Author Topic: Is it too late [bitcoin]?  (Read 90686 times)

ILikeDividends

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Re: Is it too late [bitcoin]?
« Reply #350 on: December 15, 2017, 02:26:05 PM »
If it's not a bubble, why does it look like every other bubble?

The problem I have when people try to line up bitcoin's price rise in comparison to other past historical bubble is that bitcoin's price rise came from a value of $0. No other historical bubble came from a starting price of $0.
It is truly astonishing that you would define a bubble based on whether the asset ever had a starting price of $0; even more astonishing that you would actually state that position in a public forum.

But, ok, I'll play.

How tulips came to the Netherlands - and even saved lives
http://www.dw.com/en/how-tulips-came-to-the-netherlands-and-even-saved-lives/a-40208176
Quote
In the 16th century, Ogier Ghiselin de Busbecq was serving as the ambassador of the Habsburg monarchy to the Ottoman Empire. While visiting Turkish sultan Suleiman the Magnificant, a fan of tulips, he was given some bulbs to take back to Vienna.

De Busbecq then passed the tulip bulbs on to his friend, Flemish botanist Charles de l'Écluse, the prefect to the emperor's garden in Vienna.
When d'Écluse left Vienna to teach at a university in Leiden, Netherlands, he brought the bulbs along and planted them there.
Starting as a mere gift, tulip bulbs flourished, and then became the bubble that sets the standard for every bubble ever since.

So I suppose you reject the notion that there ever was a tulip bubble, since it came to the Netherlands by way of a (free) gift?  I really don't know what other conclusion to draw from your statement.
« Last Edit: December 15, 2017, 02:44:22 PM by ILikeDividends »

lifeanon269

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Re: Is it too late [bitcoin]?
« Reply #351 on: December 15, 2017, 02:26:58 PM »
I guess we're not counting the pre-bubble phase of bitcoin from 2009 to mid 2013, and the 2014 buildup and drop.

What do you mean? That's the whole point of looking at it from a logarithmic scale. It shows how the previous historical rises in the price of bitcoin were much more astronomical in relativity than compared to now.

lifeanon269

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Re: Is it too late [bitcoin]?
« Reply #352 on: December 15, 2017, 02:30:04 PM »
It is truly astonishing that you would define a bubble based on whether the asset ever had a starting price of $0.

Where did I define a bubble as whether or not it ever had a starting price of $0? Don't put words in my mouth.

GuitarStv

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Re: Is it too late [bitcoin]?
« Reply #353 on: December 15, 2017, 02:33:45 PM »
I guess we're not counting the pre-bubble phase of bitcoin from 2009 to mid 2013, and the 2014 buildup and drop.

What do you mean? That's the whole point of looking at it from a logarithmic scale. It shows how the previous historical rises in the price of bitcoin were much more astronomical in relativity than compared to now.

You were saying that the starting price of bitcoin before the bubble phase was 0$.  I was pointing out that for the first four years or so, bitcoin wasn't 0$ and wasn't in a bubble.

ILikeDividends

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Re: Is it too late [bitcoin]?
« Reply #354 on: December 15, 2017, 02:37:47 PM »
It is truly astonishing that you would define a bubble based on whether the asset ever had a starting price of $0.

Where did I define a bubble as whether or not it ever had a starting price of $0? Don't put words in my mouth.

Um, here:

If it's not a bubble, why does it look like every other bubble?

The problem I have when people try to line up bitcoin's price rise in comparison to other past historical bubble is that bitcoin's price rise came from a value of $0. No other historical bubble came from a starting price of $0.
 
That was your answer to a question asking you to explain why bitcoin isn't a bubble.

Silly me, that's what I assumed you actually thought.
« Last Edit: December 15, 2017, 02:46:24 PM by ILikeDividends »

runbikerun

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Re: Is it too late [bitcoin]?
« Reply #355 on: December 15, 2017, 02:40:21 PM »
It is truly astonishing that you would define a bubble based on whether the asset ever had a starting price of $0.

Where did I define a bubble as whether or not it ever had a starting price of $0? Don't put words in my mouth.

"The problem I have when people try to line up bitcoin's price rise in comparison to other past historical bubble is that bitcoin's price rise came from a value of $0."

There may be some incredibly narrow semantic needle to be threaded here, but under any non-tortured reading of the above sentence, you're saying that it doesn't make sense to compare Bitcoin to historical bubbles because Bitcoin started from zero. From there, it is an extremely short journey to the conclusion that you think the start from zero means we're not dealing with a bubble. Like I said, there may be a very narrow and specific reading of what you said that doesn't imply that you think a starting point of zero means it's not a bubble, but to nine out of ten readers that's the conclusion that would be drawn.

maizeman

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Re: Is it too late [bitcoin]?
« Reply #356 on: December 15, 2017, 03:16:17 PM »
I guess we're not counting the pre-bubble phase of bitcoin from 2009 to mid 2013, and the 2014 buildup and drop.

What do you mean? That's the whole point of looking at it from a logarithmic scale. It shows how the previous historical rises in the price of bitcoin were much more astronomical in relativity than compared to now.

You were saying that the starting price of bitcoin before the bubble phase was 0$.  I was pointing out that for the first four years or so, bitcoin wasn't 0$ and wasn't in a bubble.

I'm underlying the key word here. You're saying bitcoin is in a bubble today. Which I completely agree with given the behavior of prices in 2017, and the fact that all the discussion I hear about it in non-geeky venues is focused solely on the price increase, not on actual use cases. 

Others are saying that bitcoin, itself, is a bubble, which would mean that has no underlying utility at all, which I disagree with because I do think it, or similar cyptocurrencies, do provide some utility to our society.

lifeanon269

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Re: Is it too late [bitcoin]?
« Reply #357 on: December 15, 2017, 03:31:18 PM »
Quote
The problem I have when people try to line up bitcoin's price rise in comparison to other past historical bubble is that bitcoin's price rise came from a value of $0.

For clarification, this response is not me defining whether an asset or investment is in a bubble based on whether or not it ever had a starting price of $0. That's what ILikeDividends claimed, but that's not what I meant. To put it more clearly, the key part of that statement that was missed was the "in comparison" portion. In other words, looking at bubbles relative to each other simply based on the prices of the underlying in each given bubble is a complete failure in analysis. A $0 starting point is not a defining characteristic of what makes a bubble or not, that's absolutely true, we're not in disagreement there. But, it makes no sense to compare bubbles simply on the merits of their prices without understanding the underlying forces in the market behind those prices.

This is why looking at the price of bitcoin on a logarithmic scale is so important. You could've easily taken a snapshot of bitcoin's price at numerous points along the way and it would yield a similar curve to match up to historical bubbles just like the above chart showed. Yet, doing so wouldn't give you any indicator at all as to whether or not you're dealing with a bubble in bitcoin or any other asset for that matter. For example, you could've taken a snapshot starting in Jan 2012 when it had a starting price of $4 and then had "today's" price on that graph be Jan 2014 where it had a price of around $1000. That's a multiplier of 250x and it would've dwarfed every bubble on that chart. In otherwords, this chart skews data historically simply based on arbitrary prices without regard to what determines those prices in the market.

ILikeDividends

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Re: Is it too late [bitcoin]?
« Reply #358 on: December 15, 2017, 03:42:32 PM »
I guess we're not counting the pre-bubble phase of bitcoin from 2009 to mid 2013, and the 2014 buildup and drop.

What do you mean? That's the whole point of looking at it from a logarithmic scale. It shows how the previous historical rises in the price of bitcoin were much more astronomical in relativity than compared to now.

You were saying that the starting price of bitcoin before the bubble phase was 0$.  I was pointing out that for the first four years or so, bitcoin wasn't 0$ and wasn't in a bubble.

I'm underlying the key word here. You're saying bitcoin is in a bubble today. Which I completely agree with given the behavior of prices in 2017, and the fact that all the discussion I hear about it in non-geeky venues is focused solely on the price increase, not on actual use cases. 

Others are saying that bitcoin, itself, is a bubble, which would mean that has no underlying utility at all, which I disagree with because I do think it, or similar cyptocurrencies, do provide some utility to our society.
While I wouldn't disagree that stating "bitcoin is in a bubble" would be more grammatically correct than stating "bitcoin is a bubble," but I would argue that the latter expression shouldn't be taken as anything more than a less-than-perfect version of the former expression.

Personally, I don't think it refers to any utility it might have. E.g., if I referred to "tulip mania" as the "tulip bubble," would you spend any time puzzling over how a tulip could BE a bubble?

But if it's possible to find common ground here, I would at least agree that, "bitcoin is a bubble," is a nonsensical statement, if taken too literally.
« Last Edit: December 15, 2017, 03:47:06 PM by ILikeDividends »

Telecaster

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Re: Is it too late [bitcoin]?
« Reply #359 on: December 15, 2017, 03:43:21 PM »
Quote
The problem I have when people try to line up bitcoin's price rise in comparison to other past historical bubble is that bitcoin's price rise came from a value of $0.

For clarification, this response is not me defining whether an asset or investment is in a bubble based on whether or not it ever had a starting price of $0. That's what ILikeDividends claimed, but that's not what I meant. To put it more clearly, the key part of that statement that was missed was the "in comparison" portion. In other words, looking at bubbles relative to each other simply based on the prices of the underlying in each given bubble is a complete failure in analysis. A $0 starting point is not a defining characteristic of what makes a bubble or not, that's absolutely true, we're not in disagreement there. But, it makes no sense to compare bubbles simply on the merits of their prices without understanding the underlying forces in the market behind those prices.


Okay.  So what is the market force driving the rise in bitcoin?  Is it:

1) People are clamoring to buy and sell stuff with bitcoin therefore driving demand? Or,

2)  People are buying bitcoin hoping to participate in future price increases?




waltworks

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Re: Is it too late [bitcoin]?
« Reply #360 on: December 15, 2017, 03:54:50 PM »
It can be simultaneously true that bitcoin (and other cryptos) are massively overvalued/well into bubble territory, AND that some of them (which may or may not be extant today) will be someday useful for making transactions.

If I were a big crypto guy I'd be *furious* about the bubble. It makes it hard/impossible to actually buy things, and it runs the risk of discrediting the whole enterprise after the inevitable collapse such that Goldman Sachs' or Chase's take on the blockchain is the one that ends up getting widely used.

-W

maizeman

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Re: Is it too late [bitcoin]?
« Reply #361 on: December 15, 2017, 04:29:40 PM »
Waltworks and ILikeDividends, I think we are in fact in agreement here.

Indexer

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Re: Is it too late [bitcoin]?
« Reply #362 on: December 15, 2017, 04:47:23 PM »
Going to repeat my earlier questions and see if anyone pro-bitcoin will bite.

Is anyone using it to buy legal goods and services?

I imagine there are a few, but do we have any data on the frequently?

If the answer is no, which I assume it is, then bitcoin has no future. I get the very strong impression it is only be traded back and worth between speculators and that no one is actually using it... outside of money laundering and buying drugs.

maizeman

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Re: Is it too late [bitcoin]?
« Reply #363 on: December 15, 2017, 04:58:22 PM »
Is anyone using it to buy legal goods and services?

Yes, I have used it to buy legal goods from overseas. If transactions fees don't come way back down from their current prices in the mid-$20 I'm not going to ever again though (although I might try some other cryptocurrency instead at some point in the future).

Quote
I imagine there are a few, but do we have any data on the frequently?

To the best of my knowledge there isn't any good data on specifically legal usage frequency. Bitpay says they are on track to process approx. $1 billion worth of bitcoin payments. That's almost certainly all payments for legal goods and services, but who knows whether that's 1% of the the total volume being used for actual payments, or 10% or 50%.

sherr

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Re: Is it too late [bitcoin]?
« Reply #364 on: December 15, 2017, 05:09:10 PM »
AND that some of them (which may or may not be extant today) will be someday useful for making transactions.

This is an undervalued point. There are already today crytocurrencies that are better than Bitcoins for any particular use-case. You can transfer value worldwide for cheaper and faster with any of them. So then what is Bitcoin's long-term valuation? Nothing. The only thing driving the prices and continued use is speculation and momentum. There will come a day when bitcoin transactions are too slow or too expensive or too hard compared to something else, and everyone will jump ship to the other thing. And then the same thing will happen to that and they'll jump ship to the next thing.

I'm sure that there are some long-term use-cases that will make cryptocurrencies stick around. But the long-term value of any particular cryptocurrency will always be zero, and people who jump  in to the middle of a price spike will loose their shirts when the bubble pops. Cryptocurrencies and Blockchain as a *technology* I think has some staying power. Any individual implementation is transient.

ILikeDividends

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Re: Is it too late [bitcoin]?
« Reply #365 on: December 15, 2017, 05:13:03 PM »
AND that some of them (which may or may not be extant today) will be someday useful for making transactions.

This is an undervalued point. There are already today crytocurrencies that are better than Bitcoins for any particular use-case. You can transfer value worldwide for cheaper and faster with any of them. So then what is Bitcoin's long-term valuation? Nothing. The only thing driving the prices and continued use is speculation and momentum. There will come a day when bitcoin transactions are too slow or too expensive or too hard compared to something else, and everyone will jump ship to the other thing. And then the same thing will happen to that and they'll jump ship to the next thing.

I'm sure that there are some long-term use-cases that will make cryptocurrencies stick around. But the long-term value of any particular cryptocurrency will always be zero, and people who jump  in to the middle of a price spike will loose their shirts when the bubble pops. Cryptocurrencies and Blockchain as a *technology* I think has some staying power. Any individual implementation is transient.
One could argue that this is now a historical fact, rather than mere speculation about the future.

'Bitcoin Jesus' is 'really, really concerned' about the future of the digital currency
https://www.cnbc.com/2017/12/11/bitcoin-jesus-is-really-really-concerned-about-the-future-of-the-digital-currency.html

Since this guy, AKA Roger Ver, reportedly turned $25K into $244 million buying into bitcoin at a dollar, I would dare say that he speaks from a pretty strong position of authority, and he seems to agree with your points, exactly as you stated them.
« Last Edit: December 15, 2017, 05:40:57 PM by ILikeDividends »

WhiteTrashCash

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Re: Is it too late [bitcoin]?
« Reply #366 on: December 15, 2017, 05:22:09 PM »
It may be too late to get into bitcoin investing, but it's never too late to get into baseball card investing. I have a Ken Griffey Jr. rookie card that I'm willing to part with. Cheap.

ILikeDividends

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Re: Is it too late [bitcoin]?
« Reply #367 on: December 15, 2017, 05:24:55 PM »
It may be too late to get into bitcoin investing, but it's never too late to get into baseball card investing. I have a Ken Griffey Jr. rookie card that I'm willing to part with. Cheap.
Cheap?  Ok, I'll bid $18,000.  Going once, going twice . . .

(BTW, what is a baseball card, what is a rookie card, and who the heck is Ken Griffey Jr?)
« Last Edit: December 15, 2017, 05:29:03 PM by ILikeDividends »

lifeanon269

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Re: Is it too late [bitcoin]?
« Reply #368 on: December 15, 2017, 05:42:01 PM »
Is anyone using it to buy legal goods and services?

I imagine there are a few, but do we have any data on the frequently?

If the answer is no, which I assume it is, then bitcoin has no future.

I use bitcoin for all my purchases. Granted, probably about 95% of my purchases are made off-chain through a payment provider, but I do make many purchases with bitcoin as on-chain transactions for a few legal services that I use that justify the on-chain transaction costs (which are about $4-6 for me at the moment).

I suppose I don't understand the emphasis on the necessity for bitcoin to be used for everyday legal goods and services to justify its existance. Bitcoin has use cases that extend well beyond paying for your coffee (remittance, censorship resistant store of value, international payments, programmability, irreversible transactions, etc). In fact, I'd argue that a proof-of-work crypto-currency like bitcoin's last use case should be coffee purchases. We already have plenty of payment technologies that can provide services such as that without requiring the security that a decentralized censorship resistant proof-of-work payment network provides. For the most part, fast and cheap transactions don't require that level of security. Therefore, requiring the full proof-of-work of the most secure payment network on the planet (Bitcoin) is not required. This is why side chain solutions for scaling are being introduced for bitcoin and why intermediary payment providers or other less secure crypto-currencies can offer better "coffee payment services" than on-chain bitcoin transactions can provide. That being said, the fact that people are paying anywhere from $4-$15 for on-chain bitcoin transactions shows that the network provides value to the people looking to transact on it. So if you're assuming that bitcoin has no future because there aren't enough coffee cups being purchased with it, then I'm afraid you miss the entire point of Bitcoin.

waltworks

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Re: Is it too late [bitcoin]?
« Reply #369 on: December 15, 2017, 05:45:52 PM »
It may be too late to get into bitcoin investing, but it's never too late to get into baseball card investing. I have a Ken Griffey Jr. rookie card that I'm willing to part with. Cheap.

I'll trade you all my copies of X-men #1. With all the different covers. Best investment ever! They're printing 7 million and maybe 100,000 people want to actually read it, it's an instant collector's item!

-W

maizeman

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Re: Is it too late [bitcoin]?
« Reply #370 on: December 15, 2017, 06:06:17 PM »
I suppose I don't understand the emphasis on the necessity for bitcoin to be used for everyday legal goods and services to justify its existance. Bitcoin has use cases that extend well beyond paying for your coffee (remittance, censorship resistant store of value, international payments, programmability, irreversible transactions, etc). In fact, I'd argue that a proof-of-work crypto-currency like bitcoin's last use case should be coffee purchases. We already have plenty of payment technologies that can provide services such as that without requiring the security that a decentralized censorship resistant proof-of-work payment network provides. For the most part, fast and cheap transactions don't require that level of security. Therefore, requiring the full proof-of-work of the most secure payment network on the planet (Bitcoin) is not required. This is why side chain solutions for scaling are being introduced for bitcoin and why intermediary payment providers or other less secure crypto-currencies can offer better "coffee payment services" than on-chain bitcoin transactions can provide.

The problem isn't that there are some use cases that can still work with $20 transaction fees. The problem is that once those other cyptocurrencies start getting a lot more real world use for things like buying cups of coffee where transaction fees should really be a few cents at most to be competitive, it's hard to see why those new more cost effective cyptocurrencies couldn't also replace bitcoin for the use cases where people would be willing to pay a $20 transaction fee. (Because who wouldn't rather pay $0.02 than $20, all things being equal?).

lifeanon269

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Re: Is it too late [bitcoin]?
« Reply #371 on: December 15, 2017, 06:29:19 PM »
The problem isn't that there are some use cases that can still work with $20 transaction fees. The problem is that once those other cyptocurrencies start getting a lot more real world use for things like buying cups of coffee where transaction fees should really be a few cents at most to be competitive, it's hard to see why those new more cost effective cyptocurrencies couldn't also replace bitcoin for the use cases where people would be willing to pay a $20 transaction fee. (Because who wouldn't rather pay $0.02 than $20, all things being equal?).

I'll argue the opposite of that. As I said, there are already plenty of other crypto-currencies and payment systems out there that can be used for buying cups of coffee. This misunderstands the value that the Bitcoin proof-of-work network provides. No other currency has found a way to provide the decentralized security and censorship resistance that the Bitcoin network can provide while at the same time being able to scale to meet the global demand that a POS system requires. The truth of the matter is that POS payments don't require that level of security and so therefore it makes no sense to sacrifice the one thing that makes Bitcoin unique (decentralized censorship resistance provided by proof-of-work). This is why the Lightning Network is such a novel concept. It allows for massive scalability (millions of tx/sec) without requiring any proof-of-work, but can still settle back to the same secure blockchain when needed. Another solution could be to possibly utilize atomic swaps between another crypto-currency that can handle higher volume, but isn't as decentralized or use the same secure proof-of-work Bitcoin provides.

You can only choose two, unless you can break the laws of physics:
1) Fast, cheap on-chain txs
2) Secure, censorship-resistant txs
3) Widespread adoption

ILikeDividends

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Re: Is it too late [bitcoin]?
« Reply #372 on: December 15, 2017, 06:35:22 PM »
The problem isn't that there are some use cases that can still work with $20 transaction fees. The problem is that once those other cyptocurrencies start getting a lot more real world use for things like buying cups of coffee where transaction fees should really be a few cents at most to be competitive, it's hard to see why those new more cost effective cyptocurrencies couldn't also replace bitcoin for the use cases where people would be willing to pay a $20 transaction fee. (Because who wouldn't rather pay $0.02 than $20, all things being equal?).

I'll argue the opposite of that. As I said, there are already plenty of other crypto-currencies and payment systems out there that can be used for buying cups of coffee. This misunderstands the value that the Bitcoin proof-of-work network provides. No other currency has found a way to provide the decentralized security and censorship resistance that the Bitcoin network can provide while at the same time being able to scale to meet the global demand that a POS system requires. The truth of the matter is that POS payments don't require that level of security and so therefore it makes no sense to sacrifice the one thing that makes Bitcoin unique (decentralized censorship resistance provided by proof-of-work). This is why the Lightning Network is such a novel concept. It allows for massive scalability (millions of tx/sec) without requiring any proof-of-work, but can still settle back to the same secure blockchain when needed. Another solution could be to possibly utilize atomic swaps between another crypto-currency that can handle higher volume, but isn't as decentralized or use the same secure proof-of-work Bitcoin provides.

You can only choose two, unless you can break the laws of physics:
1) Fast, cheap on-chain txs
2) Secure, censorship-resistant txs
3) Widespread adoption
Apart from you, and maybe 100 other people, who actually knows what this means, or even cares?

I can wholly appreciate why someone in Venezuela or China would, out of desperation, use bitcoin to "stache" (pun intended) their wealth in a presumptuously safer place, but I doubt any of them would understand, or have even the slightest appreciation for any merits (if any actually exist, net net) for what you just said.

They are desperate to preserve their wealth, and would doubtless choose the baseball card option, if they thought that was a more viable choice.
« Last Edit: December 15, 2017, 06:47:10 PM by ILikeDividends »

lifeanon269

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Re: Is it too late [bitcoin]?
« Reply #373 on: December 15, 2017, 06:44:04 PM »
Apart from you, and maybe 100 other people, who actually know what this means, or even cares?

I can wholly see why someone in Venezuela or China would want to use bitcoin to "stache" (pun intended) their wealth in a safer place, but I doubt any of them would understand, or have even the slightest appreciation for any merits (if any exist) for what you just said.

You don't seem to be giving humans that much credit. I'm pretty sure if you asked someone what a URL was back in the early days of the internet, you'd probably get a lot of blank stares as well.

ILikeDividends

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Re: Is it too late [bitcoin]?
« Reply #374 on: December 15, 2017, 06:49:00 PM »
Apart from you, and maybe 100 other people, who actually know what this means, or even cares?

I can wholly see why someone in Venezuela or China would want to use bitcoin to "stache" (pun intended) their wealth in a safer place, but I doubt any of them would understand, or have even the slightest appreciation for any merits (if any exist) for what you just said.

You don't seem to be giving humans that much credit. I'm pretty sure if you asked someone what a URL was back in the early days of the internet, you'd probably get a lot of blank stares as well.
That pretty much makes my point.  Bitcoin is a newborn babe, still wailing away in the infirmary, as compared to URLs and the internet.

(I give humans the credit they have earned.  After all, I kind of qualify as a member of that same category)
« Last Edit: December 15, 2017, 06:54:32 PM by ILikeDividends »

lifeanon269

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Re: Is it too late [bitcoin]?
« Reply #375 on: December 15, 2017, 06:56:20 PM »
That pretty much makes my point.  Bitcoin is a newborn babe, still wailing away in the hospital, as compared to URLs and the internet.

(I give humans the credit they have earned.  After all, I kind of qualify as a member of that same category)

If your point was that bitcoin is a newborn babe, in response to what in regard to my post does that argument apply?

ILikeDividends

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Re: Is it too late [bitcoin]?
« Reply #376 on: December 15, 2017, 07:04:30 PM »
That pretty much makes my point.  Bitcoin is a newborn babe, still wailing away in the hospital, as compared to URLs and the internet.

(I give humans the credit they have earned.  After all, I kind of qualify as a member of that same category)

If your point was that bitcoin is a newborn babe, in response to what in regard to my post does that argument apply?

I'm sure it was just an oversight that you "accidentally" edited out your comment that I replied to, so I'll help you out there; just 'cause I'm a good guy at heart.  Hint: look for the bold text I've added to your comment.  Therein lies the answer to your latest question.

Apart from you, and maybe 100 other people, who actually know what this means, or even cares?

I can wholly see why someone in Venezuela or China would want to use bitcoin to "stache" (pun intended) their wealth in a safer place, but I doubt any of them would understand, or have even the slightest appreciation for any merits (if any exist) for what you just said.

You don't seem to be giving humans that much credit. I'm pretty sure if you asked someone what a URL was back in the early days of the internet, you'd probably get a lot of blank stares as well.

Given the proper context, my reply should now make a little more sense to you:
Quote
That pretty much makes my point.  Bitcoin is a newborn babe, still wailing away in the infirmary, as compared to URLs and the internet.

(I give humans the credit they have earned.  After all, I kind of qualify as a member of that same category)

No need to thank me.  I'll just consider this my good deed for the day.
« Last Edit: December 15, 2017, 07:17:39 PM by ILikeDividends »

lifeanon269

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Re: Is it too late [bitcoin]?
« Reply #377 on: December 15, 2017, 07:17:26 PM »
I'm sure it was just an oversight that you neglected to include your comment that I replied to, so I'll help you out there; just 'cause I'm a good guy at heart.  Hint: look for the bold text I've added to your comment.  Therein lies the answer to your latest question.

Debating you is painful sometimes, lol.

I originally posted about Bitcoin's proof-of-work security stating in Reply #384:

Quote
I'll argue the opposite of that. As I said, there are already plenty of other crypto-currencies and payment systems out there that can be used for buying cups of coffee. This misunderstands the value that the Bitcoin proof-of-work network provides. No other currency has found a way to provide the decentralized security and censorship resistance that the Bitcoin network can provide while at the same time being able to scale to meet the global demand that a POS system requires.

In response to this, in Reply #385 you said:
Quote
Apart from you, and maybe 100 other people, who actually knows what this means, or even cares?

To which I responded with the URL comment.

You then responded in Reply #388 with:
Quote
That pretty much makes my point.  Bitcoin is a newborn babe, still wailing away in the infirmary, as compared to URLs and the internet.

To which I asked:

Quote
If your point was that bitcoin is a newborn babe, in response to what in regard to my post does that argument apply?

So again, where in my original response (Reply #384) does bitcoin being a "newborn babe" apply?

ILikeDividends

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Re: Is it too late [bitcoin]?
« Reply #378 on: December 15, 2017, 07:22:27 PM »
I'm sure it was just an oversight that you neglected to include your comment that I replied to, so I'll help you out there; just 'cause I'm a good guy at heart.  Hint: look for the bold text I've added to your comment.  Therein lies the answer to your latest question.

Debating you is painful sometimes, lol.

I originally posted about Bitcoin's proof-of-work security stating in Reply #384:

Quote
I'll argue the opposite of that. As I said, there are already plenty of other crypto-currencies and payment systems out there that can be used for buying cups of coffee. This misunderstands the value that the Bitcoin proof-of-work network provides. No other currency has found a way to provide the decentralized security and censorship resistance that the Bitcoin network can provide while at the same time being able to scale to meet the global demand that a POS system requires.

In response to this, in Reply #385 you said:
Quote
Apart from you, and maybe 100 other people, who actually knows what this means, or even cares?

To which I responded with the URL comment.

You then responded in Reply #388 with:
Quote
That pretty much makes my point.  Bitcoin is a newborn babe, still wailing away in the infirmary, as compared to URLs and the internet.

To which I asked:

Quote
If your point was that bitcoin is a newborn babe, in response to what in regard to my post does that argument apply?

So again, where in my original response (Reply #384) does bitcoin being a "newborn babe" apply?
I didn't even know we were debating something.  I merely expressed (and then unsuccessfully attempted to explain) the point of an opinion.

However, if you regard this a debate, then I will rest my case on statements I've already made, and formally withdraw, with the undisputed understanding that my opinion was not understood by you.

Giving you the benefit of the doubt, I will naturally assume that you wouldn't have agreed with my opinion, even if you had understood it.
« Last Edit: December 15, 2017, 08:00:44 PM by ILikeDividends »

thenextguy

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Re: Is it too late [bitcoin]?
« Reply #379 on: December 15, 2017, 07:53:29 PM »
It may be too late to get into bitcoin investing, but it's never too late to get into baseball card investing. I have a Ken Griffey Jr. rookie card that I'm willing to part with. Cheap.

Sorry dude, the baseball card bubble ended years ago.

shadow

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Re: Is it too late [bitcoin]?
« Reply #380 on: December 15, 2017, 07:55:09 PM »
I'll argue the opposite of that. As I said, there are already plenty of other crypto-currencies and payment systems out there that can be used for buying cups of coffee. This misunderstands the value that the Bitcoin proof-of-work network provides. No other currency has found a way to provide the decentralized security and censorship resistance that the Bitcoin network can provide while at the same time being able to scale to meet the global demand that a POS system requires. The truth of the matter is that POS payments don't require that level of security and so therefore it makes no sense to sacrifice the one thing that makes Bitcoin unique (decentralized censorship resistance provided by proof-of-work). This is why the Lightning Network is such a novel concept. It allows for massive scalability (millions of tx/sec) without requiring any proof-of-work, but can still settle back to the same secure blockchain when needed. Another solution could be to possibly utilize atomic swaps between another crypto-currency that can handle higher volume, but isn't as decentralized or use the same secure proof-of-work Bitcoin provides.

Criticisms against lightning network:
https://www.youtube.com/watch?v=UYHFrf5ci_g&feature=youtu.be&repost
https://www.reddit.com/r/btc/comments/7jnr31/the_lightning_network_is_not_at_alpha_release/
https://www.reddit.com/r/btc/comments/64de93/basic_questions_about_the_lightning_network/

Also, bitcoin core is less secure than bitcoin cash. The segwit change to signature validation added an additional point of risk.

Quote
You can only choose two, unless you can break the laws of physics:
1) Fast, cheap on-chain txs
2) Secure, censorship-resistant txs
3) Widespread adoption

I choose all 3 and a proof-of-stake crypto.

shadow

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Re: Is it too late [bitcoin]?
« Reply #381 on: December 15, 2017, 08:00:06 PM »
Since bitcoin cash and bitcoin core share the same pow algorithm, if there is ever an exodus of mining power, due to bitcoin core's adjustment time, it has far greater systemic risk to very, very slow transactions leading to potentially severe consequences.

lifeanon269

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Re: Is it too late [bitcoin]?
« Reply #382 on: December 15, 2017, 08:33:55 PM »
Criticisms against lightning network:
https://www.youtube.com/watch?v=UYHFrf5ci_g&feature=youtu.be&repost
https://www.reddit.com/r/btc/comments/7jnr31/the_lightning_network_is_not_at_alpha_release/
https://www.reddit.com/r/btc/comments/64de93/basic_questions_about_the_lightning_network/

Also, bitcoin core is less secure than bitcoin cash. The segwit change to signature validation added an additional point of risk.

Quote
You can only choose two, unless you can break the laws of physics:
1) Fast, cheap on-chain txs
2) Secure, censorship-resistant txs
3) Widespread adoption

I choose all 3 and a proof-of-stake crypto.

I certainly agree that there are some valid criticisms against the lightning network (ie, channel monitoring), but make no mistake it is a legitimate scaling solution that can handle thousands, if not millions, of transactions/sec with out requiring proof-of-work being it. I watched the video that you posted regarding the lightning network and there were a lot of myths spouted about the lightning network in it and bitcoin in general (stealing bitcoins, centralization, Satoshi's vision>Gavin, etc). The Lightning Network has been successfully tested (on mainnet) amongst several clients for compatibility and therefore the link you posted with regards to the development stage it is in is pointless and doesn't really make an effort to critique the network on any merit.

Please explain to me (technically) how bitcoin core is less secure than bitcoin cash? SegWit resolved transaction malleability which was a legitimate security concern. By having the transaction idenifier no longer take into account the signature, an attack who modifies the signature cannot also modify the transaction identifier. Just blindly saying that SegWit is an additional point of risk without explaining that point of risk is a faulty argument against it. On top of that, Bitcoin's network is much more decentralized compared to Bcash, both by hash rate and by node count/location. Considering the fact that a vast majority of bcash's hashrate is controlled by a single entity, it is an extremely centralized currency. Its nodes are also much more centralized when compared to Bitcoin cores. This decentralization across all aspects is what provides the censorship resistance that is required of a proof-of-work network.

Finally, how would it ever be possible to scale, on-chain, a proof-of-work system that can process millions of transactions per second. Give the fact that 1MB blocks can process about 6 transactions per second, in order to process transactions on the order of millions of transactions per second, that'd require blocks on the order of terabytes in size. There is simply no way you can propogate blocks of that size and have them reach all the necessary nodes around the world every 10 minutes. It isn't possible. Secondary solutions are required, whether it is atomic swaps with non-proof-of-work currencies (which Bcash can't do because it doesn't have SegWit) or something like the Lightning Network.

shadow

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Re: Is it too late [bitcoin]?
« Reply #383 on: December 15, 2017, 09:46:52 PM »
I certainly agree that there are some valid criticisms against the lightning network (ie, channel monitoring), but make no mistake it is a legitimate scaling solution that can handle thousands, if not millions, of transactions/sec with out requiring proof-of-work being it. I watched the video that you posted regarding the lightning network and there were a lot of myths spouted about the lightning network in it and bitcoin in general (stealing bitcoins, centralization, Satoshi's vision>Gavin, etc). The Lightning Network has been successfully tested (on mainnet) amongst several clients for compatibility and therefore the link you posted with regards to the development stage it is in is pointless and doesn't really make an effort to critique the network on any merit.

We'll see how lightning network play outs; I'm neutral about it.

Quote
Please explain to me (technically) how bitcoin core is less secure than bitcoin cash? SegWit resolved transaction malleability which was a legitimate security concern. By having the transaction idenifier no longer take into account the signature, an attack who modifies the signature cannot also modify the transaction identifier. Just blindly saying that SegWit is an additional point of risk without explaining that point of risk is a faulty argument against it. On top of that, Bitcoin's network is much more decentralized compared to Bcash, both by hash rate and by node count/location. Considering the fact that a vast majority of bcash's hashrate is controlled by a single entity, it is an extremely centralized currency. Its nodes are also much more centralized when compared to Bitcoin cores. This decentralization across all aspects is what provides the censorship resistance that is required of a proof-of-work network.

In the original bitcoin, the way a coin is transferred is taking the prior signature and the next user's public key, and hashing that. Miners saw this data and updated the utxo to the ledger. The original bitcoin was defined as a chain of digital signatures, and accompanying that was a longstanding economic model base on being able to verify the signatures. Segwit removes miners ability to 'witness' the signatures. It changed the economics and weakened the security model. In segwit, signatures have no value; the lack of witnessing a signature can allow malicious miners to redirect transactions to their own address. This, in addition to pruning and increasingly rewarding segwit transactions, creates a situation of new risk.

Here's a more in-depth article can about segwit risk: https://calvinayre.com/2017/06/19/bitcoin/risks-segregated-witness-opening-door-mining-cartels-undermine-bitcoin-network/ 

Quote
Finally, how would it ever be possible to scale, on-chain, a proof-of-work system that can process millions of transactions per second. Give the fact that 1MB blocks can process about 6 transactions per second, in order to process transactions on the order of millions of transactions per second, that'd require blocks on the order of terabytes in size. There is simply no way you can propogate blocks of that size and have them reach all the necessary nodes around the world every 10 minutes. It isn't possible. Secondary solutions are required, whether it is atomic swaps with non-proof-of-work currencies (which Bcash can't do because it doesn't have SegWit) or something like the Lightning Network.

That's what we're about to find out in 2018. Plasma aims to achieve millions of transactions per second onchain; and it will be implemented in omg; which will be initially launched on tendermint. Omg will be a modularized blockchain platform. From the tendermint website:

"Thus far, all blockchains “stacks” (such as Bitcoin) have had a monolithic design. That is, each blockchain stack is a single program that handles all the concerns of a decentralized ledger; this includes P2P connectivity, the “mempool” broadcasting of transactions, consensus on the most recent block, account balances, Turing-complete contracts, user-level permissions, etc.

Using a monolithic architecture is typically bad practice in computer science. It makes it difficult to reuse components of the code, and attempts to do so result in complex maintanence procedures for forks of the codebase. This is especially true when the codebase is not modular in design and suffers from “spaghetti code”.

Another problem with monolithic design is that it limits you to the language of the blockchain stack (or vice versa). In the case of Ethereum which supports a Turing-complete bytecode virtual-machine, it limits you to languages that compile down to that bytecode; today, those are Serpent and Solidity.

In contrast, our approach is to decouple the consensus engine and P2P layers from the details of the application state of the particular blockchain application. We do this by abstracting away the details of the application to an interface, which is implemented as a socket protocol."

1 second transactions and thousands of transactions-per-second capability to start, further facilitated by network advancements (faster internet, faster propagation, increase in processing power, etc).


sherr

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Re: Is it too late [bitcoin]?
« Reply #384 on: December 15, 2017, 11:55:52 PM »
AND that some of them (which may or may not be extant today) will be someday useful for making transactions.

This is an undervalued point. There are already today crytocurrencies that are better than Bitcoins for any particular use-case. You can transfer value worldwide for cheaper and faster with any of them. So then what is Bitcoin's long-term valuation? Nothing. The only thing driving the prices and continued use is speculation and momentum. There will come a day when bitcoin transactions are too slow or too expensive or too hard compared to something else, and everyone will jump ship to the other thing. And then the same thing will happen to that and they'll jump ship to the next thing.

I'm sure that there are some long-term use-cases that will make cryptocurrencies stick around. But the long-term value of any particular cryptocurrency will always be zero, and people who jump  in to the middle of a price spike will loose their shirts when the bubble pops. Cryptocurrencies and Blockchain as a *technology* I think has some staying power. Any individual implementation is transient.
One could argue that this is now a historical fact, rather than mere speculation about the future.

'Bitcoin Jesus' is 'really, really concerned' about the future of the digital currency
https://www.cnbc.com/2017/12/11/bitcoin-jesus-is-really-really-concerned-about-the-future-of-the-digital-currency.html

Since this guy, AKA Roger Ver, reportedly turned $25K into $244 million buying into bitcoin at a dollar, I would dare say that he speaks from a pretty strong position of authority, and he seems to agree with your points, exactly as you stated them.

I have noticed that lifeanon suddenly "magically" becomes extremely active about some other topic whenever this point is raised. Funny that. It's almost like he's merely a troll who has a vested interest in Bitcoin (specifically) being successful for as long as possible.

runbikerun

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Re: Is it too late [bitcoin]?
« Reply #385 on: December 16, 2017, 01:25:59 AM »
Quote
The problem I have when people try to line up bitcoin's price rise in comparison to other past historical bubble is that bitcoin's price rise came from a value of $0.

For clarification, this response is not me defining whether an asset or investment is in a bubble based on whether or not it ever had a starting price of $0. That's what ILikeDividends claimed, but that's not what I meant. To put it more clearly, the key part of that statement that was missed was the "in comparison" portion. In other words, looking at bubbles relative to each other simply based on the prices of the underlying in each given bubble is a complete failure in analysis. A $0 starting point is not a defining characteristic of what makes a bubble or not, that's absolutely true, we're not in disagreement there. But, it makes no sense to compare bubbles simply on the merits of their prices without understanding the underlying forces in the market behind those prices.

This is why looking at the price of bitcoin on a logarithmic scale is so important. You could've easily taken a snapshot of bitcoin's price at numerous points along the way and it would yield a similar curve to match up to historical bubbles just like the above chart showed. Yet, doing so wouldn't give you any indicator at all as to whether or not you're dealing with a bubble in bitcoin or any other asset for that matter. For example, you could've taken a snapshot starting in Jan 2012 when it had a starting price of $4 and then had "today's" price on that graph be Jan 2014 where it had a price of around $1000. That's a multiplier of 250x and it would've dwarfed every bubble on that chart. In otherwords, this chart skews data historically simply based on arbitrary prices without regard to what determines those prices in the market.

I know this was intended as an explanation of how bitcoin isn't in a bubble, but to me it reads as confirmation that bitcoin has never been anything except a bubble. Logarithmic growth by itself isn't necessarily a guarantee that something is in a bubble (although it's a useful indicator), but logarithmic growth for years on end is hard to classify as anything except a bubble. Your argument regarding logarithmic growth feels a lot like someone whipping out a PowerPoint presentation during an evacuation to explain that this isn't an emergency, the building has always been on fire.

maizeman

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Re: Is it too late [bitcoin]?
« Reply #386 on: December 16, 2017, 07:08:51 AM »
I know this was intended as an explanation of how bitcoin isn't in a bubble, but to me it reads as confirmation that bitcoin has never been anything except a bubble.

Hey, Ilikedividends? Statements like the one above are why I spend time clarifying the difference between say that something is in a bubble and that something is a bubble. ;-)

Nate79

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Re: Is it too late [bitcoin]?
« Reply #387 on: December 16, 2017, 10:10:28 AM »
Recent article in Wall Street Journal today says that 51 out of 53 economic experts and forecasters surveyed says Bitcoin is a classic bubble.

Sent from my SAMSUNG-SM-G930A using Tapatalk


ILikeDividends

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Re: Is it too late [bitcoin]?
« Reply #388 on: December 16, 2017, 11:27:25 AM »
I know this was intended as an explanation of how bitcoin isn't in a bubble, but to me it reads as confirmation that bitcoin has never been anything except a bubble.

Hey, Ilikedividends? Statements like the one above are why I spend time clarifying the difference between say that something is in a bubble and that something is a bubble. ;-)
Looks like a tied score to me.  You should at least feel some gratification in taking half a victory lap. ;)
« Last Edit: December 16, 2017, 11:35:30 AM by ILikeDividends »

maizeman

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Re: Is it too late [bitcoin]?
« Reply #389 on: December 16, 2017, 12:20:36 PM »
Ugh, we're clearly having separate discussions past each other again. Nevermind.

ILikeDividends

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Re: Is it too late [bitcoin]?
« Reply #390 on: December 16, 2017, 12:45:54 PM »
Ugh, we're clearly having separate discussions past each other again. Nevermind.
Well, hmm.  I thought we already agreed that, if taken too literally, that statement you quoted is nonsensical. 

If you were referring to that post to illustrate your prior point, well, I'd have to say, yes, I still agree.  That was as good an example as any.

Maybe I'm missing something more subtle than that? It wouldn't be a first.
« Last Edit: December 16, 2017, 12:59:21 PM by ILikeDividends »

WhiteTrashCash

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Re: Is it too late [bitcoin]?
« Reply #391 on: December 16, 2017, 02:46:17 PM »
It may be too late to get into bitcoin investing, but it's never too late to get into baseball card investing. I have a Ken Griffey Jr. rookie card that I'm willing to part with. Cheap.

Sorry dude, the baseball card bubble ended years ago.

That's.
The.
Joke.

lifeanon269

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Re: Is it too late [bitcoin]?
« Reply #392 on: December 16, 2017, 04:29:11 PM »
In the original bitcoin, the way a coin is transferred is taking the prior signature and the next user's public key, and hashing that. Miners saw this data and updated the utxo to the ledger. The original bitcoin was defined as a chain of digital signatures, and accompanying that was a longstanding economic model base on being able to verify the signatures. Segwit removes miners ability to 'witness' the signatures. It changed the economics and weakened the security model. In segwit, signatures have no value; the lack of witnessing a signature can allow malicious miners to redirect transactions to their own address. This, in addition to pruning and increasingly rewarding segwit transactions, creates a situation of new risk.

Here's a more in-depth article can about segwit risk: https://calvinayre.com/2017/06/19/bitcoin/risks-segregated-witness-opening-door-mining-cartels-undermine-bitcoin-network/ 

This is not true at all. Saying that signatures have no value with SegWit is completely false. They're still the basis and necessity for being able to spend one's bitcoins. Craig Wright has a history of misinformation (Satoshi Nakamoto ID theft?) and he has always downplayed the role that nodes play in the bitcoin network and overstates the role that miners play in the network. Any node that recognizes SegWit transactions and addresses see the signatures and therefore will validate those transactions and blocks. What Craig Wright is stating in that article would essentially result in a hard fork. It is only the old nodes that wouldn't see the witness data for SegWit transactions, so if a miner were to attempt to spend transactions that didn't meet the rules of the network according to the nodes that recognize SegWit, they'd effectively be performing a hardfork and creating a blockchain that is ignoring the rules of the network that dictate that those coins can't be spent without a valid signature. A miner attempting to mine a block trying to steal coins from SegWit transactions, those blocks would only be recognized by a few old nodes on the network and that block would get quickly orphaned as soon as more legitimate blocks that all the rest of the SegWit nodes recognize get mined. In other words, this is no different of a 51% attack under a SegWit scenario than we would have under a non-SegWit network. This is a similar soft-fork technique that P2SH scripts used when implemented.

As we've already seen this year, it has been shown that miners have much less power over the network than they've realized and Craig Wright (the author of your article) has always neglected the power that the nodes and userbase/market have in dictating the direction that the network takes.

https://seebitcoin.com/2017/02/segwit-facts-not-anyone-can-spend-so-stop-saying-they-can/

I don't know the technical side of OMG and how that works, so I can't comment there. I'd have to do some research on it more. Thanks for the info.
« Last Edit: December 16, 2017, 04:32:37 PM by lifeanon269 »

shadow

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Re: Is it too late [bitcoin]?
« Reply #393 on: December 16, 2017, 05:33:41 PM »
This is not true at all. Saying that signatures have no value with SegWit is completely false. They're still the basis and necessity for being able to spend one's bitcoins. Craig Wright has a history of misinformation (Satoshi Nakamoto ID theft?) and he has always downplayed the role that nodes play in the bitcoin network and overstates the role that miners play in the network. Any node that recognizes SegWit transactions and addresses see the signatures and therefore will validate those transactions and blocks. What Craig Wright is stating in that article would essentially result in a hard fork. It is only the old nodes that wouldn't see the witness data for SegWit transactions, so if a miner were to attempt to spend transactions that didn't meet the rules of the network according to the nodes that recognize SegWit, they'd effectively be performing a hardfork and creating a blockchain that is ignoring the rules of the network that dictate that those coins can't be spent without a valid signature. A miner attempting to mine a block trying to steal coins from SegWit transactions, those blocks would only be recognized by a few old nodes on the network and that block would get quickly orphaned as soon as more legitimate blocks that all the rest of the SegWit nodes recognize get mined. In other words, this is no different of a 51% attack under a SegWit scenario than we would have under a non-SegWit network. This is a similar soft-fork technique that P2SH scripts used when implemented.

As we've already seen this year, it has been shown that miners have much less power over the network than they've realized and Craig Wright (the author of your article) has always neglected the power that the nodes and userbase/market have in dictating the direction that the network takes.

I'll concede that segwit signatures retain value, but remain firm that the economic model has changed to increased risk, due to segwit. User non-mining nodes cannot validate transactions. Miners are the ones who decide what to validate. User nodes cannot stop what miners validate. If the reward or reason is large enough, and large number of miners collude on malicious behavior, then the chances of a hardfork are very high. What do miners lose, in this situation, and what do they stand to gain? You can't simply assume that it can't happen, or if it happens, that it will not be a big impact, especially when there is a chance of it happening.

There are a ton of controversy surrounding segwit signatures. Physicist and chief scientist of bitcoin unlimited, Peter Rizun, backs up the claim that segwit signatures have little or no value (let's make the distinction to mean monetary value (https://www.youtube.com/watch?v=hO176mdSTG0&feature=youtu.be&t=783). Segwit also poses a forensics issue: "SegWit is not concerned with maintaining digital signatures, only with validating transactions as they occur. The SegWit approach creates significant uncertainty as to whether only a hash of signature data can meet the e-SIGN statutory requirements to prove a digital signature." https://www.coindesk.com/the-risks-of-bitcoins-segregated-witness-problems-under-us-contract-law/

Segwit changed the economic model and introduced a point of risk.


lifeanon269

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Re: Is it too late [bitcoin]?
« Reply #394 on: December 16, 2017, 06:22:02 PM »
I'll concede that segwit signatures retain value, but remain firm that the economic model has changed to increased risk, due to segwit. User non-mining nodes cannot validate transactions. Miners are the ones who decide what to validate. User nodes cannot stop what miners validate. If the reward or reason is large enough, and large number of miners collude on malicious behavior, then the chances of a hardfork are very high. What do miners lose, in this situation, and what do they stand to gain? You can't simply assume that it can't happen, or if it happens, that it will not be a big impact, especially when there is a chance of it happening.

There are a ton of controversy surrounding segwit signatures. Physicist and chief scientist of bitcoin unlimited, Peter Rizun, backs up the claim that segwit signatures have little or no value (let's make the distinction to mean monetary value (https://www.youtube.com/watch?v=hO176mdSTG0&feature=youtu.be&t=783). Segwit also poses a forensics issue: "SegWit is not concerned with maintaining digital signatures, only with validating transactions as they occur. The SegWit approach creates significant uncertainty as to whether only a hash of signature data can meet the e-SIGN statutory requirements to prove a digital signature." https://www.coindesk.com/the-risks-of-bitcoins-segregated-witness-problems-under-us-contract-law/

Segwit changed the economic model and introduced a point of risk.

What are you talking about that non-mining nodes cannot validate transactions? Non-mining nodes are the very nodes that validate transactions. Miners don't validate anything. I bolded your statement above because that statement is fundementally not true. Miners perform the proof-of-work to build each of the blocks, but they don't validate those blocks. Only the non-mining nodes that store the blockchain validate whether or not a block that a miner solved is valid. This is the key misunderstanding that Craig Wright and Peter Rizun in his presentation have. We even saw this play out quite vividly this year with several of the hardforks that occurred (Bcash and S2X). Hashpower does not get to dictate what bitcoin is and isn't. A massive number of bitcoin core nodes validate and accept SegWit blocks and transactions and they view all witness data. The market sees bitcoin as having SegWit implemented and so do all the exchanges that are a part of this ecosystem. As we saw with the BCash EDA hassle this year, hashpower had little sway in what the market viewed as being bitcoin.

If you watch Peter Rizun's video that you linked to, the very first question that was asked pointed out this very clear misunderstanding and Peter Rizun's response was...

"I'm assuming that the non-mining nodes don't have too much influence over the protocol."

Peter Rizun views the bitcoin ecosystem as a closed system from the standpoint of miners and only miners. As we've seen, this is a faulty viewpoint and it isn't how the economical market reacts to what bitcoin is and isn't. If all nodes are validating SegWit blocks with witness data and the market views this as bitcoin and all the exchanges view this as bitcoin and there is massive economic activity that occurs with SegWit transactions, then the miners have very little influence with regard to trying to take over SegWit transactions without witness data. This will only get more and more true as time goes on and more and more economic activity occurs with SegWit transactions that include the witness data. As exchanges like Coinbase and many others make their transition to SegWit, it will become less and less likely that there would ever be an attempt to hard fork away from SegWit. That's essentially what is being argued here...that the miners would make an attempt to hard fork away from a Bitcoin network that uses SegWit and back onto a chain that does not recognize SegWit transactions. The economic model has not changed at all. In fact, it is the economic model (the market determines what Bitcoin is and isn't) that makes this arguement invalid in the first place. What you're essentially arguing is that nodes that don't recognize SegWit transactions that strip witness data will someday be the nodes that determine that Bitcoin no longer utilizes SegWit. In doing so, a hardfork would occur and the market would also need to agree with that fact idea...given the fact that the market would likely have billions of dollars locked up in SegWit addresses, I can assure you that would not happen.

Miners can hardfork to their hearts content, we've all seen how well that has worked in the past for them.

phil22

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Re: Is it too late [bitcoin]?
« Reply #395 on: December 16, 2017, 06:45:49 PM »
What are you talking about that non-mining nodes cannot validate transactions? Non-mining nodes are the very nodes that validate transactions. Miners don't validate anything.

false.  miners validate the entire history of the blockchain (that's the whole point) to decide which blockchain to work on top of, and miners validate all outstanding transactions in the mempool when deciding which transactions to include in a block.

Hashpower does not get to dictate what bitcoin is and isn't.

false again.  hashpower does determine which blockchain is the "concensus" blockchain.  again, that's the whole point.  hashpower = secure blockchain = bitcoin.

lifeanon269

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Re: Is it too late [bitcoin]?
« Reply #396 on: December 16, 2017, 07:16:39 PM »
false.  miners validate the entire history of the blockchain (that's the whole point) to decide which blockchain to work on top of, and miners validate all outstanding transactions in the mempool when deciding which transactions to include in a block.

Wrong, the decentralized network of non-mining nodes that store a copy of the blockchain is what validates the historical blockchain. The mining nodes simply take a hash of the latest block from those nodes to work on top of for the current block that they're processing. They can certainly choose which transactions to process from the mempool, but if they don't build a valid block that the non-mining nodes agree to, then they will have wasted their hash power. That's the whole point in how the checks and balances work between nodes and miners. If a miner builds an invalid block, that block will not be accepted by the network.

Quote
false again.  hashpower does determine which blockchain is the "concensus" blockchain.  again, that's the whole point.  hashpower = secure blockchain = bitcoin.

That's not really true as we saw and was proven this year. Hashpower is completely economically driven. If the market and ecosystem values bitcoin as being a certain chain and the tokens on the forked chain don't hold any value, then the miners would be operating at a loss under the rules of the forked chain. While they might be able to hold out for a short while, if the market does not get behind that forked chain, then ultimately the miners would need to mine the more profitable chain to stay in business. There is certainly a give and take between the two forces, but it just isn't true that hashpower is what determines what the bitcoin blockchain is. History clearly shows this to be true, so I don't really feel as if I need to argue it.
« Last Edit: December 16, 2017, 07:24:08 PM by lifeanon269 »

shadow

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Re: Is it too late [bitcoin]?
« Reply #397 on: December 17, 2017, 01:06:39 AM »
false.  miners validate the entire history of the blockchain (that's the whole point) to decide which blockchain to work on top of, and miners validate all outstanding transactions in the mempool when deciding which transactions to include in a block.

Wrong, the decentralized network of non-mining nodes that store a copy of the blockchain is what validates the historical blockchain. The mining nodes simply take a hash of the latest block from those nodes to work on top of for the current block that they're processing. They can certainly choose which transactions to process from the mempool, but if they don't build a valid block that the non-mining nodes agree to, then they will have wasted their hash power. That's the whole point in how the checks and balances work between nodes and miners. If a miner builds an invalid block, that block will not be accepted by the network.

Quote
false again.  hashpower does determine which blockchain is the "concensus" blockchain.  again, that's the whole point.  hashpower = secure blockchain = bitcoin.

That's not really true as we saw and was proven this year. Hashpower is completely economically driven. If the market and ecosystem values bitcoin as being a certain chain and the tokens on the forked chain don't hold any value, then the miners would be operating at a loss under the rules of the forked chain. While they might be able to hold out for a short while, if the market does not get behind that forked chain, then ultimately the miners would need to mine the more profitable chain to stay in business. There is certainly a give and take between the two forces, but it just isn't true that hashpower is what determines what the bitcoin blockchain is. History clearly shows this to be true, so I don't really feel as if I need to argue it.

There are two opposing schools of thought here.

One says user fullnodes are needed to keep miners honest, to enforce consensus rules against miners violating them. The more user fullnodes there are, the greater the security for bitcoin.

The other says miners, themselves, are the nodes that keep themselves in checks and balances; other miners reject invalid transactions. Most users do not need to run user fullnodes. In the original nonsegwit economic model, miners are incentivized to not accept or perform fraud, which would harm the network and their mining investments. A simple model: 

Remove user fullnodes:
Bitcoin network = miners + user fullnodes
You still have bitcoin.

Remove miners:
Bitcoin network = miners + user fullnodes
You no longer have bitcoin.

Conclusion:
Bitcoin = miners
Bitcoin can function without user fullnodes; and before user fullnodes, this was how it functioned.

Here's a good article about the this school of thought: "Why “non-mining full nodes” are a terrible idea." that fundamentally disagrees with normal users needing to run fullnodes. https://medium.com/@olivierjanss/why-non-mining-full-nodes-are-a-terrible-idea-ad3c49f7a7b6


lifeanon269

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Re: Is it too late [bitcoin]?
« Reply #398 on: December 17, 2017, 06:45:01 AM »
Shadow, the argument you're making against "user" full-nodes is not an argument I ever made. Not once did I ever mention "user" full-nodes or making the case for the ability of users to run full-nodes on Raspberry Pis.

There is a big difference between "user" full-nodes and just the idea of full-nodes in general. Essentially if you're a non-mining Bitcoin business, you're going to want to run a full node. As a business, you're not going to want to trust your business to some other third-party that is running a full-node. Secondly, Coinbase, for example, as an Exchange will want to run a full-node to ensure that their transactions are fully validated and that they're also a complete check and balance against the rest of the community. If the only full-nodes out there were miners, then that would mean miners would be able to dictate the business decisions that Coinbase as an exchange were to make. Also, since Coinbase is a business that relies directly on its userbase, Coinbase has a vested interest in listening to that user base to determine what path to follow. This is the key market mechanism that people miss when they place too much emphasis on the power that miners have over Bitcoin. Coinbase isn't in the mining business, but it most assuredly is in the business of making sure that Bitcoin follows the path that the market demands. That is essentially its entire business model and that model depends directly on running a non-mining full-node.

The article you linked to and the argument you've made only make sense when talking about "user" full-nodes, but don't make much sense in the context of what I stated above.

Finally, if you value decentralization (which the article never mentions), then you must also value non-mining full-nodes. I run cold-storage watch only Electrum SPV wallet. At any given time it is connected to about 10 different servers, many of them are Tor hidden servers, and are very geographically diverse. This is a very critical component when it comes to creating a payment network that is censorship resistant. Bitcoin mining is essentially performing energy market arbitrage by being able to be located in areas with cheap electricity. Because of this, there is a reason why a large chunk of the mining resources are located in China. I mine with an ASIC at my house and use the Slushpool mining pool since it gives me a vote as to which Bitcoin version I mine for. Since most mining takes place in pools, if only miners were the ones running full-nodes, then my SPV wallet would not be making nearly as many diverse connections around the globe. This is very bad for decentralization and censorship resistance. Large numbers of geographically diverse full-nodes provides a proper check against mining, especially when that mining is not nearly as geographically diverse.

I agree that Bitcoin without mining is not Bitcoin, but if you put too much emphasis on the power that mining has over the network, then I'd absolutely argue that Bitcoin without a large number of geographically diverse full-nodes is not Bitcoin either.
« Last Edit: December 17, 2017, 06:53:57 AM by lifeanon269 »

shadow

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Re: Is it too late [bitcoin]?
« Reply #399 on: December 17, 2017, 09:27:52 AM »
Shadow, the argument you're making against "user" full-nodes is not an argument I ever made. Not once did I ever mention "user" full-nodes or making the case for the ability of users to run full-nodes on Raspberry Pis.

There is a big difference between "user" full-nodes and just the idea of full-nodes in general. Essentially if you're a non-mining Bitcoin business, you're going to want to run a full node. As a business, you're not going to want to trust your business to some other third-party that is running a full-node. Secondly, Coinbase, for example, as an Exchange will want to run a full-node to ensure that their transactions are fully validated and that they're also a complete check and balance against the rest of the community. If the only full-nodes out there were miners, then that would mean miners would be able to dictate the business decisions that Coinbase as an exchange were to make. Also, since Coinbase is a business that relies directly on its userbase, Coinbase has a vested interest in listening to that user base to determine what path to follow. This is the key market mechanism that people miss when they place too much emphasis on the power that miners have over Bitcoin. Coinbase isn't in the mining business, but it most assuredly is in the business of making sure that Bitcoin follows the path that the market demands. That is essentially its entire business model and that model depends directly on running a non-mining full-node.

The article you linked to and the argument you've made only make sense when talking about "user" full-nodes, but don't make much sense in the context of what I stated above.


My statements don't disagree with this. Businesses that accept btc will want to run nonmining fullnodes. Enthusiasts and researchers may want to run a nonmining fullnode.

Quote
Finally, if you value decentralization (which the article never mentions), then you must also value non-mining full-nodes. I run cold-storage watch only Electrum SPV wallet. At any given time it is connected to about 10 different servers, many of them are Tor hidden servers, and are very geographically diverse. This is a very critical component when it comes to creating a payment network that is censorship resistant. Bitcoin mining is essentially performing energy market arbitrage by being able to be located in areas with cheap electricity. Because of this, there is a reason why a large chunk of the mining resources are located in China. I mine with an ASIC at my house and use the Slushpool mining pool since it gives me a vote as to which Bitcoin version I mine for. Since most mining takes place in pools, if only miners were the ones running full-nodes, then my SPV wallet would not be making nearly as many diverse connections around the globe. This is very bad for decentralization and censorship resistance. Large numbers of geographically diverse full-nodes provides a proper check against mining, especially when that mining is not nearly as geographically diverse.

I agree that Bitcoin without mining is not Bitcoin, but if you put too much emphasis on the power that mining has over the network, then I'd absolutely argue that Bitcoin without a large number of geographically diverse full-nodes is not Bitcoin either.

The thing about decentralization in a proof-of-work, is that it faces unsustainability and other risks. Every performance tweak, every optimization, every competitive advantage, every newer model of of asic, creates a situation where miners must adapt similiar enhancements to compete. Factor in areas where you get cheap electricity. Miners are ok as long as they operate in the black, but if they can't keep up with costs (higher and higher costs, or btc value doesn't keep pace with costs), they have to shutdown part of the mining operation or they may even entirely have to give it up.

Another thing about decentralization is that there is no agreement on what constitutes decentralization in a proof-of-work crypto. Miners are distributed groups, but we see a trend toward greater and greater centralization base on the factors listed above. Those who support running nonmining fullnodes says the more people that run fullnodes the better: for example, 100 users, 10 miners, and if 90 people are nonmining fullnodes, then you've extended decentralization by including nonmining fullnodes across 90% of users. You limit a protocol blocksize increase base on this decentralized reasoning 

The problem with this is that it affects usability. The crucial aspect impacted is infrastructure. The people who believe concentrated pools of miners are ok, given the factors of increasing efficiency that will phase out smaller miners, also believe that decentralization naturally results from a higher blocksize limit, which increases usability. Businesses are the ones who must at least run nonmining fullnodes because they process customer transactions. So greater usability --> more users --> more businesses. Now, you have 1000 users, 10 miners or even more (systems that rent mining power to normal users increase), and 90 businesses that run nonmining fullnodes. The percentage of nonmining fullnodes are lower than in the limited blocksize scenario (10% vs 90%), but that does not make it more centralized then the other scenario.
 
It seems to a be question of perspective: which situation would actually better defend against centralization?
« Last Edit: December 17, 2017, 09:33:47 AM by shadow »