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Exclusive. Erik Voorhees: There Were No Winners in the Bitcoin Block Size Debate

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Exclusive. Erik Voorhees: There Were No Winners in the Bitcoin Block Size Debate https://goo.gl/z2t6co - Crypto Insider Info - Whales's

Posted at: June 25, 2018 at 10:29AM
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Exclusive. Erik Voorhees: There Were No Winners in the Bitcoin Block Size Debate https://goo.gl/z2t6co
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Bitcoin will have high fees. The block size shouldn't be increased.

We've had this debate for years, and it's cropping up again. I think we need to nip this in the bud now.
If you increase the blocksize then you will decrease fees, thus making it easier for Veriblock and Coinbase to spam the network and never bother to optimise their platforms. When VeriBlock temporarily paused their system, confirmed on-chain transactions dropped from ~325,000/day to ~225,000/day. That should give you a sense as to just how much spam is being caused by low fees.
If we go to 2MB, those companies will fill blocks up again. Fees will rise to the exact same level in a short period. Now you've got the same situation as before, except a whole lot of full node operators can't keep up with the bandwidth so turn their nodes off. Blocks will propagate through the network slower, centralising mining and providing an unfair advantage to the previous block winner.
The final point, which really should shut this whole discussion down, is that we've already been through this. Bcash exists. It had the same code base as bitcoin at the time of the split. If that's how you think Bitcoin should operate, then just use bcash and be done with it. LN can be built on top of bcash, it's just barely anyone wants to develop for it because overwhelmingly technical people understand why raising the blocksize is a bad idea.
If you're right, bcash will overtake Bitcoin and you can tell everyone I told you so. But you're not going to convince us to change the block size.
And for the love of Christ, if you're a non-technical investor, maybe consider a little humility before insulting the Core devs and demanding a solution you know nothing about to a problem which doesn't exist.
submitted by Mccawsleftfoot to Bitcoin [link] [comments]

Core/AXA/Blockstream CTO Greg Maxwell, CEO Adam Back, attack dog Luke-Jr and censor Theymos are sabotaging Bitcoin - but they lack the social skills to even feel guilty for this. Anyone who attempts to overrule the market and limit or hard-code Bitcoin's blocksize must be rejected by the community.

Centrally planned blocksize is not a desirable feature - it's an insidious bug which is slowly and quietly suppressing Bitcoin's adoption and price and market cap.
And SegWit's dangerous "Anyone-Can-Spend" hack isn't just a needless kludge (which Core/Blockstream/AXA are selfishly trying to quietly slip into Bitcoin via a dangerous and messy soft fork - because they're deathly afraid of hard fork, knowing that most people would vote against their shitty code if they ever had the balls to put it up for an explicit, opt-in vote).
SegWit-as-a-soft-fork is a poison-pill for Bitcoin
SegWit is brought to you by the anti-Bitcoin central bankers at AXA and the economically ignorant, central blocksize planners at Blockstream whose dead-end "road map" for Bitcoin is:
AXA is trying to sabotage Bitcoin by paying the most ignorant, anti-market devs in Bitcoin: Core/Blockstream
This is the direction that Bitcoin has been heading in since late 2014 when Blockstream started spreading their censorship and propaganda and started bribing and corrupting the "Core" devs using $76 million in fiat provided by corrupt, anti-Bitcoin "fantasy fiat" finance firms like the debt-backed, derivatives-addicted insurance mega-giant AXA.
Remember:
You Do The Math, and follow the money, and figure out why Bitcoin has been slowly failing to prosper ever since AXA started bribing Core devs to cripple our code with their centrally planned blocksize and now their "Anyone-Can-Spend" SegWit poison-pill.
Smart, honest devs fix bugs. Fiat-fueled AXA-funded Core/Blockstream devs add bugs - and then turn around and try to lie to our face and claim their bugs are somehow "features"
Recently, people discovered bugs in other Bitcoin implementations - memory leaks in BU's software, "phone home" code in AntMiner's firmware.
And the devs involved immediately took public responsibility, and fixed these bugs.
Meanwhile...
So the difference is: BU's and AntMiner's devs possess enough social and economic intelligence to fix bugs in their code immediately when the community finds them.
Meanwhile, most people in the community have been in an absolute uproar for years now against AXA-funded Blockstream's centrally planned blocksize and their deadly Anyone-Can-Spend hack/kludge/poison-pill.
Of course, the home-schooled fiat-fattened sociopath Blockstream CTO One-Meg Greg u/nullc would probably just dismiss all these Bitcoin users as the "shreaking" [sic] masses.
Narcissistic sociopaths like AXA-funded Blockstream CTO Greg Maxwell and CTO Adam and their drooling delusional attack dog Luke-Jr (another person who was home-schooled - which may help explain why he's also such a tone-deaf anti-market sociopath) are just too stupid and arrogant to have the humility and the shame to shut the fuck up and listen to the users when everyone has been pointing out these massive lethal bugs in Core's shitty code.
Greg, Adam, Luke-Jr, and Theymos are the most damaging people in Bitcoin
These are the four main people who are (consciously or unconsciously) attempting to sabotage Bitcoin:
These toxic idiots are too stupid and shameless and sheltered - and too anti-social and anti-market - to even begin to recognize the lethal bugs they have been trying to introduce into Bitcoin's specification and our community.
Users decide on specifications. Devs merely provide implementations.
Guys like Greg think that they're important because they can do implemenation-level stuff (like avoiding memory leaks in C++ code).
But they are total failures when it comes to specification-level stuff (ie, they are incapable of figuring out how to "grow" a potentially multi-trillion-dollar market by maximally leveraging available technology).
Core/Blockstream is living in a fantasy world. In the real world everyone knows (1) our hardware can support 4-8 MB (even with the Great Firewall), and (2) hard forks are cleaner than soft forks. Core/Blockstream refuses to offer either of these things. Other implementations (eg: BU) can offer both.
https://np.reddit.com/btc/comments/5ejmin/coreblockstream_is_living_in_a_fantasy_world_in/
Greg, Adam, Luke-Jr and Theymos apparently lack the social and economic awareness and human decency to feel any guilt or shame for the massive damage they are attempting to inflict on Bitcoin - and on the world.
Their ignorance is no excuse
Any dev who is ignorant enough to attempt to propose adding such insidious bugs to Bitcoin needs to be rejected by the Bitcoin community - no matter how many years they keep on loudly insisting on trying to sabotage Bitcoin like this.
The toxic influence and delusional lies of AXA-funded Blockstream CTO Greg Maxwell, CEO Adam Back, attack dog Luke-Jr and censor Theymos are directly to blame for the slow-motion disaster happening in Bitcoin right now - where Bitcoin's market cap has continued to fall from 100% towards 60% - and is continuing to drop.
When bitcoin drops below 50%, most of the capital will be in altcoins. All they had to do was increase the block size to 2mb as they promised. Snatching defeat from the jaws of victory.
https://np.reddit.com/btc/comments/68219y/when_bitcoin_drops_below_50_most_of_the_capital/
u/FormerlyEarlyAdopter : "I predict one thing. The moment Bitcoin hard-forks away from Core clowns, all the shit-coins out there will have a major sell-off." ... u/awemany : "Yes, I expect exactly the same. The Bitcoin dominance index will jump above 95% again."
https://np.reddit.com/btc/comments/5yfcsw/uformerlyearlyadopter_i_predict_one_thing_the/
Market volume (ie, blocksize) should be decided by the market - not based on some arbitrary number that some ignorant dev pulled out of their ass
For any healthy cryptocurrency, market price and market capitalization and market volume (a/k/a "blocksize") are determined by the market - not by any dev team, not by central bankers from AXA, not by economically ignorant devs like Adam and Greg (or that other useless idiot - Core "Lead Maintainer" Wladimir van der Laan), not by some drooling pathological delusional authoritarian freak like Luke-Jr, and not by some petty tyrant and internet squatter and communmity-destroyer like Theymos.
The only way that Bitcoin can survive and prosper is if we, as a community, denounce and reject these pathological "centralized blocksize" control freaks like Adam and Greg and Luke and Theymos who are trying to use tricks like fiat and censorship and lies (in collusion with their army of trolls organized and unleashed by the Dragons Den) to impose their ignorance and insanity on our currency.
These losers might be too ignorant and anti-social to even begin to understand the fact that they are attempting to sabotage Bitcoin.
But their ignorance is no excuse. And Bitcoin is getting ready to move on and abandon these losers.
There are many devs who are much better than Greg, Adam and Luke-Jr
A memory leak is an implementation error, and a centrally planned blocksize is a specification error - and both types of errors will be avoided and removed by smart devs who listen to the community.
There are plenty of devs who can write Bitcoin implementations in C++ - plus plenty of devs who can write Bitcoin implementations in other languages as well, such as:
Greg, Adam, Luke-Jr and Theymos are being exposed as miserable failures
AXA-funded Blockstream CTO Greg Maxwell, CEO Adam Back, their drooling attack dog Luke-Jr and their censor Theymos (and all the idiot small-blockheads, trolls, and shills who swallow the propaganda and lies cooked up in the Dragons Den) are being exposed more and more every day as miserable failures.
Greg, Adam, Luke-Jr and Theymos had the arrogance and the hubris to want to be "trusted" as "leaders".
But Bitcoin is the world's first cryptocurrency - so it doesn't need trust, and it doesn't need leaders. It is decentralized and trustless.
C++ devs should not be deciding Bitcoin's volume. The market should decide.
It's not suprising that a guy like "One-Meg Greg" who adopts a nick like u/nullc (because he spends most of his life worrying about low-level details like how to avoid null pointer errors in C++ while the second-most-powerful fiat finance corporation in the world AXA is throwing tens of millions of dollars of fiat at his company to reward him for being a "useful idiot") has turned to be not very good at seeing the "big picture" of Bitcoin economics.
So it also comes as no suprise that Greg Maxwell - who wanted to be the "leader" of Bitcoin - has turned out to be one of most harmful people in Bitcoin when it comes to things like growing a potentially multi-trillion-dollar market and economy.
All the innovation and growth and discussion in cryptocurrencies is happening everywhere else - not at AXA-funded Blockstream and r\bitcoin (and the recently discovered Dragons Den, where they plan their destructive social engineering campaigns).
Those are the censored centralized cesspools financed by central bankers and overrun by loser devs and the mindless trolls who follow them - and supported by inefficient miners who want to cripple Bitcoin with centrally planned blocksize (and dangerous "Anyone-Can-Spend" SegWit).
Bitcoin is moving on to bigger blocks and much higher prices - leaving AXA-funded Blockstream's crippled censored centrally planned shit-coin in the dust
Let them stagnate in their crippled shit-coin with its centrally planned, artificial, arbitrary 1MB 1.7MB blocksize, and SegWit's Anyone-Can-Spend hack kludge poison-pill.
Bitcoin is moving on without these tyrants and liars and losers and sociopaths - and we're going to leave their crippled censored centrally planned shit-coin in the dust.
Core/Blockstream are now in the Kübler-Ross "Bargaining" phase - talking about "compromise". Sorry, but markets don't do "compromise". Markets do COMPETITION. Markets do winner-takes-all. The whitepaper doesn't talk about "compromise" - it says that 51% of the hashpower determines WHAT IS BITCOIN.
https://np.reddit.com/btc/comments/5y9qtg/coreblockstream_are_now_in_the_k%C3%BCblerross/
Core/Blockstream is living in a fantasy world. In the real world everyone knows (1) our hardware can support 4-8 MB (even with the Great Firewall), and (2) hard forks are cleaner than soft forks. Core/Blockstream refuses to offer either of these things. Other implementations (eg: BU) can offer both.
https://np.reddit.com/btc/comments/5ejmin/coreblockstream_is_living_in_a_fantasy_world_in/
1 BTC = 64 000 USD would be > $1 trillion market cap - versus $7 trillion market cap for gold, and $82 trillion of "money" in the world. Could "pure" Bitcoin get there without SegWit, Lightning, or Bitcoin Unlimited? Metcalfe's Law suggests that 8MB blocks could support a price of 1 BTC = 64 000 USD
https://np.reddit.com/btc/comments/5lzez2/1_btc_64_000_usd_would_be_1_trillion_market_cap/
Bitcoin Original: Reinstate Satoshi's original 32MB max blocksize. If actual blocks grow 54% per year (and price grows 1.542 = 2.37x per year - Metcalfe's Law), then in 8 years we'd have 32MB blocks, 100 txns/sec, 1 BTC = 1 million USD - 100% on-chain P2P cash, without SegWit/Lightning or Unlimited
https://np.reddit.com/btc/comments/5uljaf/bitcoin_original_reinstate_satoshis_original_32mb/
submitted by ydtm to btc [link] [comments]

Jeff G Throwing the hammer down today on devlist

Date: Wed, 22 Jul 2015 10:33:18 -0700 From: Jeff Garzik [email protected] To: Pieter Wuille [email protected] Cc: b[email protected] Subject: Re: [bitcoin-dev] Bitcoin Core and hard forks Message-ID: Content-Type: text/plain; charset="utf-8"
On Wed, Jul 22, 2015 at 9:52 AM, Pieter Wuille via bitcoin-dev < [email protected]> wrote:
Some people have called the prospect of limited block space and the development of a fee market a change in policy compared to the past. I respectfully disagree with that. Bitcoin Core is not running the Bitcoin economy, and its developers have no authority to set its rules. Change in economics is always happening, and should be expected. Worse, intervening in consensus changes would make the ecosystem more dependent on the group taking that decision, not less.
This completely ignores reality, what users have experienced for the past ~6 years.
"Change in economics is always happening" does not begin to approach the scale of the change.
For the entirety of bitcoin's history, absent long blocks and traffic bursts, fee pressure has been largely absent.
Moving to a new economic policy where fee pressure is consistently present is radically different from what users, markets, and software have experienced and lived.
Analysis such as [1][2] and more shows that users will hit a "painful" "wall" and market disruption will occur - eventually settling to a new equilibrium after a period of chaos - when blocks are consistently full.
[1] http://hashingit.com/analysis/34-bitcoin-traffic-bulletin [2] http://gavinandresen.ninja/why-increasing-the-max-block-size-is-urgent
First, users & market are forced through this period of chaos by "let a fee market develop" as the whole market changes to a radically different economic policy, once the network has never seen before.
Next, when blocks are consistently full, the past consensus was that block size limit will be increased eventually. What happens at that point?
Answer - Users & market are forced through a second period of chaos and disruption as the fee market is rebooted again by changing the block size limit.
The average user hears a lot of noise on both sides of the block size debate, and really has no idea that the new "let a fee market develop" Bitcoin Core policy is going to raise fees on them.
It is clear that - "let the fee market develop, Right Now" has not been thought through - Users are not prepared for a brand new economic policy - Users are unaware that a brand new economic policy will be foisted upon them
So to point out what I consider obvious: if Bitcoin requires central control over its rules by a group of developers, it is completely uninteresting to me. Consensus changes should be done using consensus, and the default in case of controversy is no change.
False.
All that has to do be done to change bitcoin to a new economic policy - not seen in the entire 6 year history of bitcoin - is to stonewall work on block size.
Closing size increase PRs and failing to participate in planning for a block size increase accomplishes your stated goal of changing bitcoin to a new economic policy.
"no [code] change"... changes bitcoin to a brand new economic policy, picking economic winners & losers. Some businesses will be priced out of bitcoin, etc.
Stonewalling size increase changes is just as much as a Ben Bernanke/FOMC move as increasing the hard limit by hard fork.
My personal opinion is that we - as a community - should indeed let a fee market develop, and rather sooner than later, and that "kicking the can down the road" is an incredibly dangerous precedent: if we are willing to go through the risk of a hard fork because of a fear of change of economics, then I believe that community is not ready to deal with change at all. And some change is inevitable, at any block size. Again, this does not mean the block size needs to be fixed forever, but its intent should be growing with the evolution of technology, not a panic reaction because a fear of change.
But I am not in any position to force this view. I only hope that people don't think a fear of economic change is reason to give up consensus.
Actually you are.
When size increase progress gets frozen out of Bitcoin Core, that just increases the chances that progress must be made through a contentious hard fork.
Further, it increases the market disruption users will experience, as described above.
Think about the users. Please.
submitted by themattt to Bitcoin [link] [comments]

Why is Blockstream CTO Greg Maxwell u/nullc trying to pretend AXA isn't one of the top 5 "companies that control the world"? AXA relies on debt & derivatives to pretend it's not bankrupt. Million-dollar Bitcoin would destroy AXA's phony balance sheet. How much is AXA paying Greg to cripple Bitcoin?

Here was an interesting brief exchange between Blockstream CTO Greg Maxwell u/nullc and u/BitAlien about AXA:
https://np.reddit.com/Bitcoin/comments/62d2yq/why_bitcoin_is_under_attack/dfm6jt?context=3
The "non-nullc" side of the conversation has already been censored by r\bitcoin - but I had previously archived it here :)
https://archive.fo/yWnWh#selection-2613.0-2615.1
u/BitAlien says to u/nullc :
Blockstream is funded by big banks, for example, AXA.
https://blockstream.com/2016/02/02/blockstream-new-investors-55-million-series-a.html
u/nullc says to u/BitAlien :
is funded by big banks, for example, AXA
AXA is a French multinational insurance firm.
But I guess we shouldn't expect much from someone who thinks miners unilatterally control bitcoin.
Typical semantics games and hair-splitting and bullshitting from Greg.
But I guess we shouldn't expect too much honesty or even understanding from someone like Greg who thinks that miners don't control Bitcoin.
AXA-owned Blockstream CTO Greg Maxwell u/nullc doesn't understand how Bitcoin mining works
Mining is how you vote for rule changes. Greg's comments on BU revealed he has no idea how Bitcoin works. He thought "honest" meant "plays by Core rules." [But] there is no "honesty" involved. There is only the assumption that the majority of miners are INTELLIGENTLY PROFIT-SEEKING. - ForkiusMaximus
https://np.reddit.com/btc/comments/5zxl2l/mining_is_how_you_vote_for_rule_changes_gregs/
AXA-owned Blockstream CTO Greg Maxwell u/nullc is economically illiterate
Adam Back & Greg Maxwell are experts in mathematics and engineering, but not in markets and economics. They should not be in charge of "central planning" for things like "max blocksize". They're desperately attempting to prevent the market from deciding on this. But it will, despite their efforts.
https://np.reddit.com/btc/comments/46052e/adam_back_greg_maxwell_are_experts_in_mathematics/)
AXA-owned Blockstream CTO Greg Maxwell u/nullc doesn't understand how fiat works
Gregory Maxwell nullc has evidently never heard of terms like "the 1%", "TPTB", "oligarchy", or "plutocracy", revealing a childlike naïveté when he says: "‘Majority sets the rules regardless of what some minority thinks’ is the governing principle behind the fiats of major democracies."
https://np.reddit.com/btc/comments/44qr31/gregory_maxwell_unullc_has_evidently_never_heard/
AXA-owned Blockstream CTO Greg Maxwell u/nullc is toxic to Bitcoin
People are starting to realize how toxic Gregory Maxwell is to Bitcoin, saying there are plenty of other coders who could do crypto and networking, and "he drives away more talent than he can attract." Plus, he has a 10-year record of damaging open-source projects, going back to Wikipedia in 2006.
https://np.reddit.com/btc/comments/4klqtg/people_are_starting_to_realize_how_toxic_gregory/
So here we have Greg this week, desperately engaging in his usual little "semantics" games - claiming that AXA isn't technically a bank - when the real point is that:
AXA is clearly one of the most powerful fiat finance firms in the world.
Maybe when he's talking about the hairball of C++ spaghetti code that him and his fellow devs at Core/Blockstream are slowing turning their version of Bitcoin's codebase into... in that arcane (and increasingly irrelevant :) area maybe he still can dazzle some people with his usual meaningless technically correct but essentially erroneous bullshit.
But when it comes to finance and economics, Greg is in way over his head - and in those areas, he can't bullshit anyone. In fact, pretty much everything Greg ever says about finance or economics or banks is simply wrong.
He thinks he's proved some point by claiming that AXA isn't technically a bank.
But AXA is far worse than a mere "bank" or a mere "French multinational insurance company".
AXA is one of the top-five "companies that control the world" - and now (some people think) AXA is in charge of paying for Bitcoin "development".
A recent infographic published in the German Magazine "Die Zeit" showed that AXA is indeed the second-most-connected finance company in the world - right at the rotten "core" of the "fantasy fiat" financial system that runs our world today.
Who owns the world? (1) Barclays, (2) AXA, (3) State Street Bank. (Infographic in German - but you can understand it without knowing much German: "Wem gehört die Welt?" = "Who owns the world?") AXA is the #2 company with the most economic poweconnections in the world. And AXA owns Blockstream.
https://np.reddit.com/btc/comments/5btu02/who_owns_the_world_1_barclays_2_axa_3_state/
The link to the PDF at Die Zeit in the above OP is gone now - but there's other copies online:
https://www.konsumentenschutz.ch/sks/content/uploads/2014/03/Wem-geh%C3%B6rt-die-Welt.pdfother
http://www.zeit.de/2012/23/IG-Capitalist-Network
https://archive.fo/o/EzRea/https://www.konsumentenschutz.ch/sks/content/uploads/2014/03/Wem-geh%C3%B6rt-die-Welt.pdf
Plus there's lots of other research and articles at sites like the financial magazine Forbes, or the scientific publishing site plos.org, with articles which say the same thing - all the tables and graphs show that:
AXA is consistently among the top five "companies that control everything"
https://www.forbes.com/sites/bruceupbin/2011/10/22/the-147-companies-that-control-everything/#56b72685105b
http://journals.plos.org/plosone/article?id=10.1371/journal.pone.0025995
http://www98.griffith.edu.au/dspace/bitstream/handle/10072/37499/64037_1.pdf;sequence=1
https://www.outsiderclub.com/report/who-really-controls-the-world/1032
AXA is right at the rotten "core" of the world financial system. Their last CEO was even the head of the friggin' Bilderberg Group.
Blockstream is now controlled by the Bilderberg Group - seriously! AXA Strategic Ventures, co-lead investor for Blockstream's $55 million financing round, is the investment arm of French insurance giant AXA Group - whose CEO Henri de Castries has been chairman of the Bilderberg Group since 2012.
https://np.reddit.com/btc/comments/47zfzt/blockstream_is_now_controlled_by_the_bilderberg/
So, let's get a few things straight here.
"AXA" might not be a household name to many people.
And Greg was "technically right" when he denied that AXA is a "bank" (which is basically the only kind of "right" that Greg ever is these days: "technically" :-)
But AXA is one of the most powerful finance companies in the world.
AXA was started as a French insurance company.
And now it's a French multinational insurance company.
But if you study up a bit on AXA, you'll see that they're not just any old "insurance" company.
AXA has their fingers in just about everything around the world - including a certain team of toxic Bitcoin devs who are radically trying to change Bitcoin:
And ever since AXA started throwing tens of millions of dollars in filthy fantasy fiat at a certain toxic dev named Gregory Maxwell, CTO of Blockstream, suddenly he started saying that we can't have nice things like the gradually increasing blocksizes (and gradually increasing Bitcoin prices - which fortunately tend to increase proportional to the square of the blocksize because of Metcalfe's law :-) which were some of the main reasons most of us invested in Bitcoin in the first place.
My, my, my - how some people have changed!
Greg Maxwell used to have intelligent, nuanced opinions about "max blocksize", until he started getting paid by AXA, whose CEO is head of the Bilderberg Group - the legacy financial elite which Bitcoin aims to disintermediate. Greg always refuses to address this massive conflict of interest. Why?
https://np.reddit.com/btc/comments/4mlo0z/greg_maxwell_used_to_have_intelligent_nuanced/
Previously, Greg Maxwell u/nullc (CTO of Blockstream), Adam Back u/adam3us (CEO of Blockstream), and u/theymos (owner of r\bitcoin) all said that bigger blocks would be fine. Now they prefer to risk splitting the community & the network, instead of upgrading to bigger blocks. What happened to them?
https://np.reddit.com/btc/comments/5dtfld/previously_greg_maxwell_unullc_cto_of_blockstream/
"Even a year ago I said I though we could probably survive 2MB" - nullc
https://np.reddit.com/btc/comments/43mond/even_a_year_ago_i_said_i_though_we_could_probably/
Core/Blockstream supporters like to tiptoe around the facts a lot - hoping we won't pay attention to the fact that they're getting paid by a company like AXA, or hoping we'll get confused if Greg says that AXA isn't a bank but rather an insurance firm.
But the facts are the facts, whether AXA is an insurance giant or a bank:
  • AXA would be exposed as bankrupt in a world dominated by a "counterparty-free" asset class like Bitcoin.
  • AXA pays Greg's salary - and Greg is one of the major forces who has been actively attempting to block Bitcoin's on-chain scaling - and there's no way getting around the fact that artificially small blocksizes do lead to artificially low prices.
AXA kinda reminds me of AIG
If anyone here was paying attention when the cracks first started showing in the world fiat finance system around 2008, you may recall the name of another mega-insurance company, that was also one of the most connected finance companies in the world: AIG.
Falling Giant: A Case Study Of AIG
What was once the unthinkable occurred on September 16, 2008. On that date, the federal government gave the American International Group - better known as AIG (NYSE:AIG) - a bailout of $85 billion. In exchange, the U.S. government received nearly 80% of the firm's equity. For decades, AIG was the world's biggest insurer, a company known around the world for providing protection for individuals, companies and others. But in September, the company would have gone under if it were not for government assistance.
http://www.investopedia.com/articles/economics/09/american-investment-group-aig-bailout.asp
Why the Fed saved AIG and not Lehman
Bernanke did say he believed an AIG failure would be "catastrophic," and that the heavy use of derivatives made the AIG problem potentially more explosive.
An AIG failure, thanks to the firm's size and its vast web of trading partners, "would have triggered an intensification of the general run on international banking institutions," Bernanke said.
http://fortune.com/2010/09/02/why-the-fed-saved-aig-and-not-lehman/
Just like AIG, AXA is a "systemically important" finance company - one of the biggest insurance companies in the world.
And (like all major banks and insurance firms), AXA is drowning in worthless debt and bets (derivatives).
Most of AXA's balance sheet would go up in a puff of smoke if they actually did "mark-to-market" (ie, if they actually factored in the probability of the counterparties of their debts and bets actually coming through and paying AXA the full amount it says on the pretty little spreadsheets on everyone's computer screens).
In other words: Like most giant banks and insurers, AXA has mainly debt and bets. They rely on counterparties to pay them - maybe, someday, if the whole system doesn't go tits-up by then.
In other words: Like most giant banks and insurers, AXA does not hold the "private keys" to their so-called wealth :-)
So, like most giant multinational banks and insurers who spend all their time playing with debts and bets, AXA has been teetering on the edge of the abyss since 2008 - held together by chewing gum and paper clips and the miracle of Quantitative Easing - and also by all the clever accounting tricks that instantly become possible when money can go from being a gleam in a banker's eye to a pixel on a screen with just a few keystrokes - that wonderful world of "fantasy fiat" where central bankers ninja-mine billions of dollars in worthless paper and pixels into existence every month - and then for some reason every other month they have to hold a special "emergency central bankers meeting" to deal with the latest financial crisis du jour which "nobody could have seen coming".
AIG back in 2008 - much like AXA today - was another "systemically important" worldwide mega-insurance giant - with most of its net worth merely a pure fantasy on a spreadsheet and in a four-color annual report - glossing over the ugly reality that it's all based on toxic debts and derivatives which will never ever be paid off.
Mega-banks Mega-insurers like AXA are addicted to the never-ending "fantasy fiat" being injected into the casino of musical chairs involving bets upon bets upon bets upon bets upon bets - counterparty against counterparty against counterparty against counterparty - going 'round and 'round on the big beautiful carroussel where everyone is waiting on the next guy to pay up - and meanwhile everyone's cooking their books and sweeping their losses "under the rug", offshore or onto the taxpayers or into special-purpose vehicles - while the central banks keep printing up a trillion more here and a trillion more there in worthless debt-backed paper and pixels - while entire nations slowly sink into the toxic financial sludge of ever-increasing upayable debt and lower productivity and higher inflation, dragging down everyone's economies, enslaving everyone to increasing worktime and decreasing paychecks and unaffordable healthcare and education, corrupting our institutions and our leaders, distorting our investment and "capital allocation" decisions, inflating housing and healthcare and education beyond everyone's reach - and sending people off to die in endless wars to prop up the deadly failing Saudi-American oil-for-arms Petrodollar ninja-mined currency cartel.
In 2008, when the multinational insurance company AIG (along with their fellow gambling buddies at the multinational investment banks Bear Stearns and Lehmans) almost went down the drain due to all their toxic gambling debts, they also almost took the rest of the world with them.
And that's when the "core" dev team working for the miners central banks (the Fed, ECB, BoE, BoJ - who all report to the "central bank of central banks" BIS in Basel) - started cranking up their mining rigs printing presses and keyboards and pixels to the max, unilaterally manipulating the "issuance schedule" of their shitcoins and flooding the world with tens of trillions in their worthless phoney fiat to save their sorry asses after all their toxic debts and bad bets.
AXA is at the very rotten "core" of this system - like AIG, a "systemically important" (ie, "too big to fail") mega-gigantic multinational insurance company - a fantasy fiat finance firm quietly sitting at the rotten core of our current corrupt financial system, basically impacting everything and everybody on this planet.
The "masters of the universe" from AXA are the people who go to Davos every year wining and dining on lobster and champagne - part of that elite circle that prints up endless money which they hand out to their friends while they continue to enslave everyone else - and then of course they always turn around and tell us we can't have nice things like roads and schools and healthcare because "austerity". (But somehow we always can have plenty of wars and prisons and climate change and terrorism because for some weird reason our "leaders" seem to love creating disasters.)
The smart people at AXA are probably all having nightmares - and the smart people at all the other companies in that circle of "too-big-to-fail" "fantasy fiat finance firms" are probably also having nightmares - about the following very possible scenario:
If Bitcoin succeeds, debt-and-derivatives-dependent financial "giants" like AXA will probably be exposed as having been bankrupt this entire time.
All their debts and bets will be exposed as not being worth the paper and pixels they were printed on - and at that point, in a cryptocurrency world, the only real money in the world will be "counterparty-free" assets ie cryptocurrencies like Bitcoin - where all you need to hold is your own private keys - and you're not dependent on the next deadbeat debt-ridden fiat slave down the line coughing up to pay you.
Some of those people at AXA and the rest of that mafia are probably quietly buying - sad that they missed out when Bitcoin was only $10 or $100 - but happy they can still get it for $1000 while Blockstream continues to suppress the price - and who knows, what the hell, they might as well throw some of that juicy "banker's bonus" into Bitcoin now just in case it really does go to $1 million a coin someday - which it could easily do with just 32MB blocks, and no modifications to the code (ie, no SegWit, no BU, no nuthin', just a slowly growing blocksize supporting a price growing roughly proportional to the square of the blocksize - like Bitcoin always actually did before the economically illiterate devs at Blockstream imposed their centrally planned blocksize on our previously decentralized system).
Meanwhile, other people at AXA and other major finance firms might be taking a different tack: happy to see all the disinfo and discord being sown among the Bitcoin community like they've been doing since they were founded in late 2014 - buying out all the devs, dumbing down the community to the point where now even the CTO of Blockstream Greg Mawxell gets the whitepaper totally backwards.
Maybe Core/Blockstream's failure-to-scale is a feature not a bug - for companies like AXA.
After all, AXA - like most of the major banks in the Europe and the US - are now basically totally dependent on debt and derivatives to pretend they're not already bankrupt.
Maybe Blockstream's dead-end road-map (written up by none other than Greg Maxwell), which has been slowly strangling Bitcoin for over two years now - and which could ultimately destroy Bitcoin via the poison pill of Core/Blockstream's SegWit trojan horse - maybe all this never-ending history of obstrution and foot-dragging and lying and failure from Blockstream is actually a feature and not a bug, as far as AXA and their banking buddies are concerned.
The insurance company with the biggest exposure to the 1.2 quadrillion dollar (ie, 1200 TRILLION dollar) derivatives casino is AXA. Yeah, that AXA, the company whose CEO is head of the Bilderberg Group, and whose "venture capital" arm bought out Bitcoin development by "investing" in Blockstream.
https://np.reddit.com/btc/comments/4k1r7v/the_insurance_company_with_the_biggest_exposure/
If Bitcoin becomes a major currency, then tens of trillions of dollars on the "legacy ledger of fantasy fiat" will evaporate, destroying AXA, whose CEO is head of the Bilderbergers. This is the real reason why AXA bought Blockstream: to artificially suppress Bitcoin volume and price with 1MB blocks.
https://np.reddit.com/btc/comments/4r2pw5/if_bitcoin_becomes_a_major_currency_then_tens_of/
AXA has even invented some kind of "climate catastrophe" derivative - a bet where if the global warming destroys an entire region of the world, the "winner" gets paid.
Of course, derivatives would be something attractive to an insurance company - since basically most of their business is about making and taking bets.
So who knows - maybe AXA is "betting against" Bitcoin - and their little investment in the loser devs at Core/Blockstream is part of their strategy for "winning" that bet.
This trader's price & volume graph / model predicted that we should be over $10,000 USD/BTC by now. The model broke in late 2014 - when AXA-funded Blockstream was founded, and started spreading propaganda and crippleware, centrally imposing artificially tiny blocksize to suppress the volume & price.
https://np.reddit.com/btc/comments/5obe2m/this_traders_price_volume_graph_model_predicted/
"I'm angry about AXA scraping some counterfeit money out of their fraudulent empire to pay autistic lunatics millions of dollars to stall the biggest sociotechnological phenomenon since the internet and then blame me and people like me for being upset about it." ~ u/dresden_k
https://np.reddit.com/btc/comments/5xjkof/im_angry_about_axa_scraping_some_counterfeit/
Bitcoin can go to 10,000 USD with 4 MB blocks, so it will go to 10,000 USD with 4 MB blocks. All the censorship & shilling on r\bitcoin & fantasy fiat from AXA can't stop that. BitcoinCORE might STALL at 1,000 USD and 1 MB blocks, but BITCOIN will SCALE to 10,000 USD and 4 MB blocks - and beyond
https://np.reddit.com/btc/comments/5jgkxv/bitcoin_can_go_to_10000_usd_with_4_mb_blocks_so/
AXA/Blockstream are suppressing Bitcoin price at 1000 bits = 1 USD. If 1 bit = 1 USD, then Bitcoin's market cap would be 15 trillion USD - close to the 82 trillion USD of "money" in the world. With Bitcoin Unlimited, we can get to 1 bit = 1 USD on-chain with 32MB blocksize ("Million-Dollar Bitcoin")
https://www.reddit.com/btc/comments/5u72va/axablockstream_are_suppressing_bitcoin_price_at/
Anyways, people are noticing that it's a little... odd... the way Greg Maxwell seems to go to such lengths, in order to cover up the fact that bigger blocks have always correlated to higher price.
He seems to get very... uncomfortable... when people start pointing out that:
It sure looks like AXA is paying Greg Maxwell to suppress the Bitcoin price.
Greg Maxwell has now publicly confessed that he is engaging in deliberate market manipulation to artificially suppress Bitcoin adoption and price. He could be doing this so that he and his associates can continue to accumulate while the price is still low (1 BTC = $570, ie 1 USD can buy 1750 "bits")
https://np.reddit.com/btc/comments/4wgq48/greg_maxwell_has_now_publicly_confessed_that_he/
Why did Blockstream CTO u/nullc Greg Maxwell risk being exposed as a fraud, by lying about basic math? He tried to convince people that Bitcoin does not obey Metcalfe's Law (claiming that Bitcoin price & volume are not correlated, when they obviously are). Why is this lie so precious to him?
https://www.reddit.com/btc/comments/57dsgz/why_did_blockstream_cto_unullc_greg_maxwell_risk/
I don't know how a so-called Bitcoin dev can sleep at night knowing he's getting paid by fucking AXA - a company that would probably go bankrupt if Bitcoin becomes a major world currency.
Greg must have to go through some pretty complicated mental gymastics to justify in his mind what everyone else can see: he is a fucking sellout to one of the biggest fiat finance firms in the world - he's getting paid by (and defending) a company which would probably go bankrupt if Bitcoin ever achieved multi-trillion dollar market cap.
Greg is literally getting paid by the second-most-connected "systemically important" (ie, "too big to fail") finance firm in the world - which will probably go bankrupt if Bitcoin were ever to assume its rightful place as a major currency with total market cap measured in the tens of trillions of dollars, destroying most of the toxic sludge of debt and derivatives keeping a bank financial giant like AXA afloat.
And it may at first sound batshit crazy (until You Do The Math), but Bitcoin actually really could go to one-million-dollars-a-coin in the next 8 years or so - without SegWit or BU or anything else - simply by continuing with Satoshi's original 32MB built-in blocksize limit and continuing to let miners keep blocks as small as possible to satisfy demand while avoiding orphans - a power which they've had this whole friggin' time and which they've been managing very well thank you.
Bitcoin Original: Reinstate Satoshi's original 32MB max blocksize. If actual blocks grow 54% per year (and price grows 1.542 = 2.37x per year - Metcalfe's Law), then in 8 years we'd have 32MB blocks, 100 txns/sec, 1 BTC = 1 million USD - 100% on-chain P2P cash, without SegWit/Lightning or Unlimited
https://np.reddit.com/btc/comments/5uljaf/bitcoin_original_reinstate_satoshis_original_32mb/
Meanwhile Greg continues to work for Blockstream which is getting tens of millions of dollars from a company which would go bankrupt if Bitcoin were to actually scale on-chain to 32MB blocks and 1 million dollars per coin without all of Greg's meddling.
So Greg continues to get paid by AXA, spreading his ignorance about economics and his lies about Bitcoin on these forums.
In the end, who knows what Greg's motivations are, or AXA's motivations are.
But one thing we do know is this:
Satoshi didn't put Greg Maxwell or AXA in charge of deciding the blocksize.
The tricky part to understand about "one CPU, one vote" is that it does not mean there is some "pre-existing set of rules" which the miners somehow "enforce" (despite all the times when you hear some Core idiot using words like "consensus layer" or "enforcing the rules").
The tricky part about really understanding Bitcoin is this:
Hashpower doesn't just enforce the rules - hashpower makes the rules.
And if you think about it, this makes sense.
It's the only way Bitcoin actually could be decentralized.
It's kinda subtle - and it might be hard for someone to understand if they've been a slave to centralized authorities their whole life - but when we say that Bitcoin is "decentralized" then what it means is:
We all make the rules.
Because if hashpower doesn't make the rules - then you'd be right back where you started from, with some idiot like Greg Maxwell "making the rules" - or some corrupt too-big-to-fail bank debt-and-derivative-backed "fantasy fiat financial firm" like AXA making the rules - by buying out a dev team and telling us that that dev team "makes the rules".
But fortunately, Greg's opinions and ignorance and lies don't matter anymore.
Miners are waking up to the fact that they've always controlled the blocksize - and they always will control the blocksize - and there isn't a single goddamn thing Greg Maxwell or Blockstream or AXA can do to stop them from changing it - whether the miners end up using BU or Classic or BitcoinEC or they patch the code themselves.
The debate is not "SHOULD THE BLOCKSIZE BE 1MB VERSUS 1.7MB?". The debate is: "WHO SHOULD DECIDE THE BLOCKSIZE?" (1) Should an obsolete temporary anti-spam hack freeze blocks at 1MB? (2) Should a centralized dev team soft-fork the blocksize to 1.7MB? (3) OR SHOULD THE MARKET DECIDE THE BLOCKSIZE?
https://np.reddit.com/btc/comments/5pcpec/the_debate_is_not_should_the_blocksize_be_1mb/
Core/Blockstream are now in the Kübler-Ross "Bargaining" phase - talking about "compromise". Sorry, but markets don't do "compromise". Markets do COMPETITION. Markets do winner-takes-all. The whitepaper doesn't talk about "compromise" - it says that 51% of the hashpower determines WHAT IS BITCOIN.
https://np.reddit.com/btc/comments/5y9qtg/coreblockstream_are_now_in_the_k%C3%BCblerross/
Clearing up Some Widespread Confusions about BU
Core deliberately provides software with a blocksize policy pre-baked in.
The ONLY thing BU-style software changes is that baking in. It refuses to bundle controversial blocksize policy in with the rest of the code it is offering. It unties the blocksize settings from the dev teams, so that you don't have to shop for both as a packaged unit.
The idea is that you can now have Core software security without having to submit to Core blocksize policy.
Running Core is like buying a Sony TV that only lets you watch Fox, because the other channels are locked away and you have to know how to solder a circuit board to see them. To change the channel, you as a layman would have to switch to a different TV made by some other manufacturer, who you may not think makes as reliable of TVs.
This is because Sony believes people should only ever watch Fox "because there are dangerous channels out there" or "because since everyone needs to watch the same channel, it is our job to decide what that channel is."
So the community is stuck with either watching Fox on their nice, reliable Sony TVs, or switching to all watching ABC on some more questionable TVs made by some new maker (like, in 2015 the XT team was the new maker and BIP101 was ABC).
BU (and now Classic and BitcoinEC) shatters that whole bizarre paradigm. BU is a TV that lets you tune to any channel you want, at your own risk.
The community is free to converge on any channel it wants to, and since everyone in this analogy wants to watch the same channel they will coordinate to find one.
https://np.reddit.com/btc/comments/602vsy/clearing_up_some_widespread_confusions_about_bu/
Adjustable blocksize cap (ABC) is dangerous? The blocksize cap has always been user-adjustable. Core just has a really shitty inferface for it.
What does it tell you that Core and its supporters are up in arms about a change that merely makes something more convenient for users and couldn't be prevented from happening anyway? Attacking the adjustable blocksize feature in BU and Classic as "dangerous" is a kind of trap, as it is an implicit admission that Bitcoin was being protected only by a small barrier of inconvenience, and a completely temporary one at that. If this was such a "danger" or such a vector for an "attack," how come we never heard about it before?
Even if we accept the improbable premise that inconvenience is the great bastion holding Bitcoin together and the paternalistic premise that stakeholders need to be fed consensus using a spoon of inconvenience, we still must ask, who shall do the spoonfeeding?
Core accepts these two amazing premises and further declares that Core alone shall be allowed to do the spoonfeeding. Or rather, if you really want to you can be spoonfed by other implementation clients like libbitcoin and btcd as long as they are all feeding you the same stances on controversial consensus settings as Core does.
It is high time the community see central planning and abuse of power for what it is, and reject both:
  • Throw off central planning by removing petty "inconvenience walls" (such as baked-in, dev-recommended blocksize caps) that interfere with stakeholders coordinating choices amongst themselves on controversial matters ...
  • Make such abuse of power impossible by encouraging many competing implementations to grow and blossom
https://np.reddit.com/btc/comments/617gf9/adjustable_blocksize_cap_abc_is_dangerous_the/
So it's time for Blockstream CTO Greg Maxwell u/nullc to get over his delusions of grandeur - and to admit he's just another dev, with just another opinion.
He also needs to look in the mirror and search his soul and confront the sad reality that he's basically turned into a sellout working for a shitty startup getting paid by the 5th (or 4th or 2nd) "most connected", "systemically important", "too-big-to-fail", debt-and-derivative-dependent multinational bank mega-insurance giant in the world AXA - a major fiat firm firm which is terrified of going bankrupt just like that other mega-insurnace firm AIG already almost did before the Fed rescued them in 2008 - a fiat finance firm which is probably very conflicted about Bitcoin, at the very least.
Blockstream CTO Greg Maxwell is getting paid by the most systemically important bank mega-insurance giant in the world, sitting at the rotten "core" of the our civilization's corrupt, dying fiat cartel.
Blockstream CTO Greg Maxwell is getting paid by a mega-bank mega-insurance company that will probably go bankrupt if and when Bitcoin ever gets a multi-trillion dollar market cap, which it can easily do with just 32MB blocks and no code changes at all from clueless meddling devs like him.
submitted by ydtm to btc [link] [comments]

Crypto and the Latency Arms Race: Crypto Exchanges and the HFT Crowd

Crypto and the Latency Arms Race: Crypto Exchanges and the HFT Crowd


News by Coindesk: Max Boonen
Carrying on from an earlier post about the evolution of high frequency trading (HFT), how it can harm markets and how crypto exchanges are responding, here we focus on the potential longer-term impact on the crypto ecosystem.
First, though, we need to focus on the state of HFT in a broader context.

Conventional markets are adopting anti-latency arbitrage mechanisms

In conventional markets, latency arbitrage has increased toxicity on lit venues and pushed trading volumes over-the-counter or into dark pools. In Europe, dark liquidity has increased in spite of efforts by regulators to clamp down on it. In some markets, regulation has actually contributed to this. Per the SEC:
“Using the Nasdaq market as a proxy, [Regulation] NMS did not seem to succeed in its mission to increase the display of limit orders in the marketplace. We have seen an increase in dark liquidity, smaller trade sizes, similar trading volumes, and a larger number of “small” venues.”
Why is non-lit execution remaining or becoming more successful in spite of its lower transparency? In its 2014 paper, BlackRock came out in favour of dark pools in the context of best execution requirements. It also lamented message congestion and cautioned against increasing tick sizes, features that advantage latency arbitrageurs. (This echoes the comment to CoinDesk of David Weisberger, CEO of Coinroutes, who explained that the tick sizes typical of the crypto market are small and therefore do not put slower traders at much of a disadvantage.)
Major venues now recognize that the speed race threatens their business model in some markets, as it pushes those “slow” market makers with risk-absorbing capacity to provide liquidity to the likes of BlackRock off-exchange. Eurex has responded by implementing anti-latency arbitrage (ALA) mechanisms in options:
“Right now, a lot of liquidity providers need to invest more into technology in order to protect themselves against other, very fast liquidity providers, than they can invest in their pricing for the end client. The end result of this is a certain imbalance, where we have a few very sophisticated liquidity providers that are very active in the order book and then a lot of liquidity providers that have the ability to provide prices to end clients, but are tending to do so more away from the order book”, commented Jonas Ullmann, Eurex’s head of market functionality. Such views are increasingly supported by academic research.
XTX identifies two categories of ALA mechanisms: policy-based and technology-based. Policy-based ALA refers to a venue simply deciding that latency arbitrageurs are not allowed to trade on it. Alternative venues to exchanges (going under various acronyms such as ECN, ATS or MTF) can allow traders to either take or make, but not engage in both activities. Others can purposefully select — and advertise — their mix of market participants, or allow users to trade in separate “rooms” where undesired firms are excluded. The rise of “alternative microstructures” is mostly evidenced in crypto by the surge in electronic OTC trading, where traders can receive better prices than on exchange.
Technology-based ALA encompasses delays, random or deterministic, added to an exchange’s matching engine to reduce the viability of latency arbitrage strategies. The classic example is a speed bump where new orders are delayed by a few milliseconds, but the cancellation of existing orders is not. This lets market makers place fresh quotes at the new prevailing market price without being run over by latency arbitrageurs.
As a practical example, the London Metal Exchange recently announced an eight-millisecond speed bump on some contracts that are prime candidates for latency arbitrageurs due to their similarity to products trading on the much bigger CME in Chicago.
Why 8 milliseconds? First, microwave transmission between Chicago and the US East Coast is 3 milliseconds faster than fibre optic lines. From there, the $250,000 a month Hibernia Express transatlantic cable helps you get to London another 4 milliseconds faster than cheaper alternatives. Add a millisecond for internal latencies such as not using FPGAs and 8 milliseconds is the difference for a liquidity provider between investing tens of millions in speed technology or being priced out of the market by latency arbitrage.
With this in mind, let’s consider what the future holds for crypto.

Crypto exchanges must not forget their retail roots

We learn from conventional markets that liquidity benefits from a diverse base of market makers with risk-absorption capacity.
Some have claimed that the spread compression witnessed in the bitcoin market since 2017 is due to electronification. Instead, I posit that it is greater risk-absorbing capacity and capital allocation that has improved the liquidity of the bitcoin market, not an increase in speed, as in fact being a fast exchange with colocation such as Gemini has not supported higher volumes. Old-timers will remember Coinsetter, a company that, per the Bitcoin Wiki , “was created in 2012, and operates a bitcoin exchange and ECN. Coinsetter’s CSX trading technology enables millisecond trade execution times and offers one of the fastest API data streams in the industry.” The Wiki page should use the past tense as Coinsetter failed to gain traction, was acquired in 2016 and subsequently closed.
Exchanges that invest in scalability and user experience will thrive (BitMEX comes to mind). Crypto exchanges that favour the fastest traders (by reducing jitter, etc.) will find that winner-takes-all latency strategies do not improve liquidity. Furthermore, they risk antagonising the majority of their users, who are naturally suspicious of platforms that sell preferential treatment.
It is baffling that the head of Russia for Huobi vaunted to CoinDesk that: “The option [of co-location] allows [selected clients] to make trades 70 to 100 times faster than other users”. The article notes that Huobi doesn’t charge — but of course, not everyone can sign up.
Contrast this with one of the most successful exchanges today: Binance. It actively discourages some HFT strategies by tracking metrics such as order-to-trade ratios and temporarily blocking users that breach certain limits. Market experts know that Binance remains extremely relevant to price discovery, irrespective of its focus on a less professional user base.
Other exchanges, take heed.
Coinbase closed its entire Chicago office where 30 engineers had worked on a faster matching engine, an exercise that is rumoured to have cost $50mm. After much internal debate, I bet that the company finally realised that it wouldn’t recoup its investment and that its value derived from having onboarded 20 million users, not from upgrading systems that are already fast and reliable by the standards of crypto.
It is also unsurprising that Kraken’s Steve Hunt, a veteran of low-latency torchbearer Jump Trading, commented to CoinDesk that: “We want all customers regardless of size or scale to have equal access to our marketplace”. Experience speaks.
In a recent article on CoinDesk , Matt Trudeau of ErisX points to the lower reliability of cloud-based services compared to dedicated, co-located and cross-connected gateways. That much is true. Web-based technology puts the emphasis on serving the greatest number of users concurrently, not on serving a subset of users deterministically and at the lowest latency possible. That is the point. Crypto might be the only asset class that is accessible directly to end users with a low number of intermediaries, precisely because of the crypto ethos and how the industry evolved. It is cheaper to buy $500 of bitcoin than it is to buy $500 of Microsoft shares.
Trudeau further remarks that official, paid-for co-location is better than what he pejoratively calls “unsanctioned colocation,” the fact that crypto traders can place their servers in the same cloud providers as the exchanges. The fairness argument is dubious: anyone with $50 can set up an Amazon AWS account and run next to the major crypto exchanges, whereas cheap co-location starts at $1,000 a month in the real world. No wonder “speed technology revenues” are estimated at $1 billion for the major U.S. equity exchanges.
For a crypto exchange, to reside in a financial, non-cloud data centre with state-of-the-art network latencies might ironically impair the likelihood of success. The risk is that such an exchange becomes dominated on the taker side by the handful of players that already own or pay for the fastest communication routes between major financial data centres such as Equinix and the CME in Chicago, where bitcoin futures are traded. This might reduce liquidity on the exchange because a significant proportion of the crypto market’s risk-absorption capacity is coming from crypto-centric funds that do not have the scale to operate low-latency strategies, but might make up the bulk of the liquidity on, say, Binance. Such mom-and-pop liquidity providers might therefore shun an exchange that caters to larger players as a priority.

Exchanges risk losing market share to OTC liquidity providers

While voice trading in crypto has run its course, a major contribution to the market’s increase in liquidity circa 2017–2018 was the risk appetite of the original OTC voice desks such as Cumberland Mining and Circle.
Automation really shines in bringing together risk-absorbing capacity tailored to each client (which is impossible on anonymous exchanges) with seamless electronic execution. In contrast, latency-sensitive venues can see liquidity evaporate in periods of stress, as happened to a well-known and otherwise successful exchange on 26 June which saw its bitcoin order book become $1,000 wide for an extended period of time as liquidity providers turned their systems off. The problem is compounded by the general unavailability of credit on cash exchanges, an issue that the OTC market’s settlement model avoids.
As the crypto market matures, the business model of today’s major cash exchanges will come under pressure. In the past decade, the FX market has shown that retail traders benefit from better liquidity when they trade through different channels than institutional speculators. Systematic internalizers demonstrate the same in equities. This fact of life will apply to crypto. Exchanges have to pick a side: either cater to retail (or retail-driven intermediaries) or court HFTs.
Now that an aggregator like Tagomi runs transaction cost analysis for their clients, it will become plainly obvious to investors with medium-term and long-term horizons (i.e. anyone not looking at the next 2 seconds) that their price impact on exchange is worse than against electronic OTC liquidity providers.
Today, exchange fee structures are awkward because they must charge small users a lot to make up for crypto’s exceptionally high compliance and onboarding costs. Onboarding a single, small value user simply does not make sense unless fees are quite elevated. Exchanges end up over-charging large volume traders such as B2C2’s clients, another incentive to switch to OTC execution.
In the alternative, what if crypto exchanges focus on HFT traders? In my opinion, the CME is a much better venue for institutional takers as fees are much lower and conventional trading firms will already be connected to it. My hypothesis is that most exchanges will not be able to compete with the CME for fast traders (after all, the CBOE itself gave up), and must cater to their retail user base instead.
In a future post, we will explore other microstructures beyond all-to-all exchanges and bilateral OTC trading.
Fiber threads image via Shutterstock
submitted by GTE_IO to u/GTE_IO [link] [comments]

Bitcoin wins the blockchain race only if it becomes widespread money

The concept of blockchain technology and its various apps is currently overhyped while bitcoin’s role of money is underestimated. If we focus on developing blockchain security and the money application for bitcoin then all other apps will come easily afterwards. Instead many developers are distracted with second stage apps like smart contracts and verifiable data which have limited practical value until a secure and decentralized blockchain with a high valued tokens is established. In addition, banks and tech giants are competing to create private blockchains and VCs impatiently finance lots of promising projects blockchain projects without any sign that they will really work.
It seems like we are designing the fruit of a tree which still has a tiny stem. We should rather focus on growing a robust trunk with deep roots and only then discuss the beautiful apps that can be built on top of it. It may sound boring but we need more people devoted to the plain old problem of bitcoin used as money. Blockchain apps are important game changers but they will remain a mirage unless we have the foundation of blockchain based widespread digital currency. Going back to basics is especially important in the context of the block size problem which currently slows bitcoin’s adoption.
Let’s take a closer look at what makes a blockchain work.
The blockchain could be used mainly for two things — transferring value and timestamping information. For these to work properly we need the highest level of trust and security possible.
Security is the main requirement for any blockchain which claims to be useful. It comes from fierce competition for the role of a temporary third party for a valuable prize. Actually when people say that there is no third party in blockchain transactions they are wrong. The third party is the miner publishing the block with our transaction. The revolutionary thing is that this third party is paid well for the service and is constantly changing because of the mining competition which is open to everyone. Therefore blockchain security equals fierce competition and fierce competition equals freedom for everyone to compete for a high valued prize.
blockchain value = security
security = competition = freedom to compete * prize for the winner
Consequently, private blockchains which are not open for everyone to compete are inferior to those who are open. At the same time, the high value of the prize is also crucial for the competition. If the prize has zero value in an open competition there will be no participants and no security. In the bitcoin model the prize is currently 25 bitcoins + transaction fees for every block. So valuable bitcoins bring more security and additional security feeds more value in an ever growing spiral. Widespread adoption also yields more transaction fees which add up to the prize.
So…
Prize for the winner = block reward + transaction fees = bitcoin price + number of paid transactions per block = demand - supply of bitcoins + widespread usage = widespread usage - supply + widespread usage = 2x widespread usage - supply (fixed schedule we cannot change)
Therefore…
Prize for the winner = 2x widespread usage
=> blockchain value = security = freedom to compete + 2x widespread usage
where 2x widespread usage = world’s most frequently used blockchain app = money
=> the ultimate blockchain winner = freedom to compete + money
So the prerequisite for all the promising blockchain apps is the first and main app - money. Consequently, bitcoin must become the most secure and user friendly money in the world. Then, progressively more people will be willing to give away government currency for these digital tokens and use them as a payment now or store their value for future payments.
In conclusion, money is the most crucial app for the blockchain technology. In fact, it is so important that it dwarfs all the others. Most efforts of the blockchain community should go towards helping the bitcoin system achieve maximum durability, highly fungible units and user friendly experience.
EDIT: The point of this article is not to open the blocksize debate. It is to show that private blockchains are not very useful. Also the thousands of blockchain apps people get excited about are much less important relative to the plain old money function. However, it will be hard if not impossible to create widespread usage while limiting the number of transactions.
submitted by bbelev to Bitcoin [link] [comments]

Some concerns on BCH

Supporting either side exclusively is a gamble, but in my opinion supporting BCH is the bigger gamble. There's a lot of money to be made if it succeeds, but there's also a lot of money to be made by betting on red if the roulette ball does end up on red.
Coming purely from a price perspective, there are more risks I see for BCH here than for BTC. You can refute most of these arguments if you're coming from an ideological perspective - power to the people, Satoshi's original vision for the greater good, cypherpunk and what have you (though in this case there are difficult questions about the lack of true anonymity as well) - but probably not from the price perspective.
What are your arguments against these points, and what do you have to add in favor or against BCH's chances of success?
submitted by gnu6969 to btc [link] [comments]

A shout out to Roger for helping to bridge the divide. Now let's get on with SegWit.

Bitcoin.com Statement on the New York Agreement
"we felt that to remain opposed to this development because it wasn’t our ideal outcome would only prolong Bitcoin’s capacity crisis and contribute to even more division than there already is. In our view, the long term health and survival of the Bitcoin network is of greater importance than being the “winners” of the block size debate. " (sic)
submitted by 101111 to Bitcoin [link] [comments]

So begins the great payment wars

So, now that the block size debate has concluded with Segwit the clear winner, it appears that the next big rift in Bitcoin will be between various payment processors.
BitPay appears to not want their merchants to accept bitcoin so they have created all sorts of hoops to jump through with just a hand full of wallets that you have to use to spend on their platform (not to mention requiring artificially high transaction fees and displaying bcash as having lower fees every time anyone uses them). CoInbAse got out and left all of their clients hanging, including Expedia.
BtcPay appears to be the popular alternative though a bit more technically difficult for companies to use.
Users are going to start wanting payment processors that use Lightning Network like BtcPay Server.
I've personally had to start using PayPal for my web hosting service because they use BitPay. I wanted to move BTC from my Korean wallet to localbitcoins but they were incompatible.
What was once simple, just use a Bitcoin address to send your bitcoins, has become yet another fork in the Bitcoin world.
submitted by Elwar to Bitcoin [link] [comments]

I am losing faith in Bitcoin Cash. Convince me to stay with rational arguments.

Since I know people here love accusing everyone of being a troll, i recommend you guys go look at my post history to realize I have been supporting BCH for multiple months. This isn't me spreading FUD, I actually want to see reasons to continue supporting this coin over others because atm I don't.
So I first bought Bitcoin Cash when it was around $450 before it started pumping all the way to $2700. I thought it was cheap (it was) and that it would be the best play, because regardless of how the s2x fork ended BCH would come out as the winner (and it did).
I spent far more of my time here over the other subreddit because I hate censorship, so I never rly spent much time there. From that I learned about the history of Bitcoin, the block size debate, etc. and really resonated more with the BCH side than the BTC side, after all it is very hard to support a "currency" with $30 fees.
I also do not fall for dumb arguments from either side. These include on the BTC side: RogeJihan are scammers, BCH was only made for ASICBoost, Block size is bad because muh decentralization, etc. And on the BCH side these include: Segwit is bad bc it separates signatures, Blockstream is evil and paying for trolls, Lightning Network is vaporwave, etc. I think these are all absurd arguments that either make no sense, or they're plain conspiracy theories.
Anyway the reason I no longer have as much faith in BCH is that Segwit support is now over 3 times what it was when I first bought BCH, fees are basically identical between BTC and BCH, and I do not see the demand going back to its highs of December anytime soon so I don't think fees will get ridiculous again. For these reasons I think the demand for BCH has greatly diminished, and that there is little reason in adding more of it to my portfolio. Currently I only see it as a way to hedge against Bitcoin in case fees go back up.
Please take into account that I am a crypto trader, therefore I am seeing this as a buy and hold investment, not a spend and replace coin of choice. I also hope this will turn into a decent discussion that will make me rethink my position, and not that it will get forgotten amongst all the other posts, since posts like these are not common here.
submitted by josephbeadles to btc [link] [comments]

The New Crypto Order & Escaping Financial Repression

The Vigilante’s View
It is our first issue in months that bitcoin hasn’t hit an all-time high! And it’s the last issue of the year. And what a year for cryptos it was.
To put it in perspective, bitcoin could fall 90% from current levels and it will still have outperformed stocks, bonds and real estate in 2017.
Bitcoin started 2017 at $960.79.
At the time of this writing it is near $13,000 for a gain of 1,250% in 2017.
And, bitcoin was actually one of the worst performing cryptocurrencies in our TDV portfolio in 2017!
Ethereum (ETH) started 2017 at $8. It has since hit over $800 for a nice 10,000% gain in 2017.
That’s pretty good, but not as good as Dash which started the year at $11.19 and recently hit $1,600 for a nearly 15,000% gain.
I hope many of you have participated in these amazing gains! If not, or you are new, don’t worry there will be plenty more opportunities in the years ahead.
It won’t all be just home runs though… in fact, some of the cryptos that have performed so well to date may go down dramatically or collapse completely in the coming years.
I’ll point out further below why Lightning Network is not the answer to Bitcoin Core’s slow speeds and high costs. And, I’ll look ahead to 2018 and how we could already be looking beyond blockchains.
Yes, things are moving so fast that blockchain just became known to your average person this year… and could be nearly extinct by next year.
That’s why it is important to stick with us here at TDV to navigate these choppy free market waters!
New Years Reflection On The Evolution Of Consensus Protocols
Sooner or later crypto will humble you by its greatness. Its vastness is accompanied by a madness that is breathtaking, because you quickly realize that there is no stopping crypto from taking over the world. The moment you think you have everything figured out, is the moment the market will surprise you.
We are for the first time living and witnessing the birth of the first worldwide free market. Throughout this rampage of innovation, we all are implicitly aiming for the best means of harnessing consensus. As we leave this bountiful 2017 and aim at 2018, it is important for us to meditate and appreciate the progress we have made in transforming the world through the decentralization of consensus. It is also important to reflect on the changes in consensus building we have partaken in and those yet to come.
Consensus is the agreement that states “this is what has occurred, and this is what hasn’t happened.”
Throughout the vastness of history, we humans have only really had access to centralized means for consensus building. In the centralized world, consensus has been determined by banks, states, and all kinds of central planners. As our readers know, any centralized party can misuse their power, and their consensus ruling can become unfair. In spite of this, many individuals still praise the effectiveness of consensus building of centralized systems.
People from antiquity have had no other option but to trust these central planners. These systems of control have created still-water markets where only a few are allowed to compete. This lack of competition resulted in what we now can objectively view as slow innovation. For many, centralized consensus building is preferred under the pretense of security and comfort. Unfortunately, these same individuals are in for a whole lot of discomfort now that the world is innovating on top of the first decentralized consensus building technology, the blockchain.
Everything that has occurred since the inception of bitcoin has shocked central planners because for the first time in history they are lost; they no longer hold power. We now vote with our money. We choose what we find best as different technologies compete for our money.
What we are witnessing when we see the volatility in crypto is nothing more than natural human motion through price. The innovation and volatility of the crypto market may seem unorthodox to some, because it is. For the first time in history we are in a true free market. The true free market connects you to everybody and for this reason alone the market shouldn’t surprise us for feeling “crazy.” Volatility is a sign of your connection to a market that is alive. Radical innovation is a sign of a market that is in its infancy still discovering itself.
In juxtaposing centralized consensus building with decentralized consensus building, I cannot keep myself from remembering some wise biblical words; “ And no one pours new wine into old wineskins. Otherwise, the new wine will burst the skins; the wine will run out and the wineskins will be ruined.” – Luke 5:37
The centralized legacy financial system is akin to old wineskins bursting to shreds by the new wine of crypto. Decentralized consensus building has no need for central planners. For example, think about how ludicrous it would be for someone to ask government for regulation after not liking something about crypto. Sorry, there is no central planner to protect you; even the mathematical protocols built for us to trust are now competing against one another for our money.
These new mathematical protocols will keep competing against one another as they provide us with new options in decentralizing consensus. As we look unto 2018, it is important that we as investors begin to critically engage and analyze “blockchain-free cryptocurrencies.”
HASHGRAPHS, TANGLES AND DAGS
Blockchain-free cryptocurrencies are technologies composed of distributed databases that use different tools to achieve the same objectives as blockchains.
The top contenders in the realm of blockchain-free cryptos are DAGs (Directed Acyclic Graphs) such as Swirlds’ Hashgraph, ByteBall’s DAG, and IOTA’s Tangle. These blockchain-free cryptos are also categorized as belonging to the 3 rd generation of cryptocurrencies. These technologies promise to be faster, cheaper, and more efficient than blockchain cryptocurrencies.
Blockchains were the first means of creating decentralized consensus throughout the world. In the blockchain, the majority of 51% determine the consensus. The limits of blockchains stem from their inherent nature, whereupon every single node/participant needs to know all of the information that has occurred throughout the whole blockchain economy of a given coin.
This opens up blockchains to issues akin to the ones we have been exposed to in regards to Bitcoin’s scaling. It is important to make a clear distinction in the language used between blockchains and blockchain-freecryptocurrencies. When we speak about blockchains it is more proper to speak about its transactionconsensus as “decentralized”, whereas with blockchain-free cryptocurrencies it is best if we refer to transaction consensus as “distributed.”
Swirlds’ Hashgraph incorporates a radical and different approach to distributing consensus. Swirlds claims that their new approach will solve scaling and security issues found on blockchains. They use a protocol called “Gossip about Gossip.” Gossip refers to how computers communicate with one another in sending information.
In comparison to the Blockchain, imagine that instead of all of the nodes receiving all of the transactions categorized in the past ten minutes, that only a few nodes shared their transaction history with other nodes near them. The Hashgraph team explains this as “calling any random node and telling that node everything you know that it does not know.” That is, in Hashgraph we would be gossiping about the information we are gossiping; i.e., sending to others throughout the network for consensus.
Using this gossiped information builds the Hashgraph. Consensus is created by means of depending on the gossips/rumors that come to you and you pass along to other nodes. Hashgraph also has periodic rounds which review the circulating gossips/rumors.
Hashgraph is capable of 250,000+ Transactions Per Second (TPS), compared to Bitcoin currently only allowing for 7 TPS. It is also 50,000 times faster than Bitcoin. There is no mention of a coin on their white paper. At this moment there is no Hashgraph ICO, beware of scams claiming that there is. There is however a growing interest in the project along with a surge of app development.
IOTAs DAG is known as the Tangle. Contrary to Hashgraph, IOTA does have its own coin known as MIOTA, currently trading around the $3 mark. There are only 2,779,530,283 MIOTA in existence. The Tangle was also created to help alleviate the pains experienced with Blockchain scaling. IOTAs Tangle creates consensus on a regional level; basically neighbors looking at what other neighbors are doing.
As the tangle of neighbors grows with more participants the security of the system increases, along with the speed of confirmation times. IOTA has currently been criticized for its still lengthy confirmation times and its current levels of centralization via their Coordinators. This centralization is due to the fact that at this moment in time the main team works as watchtower to oversee how Tangle network grows so that it does not suffer from attacks.
Consensus is reached within IOTA by means of having each node confirm two transactions before that same node is able to send a given transaction. This leads to the mantra of “the more people use IOTA, the more transactions get referenced and confirmed.” This creates an environment where transactional scaling has no limits. IOTA has no transaction fees and upon reaching high adoption the transactions ought to be very fast.
Another promising aspect about IOTA is that it has an integrated quantum-resistant algorithm, the Winternitz One-Time Signature Scheme, that would protect IOTA against an attack of future quantum computers. This without a doubt provides IOTA with much better protection against an adversary with a quantum computer when compared to Bitcoin.
ByteBall is IOTA’s most direct competitor. They both possess the same transaction speed of 100+ TPS, they both have their own respective cryptocurrencies, and they both have transparent transactions. ByteBall’s token is the ByteBall Bytes (GBYTE), with a supply of 1,000,000; currently trading at around $700. ByteBall aims to service the market with tamper proof storage for all types of data. ByteBall’s DAG also provides an escrow like system called “conditional payments;” which allows for conditional clauses before settling transactions.
Like IOTA, ByteBall is also designed to scale its transaction size to meet the needs of a global demand. ByteBall provides access to integrated bots for transactions which includes the capacity for prediction markets, P2P betting, P2P payments in chat, and P2P insurance. ByteBall’s initial coin distribution is still being awarded to BTC and Bytes holders according to the proportional amounts of BTC or Bytes that are held per wallet. IOTA, ByteBall and Hashgraph are technologies that provide us with more than enough reasons to be hopeful for 2018. In terms of the crypto market, you don’t learn it once. You have to relearn it every day because its development is so infant. If you are new to crypto and feel lost at all know that you are not alone. These technologies are constantly evolving with new competitive options in the market.
As the technologies grow the ease for adoption is set to grow alongside innovation. We are all new to this world and we are all as much in shock of its ingenuity as the next newbie. Crypto is mesmerizing not just for its volatility which is a clear indication of how connected we are now to one another, but also because of the social revolution that it represents. We are experiencing the multidirectional growth of humanity via the free market.
Meanwhile Bitcoin Is Turning Into Shitcoin
It is with a great degree of sadness that I see bitcoin is on the cusp of destroying itself. Bitcoin Core, anyway. Bitcoin Cash may be the winner from all of this once all is said and done.
Whether by design or by accident, bitcoin has become slow and expensive.
Many people point out that IF the market were to upgrade to Segwit that all would be fine. I’ll explain further below why many market participants have no incentive to upgrade to Segwit… meaning that the implementation of Segwit has been a massively risky guess that so far has not worked.
Others say that the Lightning Network (LN) will save bitcoin. I’ll point out below why that will not happen.
Lightning Networks And The Future Of Bitcoin Core
If you’ve been following bitcoin for any length of time, you’re probably aware of the significant dispute over how to scale the network. The basic problem is that although bitcoin could be used at one time to buy, say, a cup of coffee, the number of transactions being recorded on the network bid up the price per transaction so much that actually sending BTC cost more than the cup of coffee itself. Indeed, analysis showed that there were many Bitcoin addresses that had such small BTC holdings that the address itself couldn’t be used to transfer it to a different address. These are referred to as “unspendable addresses.”
In the ensuing debate, the “big blockers” wanted to increase the size of each block in the chain in order to allow for greater transaction capacity. The “small blockers” wanted to reduce the size of each transaction using a technique called Segregated Witness (SegWit) and keep the blocks in the chain limited to 1MB.
SegWit reduces the amount of data in each transaction by around 40-50%, resulting in an increased capacity from 7 transactions per second to perhaps 15.
The software engineers who currently control the Bitcoin Core code repository have stated that what Bitcoin needs is “off-chain transactions.” To do this, they have created something called Lightning Networks (LN), based on an software invention called the “two-way peg.” Put simply, the two-way peg involves creating an escrow address in Bitcoin where each party puts some bitcoin into the account, and then outside the blockchain, they exchange hypothetical Bitcoin transactions that either of them can publish on Bitcoin’s blockchain in order to pull their current agreed-upon balance out of the escrow address.
Most layman explanations of how this works describe the protocol as each party putting in an equal amount of Bitcoin into the escrow. If you and I want to start transacting off-chain, so we can have a fast, cheap payment system, we each put some Bitcoin in a multi-party address. I put in 1 BTC and you put in 1 BTC, and then we can exchange what are essentially cryptographic contracts that either of us can reveal on the bitcoin blockchain in order to exit our agreement and get our bitcoin funds.
Fortunately, it turns out that the video’s examples don’t tell the whole story. It’s possible for the escrow account to be asymmetric. See:. That is, one party can put in 1 BTC, while the other party puts in, say, 0.0001 BTC. (Core developer and forthcoming Anarchapulco speaker Jimmy Song tells us that there are game theoretic reasons why you don’t want the counterparty to have ZERO stake.)
Great! It makes sense for Starbucks to participate with their customers in Lightning Networks because when their customers open an LN channel (basically a gift card) with them for $100, they only have to put in $1 worth of Bitcoin. Each time the customer transacts on the Lightning Network, Starbucks gets an updated hypothetical transaction that they can use to cash out that gift card and collect their bitcoin.
The elephant in the room is: transaction fees. In order to establish the escrow address and thereby open the LN channel, each party has to send some amount of bitcoin to the address. And in order to cash out and get the bitcoin settlement, one party also has to initiate a transaction on the bitcoin blockchain. And to even add funds to the channel, one party has to pay a transaction fee.
Right now fees on the bitcoin blockchain vary widely and are extremely volatile. For a 1-hour confirmation transaction, the recommended fee from one wallet might be $12 US, while on another it’s $21 US. For a priority transaction of 10-20 minutes, it can range from $22-30 US. Transactions fees are based on the number of bytes in the transaction, so if both parties support SegWit (remember that?) then the fee comes down by 40-50%. So it’s between $6 and $10 US for a one hour transaction and between $11-15 for a 15 minute transaction. (SegWit transactions are prioritized by the network to some degree, so actual times may be faster)
But no matter what, both the customer and the merchant have to spend $6 each to establish that they will have a relationship and either of them has to spend $6 in order to settle out and get their bitcoin. Further, if the customer wants to “top off” their virtual gift card, that transaction costs another $6. And because it adds an address to the merchant’s eventual settlement, their cost to get their Bitcoin goes up every time that happens, so now it might cost them $9 to get their bitcoin.
Since these LN channels are essentially digital gift cards, I looked up what the cost is to retailers to sell acustomer a gift card. The merchant processor Square offers such gift cards on their retailer site. Their best price is $0.90 per card.
So the best case is that Lightning Networks are 600% more expensive than physical gift cards to distribute, since the merchant has to put a transaction into the escrow address. Further, the customer is effectively buying the gift card for an additional $6, instead of just putting up the dollar amount that goes on the card.
But it gets worse. If you get a gift card from Square, they process the payments on the card and periodically deposit cash into your bank account for a percentage fee. If you use the Lightning Network, you can only access your Bitcoin by cancelling the agreement with the customer. In other words, you have to invalidate their current gift card and force them to spend $6 on a new one! And it costs you $6 to collect your funds and another $6 to sell the new gift card!
I’m sure many of you have worked in retail. And you can understand how this would be financially infeasible. The cost of acquiring a new customer, and the amount of value that customer would have to stake just to do business with that one merchant, would be enormous to make any financial sense.
From time immemorial, when transaction costs rise, we see the creation of middlemen.
Merchants who can’t afford to establish direct channels with their customers will have to turn to middlemen, who will open LN channels for them. Instead of directly backing and cashing out their digital gift cards, they will establish relationships with entities that consolidate transactions, much like Square or Visa would do today.
Starbucks corporate or individual locations might spend a few USD on opening a payment channel with the middleman, and then once a month spend 6 USD to cash out their revenues in order to cover accounts payable.
In the meantime, the middleman also has to offer the ability to open LN channels for consumers. This still happens at a fixed initial cost, much like the annual fee for a credit card in the US. They would continue to require minimum balances, and would offer access to a network of merchants, exactly like Visa and MasterCard today.
This process requires a tremendous amount of capital because although the middleman does not have to stake Bitcoin in the consumer’s escrow account, he does have to stake it in the merchant’s account. In other words, if the Lightning Network middleman wants to do business with Starbucks to the tune of $100,000/month, he needs $100,000 of bitcoin to lock into an escrow address. And that has to happen for every merchant.
Because every month (or so) the merchants have to cash out of their bitcoin to fiat in order to pay for their cost of goods and make payroll. Even if their vendors and employees are paid in bitcoin and they have LN channels open with them, someone somewhere will want to convert to fiat, and trigger a closing channel creating a cascading settlement effect that eventually arrives at the middleman. Oh, and it triggers lots of bitcoin transactions that cost lots of fees.
Did I mention that each step in the channel is expecting a percentage of the value of the channel when it’s settled? This will come up again later.
Again, if you’ve worked in the retail business, you should be able to see how infeasible this would be. You have to buy inventory and you have to sell it to customers and every part that makes the transaction more expensive is eating away at your margins.
Further, if you’re the middleman and Starbucks closes out a channel with a $100,000 stake where they take $95,000 of the bitcoin, how do you re-open the channel? You need another $95,000 in capital. You have revenue, of course, from the consumer side of your business. Maybe you have 950 consumers that just finished off their $100 digital gift cards. So now you can cash them out to bitcoin for just $5700 in transaction fees, and lose 5.7% on the deal.
In order to make money in that kind of scenario, you have to charge LN transaction fees. And because your loss is 5.7%, you need to charge in the range of 9% to settle Lightning Network transactions. Also, you just closed out 950 customers who now have to spend $5700 to become your customer again while you have to spend $5700 to re-acquire them as customers. So maybe you need to charge more like 12%.
If you approached Starbucks and said “you can accept Bitcoin for your customers and we just need 12% of the transaction,” what are the odds that they would say yes? Even Visa only has the balls to suggest 3%, and they have thousands and thousands of times as many consumers as bitcoin.
The entire mission of bitcoin was to be faster, cheaper and better than banks, while eliminating centralized control of the currency. If the currency part of Bitcoin is driven by “off-chain transactions” while bitcoin itself remains expensive and slow, then these off-chain transactions will become the territory of centralized parties who have access to enormous amounts of capital and can charge customers exorbitant rates. We know them today as banks.
Even for banks, we have to consider what it means to tie up $100,000/month for a merchant account. That only makes sense if the exchange rate of bitcoin grows faster than the cost of retaining Bitcoin inventory. It costs nothing to store Bitcoin, but it costs a lot to acquire it. At the very least the $6 per transaction to buy it, plus the shift in its value against fiat that’s based on interest rates. As a result, it only makes sense to become a Lightning Network middleman if your store of value (bitcoin) appreciates at greater than the cost of acquiring it (interest rate of fiat.) And while interest rates are very low, that’s not a high bar to set. But to beat it, Bitcoin’s exchange rate to fiat has to outpace the best rate available to the middleman by a factor exceeding the opportunity cost of other uses of that capital.
Whatever that rate is, for bitcoin, the only reason the exchange rate changes is new entry of capital into the “price” of bitcoin. For that to work, bitcoin’s “price” must continue to rise faster than the cost of capital for holding it. So far this has happened, but it’s a market gamble for it to continue.
Since it happens because of new capital entering into the bitcoin network and thus increasing the market cap, this results in Bitcoin Core becoming the very thing that its detractors accuse it of: a Ponzi scheme. The cost of transacting in Bitcoin becomes derived from the cost of holding bitcoin and becomes derived from the cost of entering bitcoin.
Every middleman has to place a bet on the direction of bitcoin in a given period. And in theory, if they think the trend is against Bitcoin, then they’ll cash out and shut down all the payment channels that they transact. If they bought bitcoin at $15,000, and they see it dropping to $13,000 — they’ll probably cash out their merchant channels and limit their risk of a further drop. The consumer side doesn’t matter so much because their exposure is only 1%, but the merchant side is where they had to stake everything.
If you’re wondering why this information is not widely known, it’s because most bitcoin proponents don’t transact in bitcoin on a regular basis. They may be HODLing, but they aren’t doing business in bitcoin.
Through Anarchapulco, TDV does frequent and substantial business in bitcoin, and we’ve paid fees over $150 in order to consolidate ticket sale transactions into single addresses that can be redeemed for fiat to purchase stage equipment for the conference.
For Bitcoin to be successful at a merchant level via Lightning Networks, we will have to see blockchain transactions become dramatically cheaper. If they return to the sub-$1 range, we might have a chance with centralized middlemen, but only with a massive stabilization of volatility. If they return to $0.10, we might have a chance with direct channels.
Otherwise, Lightning Networks can’t save bitcoin as a means of everyday transaction. And since that takes away its utility, it might very well take away the basis of its value and bitcoin could find itself truly being a tulip bubble.
One final note: there are a some parties for whom all these transactions are dramatically cheaper. That is the cryptocurrency exchanges. Because they are the entry and exit points for bitcoin-to-fiat, they can eliminate a layer of transaction costs and thus offer much more competitive rates — as long as you keep your bitcoin in their vaults instead of securing it yourselves.
Sending it out of their control lessens their competitive advantage against other means of storage. It comes as no surprise, then, that they are the least advanced in implementing the SegWit technology that would improve transaction costs and speed. If you buy bitcoin on Poloniex, it works better for them if it’s expensive for you to move that coin to your Trezor.
In fact, an exchange offering Lightning Network channels to merchants could potentially do the following…
1) Stake bitcoins in channels with merchants. These coins may or may not be funds that are held by their customers. There is no way to know.
2) Offer customers “debit card” accounts for those merchants that are backed by the Lightning network
3) Establish middle addresses for the customer accounts and the merchant addresses on the Lightning Network.
4) Choose to ignore double-spends between the customer accounts and the merchant addresses, because they don’t actually have to stake the customer side. They can just pretend to since they control the customer’s keys.
5) Inflate their bitcoin holdings up to the stake from the merchants, since the customers will almost never cash out in practice.
In other words, Lightning Networks allow exchanges a clear path to repeating Mtgox; lie to the consumer about their balance while keeping things clean with the merchant. In other words, establish a fractional reserve approach to bitcoin.
So, to summarize, Bitcoin Core decided increasing the blocksize from 1mb to 2-8mb was “too risky” and decided to create Segwit instead which the market has not adopted. When asked when bitcoin will be faster and less expensive to transfer most Bitcoin Core adherents say the Lightning Network will fix the problems.
But, as I’ve just shown, the LN makes no sense for merchants to use and will likely result in banks taking over LN nodes and making BTC similar to Visa and Mastercard but more expensive. And, will likely result in exchanges becoming like banks of today and having fractional reserve systems which makes bitcoin not much better than the banking system of today.
Or, people can switch to Bitcoin Cash, which just increased the blocksize and has much faster transaction times at a fraction of the cost.
I’ve begun to sell some of my bitcoin holdings because of what is going on. I’ve increased my Bitcoin Cash holdings and also increased my holdings of Dash, Monero, Litecoin and our latest recommendation, Zcash.
Other News & Crypto Tidbits
When bitcoin surpassed $17,600 in December it surpassed the total value of the IMF’s Special Drawing Rights (SDR) currency.
Meanwhile, Alexei Kireyev of the IMF put out his working paper, “ The Macroeconomics of De-Cashing ,” where he advises abolishing cash without having the public aware of the process.
Countries such as Russia are considering creating a cryptocurrency backed by oil to get around the US dollar and the US dollar banking system. Venezuela is as well although we highly doubt it will be structured properly or function well given the communist government’s track record of destroying two fiat currencies in the last decade.
To say that the US dollar is being attacked on every level is not an understatement. Cryptocurrencies threaten the entire monetary and financial system while oil producing countries look to move away from the US dollar to their own oil backed cryptocurrency.
And all this as bitcoin surpassed the value of the IMF’s SDR in December and in 2017 the US dollar had its largest drop versus other currencies since 2003.
And cryptocurrency exchanges have begun to surpass even the NASDAQ and NYSE in terms of revenue. Bittrex, as one example, had $3 billion in volume on just one day in December. At a 0.5% fee per trade that equaled $15m in revenue in just one day. If that were to continue for 365 days it would mean $5.4 billion in annual revenue which is more than the NASDAQ or NYSE made this year.
Conclusion
I never would have guessed how high the cryptocurrencies went this year. My price target for bitcoin in 2017 was $3,500! That was made in late 2016 when bitcoin was near $700 and many people said I was crazy.
Things are speeding up much faster than even I could have imagined. And it is much more than just making money. These technologies, like cryptocurrencies, blockchains and beyond connect us in a more profound way than Facebook would ever be able to. We are now beginning to be connected in ways we never even thought of; and to some degree still do not understand. These connections within this completely free market are deep and meaningful.
This is sincerely beautiful because we are constantly presented with an ever growing buffet of competing protocols selling us their best efforts in providing harmony within the world. What all of these decentralized and distributed consensus building technologies have in common is that they connect us to the world and to each other. Where we are going we don’t need foolish and trite Facebook’s emojis.
As we close a successful 2017 we look with optimism towards a much more prosperous 2018. The Powers That Shouldn’t Be (TPTSB) can’t stop us. As we move forward note how much crypto will teach you about ourselves and the world. In a radical free market making our own bets will continue to be a process of self discovery. Crypto will show us the contours of our fears, the contours of our greed, and will constantly challenge us to do our best with the knowledge we have.
Remember, randomness and innovation are proper to the happenstance nature of a true digital free market.
Happy New Year fellow freedom lovers!
And, as always, thank you for subscribing!
Jeff Berwick
submitted by 2012ronpaul2012 to conspiracy [link] [comments]

Nov 24th TAU weekly update

New wallet shall be out today. TaucoinJ, the future mining node, published in GitHub still dev now, while you can start to watch the progress. In GitHub, we will publish both pc mining and mobile mining in java, but only support mobile java. you are on your risk of the pc java version.
Debate on the block size, D-C-S triangle (decentralize, consensus and scale) is getting interesting. Seem TAU is priority on DC, Bitcoin is CD, dPOS is SC, IPFS is on SD. It is really belief system generating architecture.
TAU starts to accept donation to help development of mobile node, recommend $100 each, TAU coin souvenir provided.
Most of TAUX coins returned, still 9 people not withdraw, pls do so.
Weekly consensus debate winner candidate for voting: cryptoaddictchie, zityx23, vncntluv, Kriptolab
submitted by wuzhengy1018 to Tau_coin [link] [comments]

NO2X is very dangerous game we play

For all who have forgotten, there was a unsolvable scaling debate which lasted for years. UASF was a way that Core (mostly Luke Jr.) pushed as a solution. UASF would probably be a mess like we have never seen before. UASF had a potential to do maybe a lethal damage to BTC. Barry reached out and made an agreement which was basically good for all parties. Bitcoin got SegWit and will get blockchain increase 6 months. Since we all know and agree that 2Mb increase will happen sooner or latter, I thought, ok why not in 6 months? Some say it was too fast, some say it was too late, but for me 6 months sounds like a good enough number.
Great, now that we have this out of the way, we can focus on the real enemy in banks and govs.
No! Couple months in the deal Core starts to threat to leave bitcoin project if they don’t have absolute control over every single decision and declares that they are not ready for any compromise. Parallel with that starts FUD campaign that is presenting S2X as something The Devil him self proposed… Not like it is a small block increase to 1Mb to 2Mb which will happen anyways sooner or latter anyways.
This begs the question:
Why shouldn't big corporations and miners have a say in where bitcoin should go?
I mean, if Core can't give us any good TECHNICAL explantation why is 2X bad, how are they any better than 'other guys'? It is just power play and we are voting on popularity contest (since there are no good technical arguments). I've read the post the other day here in bitcoin and the guy was saying something like "If Satoshi was Jesus, Core developers are Apostoles". I mean - come on!?!
I'm all pro Core but this Civil War with weak arguments makes me thinking that they are steering bitcoin in this direction just so that money that goes to miners goes to L2 nodes instead. This doesn't have to be necessary bad thing, however let the market decide this by giving them an option to use both on-chain and L2 as long as it is possible. Maybe NO2X is just is just a power play between current business and business that would be built on L2 network and L2 wants to push as much users as possible into using it right out of get go.
S2X Pro: Cheeper transactions
S2X Cons: It will be slightly more expensive to run full node
Fact: 2Mb increase will happen sooner or latter.
Some of the FUD arguments I see here latterly:
Governments will now be able to control Bitcoin through big business
That just don't work like that. Any malicious protocol change will be rejected by community because we are not stupid. Basically no one will run that code. Big Corporations wouldn't run that code in the first place. Currently we are talking about change that will happen sooner or latter, not something hostile. We are accepting this 2X only because of a reason that good portion of community wants it and there is no good reason agains it. You can't blow narrative out of proportion to prove your point. That is like if mother asks you to wash the dishes and you answer: "OMG NO! I'm not your slave! I will not wash the dishes because tomorrow you'll ask me to kill a man and I don't want to become a killer!". :)
We will not be able to run enough Nodes if blocks are 2Mb
Sure, number of nodes will decrease, but that wouldn’t have big impact on the network. This is small block size increase and impact on node count will be modest.
This agreement wasn’t made publicly discussed or though BIP
I agree that the way how the deal was made is not ideal, however that doesn’t make it a bad deal! The deal is good and I think all parties should be happy with it. Again, maybe we can discuss timing of 2Mb HF, but who really cares? If it turns out that we increased it too early we can just delay next block size increase and that’s it. We don’t have to waste time and energy on this brother killing war.
S2X is malicious because of no replay protection
If BitcoinCore gains enough momentum to keep that fork alive someone will have to put replay protection. However, this is not problem with S2X it self, it is problem with how it is implemented. If Core have agreed to Segtiw2X, and wrote implementation code we would never have this conversation or NO2X FUD campaign. So you can blame core for this mess as well if you look it from that perspective.
NO2X will be a mess.
There will be no winners in this war.
submitted by Rdzavi to Bitcoin [link] [comments]

"There is no possibility of not 'forking.' In fact a chain fork (hashpower referendum) happens at every block. Merely because the referendum has voted in the incumbent ruleset a great many times in a row does not imply a referendum (chain fork) is not happening every block." ~ u/ForkiusMaximus

https://np.reddit.com/btc/comments/68ju8a/utempatroy_uadam3us_unullc_ulukejr_dont_even/dgz7u1r
https://np.reddit.com/btc/comments/41lpisegwit_economics/cz3cazb/
Bitcoin, as a creature of the market, should be hard forking on a regular basis, because a hard fork is the only time the market gets an opportunity to express its will in anything other than a binary YES/NO fashion. That is, without a hard fork, the market only can push the price up or down, but with a hard fork it can actually select Option A over Option B. It can even assign a relative weighting to those options, especially if coins in the two sides of the fork are allowed to be bought and sold in advance by proxy through futures trading on exchanges (e.g., Bitfinex would let you buy futures in CoreCoins and/or ClassicCoins so that the matter could be resolved before the fork even happens, with the legendary accuracy of a prediction market).
Anything controversial, on which many reasonable people are in disagreement, is the perfect time for a hard fork. The idea that controversial hard forks are to be avoided is not only exactly backwards, to even entertain the idea shows a fundamental misunderstanding of how Bitcoin works and calls into question everything else one might say on the subject.
Hard forks are the market speaking. Soft forks on any issues where there is controversy are an attempt to smother the market in its sleep. Core's approach is fundamentally anti-market and against the very open-source ethos Bitcoin was founded on.
EDIT: Looks like Ben Davenport is on the same page as far as "fork arbitrage."
~ u/ForkiusMaximus
https://np.reddit.com/btc/comments/61n9y9/bruce_fenton_core_supporters_if_you_dont_like_it/dffz6g1/
People saying Bitcoin isn't antifragile is a contrarian indicator. Look at how different things are now. People are actually debating the dynamics of a hard fork, fork trading, fork futures, and Core is on the run with them being the ones having to discuss a PoW change. Besides this happening pretty slowly, what more could you ask for? Wasn't this in the cards all along?
Bitcoin will be the first cryptocurrency to dash the illusion of incorruptible leaders and blossom to a truly pluralistic development environment where no one dev or group of devs or foundation has de facto final say over changes. No major altcoin has overcome this yet, as all have their own trusty Gavin-like person or Bitcoin Wizards-like groups that is so far navigating everything well. The transition to fully realized Market Governance is a huge step, fraught with peril, but a necessary prerequisite for reaching trillion-dollar market caps.
~ u/ForkiusMaximus
https://np.reddit.com/btc/comments/4mbmrt/a_sanity_check_appeal_to_greg_co/d3u88jq/
In fairness, Greg and the others have raised one halfway decent point among all the weaseling around: what Classic did was probably the wrong way to get around Core.
Classic framed it as a miner vote, which Greg is calling a coup against "the users." Of course he's trying to bullshit that Core = the community, but there is still a grain of truth left after the BS is washed away. The fact is, Bitcoin doesn't work by miner vote; it works - ultimately - by market vote. The miners should serve as a proxy for that, but due to mining becoming disconnected with nodes (pooled mining) there are indeed like 10 guys who sort of have some possible control over Bitcoin (yes people can just switch pools, but is this the ideal way?).
The rightful remedy to this situation is to put competing forks up to a direct market test: commence fork futures trading on the major Bitcoin exchanges. Investors buy and sell 1MB-BTC futures and 2MB-BTC futures until a clear winner emerges. The market speaks. (And in the unlilely event that no clear winner emerges, the market has expressed its value for a persistent split.) In all cases, hodler purchasing power is unaffected.
Then neither Classic nor any other such fork can be called any kind of coup against the users, by any stretch. The 75% hashpower threshold should be removed. And I don't mean it should be increased to 95%. The blocksize cap in Classic should just be 2MB straight up as a flag day (increase to 2MB at this block...or gradual stepwise increase if prefered).
We have had endless debate because both alternatives were flawed: we should have no miner vote as proxy for a market vote; just a direct market vote. (In the event that the market chooses a persistent split, the minority chain would have to make some hashing and signing tweaks to prevent interference, of course.)
~ u/ForkiusMaximus
submitted by ydtm to btc [link] [comments]

Bitcoin 101 – What is The Longest Chain Rule? ( A Farming Analogy!)

Hey guys,
   
While many of us are strong supporters of Bitcoin (and other aspects of blockchain) – there are still some key concepts that we don't fully "grasp"
 
If you understand these concepts, however, I am certain that your love for Bitcoin will increase – and so shall your conviction to hold through market downtrends ;)
 
That being said – I know it's not easy to wrap your head around some of the stuff. So I've written SUPER SIMPLE analogies to help you!
 
A few weeks ago I wrote one on the Proof Of Work Puzzle
Today, I wrote an analogy on an equally important but often under-discussed topic: The Longest Chain Rule
 
If you understand The Longest Chain Rule it will help you with other concepts as well (Like 51% Attack, Double spends etc) So I wrote an analogy to explain the meat of it – A Farmer Analogy
 
(Expert reader beware – I kept it super simple ;) )
 
Formatted & Readable Orignal Post
 

Longest Chain Explained - A Farmer's Analogy

Let’s pretend we’re all farmers living in a small town. Majority of us farm rice as our major source of income. Weharvest the rice and pack them into 1KG gunny sacks and then carry the sacks to the Townhall. The sacks are then placed onto the only carriage the town has and transported to The Main City and sold.
 
 

The Town Hall Meeting: One day a Town Hall meeting is called to discuss the size of the gunny sacks...

An angry debate ensues on whether or not they should increase the size of each gunny-sack. Some farmers want the increased gunny-sack size for increased profits. But other farmers are against the idea – and claim it will make it more difficult for the oldeyoungeweaker farmers to carry the gunnysack to the Townhall.
 

The Mayor suggests that a vote should be conducted to solve the matter. However, an objection is raised:

 
“How is that fair? I do more work than these guys. I harvest far more rice. My vote should count more”
 
 

The Vote: That’s when a farmer named Satoshi comes up with an idea. He suggested that the next time they come to the town hall – they vote with their gunny-sacks of rice.

Each gunny-sack would represent a vote. That way, if you have more gunny-sacks you can cast more votes.Each sack of rice would be proof of their hard work. Farmers who worked harder, had more rice – and hence got to cast more votes
 
 

The Result: Everyone loved the idea. The next day, two rows were laid out near the Town Hall. The first row represented “Increase Gunny Sack Size” and the second row represented “Don't Increase Gunny Sack Size”

Farmers would carry their gunny sacks to the town hall and place each sack in one of the two rows – thus casting their vote. The row that had the longer chain of gunny sacks would be picked as the final decision. At the end of the day, the “Don't Increase Gunny Sack Size” row had the longer chain of gunny sacks – and thus was the winner!
 
 
Disagreements within a blockchain are pretty much solved the same way. Each gunnysack represents a “block” in the blockchain. A row of gunny sacks represents a chain.
 
Whenever there’s a disagreement, network participants can “fork” off the current chain. Thereby starting a new chain of blocks. Participants who agree with this new chain can now start applying their “blocks” to the new chain as well. Eventually, if the new chain extends the old chain – the Longest Chain Rule will kick in and will be declared the winning chain.
 
 

Longest Chain & “Work”

In our analogy, farmers were adding sacks of rice to “vote”. These sacks of rice are tangible and represent work done. The longest row of sacks represents the majority.
 
Similarly, in the blockchain, miners add a block to the chain to cast their vote. And the longest chain of blocks represent the majority. Miners on the network compete against each other by attempting to solve a puzzle – in order to win the “right” to add the next block onto the chain.
 
A miner consumes a lot of electricity to solve these puzzles. But each time he wins (i.e solve it before someone else does) – his block gets added to the chain.
 

But - How does a “digital” block represent something tangible/work?

In a way, the miner has permanently applied his electricity onto the block he just created. Since he won the solved the cryptographic puzzle, his block (with his ‘electricity’) gets added to the chain.
 
 

So now you could say...

The farmers ‘proof of work’ was his sack of rice – and hence got to vote. After all the farmers place their sacks of rice in each of the two rows, we have our decision because:
 
​“The longest row of sacks represents where the majority farmers have placed their vote”
 
The miner’s proof of work is his winning “block” of transactions - since each block represents a miner’s electricity consumed – the entire chain represents the consumed electricity of all the previous winning blocks.
 
“The longest chain of blocks represents where the majority miners have placed their vote"
 
 

Concluding Thoughts - Longest Chain & Immutability

Remember, energy is never destroyed – simply transferred. In the proof of work, you could say that the energy is transferred to secure the blockchain.
 
Why ‘secure’? Because to change a block, you’ll have to redo the “work” that was needed to create that block.
 
To undo any of the previous blocks, you’ll have to redo the work for that block and every block that followed it. I’ll explain (in detail) why in another post. But this is what gives Bitcoin it’s strong immutability.
 
In essence, an attacker will have to start a new chain and do enough work to also become the longest chain. If and only if his chain is the longest chain will it be considered the winner and valid. And you may understand now – to achieve this, would require consuming a lot of electricity. This is why The Longest Chain rule is so crucial to understand
 
 
Hope this post helps! :)
 
 
submitted by PoRco1x to Bitcoin [link] [comments]

Divide and conquer

I've become more and more convinced that the BCH Vs B2X Vs B1X debate is really nothing to do with any aspect of bitcoin technology, and nothing to do with the block size debate. That's merely the vehicle that has been chosen for the real attack.
It's purely about splitting the community into isolated camps along bogus idealogical lines in order to discredit the entire bitcoin concept, maybe even the entire cryptocurrency concept (I'm watching for a similar attack on ethereum, e.g. via a contentious DAO-like rollback).
So a message to everyone: you've been all bloody duped. When the dust settles in November some will be beaten and sore, some will be joyously thumping fists in the air, but overall everyone will lose even the winners.
BCH, B2X and B1X are all probably about the same in terms of ability-to-change-the-world. Any one of them is a far better option than no bitcoin at all. But all three together? Well that's surely the best possible outcome for the incumbent finance sector.
Any thoughts on this line? Please don't respond with "S2X rocks, BCH sucks" or anything similar. Just generally, do you think the entire bitcoin community, all 3 camps, is being fooled here?
submitted by fergalius to btc [link] [comments]

The Re-solution of the Block Size Debate

Author’s note: I typically don’t seem to approach problems the way most of us are expected to. In some ways I think this could be useful for various reasons, but unfortunately there are “side effects” as well. Once such side effect is my inability to use language in the standard way. The reader will have to forgive me for this, however, I believe that for this writing, the meaning and purpose will still translate to SOME players. If a few players can understand the content well enough, perhaps those who themselves HAVE a talent in language, might be able to translate the content in their own respective ways.
Introduction
…it cannot be irrelevant whether or not the future quality of a currency is really assured or whether instead that it depends on the shifting sands of political decisions or the possibly arbitrary actions of a bureaucracy of official.~John Nash-Ideal Money
Ever since Satoshi put the 1mb cap on the block-size, the community has been dividing itself further and further, between those that want a dramatic increase in the limit and those that do not. This creates an uncertainly in the future quality of the currency, and I think both sides would admit that this necessarily affects adoption and the price of the bitcoin. The most popular sentiment SEEMS to be that “big-blockers” want to scale bitcoin to have a transaction capacity that would allow it to evolve to be a global currency. However, big-blockers also have the biggest hill to climb, because they must convince Core to bend to their mandate (and then convince the network to adopt such a proposal). Core seems to have no intention in even addressing this issue. Bitcoin is in a state of flux. The purpose of this writing is to put and end this flux.
Re-solution and Rheomodes
If we can see what all of our opinions mean, then we are sharing a common content, even if don’t agree entirely.~David Bohm-On Dialogue
In order to do this I must be allowed to extend our language slightly. Rheomodes are a new mode of words (like verb, noun, pronoun, adjective etc.) created by Dr. David Bohm as an experiment to see if we can derive any value from taking emphasis off the noun and putting it onto the verb (in this instance rheo refers “to flow” or movement like an action word). In regard to bitcoin we might think of the distinction as the difference between “I’ll send you some BITCOIN” or “BITCOIN it to me”. The former treats bitcoin like a noun, and the latter like an action (a payment method).
It might not be immediately obvious what the importance of introducing a rheomodes. And it is indeed a difficult subject to introduce. A rheomode refers to a type of perspective that could either be called “objective” or an “aggregate of all subject perspectives”. An easier way to say this is that a rheomode means ‘to call the groups attention to X’, where X depends on the definition of the rheomode.
For the purpose of this essay the rheomode I wish to levate (call attention to) is “re-solution”. ‘Re’ (followed by a hyphen) in this instance, along with denoting the rheomode also implies “again”. ‘Solution’ in this instance, will not refer to the solution to a problem per se, but rather the mixture of two otherwise divided parts into a whole. The “again” or “re” implies that these separate parts were already a whole, and they were somewhat unnecessarily or unjustly divided (this creates an implication that there is a need or want for the parts to return to the whole, hence the connection to the root word ‘resolution’).
This is the basic aspect of the concept of rheomode I wish to bring to our attention, and the rheomode itself, re-solution, means, essentially, “to bring to the community’s attention the spontaneous combining of two otherwise separate parts, in such a way that a new wholistic perspective arises for the group”.
Now I will give an example of how we might use this rheomode in practice so that we might better understand its purpose and function.
The Re-solution of Gresham’s Law and Tier’s Law
After previously trying to re-solve the block-size debate with Gresham’s law, and the explanation that people will not circulate bitcoin, but rather they will hoard it versus a fiat counterpart, it has been brought to my attention that Gresham’s law isn’t necessarily applicable to bitcoin since there is no legal-tender law in relation to it.
Furthermore, astute players (and usually proponents of big-blocks) point out that the bitcoin phenomenon should work in REVERSE to Gresham’s law-people will circulate bitcoin and drop fiat altogether. This is called Tier’s law and it is said to come into play in the absence of any legal tender laws.
And here is where our example for our rheomode comes in (wiki):
The Nobel prize-winner Robert Mundell believes that Gresham’s Law could be more accurately rendered, taking care of the reverse, if it were expressed as, “Bad money drives out good if they exchange for the same price.”[18]
Now we can use our rheomode in a sentence: Robert Mundell “re-solved” Gerham’s law with Thier’s law which such a statement. That is to say, by taking a higher level perspective, Mundell was able to present a more general perspective that encapsulated both of the laws, and because of the succinct and direct use of language he was able to call this generalized perspective to the attention of the academic community and citizenry of this world. (note: In the language I have been working on, I would call this observation transmutation, which basically refers to “that which changes, and that which doesn’t change. Here the common meaning of transmutation seems appropriate as well.)
In going with Mundell’s insight we can begin to re-solve the future of bitcoin, without breaking Gresham’s or Tier’s law as follows. If bitcoin, left as is, became the new gold standard, people began to hoard it, and the velocity of fiat started to increase, we might view this phenomenon as a similar RESULT to Gresham’s law (even though the initial circumstances are not necessarily the same). If we raised bitcoin’s transaction capacity to facilitate a low fee coffee money, and bitcoin grew to be a world currency fast enough that fiat was effectively dropped altogether, we might view this phenomenon, instead, to be comparable to Tier’s law.
Ideal Money: A COMMON Goal
Each side of the debate seems to share a common interest in that they want to use bitcoin in the most optimal fashion possible. And each side shares a common interest in wanting to bring our global financial system into order. I want to paint two distinct pictures, big-blockers that wish to optimize bitcoin as a currency, and small-blockers, that might be thinking of bitcoin as a new age digital gold, which inspires optimized currency systems to run in and around bitcoin and the block-chain.
Each of us has our own view on what ideal money might be, however we need to take note that a very brilliant man has spent many years meditating and speaking on the subject of Ideal Money. His definition for what would ultimately be Ideal Money comes down to basically, ‘money that doesn’t degrade in value/purchasing power over time’. Now this is a slippery definition, it is not in itself a solution (this is why it is called IDEAL). But it does provide us a basis or a ceiling that we might strive for.
I have always understood this to support the small-blocker agenda, in that as bitcoin becomes a safe haven for inflation, government will be forced to print money of a better and better quality. The eventually “asymptotic” result being the ceiling or “Ideal”.
I think though we can begin to re-solve both sides of the debate by using another perspective or definition in regard to a common goal or an Ideal Money. Here is another quote from Dr. Nash:
…to improve the conditions under which agreements regarding long-term lending and borrowing would be made, a money would be more or less equivalently good if it had a completely steady and constant rate of inflation. Then this inflation rate could be added to all lending an borrowing contracts.~Ideal Money
Now I think then I can see the possibility (like Thier’s law states) that the people could adopt bitcoin perhaps in a relatively short period of time, and drop fiat currency so fast that governments have no realistic time to adjust. Then bitcoin could become a global currency with a very moderate inflation rate for some period of time. This too I think could bring our global financial system into order, as bitcoin could either be continually optimize, or perhaps new currencies in the future could arise to take its place (but not fiat). This path though, does require a higher transaction capacity (ie bigger-blocks).
The Re-solution of the Block Size Debate
Now I believe we have brought about a great insight. I think it can now basically be shown that Ideal Money could be brought about using EITHER path for bitcoin. And this possibility changes the nature of the problem. If we can be allowed to suggest that both sides do in fact have legitimate claims to bringing about order to our financial system, then it is no wonder that sincere players are so passionate and adamant that their agenda pull through!
In fact such a realization can be used to create 4 useful player archetypes I wish use to remember to use: the rational small-blocker, the irrational small-blocker; the rational big-blocker, and the irrational big-blocker. Notice that even if someone calls another player an “irrational X-blocker” there is still an implication from that person that the X side does in fact have rational players. This alone, it seems, could change the nature of the debate.
I think some people will read this writing and be unsatisfied with the claim that I may have re-solved the block-size debate. I wish us to keep in mind the purpose and definition of our rheomode (re-solution), and especially that it means “to bring to the community’s attention the spontaneous combining of two otherwise separate parts, in such a way that a new wholistic perspective arises for the group”. This is what I have done, but what I have not done is the traditional use of the word “resolution”, I have not chosen or proved one side of the debate is correct. Instead, by showing both sides can lead to our shared goal, I believe I have served the stated purpose of this paper, which is to help bring bitcoin out of flux.
Rational players on both sides now have a common goal and reason to come together. And it can be side that if each player cannot admit that there are rational players on both sides of the debate, then that player must be seen as insincere. Now much of the focus can be on finding the optimal PATH to take bitcoin on, rather than focusing on winning the debate, in the name of what each player KNOWS is “correct”. That is to say this paper, if successful, should alleviate pressure on Core, which in turn should bode well for the present day and long term health and circumstances of our beloved currency.
In closing, I would like to say, I have now changed my stance on the block-size debate as a previously devote small-blocker. I am no long afraid of big blocks. I am no longer afraid of X-size blocks, and I hope now the reader no longer is either.
submitted by pokertravis to Bitcoin [link] [comments]

What is Bitcoin - What about block size? Bitcoin blocksize debate - An overview of both sides arguments EB82 – Mike Hearn - Blocksize Debate At The Breaking Point Bitcoin Scaling Debate - Big Blocks, Hard Fork - Roger Ver, Phil Potter, Petrov, Lombrozo - Dec 2016 Bitcoin Q&A: Scaling and the block size debate - YouTube

Bitcoin will have high fees. The block size shouldn't be increased. We've had this debate for years, and it's cropping up again. I think we need to nip this in the bud now. If you increase the blocksize then you will decrease fees, thus making it easier for Veriblock and Coinbase to spam the network and never bother to optimise their platforms. When VeriBlock temporarily paused their system ... As always, our debate will go in three rounds and then our audience here at the Adam Smith Society's 2018 national meeting in New York will choose the winner. As always, one side wins unless there's a tie, and if all goes well civil discourse will also win. Our motion is Bitcoin is More Than a Bubble and is Here to Stay. Let's meet our debaters. First, on the team arguing for the motion please ... Scaling Bitcoin and the Block Size Debate. by Joseph Young. 5 years ago. in Uncategorized. Reading Time: 3 min Bitcoin ended 2015 with some of the most spectacular achievements the community has long awaited for. Bitcoin transactions have surpassed the 100 million mark and the 15 millionth Bitcoin was mined in the past year. However, despite these technological milestones, the Bitcoin network ... Biggest Average Bitcoin Block Size to Date. The latest data from Blockchain.com shows that February 12, 2019 saw an average block size of 1.305 megabytes, the biggest on record.. In fact, the blocks mined (approximately every 10 minutes) today by the Bitcoin network are now regularly bigger than 1MB. This was the previous limit that existed before Segregated Witness (SegWit) was introduced in ... The bitcoin block size debate is a little like that. While creating an incredibly valuable, fully decentralized monetary system, bitcoin and the blockchain may allow fully equal self-government ...

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What is Bitcoin - What about block size?

What is Bitcoin? Follow Evander Smart, Bitcoin journalist, author and video producer on a journey into Bitcoin, "The Future of Money" In these videos, learn Bitcoin facts, tips, lessons, and the ... Ethereum Classic, Block sizes, BitFinex hack and central banks Part 1 - Duration: 12 ... Andreas M. Antonopoulos: The Bitcoin Blocksize debate - Duration: 3:38. Bitcoinboy 745 views. 3:38 . How ... In this talk in Berlin, Andreas looks at the inner structure of bitcoin and how high-level financial and trust applications are composed from smaller element... The highly-charged debates around both Ethereum's potential hardfork and Bitcoin's block size appear different on the surface, but are caused by the same des... The bitcoin blocksize debate has been going for a while now. There is 2 factions that are discussing it. One side wants the blocksize to stay small, around 1 mb, and the other side wants the ...

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