The Resolution Of The Bitcoin Experiment

Discussion in 'Off-Topic' started by ironbits, Jan 15, 2016.

Tags:
  1. 2017/12/15 - Decred v1.1.2 released! → Release Notes  → Downloads
  1. ironbits

    ironbits New Member
    Advocate (Twitter)

    Jan 13, 2016
    27
    24
    Male
    The resolution of the Bitcoin experiment

    I’ve spent more than 5 years being a Bitcoin developer. The software I’ve written has been used by millions of users, hundreds of developers, and the talks I’ve given have led directly to the creation of several startups. I’ve talked about Bitcoin on Sky TV and BBC News. I have been repeatedly cited by the Economist as a Bitcoin expert and prominent developer. I have explained Bitcoin to the SEC, to bankers and to ordinary people I met at cafes.

    From the start, I’ve always said the same thing: Bitcoin is an experiment and like all experiments, it can fail. So don’t invest what you can’t afford to lose.I’ve said this in interviews, on stage at conferences, and over email. So have other well known developers like Gavin Andresen and Jeff Garzik.

    But despite knowing that Bitcoin could fail all along, the now inescapable conclusion that it has failed still saddens me greatly. The fundamentals are broken and whatever happens to the price in the short term, the long term trend should probably be downwards. I will no longer be taking part in Bitcoin development and have sold all my coins.

    Why has Bitcoin failed? It has failed because the community has failed. What was meant to be a new, decentralised form of money that lacked “systemically important institutions” and “too big to fail” has become something even worse: a system completely controlled by just a handful of people. Worse still, the network is on the brink of technical collapse. The mechanisms that should have prevented this outcome have broken down, and as a result there’s no longer much reason to think Bitcoin can actually be better than the existing financial system.

    Think about it. If you had never heard about Bitcoin before, would you care about a payments network that:

    • Couldn’t move your existing money
    • Had wildly unpredictable fees that were high and rising fast
    • Allowed buyers to take back payments they’d made after walking out of shops, by simply pressing a button (if you aren’t aware of this “feature” that’s because Bitcoin was only just changed to allow it)
    • Is suffering large backlogs and flaky payments
    • … which is controlled by China
    • … and in which the companies and people building it were in open civil war?
    I’m going to hazard a guess that the answer is no.

    Deadlock on the blocks
    In case you haven’t been keeping up with Bitcoin, here is how the network looks as of January 2016.

    The block chain is full. You may wonder how it is possible for what is essentially a series of files to be “full”. The answer is that an entirely artificial capacity cap of one megabyte per block, put in place as a temporary kludge a long time ago, has not been removed and as a result the network’s capacity is now almost completely exhausted.

    Here’s a graph of block sizes.


    [​IMG]

    The peak level in July was reached during a denial-of-service attack in which someone flooded the network with transactions in an attempt to break things, calling it a “stress test”. So that level, about 700 kilobytes of transactions (or less than 3 payments per second), is probably about the limit of what Bitcoin can actually achieve in practice

    NB: You may have read that the limit is 7 payments per second. That’s an old figure from 2011 and Bitcoin transactions got a lot more complex since then, so the true figure is a lot lower.
    The reason the true limit seems to be 700 kilobytes instead of the theoretical 1000 is that sometimes miners produce blocks smaller than allowed and even empty blocks, despite that there are lots of transactions waiting to confirm — this seems to be most frequently caused by interference from the Chinese “Great Firewall” censorship system. More on that in a second.

    If you look closely, you can see that traffic has been growing since the end of the 2015 summer months. This is expected. I wrote about Bitcoin’s seasonal growth patterns back in March.

    Here’s weekly average block sizes:


    [​IMG]

    So the average is nearly at the peak of what can be done. Not surprisingly then, there are frequent periods in which Bitcoin can’t keep up with the transaction load being placed upon it and almost all blocks are the maximum size, even when there is a long queue of transactions waiting. You can see this in the size column (the 750kb blocks come from miners that haven’t properly adjusted their software):


    [​IMG]

    When networks run out of capacity, they get really unreliable. That’s why so many online attacks are based around simply flooding a target computer with traffic. Sure enough, just before Christmas payments started to become unreliable and at peak times backlogs are now becoming common.

    Quoting a news post by ProHashing, a Bitcoin-using business:

    Some customers contacted Chris earlier today asking why our bitcoin payouts didn’t execute …The issue is that it’s now officially impossible to depend upon the bitcoin network anymore to know when or if your payment will be transacted,because the congestion is so bad that even minor spikes in volume create dramatic changes in network conditions. To whom is it acceptable that one could wait either 60 minutes or 14 hours, chosen at random?It’s ludicrous that people are actually writing posts on reddit claiming that there is no crisis. People were criticizing my post yesterday on the grounds that I somehow overstated the seriousness of the situation. Do these people actually use the bitcoin network to send money everyday?
    ProHashing encountered another near-miss between Christmas and New Year, this time because a payment from an exchange to their wallet was delayed.

    Many Bitcoin users and observers have been assuming up until very recently that somehow these problems would all sort themselves out, and of course the block chain size limit would be raised. After all, why would the Bitcoin community … the community that has championed the block chain as the future of finance … deliberately kill itself by strangling the chain in its crib? But that’s exactly what is happening.

    Eventually, some users found their way to a new uncensored forum. Reading it is a sad thing. Every day for months I have seen raging, angry posts railing against the censors, vowing that they will be defeated.

    But the inability to get news about XT or the censorship itself through to users has some problematic effects.

    For the first time, investors have no obvious way to get a clear picture of what’s going on. Dissenting views are being systematically suppressed. Technical criticisms of what Bitcoin Core is doing are being banned, withmisleading nonsense being peddled in its place. And it’s clear that many people who casually bought into Bitcoin during one of its hype cycles have no idea that the system is about to hit an artificial limit.

    This worries me a great deal. Over the years governments have passed a large number of laws around securities and investments. Bitcoin is not a security and I do not believe it falls under those laws, but their spirit is simple enough: make sure investors are informed. When misinformed investors lose money, government attention frequently follows.

    Why is Bitcoin Core keeping the limit?
    People problems.

    When Satoshi left, he handed over the reins of the program we now call Bitcoin Core to Gavin Andresen, an early contributor. Gavin is a solid and experienced leader who can see the big picture. His reliable technical judgement is one of the reasons I had the confidence to quit Google (where I had spent nearly 8 years) and work on Bitcoin full time. Only one tiny problem: Satoshi never actually asked Gavin if he wanted the job, and in fact he didn’t. So the first thing Gavin did was grant four other developers access to the code as well. These developers were chosen quickly in order to ensure the project could easily continue if anything happened to him. They were, essentially, whoever was around and making themselves useful at the time.

    More...
     
    anondran likes this.
  2. Blizzy

    Blizzy Full Member

    Jan 4, 2016
    225
    109
    Male
  3. RegenX

    RegenX Jr. Member

    Jan 2, 2016
    127
    35
    Male
    and the price keeps plummeting, down $22 on the news now, just hours after this was released.
     
  4. anondran

    anondran Full Member
    Advocate (Reddit)

    Jan 13, 2016
    131
    119
    Male
    Just above 400usd.
    I guess it's the perfect time for Decred to Enter the crypto scene.
     
    ironbits likes this.
  5. RegenX

    RegenX Jr. Member

    Jan 2, 2016
    127
    35
    Male
    Bitcoin is having a rough week
    BitcoinCrash.jpg
     
  6. Blizzy

    Blizzy Full Member

    Jan 4, 2016
    225
    109
    Male
    ClokworkGremlin and anondran like this.
  7. anondran

    anondran Full Member
    Advocate (Reddit)

    Jan 13, 2016
    131
    119
    Male
    All it takes is a single good innovative cryptocoin to disrupt the cryptocurrency market. People are looking for other alternatives
     
    koolykg and ironbits like this.
  8. ironbits

    ironbits New Member
    Advocate (Twitter)

    Jan 13, 2016
    27
    24
    Male
    Really, this is a good time for decred...
     
    koolykg, RegenX and anondran like this.
  9. ClokworkGremlin

    ClokworkGremlin Sr. Member

    Jan 10, 2016
    535
    381
    Male
    Whatever I want.
    The "real" price of Bitcoin should have been in the $300-350 range. IMO the spike to $450 was an obvious pump-and-dump. Mike Hearn's ragequit may have caused the bubble to pop, but that was less an "if" and more a "when."
     
    Lee Sharp likes this.
  10. Lee Sharp

    Lee Sharp Sr. Member

    Dec 28, 2015
    308
    217
    Male
    Independent Consultant
    Houston, Texas
    Bitcoin is way to speculative, and that is a lot of the problem.
     
    Renato Abreu likes this.
  11. highlonesome

    highlonesome Member
    Designer

    Jan 11, 2016
    104
    93
    I was just thinking that. A lot of people don't seem to treat it like a currency, more as a trading commodity. Seems like you'd HAVE to check the price action even minutes before buying anything with BTC.

     
  12. ClokworkGremlin

    ClokworkGremlin Sr. Member

    Jan 10, 2016
    535
    381
    Male
    Whatever I want.
    That's really all a currency has ever been. The relatively stable(hah!) currencies that we have around us today are an anomaly, it wasn't uncommon 500 years ago for merchants to visit money exchangers regularly to check what the relative exchange rates were.
    (There's a couple of really good scenes in the anime, Spice And Wolf, but unfortunately I can't find them on YouTube.)
     
  13. shoshin

    shoshin Member

    Dec 28, 2015
    86
    94
    Male
    This is a terrible loss for the Bitcoin community, Mike is a skilled dev and a strategic thinker... Many of the people here likely started their journey into the world of cryptos with Bitcoin. I know I did, I will treasure the memories and continue to hold Bitcoin, however one must admit that a degree of damage has been inflicted by the "Core" developers. It is interesting how events can simply line up by chance due to the cyclical nature of time, it makes one appreciate the potential that Decred may be able to unlock.
     
    highlonesome likes this.
  14. highlonesome

    highlonesome Member
    Designer

    Jan 11, 2016
    104
    93
    Yup! Googled it. Haha, guess we shouldn't complain, all we have to do is look up the price. And we get it real-time.

     
    ClokworkGremlin likes this.
  15. mreichardt

    mreichardt New Member

    Jan 16, 2016
    37
    17
    Male
    Developer
    St. Louis, MO
    If anyone has not checked the price is rebounding. Glad I sinked more money into it on the low ;)
     
    ClokworkGremlin likes this.
  16. Renato Abreu

    Renato Abreu Jr. Member
    Advocate (Twitter)

    Jan 3, 2016
    252
    45
    Male
    Programador
    Brazil
    Recovering always ... just that devaluation will be gradual growth of Decred.o_O
     
  17. RegenX

    RegenX Jr. Member

    Jan 2, 2016
    127
    35
    Male
    it's recovering and stabilizing now , with the halving coming in six months and the price stabilized at around $400 even under this combined
    onslaught, its looking good for the next couple of months initial core run-up to July halving event, at a guess. The recoveries always seem
    to surge stronger than the dips , so this latest dip will probably be answered by a climb to $500.
     
  18. Renato Abreu

    Renato Abreu Jr. Member
    Advocate (Twitter)

    Jan 3, 2016
    252
    45
    Male
    Programador
    Brazil
    Opinion is opinion what little I know I can not view it in the coming months
     

Share This Page