About "adopting" and increasing block size. I think most developers agree that we would need to increase it at some point, but I believe core Bitcoin developers refusing to do it to accelerate real scalability solution (e.g. Lightning Network). After we have a working scaling solution we might see increase in block size to lower fees and increase throughput.
The Lightning Network design is exactly what the first sentence of Satoshi's Bitcoin whitepaper seeks to avoid - payment processor middlemen.
"A purely peer-to-peer version of electronic cash would
allow online payments to be sent directly from one party
to another without going through a financial institution." [2]
LN can't solve the TSP without either publishing a map of all nodes and routes, or having all nodes broadcasts to all nodes. The former significantly reduces decentralization and further removes the "electronic cash" aspect requiring payment processor hubs, while the latter will suffer from latency/scaling issues/DDoS susceptibility.
[1] https://en.wikipedia.org/wiki/Travelling_salesman_problem
Secondly, even if it was the TSP, you don't need to 100% solve it in order to have a working system. How do you think actual travelling salesmen can exist? They just pick a good enough route, nobody is checking whether they picked the perfect route, and nobody cares.
"A purely peer-to-peer version of electronic cash would
allow online payments to be sent directly from one party
to another without going through a financial institution."
The constant repetition of talking points without actually addressing the critiques of those talking points may fool the gullible, but the technologically savvy see it, and it costs you your credibility with them. You guys are like Marco Rubio [1] constantly repeating the same talking points regardless what critiques are thrown your way.
You've provided no technical details, only an ad hominem fallacy.
Feel free to explain actual technical details of how LN does anything interesting, other than further centralize Bitcoin into centralized payment processor hubs?
As per the LN white paper:
8.4 Payment Routing
It is theoretically possible to build a route map
implicitly from observing 2-of-2 multisigs on the
blockchain to build a routing table. Note, however, this
is not feasible with pay-to-script-hash transaction
outputs, which can be resolved out-of-band from the
bitcoin protocol via a third party routing service.
Building a routing table will become necessary for large
operators (e.g. BGP, Cjdns). Eventually, with
optimizations, the network will look a lot like the
correspondent banking network, or Tier-1 ISPs.Satoshi Nakamoto is not a god.
The white paper is not a gospel.
This is a technology project. It's okay to rethink the possible ways of solving the problem 8 years into it.
Not only is it easy to start fresh, but it's measurably more fair for new users to avoid BTC/ETH and other early cryptocoins which use manipulative ponzi/pyramid like work:coin production:time algorithms which exploit "late" users.
Lightning Network might not be perfect solution, but it is a solution to scaling problem. Increasing block size is certainly not a long term solution.
But it can keep coins that remain in them until the channel expires and for usable channels it will be at least a month or two. So some amount of trust is required. Also, unless I don't know about something, wallet software needs to store additional data for LN to work that can't be just reconstructed from private key/paper wallet.
the truth is, that NP-hardness is only true for perfect solution in polynomial time. good-enough solutions can be found in finite time intervals just fine, there are plenty of practical implementations of that.
ever heard of this thing called "delivery companies"? well they solve TSP sub-optimally millions of times every day.
shocker, i know.
Latency?
Let's look at the Lightening network white paper:
8.4 Payment Routing
It is theoretically possible to build a route map
implicitly from observing 2-of-2 multisigs on the
blockchain to build a routing table. Note, however, this
is not feasible with pay-to-script-hash transaction
outputs, which can be resolved out-of-band from the
bitcoin protocol via a third party routing service.
Building a routing table will become necessary for large
operators (e.g. BGP, Cjdns). Eventually, with
optimizations, the network will look a lot like the
correspondent banking network, or Tier-1 ISPs.
Why not just use venmo at that point?
Why would someone want to use Bitcoin with the LN, especially if it requires them buying Bitcoin from someone else?
The routing problem of internet nodes:
the internet is not a physical space so tell me how do you
measure distance between nodes?
As stated in the OP:
LN can't solve the TSP without either publishing a map of
all nodes and routes, or having all nodes broadcasts to all nodes.
LN relies on hubs and a map. It's setup to extract wealth into centralized liquidity providers. This is antithetical to cash, and at this point why not use a faster centralized service like venmo?
You’re the one that claimed connection to TSP, you tell me.
Shortest path requires publishing all nodes and connections.
What if nodes go offline? How fast will the LN algorithm reroute? Does this mean everyone must connect to the Winkevoss/Bitmain/WellsFargo Nodes for payments?
Why would anyone bother dealing in Bitcoin when there's other usable alternatives, faster cryptocurrencies, or just paypal/venmo?
Because it's a ridiculous proposition. Just opening and closing a channel will require a transaction on-chain, with the accompanying fees.
And if someone sends you coins, you can only spend them if there's a route to whoever you want to pay, otherwise you have to close the channel....and again pay the damn fee.
Lastly: it's not even a network. A network implies that there are multiple connected nodes, and AFAIK the number of merchants using LN in production is exactly zero.
The whole blockchain is already "centralized" in that sense - almost all mining happens in a small number of large mining pools.
1GB every 10 minutes doesn't sound so bad. Random users probably won't run full chains on their desktops, sure, but the option's available if they want to (in distinct contrast to Lightning). Third-party service providers could run full chains and sell validation against the full chain as a service, in a competitive free market - you don't need anyone's permission to run the full chain, so if prices get high or service gets bad then another provider can enter the market.
Sadly it seems under-researched.
And it's not only an issue for end-users (can't run a bitcoin client on your phone, you'd burn through your data within a couple days), but also for miners. They'd be far more likely to mine on top of an old block, leading to stale blocks.
There was a talk a while ago how the bitcoin developers improved the propagation of new blocks within the network and it basically eliminated stale blocks (at least for a while).
It's not really an issue. End-users always have the possibility of running in SPV mode where they don't download full blocks.
«They'd be far more likely to mine on top of an old block»
Not really. First of all, a 1GB block today would be transmitted in typically only ~12-15MB thanks to Compact Blocks (6 bytes per txn ID). Graphene would cut this down to 3-5 MB (http://forensics.cs.umass.edu/graphene/). Secondly, with current software and current hardware, we can still bump the block size ~100× while keeping the block verification time low enough that it's still workable. Then with software optimizations and another few years of technical hardware and network bandwidth improvements, we can get another 10×.
All other chains will face the same cost-of-scaling problem as Bitcoin as they grow. No one has yet developed a public consensus mechanism proven to provide the same security as PoW with the requisite order of magnitude higher scalability and lower costs. Unless some technological breakthroughs are made on that subject, they'll all hit the same wall as their usage grows.
Bitcoin core has made significant technical decisions that has hampered the project in these two areas.
*Source: https://themerkle.com/bitcoin-vs-ethereum-transaction-throug...
https://techcrunch.com/2018/01/15/vitalik-buterin-fenbushi-c...
>In a lengthy statement released to TechCrunch, Buterin explained that he plans to spend more time ensuring that Ethereum fulfills its potential as a platform.
"2017 really has been the year where hype in crypto, including financial hype and social hype in general has far exceeded the reality of what existing blockchain systems can offer. There is a lot of attention, and a lot of eager expectation, but as far as reality goes the practical usability of blockchains has in some cases even regressed due to rising transaction fees."
"I expect 2018, at least within the Ethereum space that I’m best able to speak about, will be the year of action. It will be the year where all of the ideas around scalability, Plasma, proof-of-stake, and privacy that we have painstakingly worked on and refined over the last four years are finally going to turn into real, live working code that you can play around in a highly mature form in some cases on testnets, and in some key cases even on the public mainnet. Everyone in the Ethereum space recognizes that the world is watching, and we are ready to deliver."
1 block per 10 minutes with 4000tx per block results in 7tx/s ... well, why not use blocks of 100x size for starters, that would immediately produce 700tx/s. Still not VISA, yet that would be at least something. The main reason it is not going to happen is probably that that the major Bitcoin stakeholders are completely satisfied with the current situation where they are collecting higher and higher fees (reaching 10BTC+ per block!).
The main promise of Bitcoin - the scarcity of coins - has even been much more exceeded by the scarcity of transaction slots.
> On-chain scaling is not sustainable. If you want to handle as many transaction as for example Visa, you would need 1 GB blocks every 10 minutes, which would make the whole blockchain heavily centralized because regular users won't be able to host full nodes to validate payments.
This article explain their vision the best, I think: https://www.stellar.org/blog/why-design-matters/
Although not stated as clearly, the rest of their blog shows that from the beginning, through their will of "banking the unbanked", their primary focus is to be usable as a payment system.
One can expect they will decide on roadmap being more inclined toward scalability of microtransactions than a crypto seeing itself as a store of value (is that the case for bitcoin? I hear "store of value" a lot around it, but I don't know if it's an "official" vision).
It has never been the goal of bitcoin. The original Satoshi paper rather implies the "unbank the banked" objective which is to remove corrupt middleman.
Those don't fix the fundamental problem of scaling a blockchain. Raiblocks is the only big one that I'm aware of which tries to address this.
I kept seeing things about third world countries using it and thought it was simply due to old-timers (in Bitcoin time that means 3-4 years ago) not realising that the block congestion and resulting fees had snuck up on them. They are even further from reality because most of them are "holding" Bitcoin rather than trying to use it. The authors of the article are clearly looking Bitcoin as what it was, or what it was designed for, rather than what it has become.
Check this excllent presentation by Thomas Greco and Joseph Poon for background:
Many sites recommend buying Litecoin or Ether for that rather than Bitcoin, exactly because Bitcoin is so impractical. Bitcoin is failing as a currency even in the cryptocurrency market.
Recently there was a bitcoin conference that stopped accepting bitcoin as payment because processing was too expensive.
Cryptocurrencies might become mainstream payment systems some day, but it's not going to be Bitcoin. Ether is probably the most likely candidate.
Anyway I agree that Bitcoin probably won't be used as a currency but more like gold. Perhaps it will be used to back some way cheaper transaction method.
But without that nifty property of intrinsic value.
Then again, if the intrinsic value is worth less than the effort to use it, is there a difference from having no intrinsic value at all?
Your definition of “intrinsic value” does not match that of standard economic terminology.
Gold has intrinsic value beyond speculation because it can be used for industrial supplies and because it’s a well-liked jewelry item. Extrinsic value contributed by speculation can drive this price away from those anchors, but the anchors exist.
Your definition seems vaguely philosophical, but in any case your argument, as posed, is incoherent. Either you’re using the same definition as what others are, in which case your argument is simply incorrect, or you’re using an alternate definition, and your argument ceases to be relevant.
I am well aware of that—because using standard economic terminology in this case, that of ascribing the property of intrinsic value to gold, is dead wrong. It’s both a misuse of language and a confusion of terms. Value is a thing agents ascribe to objects; in economic theory, it is a measured result of social relations. It is not a property of the objects themselves. The physical properties of gold are intrinsic to gold itself. The use and exchange value is created by humanity.
If everyone decides gold has no value tomorrow, it has no value. There’s nothing intrinsic about it.
> Gold has intrinsic value beyond speculation because it can be used for industrial supplies and because it’s a well-liked jewelry item. Extrinsic value contributed by speculation can drive this price away from those anchors, but the anchors exist.
You are describing use values, and each of them are further describing exactly my point. The intrinsic physical properties of gold are found to have use value by acting agents. The value found, discovered, or created on the basis of an object’s properties is not intrinsic to the object itself. It comes from outside.
> Your definition seems vaguely philosophical, but in any case your argument, as posed, is incoherent. Either you’re using the same definition as what others are, in which case your argument is simply incorrect, or you’re using an alternate definition, and your argument ceases to be relevant.
I find the argument that use and exchange values are intrinsic to any object to be far more incoherent. All of economics is rooted in philosophical positions on value, markets, commodities, exchange, and so on. The notion that value is intrinsic to an object is one of the most incoherent foundations to most people’s understanding of economics and value. I am using the same definition—but directly disputing its coherence. It’s fine if we can’t agree that the notion of intrinsic value is a confusion of terms itself, but that doesn’t render incoherent those who point this out.
This whole “gold has intrinsic value” notion is, in my opinion, a sad confusion of the intrinsic theory of value as it has over time trickled into common parlance. When most people go about saying, “Gold has the nifty property of intrinsic value”, that statement far too often suggests or implies value as a property, rather than a measured result (of socioeconomic activity among actors in a market).
And then I will buy the entire supply of gold and abuse my market power to force manufacturers to pay exorbitant prices and become a billionaire.
Why? Because even if all the speculators have left people still want jewelry and corrosion resistant metals.
You’re also, like other commenters, unnecessarily stuck on the example of gold. See past that. Gold is no different from any other object—anything can lose its value, because that value is the product of human activity, ideas, and relations in a market. When I say If everyone decides gold has no value tomorrow, it has no value, I was talking all value. Your scheme won’t work when everyone decides gold has no value, because gold is nothing more than an object in the market whose value is constructed by human relations and activity.
Think about diamonds. They have utility to and they have value as jewelry, they used to be of almost no value as jewelry.
It's not impossible that we will be able to create to find another metal that corrosion resistant. The value as a jewelry is exactly like bitcoin. It's speculative.
Gold has intrinsic value in electronics. It is used for electrical connectors due to its corrosion resistance and conductivity. Tiny golden wires are used in packaging integrated circuits (connecting the ICs to the pins of the chip).
Bitcoins have no such intrinsic value. They can only be bartered for something else.
Even fiat has intrinsic value: you can burn bills for warm.
Thinking “gold is valuable” is a shorthand for this recognition of use and exchange values on the basis of gold’s intrinsic physical properties. But the value found in those properties is not a property of gold itself.
The bitcoin blockchain is also immutable.
Bitcoin have utility as a store of value.
Does anyone know what the above logical fallacy would be named? I see this kind of argumentation a lot: where one refutes an argument which has not been made.
Moreover, there is no logical fallacy here on my part. I was not refuting an argument that was not made—I was directly disputing the coherence of an economic adage the average person has been taught is actually rational and sensible when it was brought into the discussion.
Value is never intrinsic, but always created by economic actors—the logical fallacy is arguing otherwise.
Gold, like silver, various other precious metals, and a number of other things—like land, for example—have long histories of value. The historic value of gold among human societies can not be disputed. But that long history has not infused value as a physical property upon gold—or any other thing—itself.
My original statement was neither outrageous nor illogical. Bitcoin is in this case a rather perfect example that highlights exactly what I’m pointing out—the value of bitcoin is in no way intrinsic to bitcoin itself. Bitcoin possesses a number of properties which, analogous to similar properties in a physical object like gold, are found to have both use and exchange value among economic agents. But that value is not actually a core property of bitcoin anymore than value is a core property of gold. Agents identify properties in bitcoin and assign them value. This is always where value comes from—use values from the things one can do with the commodity, and exchange values from the things one can buy with the commodity.
But again, with that you're departing from the modern economic notion of intrinsic value in discussions of money.
In this specific instance, the commenter is using a non-standard definition of “intrinsic value” to argue that gold has no such value. I like to call this “Wittgensteinian chaos” - you see it happen whenever two or more parties fail to explicitly define terms before arguing. It’s usually accidental, not deceptive. In particular, this is likely to happen with technical terminology that does not look enough like jargon to prompt people to look it up, because it also has a coherent, non-technical meaning.
Now circle back to “intrinsic value” - if you aren’t immediately aware that this is a specific economic term[1], you might think to yourself, “oh I get what he’s trying to say”, and proceed to try and refute it. I think economics is particularly prone to this in internet debates.
You have twice now in your comments made a host of assumptions about my intentions and the coherence, relevance, and applicability of my statement. You’re ascribing an awful lot of impossible-to-possess knowledge of my mental processes here.
The notion that gold has intrinsic value—despite the longstanding place that notion has remained in social and economic thought for quite some time—is inconsistent with reality. There is no damage done to gold, its value, its physical properties, or economics itself to point out this inconsistency. We’d be better served to use terms that reflect and remain consistent with reality. And when it comes to economic value, the harsh reality we ought to always keep in mind is that no value is intrinsic—despite how frequently it feels (or even seems sensible to believe) otherwise.
I mean I could do you one better with this type of argumentation and say 'your idea is wrong because all ideas are social constructs, so all are equally the imagination of peoples and all are equally valid,' and we could just have nothing left to talk about and get nowhere with anything.
Anyway, it’s pretty late, and you make a great point that nobody wants to talk about philosophical ideas. Cheers.
The claim was that gold have intrinsic value and bitcoin doesn't. But to the extent of discussing intrinsic value in economical terms then bitcoin does too.
In other words you can't both have your cake and eat it.
Either both bitcoin and gold has intrinsic value in economical terms or none of them have in philosophical terms.
> Either both bitcoin and gold has intrinsic value in economical terms or none of them have in philosophical terms
The argument is precisely that gold has, and bitcoin hasn't, intrinsic value (in the economic sense).
Gold can fulfil the functions of money, but also has other uses. Bitcoin can fulfil some functions of money (barely), but has no other uses.
Bitcoin also have other uses such as store of value (just like gold) and a unique footprint which makes it useful in the digital space.
So no it's not wrong at all.
There was a time when gold wasn't useful for much other than as a store of value and as jewelry. If we are to follow your own argument then Gold had no intrinsic value because of it's limited use before the industrial revolution.
Only the market determines whether something have value. The idea of intrinsic value in anything (also when used in economic terms) is simply misleading and not representing reality but rather the illusion of a reality that doesn't exist.
Gold can loose it's value completely.
It's not at all like Netflix or a DVD.
Cryptocurrencies as a whole are not scarce, unlike gold. Thus, they are not a substitute for gold.
Bitcoins price is not based on how many cryptocurrency mines you can open. If that was the case bitcoins price would have gone down not up.
And no one is claiming that crypto coins are substituting gold. No need for strawmen.
What you and many other people seem to be confusing is that Bitcoin the protocol isn't what's valuable. It's the ability to turn it into a physical like property.
The value of gold can dissapear too overnight. Same rules apply. Gold can be obsolete and just because it historically have had value does not mean it will always have that.
There being a set amount is only relevant in that context.
Bitcoin has a unique history and a unique set of backers, current and future utility and more trust than any other cryptocurrency.
None of the other coins have that.
Your argument is like saying that the only thing that distinguishes the USD from the drakmar is branding.
There is always a reason why something have a value and people trust it. The value of that trust can appear and disappear from one day to the other with anything we consider valuable, just think of Diamonds as a great example of something that is suddenly worth a lot.
Humans decide the value, the market decides the claimed "intrinsic value" the market have determined the value of bitcoin.
The US Dollar is supported by a government that will help adjust supply, interest rates etc to keep its value roughly stable and it's utility in place. By design Bitcoin has none of this stuff.
I'm not making arguments about intrinsic value, I am saying that the value of BTC is built on sand much more than a national currency, and it's limited supply street cred is no sort of guarantee, based as it is on brand.
It's an illusion to think that just because a government is behind a currency it's exempt from loosing all it's value.
The lender of last resort is the government but governments can fail.
Just because they are stable today does not make them stable tomorrow.
Bitcoin has more utility than a clone because it has a unique history and a unique set of backers (the network) and those backers have exactly the same function as they state.
Bitcoin is better supported than some currencies and worse supported than others. But it exist in that spectrum not separate from it.
With Cryptocurrencies there are none, by design.
>> Bitcoin has more utility than a clone because it has a unique history and a unique set of backers (the network) and those backers have exactly the same function as they state.
This is utter nonsense, backers have none of the power of the state to alter supply, set rates etc etc.
>> Bitcoin is better supported than some currencies and worse supported than others. But it exist in that spectrum not separate from it.
Well, given the fees, processing times, lack of support mechanisms and transaction processing limits, I'd say it's a damn poor one.
There is always a reality. That same reality plays out differently with bitcoin compared to the USD but fundamentally there is no absolute base for either currency nor bitcoin. And history is littered with examples of this.
The nonsense part was you saying that the BTC community back the currency like a government. They can't, the currency doesn't work that way.
I'm surprised you don't know this.
You claimed that bitcoin's backers have the same power as the state. They do not. End of story.
So no it's not irrelevant it's the very core of this discussion.
Which they do.
Intrinsic value means the actual value but the only way to determine the actual value is to see what people will pay for it in an exchange. In other words the market determines the value of gold based on a set of assumptions. These assumptions can change in the future. Bitcoin is also valued by the market based on a set of assumptions.
The world doesn't disagree with parent, in fact it agrees with him and bitcoin is the proof of this.
You can't both have your cake and eat it. Either gold and bitcoin have intrinsic value by the economic definition and the market determines what that is or neither of them have.
What it's all based on is trust whether FIAT, Gold or Bitcoin.
Unless you mean something very different from the established consensus of economics when you use the term, “intrinsic value”, both of those statements are false.
The only way to determine it's value is to see if people want to pay for it. Just because they want to pay for it right now doesn't mean they want to do it tomorrow.
And thats exactly why the idea of intrinsic value should die. It doesn't exist. There isn't an absolute floor only a market determined one .... just like with bitcoin.
The claim was that gold have intrinsic value and bitcoin doesn't. But to the extent of discussing intrinsic value in economical terms then bitcoin does too.
In other words you can't both have your cake and eat it.
Either both bitcoin and gold has intrinsic value in economical terms or none of them have in philosophical terms.
The value of them are both based on the trust that the market will accept that value which currently for bitcoin is fluctuating very rapidly and for gold more slowly.
Deception and inaccuracies in your statement:
* You're using an average function in a non gaussian distribution.
* Fees in a blockchain are a function of the transaction size
* You can have multiple payments per transaction
* The median fee for a typical transaction in the past week is about $1.50 USD. [1]
[1] https://anduck.net/bitcoin/fees/1008_blocks.php
Median is between $8/kB and $4/kB. $6/kB*.25 kB typical transaction size = $1.50
- You are misreading your charts. The real-world median txn fee is far from $1.50... it's $13: https://bitinfocharts.com/comparison/bitcoin-median_transact...
- A real-world txn is on average 500 bytes, not 250.
- Although you can have multiple recipients/outputs in a single txn ("batch transactions"), it is not used very often. I computed not too long ago 2.6 outputs on average (https://mobile.twitter.com/zorinaq/status/934442392501063685). If batching was unused, we would expect on average 2 outputs. One reason batching is uncommon is that it is by nature doable only by services sending multiple transactions per block, eg. a hosted wallet provider. I can't batch the occasional txns sent from my local phone wallet.
The site you quote is showing the median transaction fee of each block. That's not what I stated: "The median fee for a typical transaction in the past week"
>- A real-world txn is on average 500 bytes, not 250. What's your source? https://bitcoinfees.earn.com/ indicates 225. It seems like you're using a source that assumes two UTXO inputs, which would result in a doubling of the size.
Source for average (mean) txn size: https://charts.bitcoin.com/chart/transaction-size#b2k which is a bit above 500 bytes. Bitcoinfees.earn.com shows the median, not mean, txn size.
https://anduck.net/bitcoin/fees/fpkb_1008blocks.png
It looks like the green bars (median) are at most $50/kB to $70/kB, with a good number of dips to $30/kB and some to $12/kB.
Edit: it is a confusing chart because it has mBTC/kB on one side and USD/kB on the other. And also it assume a constant exchange rate, so it does not reflect the actual price of those transactions at the time they occurred.
The middle chart is showing the median of that block's fees. I'm referring to the median of the last week's worth of confirmed transactions. That's show in the right hand side of the first chart with the, implied, cumulative distribution function.
What if you end up paying on the extremely higher side? Would you feel comfortable using a system in which fees can swing wildly even for a minority of users.
I remember when people were debating putting "almost feeless" on a bitcoin website because transaction fees were so low as a percentage of the amount, but I don't know if that still holds.
Think instead because of it’s scarcity, Bitcoin could be used to back currencies. Much like the gold standard before. Transaction fees in this scenario (even with it’s high transaction fees for us normies) would be considered negligible when moving large amounts of money.
In this scenario, we can even have other cryptos which are better for daily use be backed by bitcoin.
It doesn't work for that use case any more unfortunately due to its high fees.
but why does currency need a 'backing' like this (of which was the purpose of gold originally)?
Does or did that make Gold a currency?
These claims have been made about every altcoin/feature since 2009. There's too much baseless hype. You guys want me to buy Raiblocks, Plasma, or Omise Go? Are you sure the devs know what they are doing and why?
Is anyone still holding Mazacoin?
it's insecure and its programming language is bad.
They mention Zimbabwe moving to it as an alternative. The average Bitcoin fee is now $40 and the average weekly salary there is around $60. It is ludicrous to even think about asking someone to spend almost a week's wage for something as simple as a transaction fee. Bitcoin has failed completely at accomplishing the "banking the unbanked" goal that drew many of us to it in the first place. That story and that loss is a long, convoluted, and sad story for another time. But other cryptos with teams willing to adapt and listen to reason are moving forward with this torch.