You only need to read the first couple of sentences of the whitepaper to understand that it was primarily designed as a digital currency with a focus on spending/transacting.

Not to mention, "safe storage" of that currency for spending. It was literally an escape from traditional banking that was born out of the 2008 financial crisis where wallstreet caused billions in losses.

"In this sense, it's more typical of a precious metal. Instead of the supply changing to keep the value the same, the supply is predetermined and the value changes. As the number of users grows, the value per coin increases. It has the potential for a positive feedback loop; as users increase, the value goes up, which could attract more users to take advantage of the increasing value."

- Satoshi

https://p2pfoundation.ning.com/xn/detail/2003008:Comment:956...

Misleading. He's talking about Bitcoin being an (ultimately) deflationary currency. Not any "it's a store of value but not peer to peer electronic cash" fallacious arguments.

Are those two concepts mutually exclusive? A liquid currency that holds value in unstable economies would seem to serve both the purpose of being spendable as well as a stable investment like gold. Maybe I'm misunderstanding what it means to be "gold like" though.

I'm not sure I'd use as strong language as "mutually exclusive", but to the point: when was the last time you used gold to buy your lunch? Get groceries? Pay for an Uber? Tip someone?

I'm sure someone out there insists gold is a perfectly legitimate currency for day to day life, and it's not 100% incorrect. But gold is very inconvenient to attempt to use for quick transactions. You would typically exchange gold for some other currency to do day to day spending. The same is basically true of bitcoin now as well, which was (arguably) not the original intent at all.

No they aren't mutually exclusive. In fact sound money should be both a good store of value and a medium of exchange (in other words work well for payments).

The problem is that Bitcoin's high fees has made it unsuitable for regular payments, so proponents only have the store of value explanation left.

Exactly this. To me it was proof that 99% of the Bitcoin community (such as the Bitcoin subreddit which had an absurd amount of influence, thus why taking it over and censoring discussion was so effective) didn't care about Bitcoin as a currency and had never once used it as a currency. They just bought it on Coinbase and never even transferred to their own wallet.

Meanwhile people like me who actually cared about using the damn thing, would be paying a $60 transaction fee on a $20 purchase simply because the powers that be decided that increasing the blocksize, (aka increasing the arbitrary global transaction throughput cap) was somehow antithetical to bitcoin's decentralized design.

> Meanwhile people like me who actually cared about using the damn thing, would be paying a $60 transaction fee on a $20 purchase simply because the powers that be decided that increasing the blocksize, (aka increasing the arbitrary global transaction throughput cap) was somehow antithetical to bitcoin's decentralized design.

Big blocks would have never solved this issue, and you're still free to use Bcash, but you won't as no one does... because that wasn't the issue.

Second layer solutions are the crux of that story, and people who didn't or wouldn't understand that were vocal non-tech people (like Roger Ver) who don't understand basic network protocol topology and why things need to run on secondary, tertiary etc... layers on Bitcoin (the Network) that uses bitcoin (the token) to validate your $20 tx on the blockchain, which by the way if you paid $60 for goes to show you never understood Bitcoin the network.

No one would sacrifice that much to miners instead of just opting for fiat at that point unless there was an absolute imperative need to do so, which at $20 is clearly not the case. I should know I did it.

I've been in this for a long time and the only time tx fees were above $20 was when the Bcash fork happened and Ver/Jihan spammed the network. I paid $25 tx fee on behalf of a new customer (merchant I just on-boarded) that was panicking because they didn't understand mining fee priority (I did explain it to them) and thought they lost they money, when in reality the 5 sat/byte tx cleared in a weeks time and I just recovered my funds then.

I discussed it and felt absolved of responsibility but rather than lose a potential client I just begrudgingly paid the mining fee, to Antminer/Jihan no less, which added insult to injury.

This is far from ideal, and I have a stuck tx as we speak (2sat/byte were clearing without a problem until then) for a over a week now, but it just goes to show that these new billionaire class investors (Saylor) don't understand this tech at all and that they need to use their new found fortune to help flesh out LN to get it to function to its full potential without all this mempool bloat they've help create.

Mainchain (layer 1) is doing EXACTLY what we would think would happen under these conditions even after Segwit, its purposely this way as this is the trade off for security, which makes it less than ideal as a settlement network for small, low cost, individual transactions.

That's what LN is for and I wish these instituinal investment firms would understand that, to date only Jack Dorsey (an actual technologist/developer) has funded Lightening labs, while the Winklevoss, Saylors of the World just keep trying to compete for more headline grabbing media attention and ignoring this vital issue as they do not understand or care to take the time to learn this very obvious fact.

As for me, I want them to keep doing this as it gives me a better buy-in position so I'm all for it.

PS: Keep downvoting, but a 2.58 tx fee cleared in less than an hour with 5+ confirmations, thus proving my point. I think we're far from the bloat we saw back then proving Segwit worked as expected and block sizes weren't a viable option nor tenable a solution to our problem, which I sincerely remains one of LN progress .

A good argument can be made that money should not be a long-term store of value, and should only store value long enough to be useful as a medium of exchange. The idea is that it is better to lend your money than to store it, and that the best way for people to "store value" is to be invested in economically productive activities.

You're right!

The key point, no matter which theory you subscribe to, is that medium of exchange is the most important property.

I think there are tradeoffs available there since it's mostly tx count and not currency value beings moved that dictates network fees. Potentially gift cards backed by BTC solve the issue of both slow TXs and expensive TXs.

I'm sure there are better solutions, but that's one that comes to mind.

They're not mutually exclusive, and that's always been the point made by those like me who supported a blocksize increase and were on the BCH side of things.

Those on the Bitcoin Core side of things believe that they are mutually exclusive, and that you can either be a gold-like store of value (that is to say, absolutely fucking useless) or a peer-to-peer electronic cash, but not both.

To me it's so obvious that the value of something as a currency is what makes it equally a good store of value.

The whitepaper didn’t expect/predict most hashing power being controlled by very few actors.

Edit: I’d say the whitepaper did expect this and basically said it could be a problem:

From the abstract:

> As long as a majority of CPU power is controlled by nodes that are not cooperating to attack the network, they'll generate the longest chain and outpace attacker.

Satoshi did predict just that, even before he launched the network (in 2008).

    “At first, most users would run network nodes, but as the network grows beyond a certain point, it would be left more and more to specialists with server farms of specialized hardware.”   – 2008. 
    “At equilibrium size, many nodes will be server farms with one or two network nodes that feed the rest of the farm over a LAN.” – 2010.
    “The design supports letting users just be users.  The more burden it is to run a node, the fewer nodes there will be.  Those few nodes will be big server farms.  The rest will be client nodes that only do transactions and don’t generate.” – 2010.

That's a fundamental security assumption made by Nakamoto consensus. It's like assuming the discrete log problem is hard. If/when the assumption doesn't hold the security is gone.

That’s a better way of putting it. It’s a good argument for ASIC resistance and CPU dependence because it’s a lot harder to control General-Purpose CPU supply than ASIC supply.

Meanwhile my regular joe laptop can earn double its electricity cost in Monero (before it thermally locks up).

I am not a hardcore bitcoiner, but the price would fall quickly if these few controlling nodes would do something malicious. Which is against their own interest.

Probably. But a core aspect of decentralization is that you shouldn’t need to trust a few others at all.

I think it's more like limits: Trust minimization, not trust elimination.

Who cares about technicalities, the point was to let people hold the system in their own hands.

In Trust we trust!

Satoshi couldn't have thought of a solution of the scaling issues, just like Mark Zuckerberg didn't design Facebook for billions of people originally. From the paper it's clear that he would have liked if all people could have access to P2P layer, but it's just technically impossible.

That's not entirely accurate. His solution was to increase the block limit [1], and use faster computers [2]. Note that Bitcoin Cash is currently implementing this, and succeeding at scaling to 1,100 tx/sec on testnet. (Bitcoin Core supports 3 to 7 tx/sec.)

[1] "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. When we're near the cutoff block number, I can put an alert to old versions to make sure they know they have to upgrade."

~ Satoshi Nakamoto, on bitcointalk.org, October 04, 2010, 07:48:40 PM

[2] "Hi Mike,

I'm glad to answer any questions you have. If I get time, I ought to write a FAQ to supplement the paper. There is only one global chain.

The existing Visa credit card network processes about 15 million Internet purchases per day worldwide. Bitcoin can already scale much larger than that with existing hardware for a fraction of the cost. It never really hits a scale ceiling. If you're interested, I can go over the ways it would cope with extreme size. By Moore's Law, we can expect hardware speed to be 10 times faster in 5 years and 100 times faster in 10. Even if Bitcoin grows at crazy adoption rates, I think computer speeds will stay ahead of the number of transactions.

I don't anticipate that fees will be needed anytime soon, but if it becomes too burdensome to run a node, it is possible to run a node that only processes transactions that include a transaction fee. The owner of the node would decide the minimum fee they'll accept. Right now, such a node would get nothing, because nobody includes a fee, but if enough nodes did that, then users would get faster acceptance if they include a fee, or slower if they don't. The fee the market would settle on should be minimal. If a node requires a higher fee, that node would be passing up all transactions with lower fees. It could do more volume and probably make more money by processing as many paying transactions as it can. The transition is not controlled by some human in charge of the system though, just individuals reacting on their own to market forces.

Eventually, most nodes may be run by specialists with multiple GPU cards. For now, it's nice that anyone with a PC can play without worrying about what video card they have, and hopefully it'll stay that way for a while. More computers are shipping with fairly decent GPUs these days, so maybe later we'll transition to that."

~ Satoshi Nakamoto in correspondence with Mike Hearn

>That's not entirely accurate. His solution was to increase the block limit [1], and use faster computers [2].

This doesn't address the storage requirement problem. 15M transactions per day * 250 bytes per transaction = 1.369 TB per year. After a year most home users wouldn't be able to run a full node without shelling out for extra hardware. After 10 years you'll need to spend hundreds on hard drives just to get started. Sure, it's still decentralized in the sense that you can still run a node, but it'd be closer to usenet (users connecting to independent server farms) than what we have now.

Yes, and we’re already seeing exactly what happens with bigger blocks from Ethereum. The entire thing is being run on Consensys’s centralized Infura servers on AWS. It’s not even decentralized.

This is an unavoidable physical constraint given Bitcoin’s architecture. You can either prioritize decentralization (and with it, censorship resistance), or you can prioritize TPS or in Ethereum’s case heavy-weigh smart contracts (at the cost of decentralization).

While I agree with you on everything, and I'm all in on BTC as a store of value, I love some of the contracts that are built on top of Ethereum. Uniswap is an example system that should be implemented in Bitcoin as well over time, as it brings transparency to trading and asset ownership. It doesn't need turing completeness (so gas is not required), though as it needs state management, I think it's important to be able to account for the cost of UTXO created.

Yes Ethereum is useful and interesting as an experimental platform to see what's possible with this new tech, and what better-designed L1 protocols, programming languages, and APIs may be able to support.

But I'm not comfortable with their marketing it as a "world computer" among other things, implying it's more production-ready and robust than it really is.

Everyone having a copy of the whole blockchain is not needed. What you need is sufficiently distributed hashpower that no actor can perform a 51% attack. That's all.

Small-time users can use thin wallets; mega-power users can download the whole blockchain and spend whatever (in perspective, not super significant) amount of money they need for sufficient storage. Users in between can carry a reduced form of the blockchain that doesn't care so much about a full transaction log but accurately describes the state of every wallet's balance (thereby functioning the same from a "verify that they're not bullshitting me" perspective).

You just described a way to decrease the security of Bitcoin. Users already decided collectively that no amount of security should be exchanged for other features inside Bitcoin. Even taproot, which is a relatively small change takes years to get to a point that it's accepted.

It's like Kosher food: if a small percentage of people want food to be kosher, it's often easer to make all food Kosher.

As Michael Saylor says, Bitcoin is good enough to store hundreds of trillions of dollars. Just don't f*ck it up.

> After 10 years you'll need to spend hundreds on hard drives just to get started.

Do you think that 10 years from now, a 15 TB hard drive will cost at least $200?

Maybe? Hard drive growth speeds have slowed down in the past decade or so. While there's no doubt that storage capacity growth will outpace transaction volume growth, and that eventually it would be feasible for a typical home user to run their full node (at visa's TPS). It remains to be seen whether that's 10 years away or 50+ years away.

It's interesting, so he didn't see the limits of the system. Scaling tx/s is easy, scaling it without increasing block verification time and cost is what's impossible.

So Bitcoin is not exactly what Satoshi planned, but for me it changed my life completely.

Satoshi did actually see those limits and discussed them in the early days on Metzdowd and Bitcointalk.org. But he covered his bases and allowed for both big data centers and/or layer 2 architectures to solve that problem. I’m don’t recall if he expressed a strong preference for one over the other, though.

Could you please point to me where Satoshi discussed using "layer 2 architectures" to handle the scaling problem? To my knowledge he always talked about scaling from the perspective of every transaction being published to the blockchain, because that's how the whole system works.

> It's interesting, so he didn't see the limits of the system. Scaling tx/s is easy, scaling it without increasing block verification time and cost is what's impossible.

Nonsense, he absolutely thought about scaling and in his head it was quite simple...because it was. You just need blocks big enough to allow the transaction throughput the world requires, but they need to be a finite size. That's all.

Not sure what you mean about "block verification time" having a scaling problem. It really doesn't.