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Which type of curren(t) do you want to see(cy)? A analysis of the intention behind bitcoin(s). [Part 2]
Part 1 It's been a bit of time since the first post during which I believe things have crystallised further as to the intentions of the three primary bitcoin variants. I was going to go on a long winded journey to try to weave together the various bits and pieces to let the reader discern from themselves but there's simply too much material that needs to be covered and the effort that it would require is not something that I can invest right now. Firstly we must define what bitcoin actually is. Many people think of bitcoin as a unit of a digital currency like a dollar in your bank but without a physical substrate. That's kind of correct as a way to explain its likeness to something many people are familiar with but instead it's a bit more nuanced than that. If we look at a wallet from 2011 that has never moved any coins, we can find that there are now multiple "bitcoins" on multiple different blockchains. This post will discuss the main three variants which are Bitcoin Core, Bitcoin Cash and Bitcoin SV. In this respect many people are still hotly debating which is the REAL bitcoin variant and which bitcoins you want to be "investing" in. The genius of bitcoin was not in defining a class of non physical objects to send around. Why bitcoin was so revolutionary is that it combined cryptography, economics, law, computer science, networking, mathematics, etc. and created a protocol which was basically a rule set to be followed which creates a game of incentives that provides security to a p2p network to prevent double spends. The game theory is extremely important to understand. When a transaction is made on the bitcoin network your wallet essentially generates a string of characters which includes your public cryptographic key, a signature which is derived from the private key:pub key pair, the hash of the previous block and an address derived from a public key of the person you want to send the coins to. Because each transaction includes the hash of the previous block (a hash is something that will always generate the same 64 character string result from EXACTLY the same data inputs) the blocks are literally chained together. Bitcoin and the blockchain are thus defined in the technical white paper which accompanied the release client as a chain of digital signatures. The miners validate transactions on the network and compete with one another to detect double spends on the network. If a miner finds the correct solution to the current block (and in doing so is the one who writes all the transactions that have elapsed since the last block was found, in to the next block) says that a transaction is confirmed but then the rest of the network disagree that the transactions occurred in the order that this miner says (for double spends), then the network will reject the version of the blockchain that that miner is working on. In that respect the miners are incentivised to check each other's work and ensure the majority are working on the correct version of the chain. The miners are thus bound by the game theoretical design of NAKAMOTO CONSENSUS and the ENFORCES of the rule set. It is important to note the term ENFORCER rather than RULE CREATOR as this is defined in the white paper which is a document copyrighted by Satoshi Nakamoto in 2009. Now if we look at the three primary variants of bitcoin understanding these important defining characteristics of what the bitcoin protocol actually is we can make an argument that the variants that changed some of these defining attributes as no longer being bitcoin rather than trying to argue based off market appraisal which is essentially defining bitcoin as a social media consensus rather than a set in stone rule set. BITCOIN CORE: On first examination Bitcoin Core appears to be the incumbent bitcoin that many are being lead to believe is the "true" bitcoin and the others are knock off scams. The outward stated rationale behind the bitcoin core variant is that computational resources, bandwidth, storage are scarce and that before increasing the size of each block to allow for more transactions we should be increasing the efficiency with which the data being fed in to a block is stored. In order to achieve this one of the first suggested implementations was a process known as SegWit (segregating the witness data). This means that when you construct a bitcoin transaction, in the header of the tx, instead of the inputs being public key and a signature + Hash + address(to), the signature data is moved outside of header as this can save space within the header and allow more transactions to fill the block. More of the history of the proposal can be read about here (bearing in mind that article is published by the bitcoinmagazine which is founded by ethereum devs Vitalik and Mihai and can't necessarily be trusted to give an unbiased record of events). The idea of a segwit like solution was proposed as early as 2012 by the likes of Greg Maxwell and Luke Dash Jnr and Peter Todd in an apparent effort to "FIX" transaction malleability and enable side chains. Those familiar with the motto "problem reaction solution" may understand here that the problem being presented may not always be an authentic problem and it may actually just be necessary preparation for implementing a desired solution. The real technical arguments as to whether moving signature data outside of the transaction in the header actually invalidates the definition of bitcoin as being a chain of digital signatures is outside my realm of expertise but instead we can examine the character of the individuals and groups involved in endorsing such a solution. Greg Maxwell is a hard to know individual that has been involved with bitcoin since its very early days but in some articles he portrays himself as portrays himself as one of bitcoins harshest earliest critics. Before that he worked with Mozilla and Wikipedia and a few mentions of him can be found on some old linux sites or such. He has no entry on wikipedia other than a non hyperlinked listing as the CTO of Blockstream. Blockstream was a company founded by Greg Maxwell and Adam Back, but in business registration documents only Adam Back is listed as the business contact but registered by James Murdock as the agent. They received funding from a number of VC firms but also Joi Ito and Reid Hoffman and there are suggestions that MIT media labs and the Digital Currency Initiative. For those paying attention Joi Ito and Reid Hoffman have links to Jeffrey Epstein and his offsider Ghislaine Maxwell. Ghislaine is the daughter of publishing tycoon and fraudster Robert Maxwell (Ján Ludvík Hyman Binyamin Hoch, a yiddish orthodox czech). It is emerging that the Maxwells are implicated with Mossad and involved in many different psyops throughout the last decades. Greg Maxwell is verified as nullc but a few months ago was outed using sock puppets as another reddit user contrarian__ who also admits to being Jewish in one of his comments as the former. Greg has had a colourful history with his roll as a bitcoin core developer successfully ousting two of the developers put there by Satoshi (Gavin Andreson and Mike Hearn) and being referred to by Andreson as a toxic troll with counterpart Samon Mow. At this point rather than crafting the narrative around Greg, I will provide a few links for the reader to assess on their own time:
Now I could just go on dumping more and more articles but that doesn't really weave it all together. Essentially it is very well possible that the 'FIX' of bitcoin proposed with SegWit was done by those who are moral reprobates who have been rubbing shoulders money launderers and human traffickers. Gregory Maxwell was removed from wikipedia, worked with Mozilla who donated a quarter of a million to MIT media labs and had relationship with Joi Ito, the company he founded received funding from people associated with Epstein who have demonstrated their poor character and dishonesty and attempted to wage toxic wars against those early bitcoin developers who wished to scale bitcoin as per the white paper and without changing consensus rules or signature structures. The argument that BTC is bitcoin because the exchanges and the market have chosen is not necessarily a logical supposition when the vast majority of the money that has flown in to inflate the price of BTC comes from a cryptographic USD token that was created by Brock Pierce (Might Ducks child stahollywood pedo scandal Digital Entertainment Network) who attended Jeffrey Epstein's Island for conferences. The group Tether who issues the USDT has been getting nailed by the New York Attorney General office with claims of $1.4 trillion in damages from their dodgey practices. Brock Pierce has since distanced himself from Tether but Blockstream still works closely with them and they are now exploring issuing tether on the ethereum network. Tether lost it's US banking partner in early 2017 before the monstrous run up for bitcoin prices. Afterwards they alleged they had full reserves of USD however, they were never audited and were printing hundreds of millions of dollars of tether each week during peak mania which was used to buy bitcoin (which was then used as collateral to issue more tether against the bitcoin they bought at a value they inflated). Around $30m in USDT is crossing between China to Russia daily and when some of the groups also related to USDT/Tether were raided they found them in possession of hundreds of thousands of dollars worth of counterfeit physical US bills. Because of all this it then becomes important to reassess the arguments that were made for the implementation of pegged sidechains, segregated witnesses and other second layer solutions. If preventing the bitcoin blockchain from bloating was the main argument for second layer solutions, what was the plan for scaling the data related to the records of transactions that occur on the second layer. You will then need to rely on less robust ways of securing the second layer than Proof Of Work but still have the same amount of data to contend with, unless there was plans all along for second layer solutions to enable records to be deleted /pruned to facilitate money laundering and violation of laws put in place to prevent banking secrecy etc. There's much more to it as well and I encourage anyone interested to go digging on their own in to this murky cesspit. Although I know very well what sort of stuff Epstein has been up to I have been out of the loop and haven't familiarised myself with everyone involved in his network that is coming to light. Stay tuned for part 3 which will be an analysis of the shit show that is the Bitcoin Cash variant...
Hello again. It's been a while. People have been emailing me about once a week or so for the last year to ask if I'm coming back to Bitcoin now that Bitcoin Cash exists. And a couple of weeks ago I was summoned on a thread called "Ask Mike Hearn Anything", but that was nothing to do with me and I was on holiday in Japan at the time. So I figured I should just answer all the different questions and answers in one place rather than keep doing it individually over email. Firstly, thanks for the kind words on this sub. I don't take part anymore but I still visit occasionally to see what people are talking about, and the people posting nice messages is a pleasant change from three years ago. Secondly, who am I? Some new Bitcoiners might not know. I am Satoshi. Just kidding. I'm not Satoshi. I was a Bitcoin developer for about five years, from 2010-2015. I was also one of the first Bitcoin users, sending my first coins in April 2009 (to SN), about 4 months after the genesis block. I worked on various things:
My main effort was an implementation of a Java library called bitcoinj. This was the engine used in the first p2p mobile wallet ("Bitcoin Wallet for Android"), and the first p2p desktop wallet that was faster to run than Bitcoin [Core] itself (MultiBit). These together were responsible for around 2.5 million user installs at a time when downloading the full block chain was becoming too slow for normal users to tolerate and the only alternative was a "bitbank" or cloud-hosted wallet. It was used in the first trustless gambling site (SatoshiDice), over 100 products and projects, and many academic research papers.
With Gavin Andresen and others I designed some upgrades to the Bitcoin protocol like Bloom filtering and BIP70.
With Matt Corrallo I implemented and demonstrated the first version of (micro)payment channels. I put together a demo of a file server that charged micropayments using a GUI called Payfile (mentioned in New Scientist here). I used to have a video of this but unfortunately it no longer seems to be on YouTube. Payment channels went on to be used in the design of the Lightning Network.
You can see a trend here - I was always interested in developing peer to peer decentralised applications that used Bitcoin. But what I'm best known for is my role in the block size debate/civil war, documented by Nathaniel Popper in the New York Times. I spent most of 2015 writing extensively about why various proposals from the small-block/Blockstream faction weren't going to work (e.g. on replace by fee, lightning network, what would occur if no hard fork happened, soft forks, scaling conferences etc). After Blockstream successfully took over Bitcoin Core and expelled anyone who opposed them, Gavin and I forked Bitcoin Core to create Bitcoin XT, the first alternative node implementation to gain any serious usage. The creation of XT led to the imposition of censorship across all Bitcoin discussion forums and news outlets, resulted in the creation of this sub, and Core supporters paid a botnet operator to force XT nodes offline with DDoS attacks. They also convinced the miners and wider community to do nothing for years, resulting in the eventual overload of the main network. I left the project at the start of 2016, documenting my reasons and what I expected to happen in my final essay on Bitcoin in which I said I considered it a failed experiment. Along with the article in the New York Times this pierced the censorship, made the wider world aware of what was going on, and thus my last gift to the community was a 20% drop in price (it soon recovered).
The last two years
Left Bitcoin ... but not decentralisation. After all that went down I started a new project called Corda. You can think of Corda as Bitcoin++, but modified for industrial use cases where a decentralised p2p database is more immediately useful than a new coin. Corda incorporates many ideas I had back when I was working on Bitcoin but couldn't implement due to lack of time, resources, because of ideological wars or because they were too technically radical for the community. So even though it's doesn't provide a new cryptocurrency out of the box, it might be interesting for the Bitcoin Cash community to study anyway. By resigning myself to Bitcoin's fate and joining R3 I could go back to the drawing board and design with a lot more freedom, creating something inspired by Bitcoin's protocol but incorporating all the experience we gained writing Bitcoin apps over the years. The most common question I'm asked is whether I'd come back and work on Bitcoin again. The obvious followup question is - come back and work on what? If you want to see some of the ideas I'd have been exploring if things had worked out differently, go read the Corda tech white paper. Here's a few of the things it might be worth asking about:
Corda's data model is a UTXO ledger, like Bitcoin. Outputs in Corda (called "states") can be arbitrary data structures instead of just coin amounts, so you don't need hacks like coloured coins anymore. You can track arbitrary fungible assets, but you can also model things like the state of a loan, deal, purchase order, crate of cargo etc.
Transactions are structured as Merkle trees.
Corda has a compound key format that can represent more flexible conditions than CHECKMULTISIG can.
Smart contracts are stateless predicates like in Bitcoin, but you can loop like in Ethereum. Unlike Bitcoin and Ethereum we do not invent our own VM or languages.
Transactions can have files attached to them. Smart contracts in Corda are stored in attachments and referenced by hash, so large programs aren't duplicated inside every transaction.
The P2P network is encrypted.
Back in 2014 I wrote that Bitcoin needed a store and forward network, to make app dev easier, and to improve privacy. Corda doesn't have a store and forward network - Corda is a store and forward network.
It has a "flow framework" that makes structured back-and-forth conversations very easy to program. This makes protocols like payment channelss a lot quicker and easier to implement, and would have made Lighthouse much more straightforward. A big part of my goal with Corda was to simplify the act of building complicated decentralised applications, based on those Bitcoin experiences. Lighthouse took about 8 months of full time work to build, but it's pretty spartan anyway. That's because Bitcoin offers almost nothing to developers who want to build P2P apps that go beyond simple payments. Corda does.
The flow framework lets you do hard things quickly. For example, we took part in a competition called Project Ubin, the goal of which was to develop something vaguely analogous in complexity to the Lightning Network or original Ripple (decentralised net-out of debts). But we had about six weeks and one developer. We successfully did that in the time allowed. Compare that to dev time for the Lightning Network.
Corda scales a lot better than Bitcoin, even though Bitcoin could have scaled to the levels needed for large payment networks with enough work and time. It has something similar to what Ethereum calls "sharding". This is possible partly because Corda doesn't use proof of work.
It has a mechanism for signalling the equivalent of hard forks.
It provides much better privacy. Whilst it supports techniques like address randomisation, it also doesn't use global broadcast and we are working on encrypting the entire ledger using Intel SGX, such that no human has access to the raw unencrypted data and such that it's transparent to application developers (i.e. no need to design custom zero knowledge proofs)
When BTC consigns itself to a use case that no one uses it for
A few years ago in the Bitcoin community the discussion was all about how the Bitcoin blockchain could do it all so there was no reason for altcoins (or "shitcoins"). Everything was being built on Bitcoin, or should be built on Bitcoin, because it was going to be the only global blockchain that mattered. Need to issue your own tokens or do something that required more scripting? Colored coins and Counterparty (and later RSK)! Supply chain tracking? Blockchain voting? Notary? Property ownership? Bitcoin can do it all. But now the community seems to be more in the spirit of Bitcoin being a store of value and a transfer of value and that's it. The comments on this post sum it up. Ignoring Luke-jr's expected nonsense, so many people are adamantly against anyone using the Bitcoin blockchain for anything other than transferring money. Which is an interesting issue, because almost no one uses Bitcoin for that. Specifically, in 2016, the majority of transfers are between exchanges, only a tiny fraction is for payments or other transfers, see chart in article. This is probably why the number of transactions keep climbing and fees keep rising despite people complaining. Exchanges aren't really hurt by high fees, they can pass them on or absorb them since their average txn amount is relatively high so the fees for them are still low. As an aside, it's almost funny that LN is being offered as a scaling solution, but the majority of users who are actually making money off Bitcoin (exchanges, and miners) don't need that solution at all. They also don't need larger blocks (perhaps someday the exchanges would, but they don't seem to need them currently). Is it no wonder the scaling issue is in a stalemate? Anyway... So what does this have to do with /ethtrader? It seems to me that the Bitcoin community has mostly relegated Bitcoin to a use (transfer of value) that almost no one uses it for (majority use it for speculation and store of value, with the idea that future users will need it as a transfer of value). While a market can stay irrational longer than anyone can stay liquid, they do eventually catch up to reality, and when that happens with Bitcoin some money will go to things like Dash, Monero, and Litecoin, but I think the majority will go to Ethereum. It might be years, but that's ok, I think most of us are in this for the long haul, both as an investment and as a technological revolution.
Bitcoin mining is now wasting at least 60 times more electricity than is required, much of it is the least expensive hydro in the US and geothermal in the world. There are alternative crypto-coins that do not have this problem
TL;DR: This non-technical intro covers what Bitcoin is, its benefits over current payment technologies, and the threats to its success. The goal is to get a beginner quickly up to speed and making sense of the headlines. The primer is divided into two parts, and the second part is linked to at the bottom. Suggestions for additional resources are provided at the end of Part 2. There was a recent post asking "I've been hearing a lot of talk about Bitcoin the past few months, and I want to get started, but I want to know what it is, and the benefits of using Bitcoin over other forms of currencies." While it's relatively easy to find resources on the technical underpinnings of Bitcoin, or on how to purchase your first bitcoins, it's difficult to find summaries of the many issues it faces as a technology. Media stories can be confusing to navigate, with some heralding Bitcoin as the next great revolution, and others deriding it as a tool for criminals. I thought this would be a good opportunity to post an early draft of my primer covering the important non-technical aspects of Bitcoin. It should be enough to get a beginner off to a good start. Part 1 is below, and Part 2 is linked to at the bottom. Comments are appreciated! WHAT'S THE BIG DEAL? We can now communicate in a truly global way, thanks to the World Wide Web. Instead of sending letters, we send e-mail. Instead of expensive long-distance phone calls, we have Skype and Google Hangouts. Instead of looking up information with a card catalog, we search Google or go to Wikipedia. Unlike our communications systems, our traditional payment systems are not global, despite the fact that we live in an increasingly global economy. Bitcoin is the first web-native payment protocol and consensus network that supports global, decentralized peer-to-peer payments (I'll explain more about what that means in a bit). At first, you can think of it as a global form of cash for the internet, but it's actually more than that. It has the potential to do for the world economy what the World Wide Web did for communications. At present, we largely rely on payment systems that were designed before the web even existed. Our methods of payment depend on a patchwork of local currencies and banking systems. Traditional payment systems, such as credit cards as we currently know them, were introduced in the U.S. in the late 1950s! People have recognized the need for a new payment network for a long time and have been trying to invent a form of e-cash for decades. The main problem is that digital money, like anything that's digital, is easy to copy. We can't have people copying their money and fabricating billions of e-dollars for themselves, because those e-dollars would become worthless. Bitcoin is a major breakthrough in computer science that has solved the problem of copying money (called "double spending"). HOW COULD MONEY WITH NO CENTRAL ISSUING AUTHORITY EXIST? When we say Bitcoin is decentralized, we mean that it's run by the users. How? Here's a brief, non-technical overview. The users include people who use bitcoins for transactions (consumers and merchants), developers who create new ways to use Bitcoin, and miners. Miners run specialized computers all over the world that verify transactions (checking that no double spending has occurred); they are rewarded with newly "mined" bitcoins (this is how new bitcoins are created, instead of them being issued by a government). All the transactions are recorded on a public ledger called the blockchain (since the blockchain puts everyone in agreement with the transaction history, it's the consensus mechanism alluded to earlier). Bitcoin with a capital "B" refers to both the protocol (the technical specification of how this system works and the code that implements it) and the whole payment network of users. When written with a lowercase b, bitcoin usually refers to the currency that is transacted across this system. (It turns out that Bitcoin, as a protocol, supports many other applications in addition to the bitcoin currency. In a way, it's similar to how the internet is used for more than sending e-mail, but I won't get into additional applications here.) So, what are some advantages of Bitcoin? WHAT MAKES BITCOIN DIFFERENT SECURITY You buy something online at Target by typing in your credit card number. Target gets hacked (as we saw early this year), and hackers now have your account number, which is basically the key or password to your credit line. Now consider e-mail. When you send someone e-mail, do you need to give them your password in order for them to read the e-mail? No. You have a public e-mail address that you can share with them, if they need to reply to you. Bitcoin is like that. You have a public key (like your e-mail address) and a private key (like your password). You can send and receive payments without giving away the keys to your funds. So, things like the Target debacle could not happen. Yes, people's coins do get stolen, and there are still security issues, but often these have to do with people who are not knowledgeable about Bitcoin and who try to store the coins themselves (as opposed to storing them with a reputable third party), and they end up not securing their private keys properly. Or, they'll print what's called a paper wallet with unencrypted private keys and send it through the USPS (you wouldn't send a lot of cash in an envelope through USPS, would you? I'm hoping you answered no!). Please do not do this! So, people need to learn that Bitcoin is like cash in some ways; if you lose it, you're not getting it back (although some efforts at insuring bitcoins are starting to crop up). As the industry grows, storing coins securely will become easier for the non-techie. Remember, it used to require lots of technical knowledge just to get on the World Wide Web. LOW FEES It's difficult to overstate the importance of this. Low fees will help workers sending money abroad to family, they'll help small business owners and larger merchants, and they'll enable new business models. Currently, people can pay around 10% to send international remittances (e.g. if they're sending $200 to family abroad, they might pay $20 in fees), and the international remittance market is huge. For example, in 2010, India received 55 billion U.S. dollars in remittances; perhaps half of this was for family maintenance. Remittance fees are therefore a big burden on lots of families worldwide. Merchants pay around 2-2.5% on all the money they bring in through credit cards. Small businesses accepting payments through PayPal pay 2.9% +.30. An individual bringing in about $3000 monthly could pay around $90 per month to be able to accept payments. Typical Bitcoin transactions range from free to .0001 BTC, or about $.06 per transaction, regardless of the number of Bitcoins sent. (Fellow redditors, please chime in on this if you have helpful sources). Low fees also enable microtransactions, which are very small payments, and these can support entirely new business models. For example, consider an online newspaper that charges a large monthly fee. Many users just want to read one article. With microtransactions, it's conceivable that users could instead just pay a few cents per article. This was previously impossible, because the fees paid by the newspaper to collect the payment would be larger than the payment itself. Why are the payments so cheap? What's the catch? Bitcoin payments are peer-to-peer, so there aren't third parties charging fees. Most of the fees charged by credit card companies, as I understand it, go toward fraud prevention, but Bitcoin does not suffer from the same security flaws. GLOBAL SOLUTION Bitcoin is built for a web-connected world. It's not issued by any particular government and can be sent between two parties anywhere in the world without going through intermediate banks and exchanges, which reduces cost. ACCESS FOR THE UNBANKED Roughly half of the world's adult population is unbanked, i.e. does not have access to a bank account. Not having access to a bank account makes it difficult and expensive to send payments, to store funds securely, and so on. In short, it's a major hardship. It's not that the unbanked have no money. Often, there is just no access to a reliable banking infrastructure where they live. In the developed world, it’s possible to be denied access to a banking account because of having overdrawn an account many years ago. "Mistakes like a bounced check or a small overdraft have effectively blacklisted more than a million low-income Americans from the mainstream financial system for as long as seven years" according to the New York Times. A million people is a small number compared to half the world's adult population, but this shows that access to banking can be difficult for a lot of people in developed nations as well. As the Bitcoin industry grows, it will become easier for individuals to securely store their money (people in developing nations often do have access to cell phones, and payment applications for such cell phones are already being developed). In this way, developing countries can leapfrog traditional banking infrastructure as they did with telecommunications networks by going straight from having no land lines to having cell phones. PREVENTION OF RAMPANT INFLATION In many countries, such as Venezuela, Argentina, and Iran, the local currency can be highly inflationary. People's hard-earned assets become less and less valuable. This can happen when a country prints too much money. With Bitcoin, the rate at which new bitcoins enter the economy is strictly controlled by the protocol. Eventually, there will be a maximum of 21 million bitcoins in circulation. After that, no more bitcoins will be produced. Right now, the price of Bitcoin is very volatile, but much of this volatility is the result of Bitcoin being new. If it succeeds in becoming more widely adopted by merchants and consumers, and if more institutional investors start getting into Bitcoin, and if regulatory clarity increases from governments, this volatility will diminish. (All of these things are starting to happen.) A related aspect of Bitcoin that is novel is that if it becomes widely adopted, then in the medium term, its value will increase fairly dramatically, instead of decreasing as with inflationary currencies. Basically, the bitcoin supply won't increase too much, but the goods and services paid for with that supply will increase. So, the value of the bitcoins will need to go up to accommodate that change. (In the short-term, the price is determined more by speculation, but it's this speculation that makes bitcoins valuable enough to actually be useful). Bitcoins constitute a new kind of asset class. People can use them as a currency, but they can also use them as an investment (especially now, while it's still early). These two aspects of the currency will pull in opposite directions for now (if it'll grow in value, should I really spend it?). People here on bitcoin might tend to hope that this tension will be resolved, as Bitcoin will be made popular by its many advantages. No one knows how it will play out. PERMISSIONLESS APPLICATIONS LAYER Early on in Bitcoin's history, a famous economist (who I won't name, so as not to make personal attacks) who vastly underestimated the potential of the World Wide Web as a transformative economic force, made a similar estimate of Bitcoin's potential. In this terrific article, a research fellow at George Mason University explains that this economist was making the same mistake in both cases. In the early days of the internet, it wasn't clear to everyone why it was better than the existing telecommunications networks. It turns out that the primary feature that set it apart is its permissionless applications layer. In other words, the internet is built on a protocol for data transfer, but developers can do whatever they want with the data at the ends of the network, without having to modify the network itself or get permission from internet service providers. For example, AT&T experimented with video calls as far back as the 1960s. It wasn't until the World Wide Web that cheap video calls were made possible by the likes of Skype and Google. In a similar way, Bitcoin is a protocol for transferring data and recording it on a public ledger, and developers can create new features on top of the protocol. This is why Bitcoin has been called "the internet of money." A helpful analogy to keep in mind is that internet:communication::Bitcoin:finance. This is fleshed out in the "terrific article" I linked to. NO CHARGEBACKS Let's say someone steals your credit card information and fraudulently uses it to purchase goods. You dispute the charge, and you get your money back (hence the term chargeback). Since the money goes back to you, it's taken away from the merchant, despite the fact that the merchant has already given away the goods. Chargebacks can also happen if the consumer is unsatisfied with the goods, and for other reasons as well. This can be very costly for merchants. Bitcoin payments are irreversible, so chargebacks do not happen. This is very helpful to merchants, but it means that when you purchase faulty goods as a consumer, you might not have a formal process in place to get your money back. A trustworthy merchant could voluntarily send your money back, but there is no third party bank that can reverse the payment. ACCEPTING BITCOIN IS EASY All you have to do is post your public key (like an e-mail address), and people can send you payments. TO BE CONTINUED I've run out of room. In Part 2 of this primer, pseudonymity is discussed, along with threats to Bitcoin's success. Edits: Wording under "SECURITY," per BitCamel; typos; linked to remittance data.
WSJ, NYT, Yahoo Finance, Independent (UK), Wikipedia report that Blockstream is funded by top insurer AXA, whose CEO is on the board of HSBC and *chairs* the Bilderberg Group. Blockstream President Austin Hill desperately tweets trying to dismiss these facts as "batshit crazy Illuminati theories"!
https://np.reddit.com/btc/comments/489ckf/austin_hill_borgstream_president_on_twitte https://twitter.com/austinhill/status/703958443141369856 https://np.reddit.com/btc/comments/47zfzt/blockstream_is_now_controlled_by_the_bilderberg/ Sorry Austin Hill, but you can't have it both ways. If you accept millions of dollars from one of the biggest insurance companies in the world (AXA Strategic Ventures, investment arm of AXA Group) - whose CEO sits on the board of HSBC (one of the biggest banks in the world) - and who is also leader of the ultra-secretive financial power elite group known as the Bilderberg Group, then people are going to talk about it - and people are going to be curious and concerned about how this could influence Blockstream's corporate goals and strategies. But in a pathetic attempt to deflect public awareness and transparency about the secretive, elite Bilderberg Group investors who Blockstream now reports to, Blockstream Presdient Austin Hill austindhill is now desperately tweeting attempting to claim that sources such as The Wall Street Journal, The New York Times, The Independent (UK), Yahoo Finance and Wikipedia are "batshit crazy with illuminati theories about who is involved in Blockstream"... But the Reddit post to which he is evidently referring simply quotes those reputable sources like WSJ, NYT, etc. - providing information that is part of the public record (but which Austin Hill evidently doesn't want too many people to pay attention to). No "batshit crazy Illuminati theories" here. Just simple googling and grassroots journalism which any concerned user of Bitcoin could do in a few minutes. The Bitcoin-using public is just following the money. And asking the following simple and obvious question: Could Blockstream's ongoing inexplicable attempts to cripple the Bitcoin "Core" implementation by driving people off-chain possibly be explained by the fact that one of Blockstream's co-lead investors (AXA Strategic Investments) is the investment arm of a company (AXA Group) whose CEO (Henri de Clastries) is not only on the board of one of the biggest "fiat" banks in the world (HSBC), but is also the head of the notorious ultra-secretive financial power elite Bilderberg Group? The simple facts - which Austin Hill cannot deny, no matter how much he dismissively tweets about "batshit crazy Illuminati theories" - are as follows: (1) Blockstream just got another $55 million in venture capital in recent its Series A funding round - in addition to its previous $21 million in venture capital; (2) The co-lead of this recent funding round is AXA Strategic Ventures - which is the investment arm of French insurance giant AXA Group; (3) The CEO of AXA Group is Henri de Castries, who also sits on the board of one of the biggest banks in the world, HSBC; (4) Since 2012, Henri de Castries is also been chairman of the Bilderberg Group, one of the world's most secretive organizations composed of "the elite of the elite" from banking, finance, and government; (5) As we all know by now, the two main goals of Blockstream (and, apparently, of at least some of the investors it reports to) are: (a) to discourage people from transacting directly on the Bitcoin blockchain, and (b) to prematurely create fee markets. (6) Blockstream's two main strategies for achieving these goals are: (a) to spread FUD and lies claiming that Bitcoin cannot scale, in order create artificial scarcity of space for transacting directly on the Bitcoin blockchain by their ongoing, unjustifiable refusal to release a Bitcoin implementation supporting blocks bigger than 1 MB; (b) to steer people onto Blockstream's complicated, centralized, expensive off-blockchain transacting "solutions" such as Lightning Network - which will "lock up" more funds from users, and steal fees from miners. There are no "batshit crazy illuminati theories about who is involved in Blockstream" in anything of the above. These are just the facts, on the public record. Now, the only "theories" involve wild speculation regarding: Why is Blockstream attempting to cripple Bitcoin? But Blockstream brought these "theories" on themselves - by refusing to release any code (until maybe July 2017) which would allow blocks to be bigger than 1 MB - when research has shown that Bitcoin infrastruture and Bitcoin operators could easily support 3-4 MB blocks already, and when the Bitcoin network is rapidly becoming congested and clogged jeopardizing its usefulness for transacting. Here is the exposé which got Austin Hill so upset - the top story on /btc this past weekend:
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.
Blockstream Announces $55 Million Series A Investment Bringing Total Capital Raised to $76 Million The round is being led by Horizons Ventures, AXA Strategic Ventures, and Digital Garage, with participation from existing investors including AME Cloud Ventures, Blockchain Capital, Future\Perfect Ventures, Khosla Ventures, Mosaic Ventures, and Seven Seas Venture Partners.
Ex-C.E.O. of Diageo and AXA Chairman [Henri de Castries] to Join HSBC Board
http://www.nytimes.com/2015/11/14/business/dealbook/hsbc-board-henri-de-castries-paul-walsh.html?_r=0 If Blockstream President Austin Hill austindhill wishes to dispute any of these well-known facts, he is welcome to try. Frankly it is rather pathetic of him to think he can simply dismiss facts on the public record by trying to refer to them as "batshit crazy Illuminati theories" - in his hopeless attempt to deflect public attention away from the fact that it is solely his company Blockstream, and its refusal to let blocks grow bigger than 1 MB, which to blame for:
congesting the Bitcoin network,
suppressing Bitcoin adoption and price, and
driving people to use alt-coins
... all of which are threatening to strangle Bitcoin in its infancy. But hey, who knows, maybe that's not a "bug" - maybe that's a "feature"! In other words, maybe maybe that's what the chairman of the global banking power elite Bilderberg Group behind Blockstream really wants to do to Bitcoin: embrace, extend, and extinguish it with their apparently Straussian agenda.
More information on the Renewable Energy consumption of Bitcoin and the environmentally friendly alternative BlackCoin TL:DR
The amount of electricity required to maintain Bitcoin’s security is legendary. Its miners are scouring the globe searching for areas with the least-expensive electricity rates. Unfortunately, these areas are where the least expensive renewable-energy resources exist in the world. Links are provided below to the references to back up the claims made here. This document will be updated as needed based on your comments below. It has been estimated that the additional electricity required to maintain BlackCoin’s cooperative minting network is much less than three one-thousands ( 3 / 1000 ) of what is now used to run an equivalent sized competitive Bitcoin mining network. Bitcoin’s current electrical consumption equipment arms race is gobbling up irreplaceable, renewable-energy resources in areas where they provide the less expensive renewable energy options bar none. A recent study cited in the Wall Street Journal shows that the hash rate required for Bitcoin’s security last fall was one one-sixtieth (1 / 60) of what it is now. This hash rate inflation has been fueled by the tremendous profitability of large scale corporate mining operations, which have produced the mining technology arms race. The largest known corporate Bitcoin mining operation is reported to be housed in a warehouse in Central Washington State where it takes advantage of the US’s lowest electricity rates bar none. The Spokane Review recently reported that a handful of additional competitors are now about to pop up. Washington State is the leader in hydroelectric generation with 29% of the total national capacity according to the US Energy Information Administration. It is 10th in wind energy production. Nevertheless, the whole state still has the lowest residential electric rates in the country. The New York Times reported on a similar setup in Iceland, which may have the least expensive electricity of any country in the world. It is powered by hydro and geothermal resources. These corporate mining operations compete against each other for the right to enter the next ledger page into the Bitcoin blockchain. The startups that produce the otherwise useless mining equipment are forced to make outrageous claims for their latest drawing board designs to get preorder payments to finance their production as has been well documented by CoinDesk in numerous articles. Are we about to repeat the environmental disasters that followed the 1849 California Gold Rush and the wildcatting boom that began with the Spindletop oil gusher? This trend will continue as long as the Bitcoin mining technology continues to improve at breakneck speed driven by the profitability resulting from the squandering of these irreplaceable resources. It took three and a half years after Satoshi Nakamoto launched Bitcoin in January 2009 before Sunny King in August 2012 to launch Peercoin, the first environmentally friendly cryptocurrency. However, Peercoin is designed to be the savings account complementing the best environmentally friendly checking account cryptocurrency. The market has been trying since then to settle on the best environmentally friendly challenger for Bitcoin. The Russian crypto developer rat4 launched BlackCoin on February 24, 2014 at 6:00 UTC after making the customary announcement on February 16 on the Bitcoin Forum. Startup crypto exchange Mintpal quickly recognized the potential of rat4’s improvement of the design of the innovative Mintcoin protocol. This helped catapult BlackCoin into 19th place in market cap by the start of April. BlackCoin obtained its current 10 th place position after Coinkite chose Blackcoin to add to its terminals in June joining Bitcoin and Litecoin. Sunny King’s protocol has now been tested on many environmentally friendly alternatives. The market has now chosen BlackCoin to be checking account to Peercoin’s saving account. The Bitcoin MIT Project will provision every undergraduate at that institution with $100 worth of bitcoins in the fall semester as an experiment. The proposed BlackCoin MIT Airdrop is currently being discussed by the Blackcoin Community on its reddit page. The proposal calls for provisioning each MIT graduate student with $100 of the best environmentally friendly alternative to Bitcoin in the best technology crucible in the world. It appears from the MIT announcement that the MIT Kerberos & Internet Trust Consortium may have been used as the vehicle for obtaining tax exempt fiat donations. Therefore, should the newly formed BlackCoin Foundation ask the Trust to set up a donation account and let the environmental community try to raise the less than $1 million required to fund the MIT Airdrop. If you have arrived here from somewhere else and are interested in learning more about BlackCoin and the MIT BlackCoin Project, please join the discussion with us at the BlackCoin subreddit: reddit.com/BlackCoin/ Please report proofreading and editing corrections in comments below. References Electricity requirement calculations needed to maintain the BlackCoin network http://www.reddit.com/blackcoin/comments/25a4fq/if_you_are_good_at_science_or_if_you_are_an/ Wall Street Journal Article on Bitcoin hash rate http://blogs.wsj.com/moneybeat/2014/04/29/bitbeat-for-bitcoin-miners-a-hot-problem-this-summe Spokane Review Article http://www.spokesman.com/stories/2014/ap26/northwests-cheap-power-drawing-bitcoin-miners/ US Energy Information Administration – Washington State Renewable Energy Report http://www.eia.gov/state/?sid=WA NT Times Iceland Bitcoin mining article http://dealbook.nytimes.com/2013/12/23/morning-agenda-the-bitcoin-mines-of-iceland/?_php=true&_type=blogs&_php=true&_type=blogs&_r=1 CoinDesk mining equipment articles http://www.coindesk.com/coindesk-mining-roundup-hot-issues-lawsuits-eco-mining/ http://www.coindesk.com/problems-plague-kncminer-broken-super-jupiters-arrive-doorsteps/ http://www.coindesk.com/alpha-technology-initiates-scrypt-asic-tape/ Bitcoin MIT Project article that mentions MIT Kerberos & Internet Trust Consortium http://tech.mit.edu/V134/N22/bitcoin.html
Mike Hearn, a long-time bitcoin developer, published an article yesterday claiming that bitcoin had failed, that he had sold all of his bitcoins, and that he will no longer be contributing to the bitcoin space. This story was picked up by Nathaniel Popper at the New York Times, who wrote a nice article summarizing the situation. Hearn had a lot of valid reasons for frustration, including malicious DoS attacks on Bitcoin XT nodes. However, recent positive developments, possibly catalyzed by Hearn's article, demonstrate that a large number of major stakeholders disagree with Hearn's assessment (more on this below). Regardless, it's now a day after Hearn's article, and the price has fallen to about $370. This is down from roughly $430 before the article. There has been speculation that investors are selling on fear over the article (although it's always difficult to pin down the cause of a bitcoin price swing). At the same time, big players have recently joined Bitcoin Classic (which itself has joined Bitcoin XT and Bitcoin Unlimited as alternative implementations to Bitcoin Core that would allow a block size increase). A recent tally shows 49% of the hash power (a measure of mining power) had joined Classic, along with both Gavin Andresen and Jeff Garzik as developers. Previously, miners had been slow to back any implementation proposing a block size increase, and Andresen and Garzik had each backed their own separate proposals for a block size increase (BIP 101 and BIP 100, respectively). Major companies standing behind Classic include Coinbase, OKCoin, Bitstamp, Xapo, and a bunch of others. Bitcoin Classic's momentum may be derived from two key factors. First, their mission statement asserts that "in the future we will continue to release updates that are in line with Satoshi’s whitepaper & vision, and are agreed upon by the community". The project's maintainers have already started collecting feedback from various stakeholders using a platform called consider.it. Although consider.it may not be a perfect solution to political infighting, it may be a significant step forward, given the governance issues that have plagued bitcoin (especially over the last six months). It’s also hard to overestimate the value of a transparent decision-making process, in light of the censorship that has become the norm in other forums for community discussion. Second, they've already made the compromise of forking Core with an immediate block size increase to 2 MB, as a stopgap measure, and they're using consider.it to determine the way forward after that. With many proposals available, the future remains unseen, but one notable development is the support that has been coalescing around BitPay's recent adaptive block size increase proposal, with Gavin Andresen publicly favoring it. TL;DR: The price appears to have dropped over fear originating from Hearn's declaration of Bitcoin's failure. Nearly simultaneously, Bitcoin Classic has emerged with significant backing from users, miners, developers, and businesses, thus bringing new hope of progress. It appears that this positive news has not yet been priced in. Disclaimer: This is a personal take on the situation. It is not a recommendation to buy or sell bitcoin as an investment. Bitcoin's price will likely be volatile for some time, and if you view bitcoin as an investment, then it's best to invest only what you can afford to lose. Edit: formatting; changed a link to an NP link, per reddiquette guidelines.
Which burden do you want to carry: Going to PoS with an anti-Ethereum hacker holding (1)5 % of the Ethers? Or having an anti-principle fork in the history of the network which prevented exactly that? (80 points, 95 comments)
Someone please proofread what I have written below, so it can be posted on r/environment and other such subreddits.
Here is the title. Bitcoin requires a tremendous amount of electricity to be maintain, but there are much more environmentally-friendly, alternative cryptocurrencies. Please demand that merchants accept the environmentally friendly alternatives. Executive Summary: Large Bitcoin mining operations are now being constructed in places where they unnecessarily squander the least expensive, renewable hydro-electric and geothermal-electric resources. There are very environmentally-friendly, readily-available, alternative cryptocurrencies such as Blackcoin and NXT that do not pose a threat to these precious renewable resources. The environmentally unfriendly coins that require a lot of electricity to mine are called Proof of Work (PoW) coins. The environmentally friendly alternatives like Blackcoin and NXT are called Proof of Stake (PoS) coins. The price spike in bitcoin last fall has led to an arms race to adopt electricity-gobbling, specialized mining equipment in the pursuit of corporate mining profits. They were not required to maintain Bitcoin prior to their invention. Specialized mining equipment for a second class of coins, which are similar to Litecoin, another PoW coin, is about to start shipping. This will lead to another large surge in unnecessary corporate mining operations and greatly increase the electrical demand in the race for corporate mining profits. You can read the long report below.to find out more about the issue, and you can visit blackcoin and NXT at the links below to find out more about our coins. If you have heard enough and just want to do something quick and simple to support our efforts, visit blackcoin and NXT, click on our subscriber button to show your support, and then watch us take on Bitcoin. While you visit the two subreddits, you can judge for yourself which one you think will succeed. Hopefully, some respected environmentalist will start campaigns to get merchants that already accept Bitcoin and Litecoin to start accepting the environmentally friendly alternatives. http://www.reddit.com/blackcoin http://us.reddit.com/NXT/ Electrical requirement to mine PoW coins: The Bitcoin, Litecoin, and Dogecoin ledger are maintained by miners who compete against each other to see who can first find the next page for their blockchains. Only the miner that wins the race for each ledger page gets paid in coins. As a result of this competition and the late 2013 price spike, Bitcoin mining corporate startups are popping up in central Washington State as documented in the first link below to take advantage of the inexpensive, renewable hydro-electricity and in Iceland as documented in the second link below to take advantage of the renewable hydro and geothermal resources. If bitcoin continue to expand, it will unnecessarily eat up more and more of these valuable renewable resources Link to Washington State Bitcoin mining article http://www.spokesman.com/stories/2014/ap26/northwests-cheap-power-drawing-bitcoin-miners/ Link to Iceland Bitcoin mining article http://dealbook.nytimes.com/2013/12/23/morning-agenda-the-bitcoin-mines-of-iceland/?_php=true&_type=blogs&_r=0 The next surge in electricity requirement is about to happen: The mining hardware manufacturers are about to start shipping specialized mining equipment that can only mine the Litecoin and Dogecoin type of PoW coins as documented in the two links below. This new front in the mining arms race will gobble up much more precious renewable electricity in the competitive pursuit of corporate mining profits than is currently required to update the ledgers of these coins. http://www.cryptocoinsnews.com/news/innosilicon-a2-terminator-scrypt-asics-first-28nm-chips-litecoin-dogecoin-mining/2014/04/30 https://coinreport.net/zeusminer-pre-orders-scrypt-asic-miners/ http://www.coindesk.com/mining-roundup-multipools-doge-amazon-ec2-11ghs-usb-sticks/ This specialized equipment is prostituting the original bitcoin promise The tremendously profitable mining of crypto coins that are competitively produced is unnecessarily prostituting the original concept of their inventor, Satoshi Nakamoto. He envisioned bitcoins as being mined on standard personal computers while preforming other useful tasks. Instead, special computer hardware is being manufactured costing upwards to $10,000 apiece which can perform only one task. These individual units are being racked up in warehouses now. This specialized equipment was not required for Bitcoin prior to its invention and is not required currently for Litecoin and Dogecoin. However, it is coming anyway producing an unnecessary arm race in the pursuit of corporate profits. These specialized dev ices are energy inefficient in a second ways. These specialized devices generate so much heat that they require elaborate energy-intensive cooling system for large operation. One of the most elaborate of these cooling systems is documented in the link below for a Hong Cong corporate mining operation that emerges the energy-wasting equipment in boiling goo to keep it cool. Thus, not only does it take electricity to run the equipment for these large operations, but more to keep it all cool. http://www.theverge.com/2013/12/2/5165428/bitcoin-mine-in-hong-kong-uses-jelly-to-keep-cool PoS coins are the environmentally friendly alternative. In contrast, the ledger pages of coins like Blackcoin and NXT are generated by stakeholders who cooperate to perform the task which are being done on standard multitasking computers. Many of these computers would be running anyway as originally envisioned by the inventor of the blockchain. If you have heard enough and just want to do something quick and simple to support our efforts, visit blackcoin and NXT, click on our subscriber button to show your support, and then watch us take on Bitcoin. While you visit the two subreddits, you can judge for yourself which one you think will succeed. Hopefully, some respected environmentalist will start campaigns to get merchants that already accept Bitcoin and Litecoin to start accepting the environmentally friendly alternatives. http://www.reddit.com/blackcoin http://us.reddit.com/NXT/
Would the MIT community be interested in a head to head competition between Bitcoin and one of the top environmental friendly alternatives next fall? Bitcoin mining wastes at least 60 times more electricity than all of the most energy efficient alternative coins.
Who could be behind Auroracoin? Could it be bitcoin miners in Iceland?
If you ask yourself what type of person is most likely to be behind Auroracoin, one would have to answer: someone who knows a lot about Iceland as well as Bitcoin? This New York Times article: http://dealbook.nytimes.com/2013/12/23/morning-agenda-the-bitcoin-mines-of-iceland/?_php=true&_type=blogs&_r=0 provides a suspect. Bitcoin mining requires a lot of electricity to run the hardware as well as to cool it. Iceland has cheap hydro and geothermal electricity as well as free, relatively cool air for the taking. This allows the bitcoin miner in this story to claim that he is virtually printing money. Even if this company was not initially involved in this project, do you really believe they would not have gotten involved by now? They have the equipment to mine and the funds to also support the currency. Think about it.
I'm guessing there are a few whale miners, who possess a massive amount of computing power (think supercomputers) who collect a significant portion of the Bitcoins that are spit into the world. What if the small handful of titan miners possess an unfathomable amount of Bitcoins? For example, the largest declared Bitcoin fortune is possessed by the Winklevoss twins (who owned 11 million $ in Bitcoins when valued at 120$/btc). Are there undeclared Bitcoin billionaires in possession of 99% or more of the produced Bitcoins? Does the current market for Bitcoins solely reflect the recreational mining community (who mine to spend on commodities), but ignore the more commercial/investment miners? Is there a way to figure out whether undeclared whale miners exist? Help me out here, I'm just trying to gain a firmer grasp on all of this.
Refute Please: "[...] seems to imply a loss of security as the value of mining goes down"
This was a comment here "Since the system is inherently deflationary, the "mining" process either becomes more valuable or incrementally less well compensated. As the Mining process is the basis for the security of the system it seems to imply a loss of security as the value of mining goes down, or it becomes subject to inflation by and increase in mining devoted hardware. In many ways it is a mathematical substitute for gold and the lack of Keynesian dynamics associated with fiat currency necessarily leads to the volatility. from the website: 'Bitcoin mining is the process of making computer hardware do mathematical calculations for the Bitcoin network to confirm transactions and increase security. As a reward for their services, Bitcoin miners can collect transaction fees for the transactions they confirm along with newly created bitcoins. Mining is a specialized and competitive market where the rewards are divided up according to how much calculation is done. Not all Bitcoin users do Bitcoin mining and it is not an easy way to make money.'"
#566 Bakkt Starbucks Deal, Zinsen auf Krypto mit BlockFi & Bitcoin Miner investieren wieder
Bitcoin is one of the most talked about but least understood technological innovations of recent years, continuing to draw new backers on Wall Street and Sil... This video is unavailable. Watch Queue Queue. Watch Queue Queue Mining Bitcoin is as easy as installing the mining software on the PC you already own and clicking start. Anyone can do this and see the money start rolling ... THIS WEEK: ----- Coinbase, a Bitcoin Start-Up, Raises $75 Million in Vote of Confidence http://dealbook.nytimes.com/2015/01/20/coinbas... The Bitcoin Group, the American Original, for over the last ten seconds, the sharpest satoshis, the best bitcoins, the hardest crypocurrency talk.