economic Change Event occurs. More generally, the post-Fee-Event next step has not been agreed upon. Is it flexcap? This key "step #2" is just barely at whiteboard stage. Short-Term Problem #7: Fee Event timing is unpredictable. As block size free space gets tighter - that is the trend - and block size remains at 1M, Users are ever more likely to hit an Economic Change Event. It could happen in the next 2-6 months. Today, Users and wallets are not prepared. It is also understandably a very touchy subject to say "your business or use case might get priced out of bitcoin" But it is even worse to let worse let Users run into a Fee Event without informing the market that the block size will remain at 1M. Markets function best with maximum knowledge - when they are informed well in advance of market shifting news and events, giving economic actors time to prepare. Short-Term Problem #8: Very little testing, data, effort put into blocks-mostly-full economics We only know for certain that blocks-mostly-not-full works. We do not know that changing to blocks-mostly-full works. Changing to a new economic system includes boatloads of risk. Very little data has been forthcoming from any party on what FFM might look like, f...[message truncated here by reddit bot]... original: http://lists.linuxfoundation.org/pipermail/bitcoin-dev/2015-Decembe011973.html
Bitcoin "knows" how much *hashpower* it has available, and the code automatically adjusts the DIFFICULTY accordingly, every 2 weeks. Could Bitcoin somehow also "know" how much *bandwidth* it has available, so the code could also automatically adjust the MAX_BLOCKSIZE accordingly, every period?
TL;DR: Are there any feasible "max blocksize" approaches which:
not only involve little or no periodic human intervention (such as voting, reconfiguring)
but also incorporate some measurement(s) of the transaction/block-relaying "throughput" and "capacity" of the network itself
... into computing the new "max blocksize"? For example, would it be possible to automatically compute the new "max blocksize" using some formula based on the actual amount of bandwidth currently available across the network - similar to way that the new "difficulty" is already set automatically, based on the amount of actual hashpower available across the network? Reading the various "max blocksize" proposals, I noticed that none of them seem to attempt to compute the new "max blocksize" for the next "period" based on any (direct or indirect) observation of the actual transaction/block-relaying "throughput" and "capacity" of the network itself. This seems to be in contrast to the way that the new "difficulty" is periodically recomputed - ie, based on the actual hashpower currently available across the network. This raises the questions:
Would it be possible to determine (ie, periodically re-compute) the new "max blocksize" for the next period, based on some actual aspect of the network hardware or infrastructure itself, such as the actual transaction/block-relaying "throughput" and "capacity" of the actual miners and full nodes themselves?
Would such a "hardware- or infrastructure-based" approach be desirable?
In precisely what sense might Bitcoin be able to:
know how much bandwidth it currently has available across the network, and
(optimally) adjust the new MAX_BLOCKSIZE accordingly
... involving minimal (or no) "direct" human intervention, and maximal reliance on observation of some actual aspect of the available installed network hardware / infrastructure itself?
There is already a summary of the various major "max blocksize" proposals here:
"Manual" approaches (based on periodically reconfiguring, voting, etc.);
"Automatic" approaches (based on a constant number, or a pre-determined formula);
"Zen" approaches (where there isn't even any notion of "max blocksize").
Proposals taking a "hands-on" (manual, reconfigurable) approach These "hands-on" proposals require some kind of periodic, explicit, manual human intervention over the course of the weeks, months and years - eg, full-node operators and/or miners would each individually periodically set some parameter (or cast a vote) which the code running on the network would then somehow aggregate (generally using some formula which would itself be hard-coded and pre-determined), in order to establish the new value of MAX_BLOCKSIZE for the coming period:
BitPay Adaptive Blocksize
Possible advantages: Would be more adaptive to dynamically evolving conditions in the future. Possible disadvantages: Requires more frequent intervention/voting; certain players might be able to "game" the voting. Proposals taking a "hands-off" (automatic, pre-configured) approach These proposals do not involve any explicit, manual human intervention over the course of the years - eg, under XT, the MAX_BLOCKSIZE would start at 8 MB and would (smoothly) double every 2 years for the next 20 years, until it reaches 8 GB.
Core / Blockstream (currently)
BIP 101 / XT
Possible advantages: No need for reconfiguring (tinking), voting (politicking). Possible disadvantages: The network could get "locked in" to a particular "max blocksize" for many years, which might not end up being compatible with the actual infrastructure / hardware which ends up being available in the future. Notes: (1) BU (Bitcoin Unlimited) would apparently provide a GUI menu allowing the user to choose among the above proposals. (2) Current voting results for some of the above proposals can be seen here: https://data.bitcoinity.org/bitcoin/block_size_votes/7d?c=block_size_votes&r=hour&t=bar Proposals taking a third, "Zen" approach It is important to bear in mind that there is probably also a third category of proposals (which we often tend to forget, perhaps because of the irresistible lure of Blocksizing Bikeshedding), where MAX_BLOCKSIZE would not even exist at all, as it would be determined through the "invisible hand" of the market itself. Actually, it could be argued that such an approach has in some sense already been in effect all along, since the market of miners are already setting their own "max blocksize(s)" in their ongoing calculations to avoid ophaning. In this perspective, the "max blocksize" during this time was such a high "ceiling" above all the actual blocksizes being mined that it didn't really have any impact on them (although this state of affairs may soon be coming to an end). Proponents of this third, "Zen" approach (based not explicitly on humans or code - but instead implicitly on markets and economics) include tsontar (who tends to post more on /BitcoinMarkets) and long-time Bitcoin luminaries such as gavinandresen and Satoshi Nakamoto himself:
Nobody has been able to convincingly answer the question, "What should the optimal block size limit be?" And the reason nobody has been able to answer that question is the same reason nobody has been able to answer the question, "What should the price today be?" – tsontar
Satoshi Nakamoto, October 04, 2010, 07:48:40 PM "It can be phased in, like: if (blocknumber > 115000) maxblocksize = largerlimit / It can start being in versions way ahead, so by the time it reaches that block number and goes into effect, the older versions that don't have it are already obsolete."
the total money supply at 21 million Bitcoins (asymptotically reached over the course of decades)
the difficulty as a function of the total actual hashpower currently available across the network, recomputed every 2016 blocks or 2 weeks
And he did also communicate or "signal" (outside the code as it were, in the informal yet iron-clad "social compact" clearly understood and embraced by all the users) that the total money supply shall in some sense be "hard" i.e. it shall never be changed. We're pretty sure (eg, based on the message he encoded in the geneis block) that the reason he did this was to avoid the kinds of unpredictabilities in money supply which have so often plagued private-central-bank-issued debt-based fiat currencies, inevitably causing all of them to eventually be destroyed by hyperinflation). Meanwhile, Satoshi (perhaps not so wisely?) did not specify the "max blocksize" (in the sense of explicitly and ceremonially specifying a formula for recalculating it, and a reason for keeping it). Well, he actually (perhaps not so wisely?) kinda did specify it - but only as a temporary anti-spam measure, which he did explicitly state could and should be removed again later). Summary of questions Anyways, as you can see, this whole meandering post is basically asking (if we're now stuck with the idea of having a "max blocksize" at all) how feasible it might be to have the "max blocksize" computed as objectively and optimally and realistically as possible - not from a formula, but rather (like the "difficulty") from something based on the current actual state of the hardware and infrastructure itself (eg, from the bandwidth actually currently available across the network). Maybe there's a reason why none of the above proposals do that - perhaps simply because the "bandwidth actually currently available across the network" isn't something that could easily or meaningfully be "measured"? By the way, how is the hashpower "measured" for the purposes of recalculating the new "difficulty" anyways? I assume that Bitcoin isn't somehow directly peeking at the hardware itself - but instead is using some kind of "proxy": say, indirectly measuring hashpower based on how fast blocks have been getting solved on the network over the last 2 weeks. Could a similar indirect approach also be taken regarding "max blocksize" - where perhaps it might not be possible to directly or easily measure the actual bandwidth currently available across the network - but maybe we could indirectly measure such a thing, by also using a "proxy": eg, observing:
how fast blocks / transactions have been getting relayed / propagated on the network over the past couple weeks;
or: how backlogged the mempool has been getting over the past couple weeks
or even: what the recommended fee for inclusion in the next 1-6 blocks has been over the past couple weeks
? Now, I realize that such "hardware- or infrastructure-based" approaches to recomputing the "max blocksize" might seem to somehow "penalize" miners / full-node operators: as they add more bandwidth, the "max blocksize" would be set higher in response. But the accepted approach to recomputing the new "difficulty" already seems to do something similar: it essentially "penalizes" miners: as they add more hashpower, the new "difficulty" is set higher in response. Finally, it seems that perhaps the main factor which Satoshi failed to foresee (and which is playing a major role in fueling this debate), is the Great Firewall of China. I have wondered elsewhere whether we might actually need to take this physical-political fact into account explicitly within Bitcoin itself - as perhaps the best way of being able to "code around it". By the way, I'm getting the ideas for these kinds of statistics from some of the "Bitcoin network monitoring" sites, eg: https://tradeblock.com/bitcoin/ https://tradeblock.com/bitcoin/historical/1d-f-txval_per_tot-01071-blksize_per_avg-01071 http://statoshi.info/dashboard/db/fee-and-priority-estimates http://www.cointape.com/#delay Nowadays I tend to watch these sites just as much as the "Bitcoin price" sites - since lately it's been starting to look like the Blockstream / Core code running on most of the network, with its hard-coded "max blocksize" limits, may be getting dangerously close to causing serious transaction backlogs.
Mike Hearn, a long-time bitcoin developer, published an article yesterday claiming that bitcoin had failed, that he had sold all of his bitcoins, and that he will no longer be contributing to the bitcoin space. This story was picked up by Nathaniel Popper at the New York Times, who wrote a nice article summarizing the situation. Hearn had a lot of valid reasons for frustration, including malicious DoS attacks on Bitcoin XT nodes. However, recent positive developments, possibly catalyzed by Hearn's article, demonstrate that a large number of major stakeholders disagree with Hearn's assessment (more on this below). Regardless, it's now a day after Hearn's article, and the price has fallen to about $370. This is down from roughly $430 before the article. There has been speculation that investors are selling on fear over the article (although it's always difficult to pin down the cause of a bitcoin price swing). At the same time, big players have recently joined Bitcoin Classic (which itself has joined Bitcoin XT and Bitcoin Unlimited as alternative implementations to Bitcoin Core that would allow a block size increase). A recent tally shows 49% of the hash power (a measure of mining power) had joined Classic, along with both Gavin Andresen and Jeff Garzik as developers. Previously, miners had been slow to back any implementation proposing a block size increase, and Andresen and Garzik had each backed their own separate proposals for a block size increase (BIP 101 and BIP 100, respectively). Major companies standing behind Classic include Coinbase, OKCoin, Bitstamp, Xapo, and a bunch of others. Bitcoin Classic's momentum may be derived from two key factors. First, their mission statement asserts that "in the future we will continue to release updates that are in line with Satoshi’s whitepaper & vision, and are agreed upon by the community". The project's maintainers have already started collecting feedback from various stakeholders using a platform called consider.it. Although consider.it may not be a perfect solution to political infighting, it may be a significant step forward, given the governance issues that have plagued bitcoin (especially over the last six months). It’s also hard to overestimate the value of a transparent decision-making process, in light of the censorship that has become the norm in other forums for community discussion. Second, they've already made the compromise of forking Core with an immediate block size increase to 2 MB, as a stopgap measure, and they're using consider.it to determine the way forward after that. With many proposals available, the future remains unseen, but one notable development is the support that has been coalescing around BitPay's recent adaptive block size increase proposal, with Gavin Andresen publicly favoring it. TL;DR: The price appears to have dropped over fear originating from Hearn's declaration of Bitcoin's failure. Nearly simultaneously, Bitcoin Classic has emerged with significant backing from users, miners, developers, and businesses, thus bringing new hope of progress. It appears that this positive news has not yet been priced in. Disclaimer: This is a personal take on the situation. It is not a recommendation to buy or sell bitcoin as an investment. Bitcoin's price will likely be volatile for some time, and if you view bitcoin as an investment, then it's best to invest only what you can afford to lose. Edit: formatting; changed a link to an NP link, per reddiquette guidelines.
Bitcoin historical price Price information and block explorers. In the beginning of the 20th century, computers were only a thought experiment, but the 1st mechanic calculators were starting to be adapted. The ideas about how to create a computer existed, but the technique to do it was not available. Lee De Forrest invented the radio-tube in 1906. At first it was only used in radios, later on ... BIP 101 (Bitcoin Improvement Proposal) This proposal includes an immediate increase in block size up to 8 MB (doubling in size every two years), reaching the block size up to32 MB at final. It would give miners even more opportunities than they had. However, BIP101 led to speculations on how miners could play the voting system. Also, other concerns that such a significant increase, followed by ... Currently, non-BIP 101 blocks make up for around 99.7% of the mining share, while Bitcoin XT and Bitcoin Unlimited blocks account for only 0.3%. With the full migration of Coinbase and KnCminer’s supposed support for BIP 101, support for the proposal seems to indicate that the number of bitcoin XT nodes and mined blocks will to continue this positive trend throughout 2016. Also read: Bitcoin Price Crashes amid Perceived Network Disagreement over Block Size. BIP 101: The Topic of Heavy and Heated Debates . While all of the drama on social media and Reddit is going from bad to ugly, most people have forgotten the reason this discussion started in the first place. The Bitcoin block size limit of 1MB proved sufficient in the early stages of the protocol, but things ... As BIP 101 is officially listed as a ”fork of Bitcoin”, the owner of the Bitcoin Reddit and Bitcointalk has deemed this proposal to be an “altcoin”. As such, altcoins have no place on the /r/Bitcoin subReddit, and it is expected most references to Bitstamp will be removed from the platform as soon as they show up.
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