I’m a ex-Wall Street Techie, 11 years at Goldman Sachs, 3 years at JPMorgan. I’ve worked with some of the smartest people that I have ever known. Then I discovered Bitcoin, and that’s when I really started to learn about money, and how the economy really works, (and why it doesn’t)* — Jerry David
*a nod to Irwin Schiff
If you haven’t been living under a rock for the last couple of weeks then you know that the whole block size debate is boiling to a close. Segwit2x arose to be a compromise solution, lead by ex-core developer Jeff Garzik, brokered and agreement in New York after the Consensus 2017 conference which had over 90% of the miners and ecosystem in agreement. Since then BIP91 has locked in, which is an effective lowering of the much exalted soft fork consensus threshold of 95%, by which half of the inner circle of core devs felt was deficient. Regardless of how this was on the surface seen to be a ‘lowering of the standards’ it was done anyway and conveniently so, as segwit was not looking like it would ever pass the 95% bar anyhow (ahem. “I TOLD YOU SO” to all the neckbeards out there, and u/jonny1000!). Now that segwit2x/segwit is going to be ‘forced’ by way of 90% of the miners starting to reject non-segwit signaling blocks, this ensures that segwit’s threshold of 95% of last 1000 blocks will be met sometime in mid-August. (yes, you read correct, BIP91 was an 80% majority agreement to come to a 95% agreement by forcing the 20% to agree with you or be orphaned — by force!).
This has set the stage for the drama to follow. For one there is already a growing group of big blockers who have mobilized to fork off the current Segwit2x/Segwit Bitcoin (let’s call this SegwitCoin) who have identified themselves as BitcoinCash. They are a fork of BitcoinCore 0.14.x with Segwit and RBF components disabled, and a 8mb Hard Fork coded to engage at Aug 1, 12:20 UTC time. This guarantees that there will be a ‘big block’ Bitcoin regardless of what happens with the SegwitCoin and the expected in-fighting among the new ‘stewards’ of the main chain (Jeff Garzik and his btc1 team) vs. the old guard which have been deposed (Bitcoin Core, Blockstream). Continue reading
The world is filled with great splits. Sometimes a split is just the best way of getting the best of both worlds. It let’s bygones be bygones and leaves freedom of choice to the market which is in the ideal position to determine the best way forward. But in Bitcoin space, talk of a split is tantamount to talking about White Privilege, racism, or dog meat as a food delicacy. Make no mistake, this is a carefully manicured and cultivated reaction culminating from 4 years of careful opinion “shaping” by interested parties, which I have written about several times in the past, but this is not a post to rehash those arguments.
Splits are Tasty. Why not in Bitcoin?
This is an attempt to examine the practical realities of a split in Bitcoin, WITHOUT any of the ethical/emotional/political/ideological baggage that so many have deliberately or inadvertently attached to the debate.
Much about the current Bitcoin splitting debate has revolved around the notion of a hard fork splitting of the network being dangerous. So dangerous, in fact, that core developers have constantly stuck to the argument that the community should trust in their (exclusive) council in order to ensure that we don’t engage in anything that may be unsafe for ourselves. Trust them, they know what is good for us. When libertarians and skeptics around the world hear that they are immediately put on alert.
Most recently an exchange between ex-Bitcoin lead maintainer Gavin Andresen with Core contributor Matt Corallo was especially interesting. Besides the run-of-the-mill talking past each other where Matt seems to ignore points that Gavin clearly addressed (regarding n**2 sighash issues, solved by capping txn sizes to 1mb) the core theme (pun intended) repeated again by Matt was that Hard Forks have no community support (by his own judgement) which is clearly shown by the fact that nobody seems to be giving much attention to the HF proposals in his (exclusive core dev curated) proposal list. Not much surprise here, the standard echo-chamber reality distortion field stuff. What was interesting, was that he once again mentioned the need, nay, the necessity of ‘replay protection’ in ANY hard fork proposal. This is very important point in the core dev platform, as it serves a dual purpose. One which on the surface is ostensibly for the public good, the other may be much more shadowy. Let’s examine what replay protection is, and why we really don’t need it.
The question of how miners will be paid in the long run, after mining subsidy rewards disappear is a much debated topic in Bitcoin. For those who don’t know, mining rewards are set to half every year until they finally reach zero sometime in the year 2140. How the Bitcoin mining ecosystem will remain profitable (and thus healthy) is up in the air. Miners are important as they provide security to the Bitcoin network because they convert real world energy into network security to guard against attacks from malicious forces. Therefore, the more decentralized and diverse a mining ecosystem is, the better for Bitcoin.
So what will happen when mining rewards disappear? Well, some miners feel that transaction fees should rise up to fill up the shortfall. As Ang Li puts it from an excerpt of the a recent article at Bitcoin.com
The incentives that Satoshi Nakamoto designed in the Bitcoin whitepaper are not enough to sustain mining for long, Li feels, adding that as the block reward halves every four years, miners income will continue to decline. According to him, keeping the block size where it is now will not provide enough incentive and therefore has to be reconsidered. Li also believes that only a larger mining transaction fee will maintain the balance. “By increasing block size, and transaction numbers, the fees will gradually replace the block reward, providing enough incentive for the miners to defend the bitcoin hashrate. This is the fundamental way to achieve healthy development of the whole ecosystem.”
This is the fourth part of a multi-part series on the myths of decentralization. You can read the previous installments here:
Part 1 – Decentralization Redefined
Part 2 – Decentralization Myth
Part 3 – Decentralization comes with People
I’ve written quite a lot about the misconceptions and deliberate misdirection that some proponents in the Bitcoin community choose to spread around in order to shape the public perception of what makes Bitcoin valuable, and as a result change the fundamental value proposition of Bitcoin. As you all should know by now, “Value does not exist outside the consciousness of Man” – Carl Menger. So changing people’s consciousness by way of affecting their ideas, affects the value of Bitcoin. Thus it is important that we re-evaluate our notions of why Bitcoin is valuable every so often with a huge dose of skepticism.
In today’s article, I’d like to review what the fundamental security model of Bitcoin is, as intended by its mysterious creator, Satoshi Nakamoto, (at least in my interpretation of it) why that model is the best we can possibly hope for, and why any further attempts at adding extra layers of ‘security’ on top of this model just ends up making it less secure by making it more centralized.
One of the heated debates that has raged over the years in Bitcoin space is whether the idea of a developer team lead by a benevolent dictator is the appropriate model to employ for a network worth more than 15 billion dollars in market capitalization. Many have cited examples of how Satoshi, and then Gavin himself were benevolent dictators, and also how some well known projects have been successfully managed under the watchful eye of a wise and benevolent (though sometimes abrasive) dictator such as the Linux project. It is also true that most civilizations evolve from dictatorships, starting with the tribal chiefs, to feudal warrior kings, to aristocratic monarchs, to emperors. The transition to a democracy is not always a smooth one, and is mired by both slippages into oligarchies, totalitarian fascism to misguided experiments into socialism. It is important then, to keep in mind that while most organized groups start as dictatorships, they eventually evolve into a system that is more inclusive of the common people’s will.
Oh, Glorious Leader, shepherd for the weak, show us the way!
Firstly, let’s get the obvious out of the way. Dictatorships are vastly more efficient than a republic or democracy. This is due to the fact there is little bounds on the leaders power, and his followers will carry out his instructions in the most expedient fashion. Contrast this to a democracy where leaders are continually second guessed by their opposition, and their political opponents who are all vying for their own chance to run the show. In a dictatorship, the only way a change of regime is possible is through open and widespread revolution. This is why despotic Chinese emperors of old made it illegal to congregate in groups of 3 or more, restrict what can be discussed in public and on occasion just committed mass murders of all the academics and scholars for fear that they may spread seeds of dissent and dissatisfaction among the peasants with their pesky logic, philosophy, and ideals of morality. Continue reading
So, voting on core’s implementation of Segwit is now enabled, and all 3 of the miners that support core have already cast their vote (2 pools and 1 cloud mining MLM), totalling about 23% of the network. Adoption seems to have stalled (as of 4Dec16) as the rest of the undecided vote remain undecided. Perfect time for an analysis breakdown of segwit, the good, the bad, and the ugly.
Segwit, the [un?]controversial softfork
Segwit has been called a ‘much needed upgrade’ to the network by core proponents, which has a somewhat jury-rigged way of expanding the effective block size of a block. (to 1.7mb)
Let’s first cut through all the marketing jazz and spin that people supporting Blockstream want to put on it and evaluate it on its technical merits alone, addressing its first its pros, then its cons.
This post is a culmination of about a year’s worth of thoughts and research that I have been informally gathering, which started with a simple question that started last year when I first read a piece which was written in the middle of the Bitcoin XT heyday describing what would be so bad about having 2 persistent forks by core developer, Meni Rosenfeld.
Forks are not scary, they are upgrades!
The post described the general understanding of forks at the time, and it was in this context that I wrote my original piece which was very much a pro-Core stance on the dangers of hard forks. I was wrong on some of my assumptions when I wrote that, which I have over the course of the year corrected, but nevertheless that original piece earned me many twitter RTs and ‘follows’ by core devs and supporters at the time (who have mostly now, funny enough, all banned me).
If he can win a rigged election as an outsider, maybe we should give him a fair chance at running the country?
So now that it is all over, all the posturing, all the fake allegations and all the pretentiousness can be dropped. I can finally say that I am relieved that Hillary did not win the election, and that all the social justice leftists have been shown some humility. I was one of the few people who was not surprised that Trump won. I mean, folks in the underground have been warning of poll rigging for a while already and even went as far as predict his win as of Nov 3rd. I was silently hopeful that all the whispers of poll rigging were true and that most of America was not delusional, and only mainstream media, and the establishment were. The morning after, everyone around me was asking me, “How the hell did he win?”, “How come nobody saw this coming?”.
My answer to them was basically, that there were those of us who did, but we did not want to speak out about it because to go against the Hillary campaign was to label oneself a racist/sexist/misogynist/hater. And really, once you (the media) poison the dialog to be about these kinds of politically incorrect topics, there really is no sense in discussing things anymore. The irony is that those of the extreme left who exonerate free speech and civil liberties, don’t seem to care so much about those causes when someone is saying something that they don’t like.
I’ll just say it. Small blockers are elitists who want to censor out Bitcoin users who cannot afford to transact on mainchain. I’ve lost count of how many times I’ve heard the old argument that scaling onchain damages decentralization, which in turn may damage the censorship resistance of Bitcoin.
Free as in Free speech and Free beer!
It is important to realize the hypocrisy in this line of reasoning. It is subtle, so I bet most of the proponents don’t even know that they are guilty of it.
Simply put, the fee market is a form of censorship. If you cannot pay for a bullet proof car in Mexico city, then you and your family is at risk. If you cannot afford to install a home alarm system, then you have been prevented, indirectly, from keeping your property safe from burglars. If you cannot afford insurance, then you are at risk of a fire, or an accident etc. Similarly, if you cannot afford to pay for the privilege of transacting when you wish in the Bitcoin network, then you must be delegated to 2nd layer networks like Lightning to do your payments. Which will have centralized payment hubs to service you and collect fees from you. How is this any different from the current banking system that we have now? Isn’t this form of slavery to debt one of the exact reason why Bitcoin was created in the first place to solve? Why then should Bitcoin treat those of means different from those without? Shouldn’t all the underserved be equal in the eyes of Bitcoin? Continue reading