> I am presently incapable of seeing how any token other than Bitcoin will be the one that wins.
In some sense, Bitcoin has already "won" in that it currently has a non-zero value. Anyone who says "Bitcoin can't possibly exist or hold value" already is known to be wrong, simply by Bitcoin's existence.
In the same way, I don't understand people like OP who say "No other cryptocurrency but Bitcoin can have value" because many of them already have a value and have "won" by some measures- Why do people keep trying to argue that dogecoin/litecoin/etc/etc don't have value, when people trade them for other currencies every day on open markets?
Near as I can tell, there will be (and already are) multiple "winners" in the cryptocurrency competition, filling different niches, just like there are multiple species on planet earth filling different niches.
> Why do people keep trying to argue that dogecoin/litecoin/etc/etc don't have value, when people trade them for other currencies every day on open markets?
B/c the majority of them care more about their investment than they do about cryptocurrencies as a technology and fear that competition of coins will hinder a successful (aka profitable) exit strategy.
To be clear, I don't claim that non-Bitcoin cryptocurrencies do not have value. You're right that their de facto value is revealed through trading activity on exchanges. I view value as subjectively revealed by market prices, not through any sort of labor theory of value or other nonsense.
I'm arguing that non-Bitcoin CCs don't really add any marginal value to the CC ecosystem, and that it's inherently unstable for multiple CCs to coexist. Whatever rationalizations people are making to justify mining Litecoin and holding onto it (ignoring sunk costs of Scrypt ASICs) are inconsistent with reality.
> Why do people keep trying to argue that dogecoin/litecoin/etc/etc don't have value, when people trade them for other currencies every day on open markets?
They have value but it's much more based on speculation. If you look at Bitcoin, there's an ecosystem of millions of users, over 100 thousand merchants including some of the world's biggest companies like Microsoft, hundreds of bitcoin-focused VC-backed startups of which one had a valuation nearing half a billion dollars etc etc.
While it's obvious that bitcoins are overvalued in relation to this ecosystem (i.e. a substantial part of its price is based on speculation that the ecosystem will become massively important in the future), there already is a genuine ecosystem out there with decent growth rates.
Dogecoin or litecoin don't have that. They have communities that keep them alive but there doesn't seem to be a long term viability. This is different from bitcoin's early days (which didn't have any real ecosystem either at one point) in that bitcoin actually offered something radically new, while litecoin for example isn't innovative, it was the first me-too that didn't totally screw over its early investors in a pump & dump scheme so it's stayed around but it doesn't offer anything special. Does that mean they have no value? Absolutely not. They do. But 'me-too' companies also have value in the short-term. In the long term they usually don't survive. We're already seeing that, litecoin for example dropped insanely in price (like 90%) in the past year and that's not just because bitcoin readjusted after late 2013's hype cycle, it crashed against bitcoin itself, too, i.e. the market is already identifying that litecoin versus just bitcoin doesn't have a future in the long-run. And if there's ANYTHING you have to know about bitcoin is that it's almost always spoken about in a long-term frame of reference. If we purely look at the short term then yes, we can say dogecoin & litecoin have value and so does bitcoin, but we would also have to say that all three combined are absolutely insignificant, a drop in the ocean, the size of a mid-cap fund of which there are thousands. The short-term isn't interesting, in the short-term me-toos exist, in the long-run they don't.
In short, the reason people say litecoin has no value is not because it's not being traded: that's speculation. It's that it is said to have no utility value over bitcoin. Bitcoin can power any utility litecoin can, with more liquidity, more market participants, more open-source libraries & development, more funding, more security etc.
I don't think we'll all be using bitcoins necessarily, but I do believe we'll all be using bitcoin (or no cryptocurrency at all, of course, that's very possible, too). i.e. yes there are niches in digital currency, but the cryptocurrency niches will, I think, if they exist in the long-term, be served by products running on top of the bitcoin network. Anything litecoin or dogecoin can do, a bitcoin treechain or sidechain or payment channel can do but with the above mentioned benefits. It's like saying there are different niches in internet protocols, as if to say the internet may run on many different protocols that serve different niches in the long-term, instead of saying TCP/IP powers the internet and it has higher-level protocols that serve niches like http or smtp. Within that line of thinking, anything but TCP/IP has no long-term value and any niche in internet technology will be built on top of that one protocol. Similarly many who say 'litecoin has no value' think of bitcoin as being the protocol for value transfer, and anything having to do with transferring value (or titles, contracts etc) will be built on top of it, rather than along side it.
In short, the claim that litecoin has no value (despite having a market value) makes a lot of sense depending on what you believe about the future of cryptocurrency.
The common adage seems to be "storage is cheap", meaning "multi-TB blockchains won't be a problem because you can buy that much storage for a few hundred dollars".
But I think the stupidly-large size of the blockchain is a major hurdle, given the concurrent trend of miniaturization. Embedded devices like one might find in the much-vaunted "internet of things" (eyeball roll) can't really afford to be toting six SSDs just for storing 3 or 4 different blockchains, or even one big one.
There comes a point when it's just no longer practical to store the entire blockchain, but truncating the chain (or only storing some kind of "working set") isn't feasible either.
Not to mention the gargantuan download that's required for that initial setup to get up to date with the latest network transactions.
I think it's a great idea in theory but ultimately pretty annoying in practice.
I recently replaced an old HDD with a new SSD for my win7 install. I had over 100g of blockchains for various coins in my user app data folder. To rebuild from scratch would have taken days and a big chunk of my broadband data allowance.
I know it's centralisation and goes against one of the features of the blockchain, but having trusted hubs through which to interact would save a lot of wasted space, time and data.
I'm not sure why inserting a check-point and resetting the blockchain size to zero would not be possible - can someone please explain this? If the status at the checkpoint were agreed upon by 51% of all nodes then why not?
Some embedded "internet of things" like device wouldn't be a full-node. Rather it would be a lite-node relying on the SPV[1] model of security.
Storing some type of "working set" is totally feasible. Technically you don't even need to keep around all blocks, simply the resultant state that you arrive at after processing all blocks in order. This is called the Unspent Transaction Output set or UTXO set.
It's also possible to only keep around XGB of blocks, or the last 500 blocks, etc (a pruned log)[3]. The purpose of keeping around all blocks is to bootstrap the syncing of new nodes to the network, or optionally to full-chain wallets for re-scanning. Before pruned nodes are widely deployed, a system needs to be developed to allow a syncing node to efficiently identify and retrieve the relevant blockchain shards it needs so it can validate everything and arrive at the current state.
Also, with BitcoinCore 0.10, syncing takes about 4 hours if you don't have shitty a hardware or internet connection [2].
You're dead right. A serious problem with the Bitcoin and Dogecoin clients (which I last used some time ago, but which changed relatively little over time) is taht they just installed themselves on the boot drive (if you're running windows) and had little in the way of configuration options. Cut to a few months later when I'm wondering why I'm running out of space on my SSD, only to realize that it's full of gigabytes of blockchain data that is a complete waste of space, with no convient way to put it somewhere else.
Could I manually get it installed and running on another large-volume and slower speed drive where this wouldn't be an issue, of course. But why do I want to bother even dealing with something so user-hostile? The average Joe or Jill who isn't a computer nerd is just going to see this thing eating his/her hard drive and get rid of it.
A friend of mine joined chain.com and, as I understand it, their value proposition is to handle the load of blockchain while providing trusted access to whatever needs to be known. I'm no expert, but this seems like the right sort of solution for the problem you pose. Blockchain management is handled in the cloud, and clients (including embedded devices) talk securely to a trusted cloud service to get the relevant details.
> There comes a point when it's just no longer practical to store the entire blockchain
Why would you have to? The point of decentralisation is not that everyone has a copy of the truth. It's that a sufficient number of nodes have a copy of the truth, such that you can check a number of them and easily verify the veracity of the data. Many blockchain applications run not by querying their own blockchain but rather querying a number of trusted sources via their API. Coinbase, Bitpay, Chain.com, Blockcypher etc all offer APIs to interface with their blockchain nodes and others.
It's like saying Facebook will never work because you can't possible store the worlds' photos on everyone's smartphones. You don't have to, Facebook stores it on their server. Similarly we will see, and already see, dedicated servers that store the blockchain, and as long as you have enough independent ones you can maintain decentralisation just as if you were hosting your own node.
There's absolutely no need to host the blockchain on small embedded devices any more than any other data, like music or photos we normally host on dedicated servers instead.
> but truncating the chain (or only storing some kind of "working set") isn't feasible either.
Yes it is. What makes you say it isn't? Pruning the blockchain is something that's currently being worked on.
The idea is that if I send you $1 a million times and you send it back $1m times, every day, for the next 1 billion years, we could either store terabytes and terabytes of data of all these transactions, or we could store the end result (= no change occurred) and the last couple weeks of transaction data. The rest can be pruned. Because each block has a hash of all its transactions, and this hash is used to mine the next block (hence a chain of blocks, blockchain), we needn't store each individual transaction, we have the hash to verify the truth of transactions.
We might have some universities saving all transactions for posterity & research, and some businesses for data mining, but the vast majorities of nodes that just need to secure the network can indeed, without security issues, not store long-spent outputs. (i.e. bitcoins that have already been spent many times over. e.g. if I give a dollar to you and you give it to the next guy, and he to the next girl, and so on 100 times, at that point there's absolutely no reason to store on every node the fact I gave a dollar to you for the security of the network.)
> Not to mention the gargantuan download that's required for that initial setup to get up to date with the latest network transactions.
Again, no need to have all redundant transactions. The pruned blockchain would currently be under a gigabyte large. Second, headers-first has already been implemented which made the initial setup much, much faster.
Beyond that, we mustn't forget that the average American makes 2 transactions a day. And one such transaction is about 400 bytes or so, in bitcoin. If you compare this to tweets, or an hour of netflix, it's puny. If you count up all the data, it's about $8 to store one day of all of US consumer transactions on a retail harddrive. Imagine the cost of storage for Mastercard for one of their nodes was $8, and instead of just powering a fraction of US retail, they'd literally handle every single transaction by themselves and store them all for $8. Even if you wanted to have thousands of nodes and store the last year of data (and given the velocity of money, you wouldn't have to as again, you can prune data after money has been spent a couple times), that's a puny amount of money to power an entire consumer financial system of the world's biggest economy. And given storage, like CPU and bandwidth, on a 50-60% yoy growth rate (Kryders, Moore's and Nielsen's laws), I think by the time bitcoin becomes important enough to run 100% of US retail (which is likely never, but hypothetically speaking), that $8 will have dropped to below $0.10 easily.
I know I'm taking big shortcuts here but this is just to illustrate the economics are extremely favorable today and in the future. I don't know if bitcoin will succeed or fail, but I'm pretty near certain it won't fail because storage/cpu/bandwidth isn't affordable enough for nodes to make it viable to run the network. I and many others have looked into this quite a bit and these aren't big problems. Bitcoin has big obstacles (no gigantic consumer benefits in a world of decent fintech like every OECD country to use bitcoin directly, is one), but storage probably isn't one of em.
I kinda get the author's point here - to run a proof of work based system you need an incentive to actually do the work. Bitcoin has such incentives, and so it will succeed for any tool that people try to run on it.
If you try to create a new system, you have to convince people to do the work in the first place.
So it makes much more sense to use bitcoin as your distributed consensus system, for whatever application you choose to place on top of it.
I'm not sure I agree with the premise, though - which is that people actually think that - I reckon that Sam Altman's comments might just be a way of saying 'Bitcoin is in the news a lot, I think it's a waste of my time, but I don't want to write it off just yet.' It's good, it makes him sound profound, everyone's kinda happy.
The question is: What non-currency applications would actually benefit hugely from being decentralised in such a way?
fact: people working on useful tools benefit us all
problem: incentive is only big-picture, feel good. money is, by design, ridiculously hard to come by for helpful projects. teachers, farmers, babysitters, soldiers and many other professions provide valuable service to society yet make only a fraction of what money-manipulators (bankers who specialize in generating $$ from $) or cross-cultural entertainment like motion pictures.
Patents, trade secrets, close source & government regulations all contribute to incidentally de-incentivize many projects built around benefitting a large chunk of humanity as opposed to localized (individual, corporate or nation-state) profiteering. << REWRITE
I ran into this recently designing <link CodeSwarm> - a distributed protocol where programmers receive escrowed bitcoins for an open-source project accepting their work, merging it into the master branch of the project. The payout system sounded promising, but the money had to come from somewhere and be managed to fund these projects!
So how can we, the people, reward people for doing good things, things we like?
"FarmerCoin", described below, is a thought experiment where local Farmers can receive fiat-by-consensus cryptocurrency in exchange for an independent third-party recording (both videographically and on a chain of signatures) the farmer's produce.
I propose the formation of semi-independent regulators for specific industries who accept payment of their choice to regulate a deed done. Regulators film their investigation and verification of the deed, publish to the protocol along with a signed message containing a hash of the video and a magnet link for nodes to torrent.
Once regulators have published a video, end-users known as "verifiers" or "voters" who have clients monitoring the network receive a notification that there is a verification to vote on. This would involve torrenting or finding the video online, verifying its hash, playing the video, then presenting a vote to the user. This vote would say "This is acceptable" or "This is not acceptable".
In "FarmerCoin", this plays out by the farmer showing regulators a bin of vegetables. 10kg of tomatoes, for example. Regulators film the weighing of the tomatoes then use a software to upload that video, a signature of its hash and farmer identity information to the network. If the tomatoes were rotten, the regulators are incentivized not to upload a video because their reputation may become damaged and farmers will not hire them (see next paragraph for why).
Farmer receives "FarmerCoin" for 10kg of tomatoes as the network approves it. If the network disapproves the quality of the tomatoes, the farmer receives nothing.
I admit - there is a flaw in this design. How much "FarmerCoin" is 10kg of tomatoes "worth"? I'm not sure. I don't know how to answer that. Maybe "FarmerCoin" should be generated per calendar year. Please discuss because I think this, at the time of writing, is the only missing link I see in the system.
Regarding the voters - trusting the internet as a whole to vote on if a farmer gets paid is ripe for exploitations. Instead, "FarmerCoin" could use votes only from public-keys the farmer has explicitly accepted to vote for them! Namely these are the farmer's regular customers at the market. This solves the trust problem on a human level. Trying to make this system "completely automated" ignores the fact that real-world actions are happening, which require intelligence. We don't have software to do this process so I think the best bet is to incentivize voters by also generating "FarmerCoin" for each vote they cast.
To be clear, YES "FarmerCoin" is generated by fiat. It is a more decentralized kind of fiat. For that reason and the reason that it is in the voters' -- who are customers of the farmer -- best interest to see the farmer receive accurate feedback on their produce so they grow better yields. ((FIRST REASON???))
YAKSEE
As far as how does "FarmerCoin" have value or "Yet Anthoer Crypto Currency" - consider this. When people speak of "Bitcoin" as being "decentralized", they really are only referring to network logs and the theoretical potential to generate currency. In actuality, those who held existing fiat resources and hardware manufacturing quickly became juggernauts in the cryptocurrency world. I mention this because when I talk about the "fiat" of the above localized consensus I imagine many crypto-currency fans revolt and insist that no, only computationally generated cryptocurrencies are valuable because commerce should be "trustless". I feel that on an intuitive level striving for a trustless society is mal-incentivized. "FarmerCoin"(s) gives us another kind of cryptocurrency just like LiteCoin's alternative hashing algorithim co-exists with Bitcoin.
Besides the intrinsic value of whatever a cryptocurrency with a novel generation mechanism, "FarmerCoin" could be accepted by farmers for discounts on food that those same voters gave feedback on. I think this completes the incentive circuit quite nicely.
MANY FARMERCOIN
"FarmerCoin" could be Tomato Coin, Apple Coin. It could also exist for each specific farm, or region. This would be up to the farmers, regulators and community of voters to work together and decide. Having an exchange (centralized or not) for these currencies to trade could provide additional economic incentives to the voters and farmers. Even if "regular" cryptocurrency is not traded for FarmerCoin, community specific networks could trade eg plows, immunizations etc.
EXPANSE
This concept can be applied to many real world actions. Making a work of art, patching a pothole, giving someone the finger, giving your cat a ball of yarn. Only if the community finds vaue in the "FarmerCoin" they are receiving and the farmer finds it beneficial to receive this subsidized fiat-by-consensus currency will the currency survive.
TL/DR: the Blockchain only wins if Bitcoin wins, because miners need an incentive to mine.
"...the Bitcoin Blockchain cannot win without Bitcoin as a currency winning too, but if the Bitcoin price languishes, the incentive mechanism backstopping the Blockchain will be weak and therefore unreliable, ..."
This argument hinges on the assumption that miners need the incentive of new coins mined from the blockchain for them to continue mining. However, there are several other incentives that people can have. There are several actors inside and outside the US who like to have a currency without government control for various ideological reasons and do not need an economic incentive to continue validating the blockchain.
> "The moment one becomes centralized, whether due to a flaw in the protocol or the concentration of mining power, it is no better (and probably worse in fact) than fiat money, e-gold, or any other monetary scheme which is vulnerable to capture by a minority, and therefore vulnerable to abusive seigniorage and capital controls."
Hasn't this already happened? I believe I heard something about a '51%' attack some time ago, which (I think) would mean that attacker could re-write history (I'd appreciate any corrections or clarifications).
The Bitcoin wiki gives full details[1], but tldr, 51% attack breaks most elements of the blockchain (reverse attacker's transactions => double spending, prevent transactions from getting confirmation, prevent valid blocks originating elsewhere) but doesn't allow the attacker to arbitrarily rewrite history.
As far as "hasn't this already happened", some of the mining pools in aggregate have had or presently could combine to get 50+% of the Bitcoin mining power[2], but to perform the attack requires active coordination from all pool participants. If an attack like this were launched, it would be obvious to anyone viewing the blockchain, likely destroy the value of Bitcoin, and hence their investment, so is economically not a good idea for them.
In order for bitcoin to "win" it needs to get massively more valuable. Valuable enough to move the equivalent of trillions of dollars per year and users need to be able to make million dollar purchases without drastically changing it's price. Otherwise it will never be truly useful as a currency and as interest is lost and prices go down parties concerned with verifying the blockchain will become sparse and the whole system collapses, magical blockchain and all.
Bitcoin has far from "won" in the sense of a currency and if another crypto-currency surpasses it's current popularity the faith in any crypto-currency being stable enough to move trillions of dollars each year is irreparably harmed.
People raising a few thousand dollars here and there in other crypto currencies is fun but it's not only paltry and not generally useful but can easily be attributed to entertainment more than economics. Once the novelty wears off, where will crypto currency stand. That's the most important question we need to ask ourselves. All these alt-coins aren't evidence of a thriving eco-system, they're evidence of the very reason why a cryptography based currency is inherently valueless.
The blockchain cannot last without bitcoin becoming massively more valuable. Many people already see bitcoin as being too valuable and alternatives too easy to create. What needs to be done to scale crypto-currency to the level of an actual currency? Government backing?
While in theory Bitcoin can be adapted to "2.0 features" and beyond, in practice it's impossible.
Bitcoin code, protocol and marshaling formats are a mess. Bitcoin blockchain and transaction data structures make too many hardcoded assumptions about underlying application - payments with a single token.
Bitcoin scripting language was designed for transaction validation only, which makes implementing a smart contracts with it a hack and requires external Oracles.
TL;DR: Bitcoin is a good PoC which gained a network effect.
> Bitcoin code, protocol and marshaling formats are a mess.
Which is why people are working on e.g. Libconsensus.
There are dozens of functional Bitcoin clients based on entirely different codebases, which indicates that it's entirely possible to start from scratch.
>payments with a single token.
While the Bitcoin transaction format is a bit inflexible, you're wrong about the assumptions it makes. Even from the beginning, there has been in-protocol support for more advanced transaction types, like escrow transactions. You can even use a lot of these transaction types right now! There are still some transaction script opcodes that haven't been fully enabled yet, but that's just a matter of tweaking the consensus rules once we're sure that the opcode was implemented correctly and won't have any bad side effects. This has happened several times already with no major problems.
I don't necessarily agree with the conclusion at the end. Supposing that sidechains can be mined simultaneously with the bitcoin at no additional cost, and that there is a fixed bitcoin <-> sidecoin conversion (not market based) built in to the protocol, bitcoin would never completely lose its value, because it could be converted to sidecoin at the same rate it would be before. The market price would be fixed to some small price differential below the price of the amount of sidecoin it could be converted to.
The thing about bitcoin is there are a lot of things done "wrong" with it, that are impossible to retrofit into it. However, the network effect means that it's also impossible to switch to another altcoin without completely devaluing bitcoin, which would mean that the altcoin would be devalued because it could happen to the altcoin as well. I agree with that part. However, something that's pinned to the value of bitcoin like what I've read of the sidechain proposal would be a way to do that.
Is that really what Sidechains are aiming for? If so I need to go back and reread their paper more carefully.
What I'm hearing you describe is that the token used by a Sidechain is not one iota different from any other Bitcoin, except perhaps that its latest output script includes some new weird feature we haven't seen yet. It's like my sending you 1.0 Bitcoin through a vanilla BTC transaction and you telling me that I now possess 10e8 Satoshis, which are different that Bitcoin but always redeemable for Bitcoin pegged at that rate.
If tokens being used by Sidechains are permanently pegged to Bitcoin, and we assume merged mining, I withdraw my objection to the concept, and would instead direct my criticism toward how the concept was presented and its seeming suggestion that Sidechain tokens might one day detach and rise in value while Bitcoins potentially fall to zero.
Interesting post in that this is the first time I've seen someone from the bitcoin speculator group challenge the thesis of those in the VC/startup group.
Both groups are clearly 'talking their book', but this reads like little more than cheerleading/threatening aimed at himself and fellow speculators. For example:
If Cryptocurrency 2.0 ever replaces Bitcoin and all Bitcoins
become worthless, confidence in the category of
cryptocurrencies in general will be, I believe,
irreparably damaged. If Cryptocurrency 2.0 just replaced
Bitcoin, there's nothing stopping Cryptocurrency 3.0 from
replacing Cryptocurrency 2.0 and sending the value of its
tokens to zero. Ad infinitum.
I'm pretty sure what people mean by "Blockchain not Bitcoin" is "Bitcoin 2.0" and not "Bitcoin 1.0" i.e. people think that the killer apps will be complex programs running on the blockchain that enable things like smart contracts etc much like search & social apps were more of killer apps than email which is the analog of bitcoin the currency. The point this article goes into detail to explain is likely not lost on people as smart as Sam Altman or Fred Wilson who say this.
One of the central assumptions in the argument is that the miners need an economic incentive, a (spendable) reward for mining.
How then to explain why people contribute to Wikipedia? Or volunteer at the local seniors centre? Or donate compute time to SETI@home (and other BOINC projects)? Or add map data to OpenStreetMap? Or test open source software? Yes, some of those people get paid, but many do not.
Say what you like, there is an incentive in the opposite direction in the case of a blockchain used as a trust-store, which does not exist in the other cases you described. One could make a lot of money subverting a trusted blockchain, whereas Wikipedia vandals don't profit a cent.
This means that you will inevitably have massively funded efforts to subvert such a blockchain. One thing I know for sure is that simple financial self-interest is one of the most powerful things in the world. Every blockchain has that fact working against it. The reason they don't collapse is that on the other hand, they have that same force working for them as well. A volunteer blockchain like you propose wouldn't stand a whelk's chance in a supernova. Sorry.
None of your examples are in regards to for-profit endeavors. Thus while you are correct that some foundations that are good causes can get people to contribute out of their own good will, this doesn't suggest that novel blockchains by for-profit companies will attract good will contributors.
I think its the decentralized nature that is the big win. However for bitcoin to really "win" is when people would actually prefer payments in bitcoin than any other medium. Which is not the case so far, except for illegal market places.
Yeah, "killer app" means a powerful application of technology, not the technology itself. The emphasis is that cool-technology is not enough, you need to get work (or play) out of it.
A warp-drive is just a technology, but "colonizing the galaxy" is the application which will make people really use it.
[+] [-] drcode|11 years ago|reply
In some sense, Bitcoin has already "won" in that it currently has a non-zero value. Anyone who says "Bitcoin can't possibly exist or hold value" already is known to be wrong, simply by Bitcoin's existence.
In the same way, I don't understand people like OP who say "No other cryptocurrency but Bitcoin can have value" because many of them already have a value and have "won" by some measures- Why do people keep trying to argue that dogecoin/litecoin/etc/etc don't have value, when people trade them for other currencies every day on open markets?
Near as I can tell, there will be (and already are) multiple "winners" in the cryptocurrency competition, filling different niches, just like there are multiple species on planet earth filling different niches.
[+] [-] nunyabuizness|11 years ago|reply
B/c the majority of them care more about their investment than they do about cryptocurrencies as a technology and fear that competition of coins will hinder a successful (aka profitable) exit strategy.
[+] [-] codexon|11 years ago|reply
Ask anyone that has been in a ponzi scheme or stocks that went to 0.
[+] [-] Terr_|11 years ago|reply
http://en.wikipedia.org/wiki/Tulip_mania
[+] [-] joe_coin|11 years ago|reply
I'm arguing that non-Bitcoin CCs don't really add any marginal value to the CC ecosystem, and that it's inherently unstable for multiple CCs to coexist. Whatever rationalizations people are making to justify mining Litecoin and holding onto it (ignoring sunk costs of Scrypt ASICs) are inconsistent with reality.
[+] [-] crazychrome|11 years ago|reply
[+] [-] IkmoIkmo|11 years ago|reply
They have value but it's much more based on speculation. If you look at Bitcoin, there's an ecosystem of millions of users, over 100 thousand merchants including some of the world's biggest companies like Microsoft, hundreds of bitcoin-focused VC-backed startups of which one had a valuation nearing half a billion dollars etc etc.
While it's obvious that bitcoins are overvalued in relation to this ecosystem (i.e. a substantial part of its price is based on speculation that the ecosystem will become massively important in the future), there already is a genuine ecosystem out there with decent growth rates.
Dogecoin or litecoin don't have that. They have communities that keep them alive but there doesn't seem to be a long term viability. This is different from bitcoin's early days (which didn't have any real ecosystem either at one point) in that bitcoin actually offered something radically new, while litecoin for example isn't innovative, it was the first me-too that didn't totally screw over its early investors in a pump & dump scheme so it's stayed around but it doesn't offer anything special. Does that mean they have no value? Absolutely not. They do. But 'me-too' companies also have value in the short-term. In the long term they usually don't survive. We're already seeing that, litecoin for example dropped insanely in price (like 90%) in the past year and that's not just because bitcoin readjusted after late 2013's hype cycle, it crashed against bitcoin itself, too, i.e. the market is already identifying that litecoin versus just bitcoin doesn't have a future in the long-run. And if there's ANYTHING you have to know about bitcoin is that it's almost always spoken about in a long-term frame of reference. If we purely look at the short term then yes, we can say dogecoin & litecoin have value and so does bitcoin, but we would also have to say that all three combined are absolutely insignificant, a drop in the ocean, the size of a mid-cap fund of which there are thousands. The short-term isn't interesting, in the short-term me-toos exist, in the long-run they don't.
In short, the reason people say litecoin has no value is not because it's not being traded: that's speculation. It's that it is said to have no utility value over bitcoin. Bitcoin can power any utility litecoin can, with more liquidity, more market participants, more open-source libraries & development, more funding, more security etc.
I don't think we'll all be using bitcoins necessarily, but I do believe we'll all be using bitcoin (or no cryptocurrency at all, of course, that's very possible, too). i.e. yes there are niches in digital currency, but the cryptocurrency niches will, I think, if they exist in the long-term, be served by products running on top of the bitcoin network. Anything litecoin or dogecoin can do, a bitcoin treechain or sidechain or payment channel can do but with the above mentioned benefits. It's like saying there are different niches in internet protocols, as if to say the internet may run on many different protocols that serve different niches in the long-term, instead of saying TCP/IP powers the internet and it has higher-level protocols that serve niches like http or smtp. Within that line of thinking, anything but TCP/IP has no long-term value and any niche in internet technology will be built on top of that one protocol. Similarly many who say 'litecoin has no value' think of bitcoin as being the protocol for value transfer, and anything having to do with transferring value (or titles, contracts etc) will be built on top of it, rather than along side it.
In short, the claim that litecoin has no value (despite having a market value) makes a lot of sense depending on what you believe about the future of cryptocurrency.
[+] [-] na85|11 years ago|reply
But I think the stupidly-large size of the blockchain is a major hurdle, given the concurrent trend of miniaturization. Embedded devices like one might find in the much-vaunted "internet of things" (eyeball roll) can't really afford to be toting six SSDs just for storing 3 or 4 different blockchains, or even one big one.
There comes a point when it's just no longer practical to store the entire blockchain, but truncating the chain (or only storing some kind of "working set") isn't feasible either.
Not to mention the gargantuan download that's required for that initial setup to get up to date with the latest network transactions.
I think it's a great idea in theory but ultimately pretty annoying in practice.
[+] [-] mandrake-c-papi|11 years ago|reply
I know it's centralisation and goes against one of the features of the blockchain, but having trusted hubs through which to interact would save a lot of wasted space, time and data.
I'm not sure why inserting a check-point and resetting the blockchain size to zero would not be possible - can someone please explain this? If the status at the checkpoint were agreed upon by 51% of all nodes then why not?
[+] [-] roasbeef|11 years ago|reply
Storing some type of "working set" is totally feasible. Technically you don't even need to keep around all blocks, simply the resultant state that you arrive at after processing all blocks in order. This is called the Unspent Transaction Output set or UTXO set.
It's also possible to only keep around XGB of blocks, or the last 500 blocks, etc (a pruned log)[3]. The purpose of keeping around all blocks is to bootstrap the syncing of new nodes to the network, or optionally to full-chain wallets for re-scanning. Before pruned nodes are widely deployed, a system needs to be developed to allow a syncing node to efficiently identify and retrieve the relevant blockchain shards it needs so it can validate everything and arrive at the current state.
Also, with BitcoinCore 0.10, syncing takes about 4 hours if you don't have shitty a hardware or internet connection [2].
[1]: https://en.bitcoin.it/wiki/Thin_Client_Security [2]: https://github.com/bitcoin/bitcoin/pull/4468 [3]: https://github.com/bitcoin/bitcoin/pull/4701
[+] [-] anigbrowl|11 years ago|reply
Could I manually get it installed and running on another large-volume and slower speed drive where this wouldn't be an issue, of course. But why do I want to bother even dealing with something so user-hostile? The average Joe or Jill who isn't a computer nerd is just going to see this thing eating his/her hard drive and get rid of it.
[+] [-] wanderingstan|11 years ago|reply
[+] [-] unknown|11 years ago|reply
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[+] [-] IkmoIkmo|11 years ago|reply
Why would you have to? The point of decentralisation is not that everyone has a copy of the truth. It's that a sufficient number of nodes have a copy of the truth, such that you can check a number of them and easily verify the veracity of the data. Many blockchain applications run not by querying their own blockchain but rather querying a number of trusted sources via their API. Coinbase, Bitpay, Chain.com, Blockcypher etc all offer APIs to interface with their blockchain nodes and others.
It's like saying Facebook will never work because you can't possible store the worlds' photos on everyone's smartphones. You don't have to, Facebook stores it on their server. Similarly we will see, and already see, dedicated servers that store the blockchain, and as long as you have enough independent ones you can maintain decentralisation just as if you were hosting your own node.
There's absolutely no need to host the blockchain on small embedded devices any more than any other data, like music or photos we normally host on dedicated servers instead.
> but truncating the chain (or only storing some kind of "working set") isn't feasible either.
Yes it is. What makes you say it isn't? Pruning the blockchain is something that's currently being worked on.
The idea is that if I send you $1 a million times and you send it back $1m times, every day, for the next 1 billion years, we could either store terabytes and terabytes of data of all these transactions, or we could store the end result (= no change occurred) and the last couple weeks of transaction data. The rest can be pruned. Because each block has a hash of all its transactions, and this hash is used to mine the next block (hence a chain of blocks, blockchain), we needn't store each individual transaction, we have the hash to verify the truth of transactions.
We might have some universities saving all transactions for posterity & research, and some businesses for data mining, but the vast majorities of nodes that just need to secure the network can indeed, without security issues, not store long-spent outputs. (i.e. bitcoins that have already been spent many times over. e.g. if I give a dollar to you and you give it to the next guy, and he to the next girl, and so on 100 times, at that point there's absolutely no reason to store on every node the fact I gave a dollar to you for the security of the network.)
> Not to mention the gargantuan download that's required for that initial setup to get up to date with the latest network transactions.
Again, no need to have all redundant transactions. The pruned blockchain would currently be under a gigabyte large. Second, headers-first has already been implemented which made the initial setup much, much faster.
Beyond that, we mustn't forget that the average American makes 2 transactions a day. And one such transaction is about 400 bytes or so, in bitcoin. If you compare this to tweets, or an hour of netflix, it's puny. If you count up all the data, it's about $8 to store one day of all of US consumer transactions on a retail harddrive. Imagine the cost of storage for Mastercard for one of their nodes was $8, and instead of just powering a fraction of US retail, they'd literally handle every single transaction by themselves and store them all for $8. Even if you wanted to have thousands of nodes and store the last year of data (and given the velocity of money, you wouldn't have to as again, you can prune data after money has been spent a couple times), that's a puny amount of money to power an entire consumer financial system of the world's biggest economy. And given storage, like CPU and bandwidth, on a 50-60% yoy growth rate (Kryders, Moore's and Nielsen's laws), I think by the time bitcoin becomes important enough to run 100% of US retail (which is likely never, but hypothetically speaking), that $8 will have dropped to below $0.10 easily.
I know I'm taking big shortcuts here but this is just to illustrate the economics are extremely favorable today and in the future. I don't know if bitcoin will succeed or fail, but I'm pretty near certain it won't fail because storage/cpu/bandwidth isn't affordable enough for nodes to make it viable to run the network. I and many others have looked into this quite a bit and these aren't big problems. Bitcoin has big obstacles (no gigantic consumer benefits in a world of decent fintech like every OECD country to use bitcoin directly, is one), but storage probably isn't one of em.
[+] [-] CHY872|11 years ago|reply
So it makes much more sense to use bitcoin as your distributed consensus system, for whatever application you choose to place on top of it.
I'm not sure I agree with the premise, though - which is that people actually think that - I reckon that Sam Altman's comments might just be a way of saying 'Bitcoin is in the news a lot, I think it's a waste of my time, but I don't want to write it off just yet.' It's good, it makes him sound profound, everyone's kinda happy.
The question is: What non-currency applications would actually benefit hugely from being decentralised in such a way?
[+] [-] hellbanner|11 years ago|reply
fact: people working on useful tools benefit us all problem: incentive is only big-picture, feel good. money is, by design, ridiculously hard to come by for helpful projects. teachers, farmers, babysitters, soldiers and many other professions provide valuable service to society yet make only a fraction of what money-manipulators (bankers who specialize in generating $$ from $) or cross-cultural entertainment like motion pictures.
Patents, trade secrets, close source & government regulations all contribute to incidentally de-incentivize many projects built around benefitting a large chunk of humanity as opposed to localized (individual, corporate or nation-state) profiteering. << REWRITE
I ran into this recently designing <link CodeSwarm> - a distributed protocol where programmers receive escrowed bitcoins for an open-source project accepting their work, merging it into the master branch of the project. The payout system sounded promising, but the money had to come from somewhere and be managed to fund these projects!
So how can we, the people, reward people for doing good things, things we like?
"FarmerCoin", described below, is a thought experiment where local Farmers can receive fiat-by-consensus cryptocurrency in exchange for an independent third-party recording (both videographically and on a chain of signatures) the farmer's produce.
I propose the formation of semi-independent regulators for specific industries who accept payment of their choice to regulate a deed done. Regulators film their investigation and verification of the deed, publish to the protocol along with a signed message containing a hash of the video and a magnet link for nodes to torrent.
Once regulators have published a video, end-users known as "verifiers" or "voters" who have clients monitoring the network receive a notification that there is a verification to vote on. This would involve torrenting or finding the video online, verifying its hash, playing the video, then presenting a vote to the user. This vote would say "This is acceptable" or "This is not acceptable".
In "FarmerCoin", this plays out by the farmer showing regulators a bin of vegetables. 10kg of tomatoes, for example. Regulators film the weighing of the tomatoes then use a software to upload that video, a signature of its hash and farmer identity information to the network. If the tomatoes were rotten, the regulators are incentivized not to upload a video because their reputation may become damaged and farmers will not hire them (see next paragraph for why).
Farmer receives "FarmerCoin" for 10kg of tomatoes as the network approves it. If the network disapproves the quality of the tomatoes, the farmer receives nothing.
I admit - there is a flaw in this design. How much "FarmerCoin" is 10kg of tomatoes "worth"? I'm not sure. I don't know how to answer that. Maybe "FarmerCoin" should be generated per calendar year. Please discuss because I think this, at the time of writing, is the only missing link I see in the system.
Regarding the voters - trusting the internet as a whole to vote on if a farmer gets paid is ripe for exploitations. Instead, "FarmerCoin" could use votes only from public-keys the farmer has explicitly accepted to vote for them! Namely these are the farmer's regular customers at the market. This solves the trust problem on a human level. Trying to make this system "completely automated" ignores the fact that real-world actions are happening, which require intelligence. We don't have software to do this process so I think the best bet is to incentivize voters by also generating "FarmerCoin" for each vote they cast.
To be clear, YES "FarmerCoin" is generated by fiat. It is a more decentralized kind of fiat. For that reason and the reason that it is in the voters' -- who are customers of the farmer -- best interest to see the farmer receive accurate feedback on their produce so they grow better yields. ((FIRST REASON???))
YAKSEE As far as how does "FarmerCoin" have value or "Yet Anthoer Crypto Currency" - consider this. When people speak of "Bitcoin" as being "decentralized", they really are only referring to network logs and the theoretical potential to generate currency. In actuality, those who held existing fiat resources and hardware manufacturing quickly became juggernauts in the cryptocurrency world. I mention this because when I talk about the "fiat" of the above localized consensus I imagine many crypto-currency fans revolt and insist that no, only computationally generated cryptocurrencies are valuable because commerce should be "trustless". I feel that on an intuitive level striving for a trustless society is mal-incentivized. "FarmerCoin"(s) gives us another kind of cryptocurrency just like LiteCoin's alternative hashing algorithim co-exists with Bitcoin.
Besides the intrinsic value of whatever a cryptocurrency with a novel generation mechanism, "FarmerCoin" could be accepted by farmers for discounts on food that those same voters gave feedback on. I think this completes the incentive circuit quite nicely.
MANY FARMERCOIN "FarmerCoin" could be Tomato Coin, Apple Coin. It could also exist for each specific farm, or region. This would be up to the farmers, regulators and community of voters to work together and decide. Having an exchange (centralized or not) for these currencies to trade could provide additional economic incentives to the voters and farmers. Even if "regular" cryptocurrency is not traded for FarmerCoin, community specific networks could trade eg plows, immunizations etc.
EXPANSE This concept can be applied to many real world actions. Making a work of art, patching a pothole, giving someone the finger, giving your cat a ball of yarn. Only if the community finds vaue in the "FarmerCoin" they are receiving and the farmer finds it beneficial to receive this subsidized fiat-by-consensus currency will the currency survive.
[+] [-] paulsutter|11 years ago|reply
"...the Bitcoin Blockchain cannot win without Bitcoin as a currency winning too, but if the Bitcoin price languishes, the incentive mechanism backstopping the Blockchain will be weak and therefore unreliable, ..."
[+] [-] nrb|11 years ago|reply
[+] [-] speleding|11 years ago|reply
[+] [-] amirmc|11 years ago|reply
Hasn't this already happened? I believe I heard something about a '51%' attack some time ago, which (I think) would mean that attacker could re-write history (I'd appreciate any corrections or clarifications).
Edit: Here's one story http://arstechnica.com/security/2014/06/bitcoin-security-gua... (not quite about rewriting history but double-spending becomes possible).
[+] [-] Smerity|11 years ago|reply
As far as "hasn't this already happened", some of the mining pools in aggregate have had or presently could combine to get 50+% of the Bitcoin mining power[2], but to perform the attack requires active coordination from all pool participants. If an attack like this were launched, it would be obvious to anyone viewing the blockchain, likely destroy the value of Bitcoin, and hence their investment, so is economically not a good idea for them.
[1]: https://en.bitcoin.it/wiki/Weaknesses#Attacker_has_a_lot_of_... [2]: https://blockchain.info/pools
[+] [-] shittyanalogy|11 years ago|reply
Bitcoin has far from "won" in the sense of a currency and if another crypto-currency surpasses it's current popularity the faith in any crypto-currency being stable enough to move trillions of dollars each year is irreparably harmed.
People raising a few thousand dollars here and there in other crypto currencies is fun but it's not only paltry and not generally useful but can easily be attributed to entertainment more than economics. Once the novelty wears off, where will crypto currency stand. That's the most important question we need to ask ourselves. All these alt-coins aren't evidence of a thriving eco-system, they're evidence of the very reason why a cryptography based currency is inherently valueless.
The blockchain cannot last without bitcoin becoming massively more valuable. Many people already see bitcoin as being too valuable and alternatives too easy to create. What needs to be done to scale crypto-currency to the level of an actual currency? Government backing?
[+] [-] nivertech|11 years ago|reply
Bitcoin code, protocol and marshaling formats are a mess. Bitcoin blockchain and transaction data structures make too many hardcoded assumptions about underlying application - payments with a single token.
Bitcoin scripting language was designed for transaction validation only, which makes implementing a smart contracts with it a hack and requires external Oracles.
TL;DR: Bitcoin is a good PoC which gained a network effect.
[+] [-] wyager|11 years ago|reply
Which is why people are working on e.g. Libconsensus.
There are dozens of functional Bitcoin clients based on entirely different codebases, which indicates that it's entirely possible to start from scratch.
>payments with a single token.
While the Bitcoin transaction format is a bit inflexible, you're wrong about the assumptions it makes. Even from the beginning, there has been in-protocol support for more advanced transaction types, like escrow transactions. You can even use a lot of these transaction types right now! There are still some transaction script opcodes that haven't been fully enabled yet, but that's just a matter of tweaking the consensus rules once we're sure that the opcode was implemented correctly and won't have any bad side effects. This has happened several times already with no major problems.
[+] [-] fryguy|11 years ago|reply
The thing about bitcoin is there are a lot of things done "wrong" with it, that are impossible to retrofit into it. However, the network effect means that it's also impossible to switch to another altcoin without completely devaluing bitcoin, which would mean that the altcoin would be devalued because it could happen to the altcoin as well. I agree with that part. However, something that's pinned to the value of bitcoin like what I've read of the sidechain proposal would be a way to do that.
[+] [-] TylerE|11 years ago|reply
Which is obviously not true. Extra storage and bandwidth at the very least.
[+] [-] joe_coin|11 years ago|reply
What I'm hearing you describe is that the token used by a Sidechain is not one iota different from any other Bitcoin, except perhaps that its latest output script includes some new weird feature we haven't seen yet. It's like my sending you 1.0 Bitcoin through a vanilla BTC transaction and you telling me that I now possess 10e8 Satoshis, which are different that Bitcoin but always redeemable for Bitcoin pegged at that rate.
If tokens being used by Sidechains are permanently pegged to Bitcoin, and we assume merged mining, I withdraw my objection to the concept, and would instead direct my criticism toward how the concept was presented and its seeming suggestion that Sidechain tokens might one day detach and rise in value while Bitcoins potentially fall to zero.
[+] [-] klochner|11 years ago|reply
Both groups are clearly 'talking their book', but this reads like little more than cheerleading/threatening aimed at himself and fellow speculators. For example:
[+] [-] levlandau|11 years ago|reply
[+] [-] troymc|11 years ago|reply
How then to explain why people contribute to Wikipedia? Or volunteer at the local seniors centre? Or donate compute time to SETI@home (and other BOINC projects)? Or add map data to OpenStreetMap? Or test open source software? Yes, some of those people get paid, but many do not.
The incentive need not be economic.
[+] [-] FBT|11 years ago|reply
This means that you will inevitably have massively funded efforts to subvert such a blockchain. One thing I know for sure is that simple financial self-interest is one of the most powerful things in the world. Every blockchain has that fact working against it. The reason they don't collapse is that on the other hand, they have that same force working for them as well. A volunteer blockchain like you propose wouldn't stand a whelk's chance in a supernova. Sorry.
[+] [-] bhouston|11 years ago|reply
[+] [-] sparaker|11 years ago|reply
[+] [-] unknown|11 years ago|reply
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[+] [-] locksley|11 years ago|reply
[+] [-] Terr_|11 years ago|reply
A warp-drive is just a technology, but "colonizing the galaxy" is the application which will make people really use it.