The core of it is the 'consensus' mechanic as I understand.
Every transaction in BTC is verified by everyone who uses BTC. This is the blockchain. That means that for every transaction a ping gets sent around the world, a whole bunch of automated 'OK's come back.
Now that system is pretty vulnerable to confusion if a ton of transactions happened very quickly. So by design it is limit.
Since there is no Bitcoin council, central bank, government etcet it seems impossible to change.
From how I understand it, the 7 Transaction Limit also allows the current workaround for the Transaction Malleability to be feasible. The "main" way of verifying if a transaction has occurred is through the transaction ID (you'll often see bitcoiners on various boards asking others to verify someone has received payment), but Transaction Malleability means that this method of ID can be manipulated. The "backup" way of verifying if a transaction has occurred is if a transaction of the same value is recorded at the same time... but if the Transaction Limit increases, the probability of a transaction of the same value taking place at roughly the same time increases.
I don't know enough about the technical aspects of bitcoin to be sure if there is a way of verifying if your transaction has been accepted into the blockchain if neither the ID nor the amount can be trusted to verify your transactions. I do think it's rather interesting that one poor design is keeping another poor design in check, apparently completely by accident.
I may be wrong, but I was under the impression that part of the "work" being done by miners is what processes the transactions into the block chain. Which is what allows them to avoid having centralized processing servers and lets them spout "no transaction fees!" all over (despite every merchant, exchange, and middleman taking a cut, but those don't count!)
Yup, pretty sure that's part of it.
The idea being that eventually mining pools will just, I don't know, get paid in bitcoins for providing the processing power to process transactions...or something. I think.
The problem is the equation gets more and more complex. Meaning mining operations will only ever make money is the price of Bitcoins continues to rise. Eventually you'll hit a point where the equipment and electricity for mining will never pay for itself.
But if miners are need to ensure transactions are processes into the block chain what happens when nobody is mining anymore because the bitcoin limit has been reached?
Then you either rely on the libertarian spirit or transaction fees like everyone else.
Really it seems like a huge issue that the amount of work that needs to be done to process a transaction scales not only with the frequency of transactions, but also with the number of users (assuming the description on the previous page is accurate). Unless I'm misunderstanding, that means that as the number of users increases, the work required to prevent a backlog increases exponentially (each user is one more validation required, and presumably that user also makes transactions since y'know user).
This may be a stupid question, but is there a reason that the majority of the entire network is required to validate all transactions rather than it being sufficient if both parties in the transaction agree on the sum and then later that the coins were actually transferred?
The core of it is the 'consensus' mechanic as I understand.
Every transaction in BTC is verified by everyone who uses BTC. This is the blockchain. That means that for every transaction a ping gets sent around the world, a whole bunch of automated 'OK's come back.
Now that system is pretty vulnerable to confusion if a ton of transactions happened very quickly. So by design it is limit.
Since there is no Bitcoin council, central bank, government etcet it seems impossible to change.
From how I understand it, the 7 Transaction Limit also allows the current workaround for the Transaction Malleability to be feasible. The "main" way of verifying if a transaction has occurred is through the transaction ID (you'll often see bitcoiners on various boards asking others to verify someone has received payment), but Transaction Malleability means that this method of ID can be manipulated. The "backup" way of verifying if a transaction has occurred is if a transaction of the same value is recorded at the same time... but if the Transaction Limit increases, the probability of a transaction of the same value taking place at roughly the same time increases.
I don't know enough about the technical aspects of bitcoin to be sure if there is a way of verifying if your transaction has been accepted into the blockchain if neither the ID nor the amount can be trusted to verify your transactions. I do think it's rather interesting that one poor design is keeping another poor design in check, apparently completely by accident.
No, the rate limit is to prevent the total size from growing too quickly
Really it seems like a huge issue that the amount of work that needs to be done to process a transaction scales not only with the frequency of transactions, but also with the number of users (assuming the description on the previous page is accurate). Unless I'm misunderstanding, that means that as the number of users increases, the work required to prevent a backlog increases exponentially (each user is one more validation required, and presumably that user also makes transactions since y'know user).
The amount of work required to process transactions is (extremely close to) independent of the frequency of transactions, if we assume that there isn't an artificial block size limit. That work is ultimately only done by one user, even though everyone is trying to do it, and it solves a block. Every other user merely then verifies that the work was done, which is a much quicker process.
This may be a stupid question, but is there a reason that the majority of the entire network is required to validate all transactions rather than it being sufficient if both parties in the transaction agree on the sum and then later that the coins were actually transferred?
You send me 1BTC, and we both agree that's happened. Tomorrow, I claim that in fact, that has not happened. How do we resolve that?
By ensuring the majority of the network agrees that the transaction happened, I can't turn around tomorrow and claim that you haven't sent me my bitcoin.
But if miners are need to ensure transactions are processes into the block chain what happens when nobody is mining anymore because the bitcoin limit has been reached?
As mentioned, transaction fees.
I'm curious how those would be collected and passed on, though. At some point, obviously, mining is no longer economically viable for the mined bitcoins alone. However, at that point transaction fees may become a viable alternative for mined bitcoins to encourage mining. However, the mining pool, from what I can tell, has no way to actually...collect those? So how does that work? Obviously a major exchange could create some sort of arrangement with a mining pool, kicking back collected transaction fees in exchange for processing power, but with the number of pools and exchanges that just seems like a clusterfuck waiting to happen.
This is, of course, the problem with the decentralized nature of the thing.
I'm curious how those would be collected and passed on, though. At some point, obviously, mining is no longer economically viable for the mined bitcoins alone. However, at that point transaction fees may become a viable alternative for mined bitcoins to encourage mining. However, the mining pool, from what I can tell, has no way to actually...collect those? So how does that work? Obviously a major exchange could create some sort of arrangement with a mining pool, kicking back collected transaction fees in exchange for processing power, but with the number of pools and exchanges that just seems like a clusterfuck waiting to happen.
This is, of course, the problem with the decentralized nature of the thing.
I think you've confused transaction fees on a BTC transaction (when sending from address to address) with fees on an exchange (when buying or selling BTC for fiat on somewhere like MtGox). The former are the ones expected to support miners once the block reward drops to a negligible amount. The latter have nothing to do with the miners.
When you make a BTC transaction, you have the option to attach a fee to it. This is a tip for miners to incentivise them to include your transaction in the next block they find - if they do so, they get the fee, as well as the normal block reward. This is also a reason for a finite block size - with only so many transactions that can be included in the next block, people attach a larger fee to be included in the next block.
The core of it is the 'consensus' mechanic as I understand.
Every transaction in BTC is verified by everyone who uses BTC. This is the blockchain. That means that for every transaction a ping gets sent around the world, a whole bunch of automated 'OK's come back.
Now that system is pretty vulnerable to confusion if a ton of transactions happened very quickly. So by design it is limit.
Since there is no Bitcoin council, central bank, government etcet it seems impossible to change.
From how I understand it, the 7 Transaction Limit also allows the current workaround for the Transaction Malleability to be feasible. The "main" way of verifying if a transaction has occurred is through the transaction ID (you'll often see bitcoiners on various boards asking others to verify someone has received payment), but Transaction Malleability means that this method of ID can be manipulated. The "backup" way of verifying if a transaction has occurred is if a transaction of the same value is recorded at the same time... but if the Transaction Limit increases, the probability of a transaction of the same value taking place at roughly the same time increases.
I don't know enough about the technical aspects of bitcoin to be sure if there is a way of verifying if your transaction has been accepted into the blockchain if neither the ID nor the amount can be trusted to verify your transactions. I do think it's rather interesting that one poor design is keeping another poor design in check, apparently completely by accident.
No, the rate limit is to prevent the total size from growing too quickly
Sorry if I wasn't clear - the rate limit is an intentional kluge to prevent the total size from growing too quickly... and also has the unintentional side-effect of making the "verify by amount/time" Transaction Malleability workaround viable.
It's like having your door jammed half open while acting as a load-bearing support for the ceiling - you may want it in that position now so just you can get in/out, but if in the future you ever wanted it fully open or closed you can't do so without the roof falling in.
I find it rather interesting that there is a huge disparity in prices between the exchanges. Mtgox is at like $240, but Bitstamp and BTCE are around $600, but still not in full agreement with each other. That's the kind of thing that just encourages me to stay away from any attempt to make money off of bitcoins, because I have no idea what that sort of thing means, other than mtgox likely being insolvent.
Well, MtGox might be because of its issues getting money out (as in, the discount you're seeing is because you can't get stuff in/out and people are taking a discount for converting to a currency they think will be easiest to remove). But if its not that then something else weird is going on (because that is a pretty big arbitrage opportunity sitting there otherwise)
Well, MtGox might be because of its issues getting money out (as in, the discount you're seeing is because you can't get stuff in/out and people are taking a discount for converting to a currency they think will be easiest to remove). But if its not that then something else weird is going on (because that is a pretty big arbitrage opportunity sitting there otherwise)
I think you're right about Gox, but at the same time that also points to the other reason that exchanges can differ quite a bit...there's so much friction in moving between bitcoin and real-live money, and enough volatility, that taking advantage of what seems like an arbitrage opportunity is actually fairly risky, and probably not as lucrative as it seems regardless.
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No-QuarterNothing To FearBut Fear ItselfRegistered Userregular
God I watched some Bitcon vids on youtube, and the comments section is full of people with Ron Paul handles, and anti- Illuminati/ Masonic avatars. It's really ludicrous.
Wait, do I want to know why the anti masons like bitcoin? Federal Reserve somesomething Prince Edward is still Grand Master etc?
pretty much federal reserver i'd imagine.
I missed you bitcoin thread.
Is it not a huge indicator that mount gox is screwed that they value the coin lower than the other exchanges? How would that even work? MtGox hold the coins but wont pay the dollers- so the keep the more valuable coins?
Chief Wiggum: "Ladies, please. All our founding fathers, astronauts, and World Series heroes have been either drunk or on cocaine."
Wait, do I want to know why the anti masons like bitcoin? Federal Reserve somesomething Prince Edward is still Grand Master etc?
pretty much federal reserver i'd imagine.
I missed you bitcoin thread.
Is it not a huge indicator that mount gox is screwed that they value the coin lower than the other exchanges? How would that even work? MtGox hold the coins but wont pay the dollers- so the keep the more valuable coins?
That was my initial assumption after posting how I thought something like a btc exchange would work.
They don't work as expected, they hold onto something. It feels like they're trying to make a "float" to earn money off of.
Floats are great when your economy works and you can make money off your money.
not a doctor, not a lawyer, examples I use may not be fully researched so don't take out of context plz, don't @ me
When you could get bitcoins out of gox but not money the bitcoin price was higher because were willing to pay a premium to get out and onto more reliable exchanges. Now that there's significant fear that gox may collapse people are willing to sell their coins there at a discount as it's believed that getting cash back after a collapse will be easier.
I don't think that I'm immune to this stuff because I'm particularly intelligent. It's the kind of "funny story" my uncle tells. Even the folklore I grew up with was full of scams, and morals about fine print.
Hmm... am I missing something? If Gox is valuing coins at $300, and other exchanges almost double that, why would I not just go to Gox, buy up some coins, and then immediately go sell them at other exchanges? Is there something preventing that?
Hmm... am I missing something? If Gox is valuing coins at $300, and other exchanges almost double that, why would I not just go to Gox, buy up some coins, and then immediately go sell them at other exchanges? Is there something preventing that?
I have to be missing something here...
Because mt Gox is grossly mismanaged and possibly completely lacking in liquidity, that $300 is basically a bet that you will still get your BTC for your $300.
So it seems the market is willing to bet about 50/50 (300 vs 600) that Mt Gox is actually not a giant money pit at the moment.
Which seems optimistic.
Plus with the freezes there's no promise you'll be able to withdraw your money anyway
it kind of undermines the idea of a cybercurrency when the only safe place for it is on a usb stick in your mattress. The longer it goes on the more Bitcoin acts like gold.
Centuries from now, pioneers will travel west to search the ruins of Silicon Valley, rumored to overflow with buried Bitcoin sticks. The only people who profit will sell metal detectors.
Hmm... am I missing something? If Gox is valuing coins at $300, and other exchanges almost double that, why would I not just go to Gox, buy up some coins, and then immediately go sell them at other exchanges? Is there something preventing that?
I have to be missing something here...
Because when Gox say they'll sell you a coin, what they mean is they'll take your money and let you look at the appearance of a coin in your Gox wallet.
You want to take it out to do something with it? Good luck with that.
Plus with the freezes there's no promise you'll be able to withdraw your money anyway
it kind of undermines the idea of a cybercurrency when the only safe place for it is on a usb stick in your mattress. The longer it goes on the more Bitcoin acts like gold.
It's not like regular currency hasn't had issues with banks before.
“Reject your sense of injury and the injury itself disappears.”
― Marcus Aurelius
Hmm... am I missing something? If Gox is valuing coins at $300, and other exchanges almost double that, why would I not just go to Gox, buy up some coins, and then immediately go sell them at other exchanges? Is there something preventing that?
I have to be missing something here...
Because mt Gox is grossly mismanaged and possibly completely lacking in liquidity, that $300 is basically a bet that you will still get your BTC for your $300.
So it seems the market is willing to bet about 50/50 (300 vs 600) that Mt Gox is actually not a giant money pit at the moment.
Which seems optimistic.
The vastly different valuations on the different exchanges are basically the sign that one or all of them are shit and illiquid.
Plus with the freezes there's no promise you'll be able to withdraw your money anyway
it kind of undermines the idea of a cybercurrency when the only safe place for it is on a usb stick in your mattress. The longer it goes on the more Bitcoin acts like gold.
It's not like regular currency hasn't had issues with banks before.
Well. They've fixed that.
not a doctor, not a lawyer, examples I use may not be fully researched so don't take out of context plz, don't @ me
Plus with the freezes there's no promise you'll be able to withdraw your money anyway
it kind of undermines the idea of a cybercurrency when the only safe place for it is on a usb stick in your mattress. The longer it goes on the more Bitcoin acts like gold.
It's not like regular currency hasn't had issues with banks before.
Well. They've fixed that.
It's no free lunch though. Deposit insurance is limited and there are arguments that it leads to depositors placing less oversight onto banks which makes it easier for banks to engage in shenanigans that lead to taxpayer bailouts.
“Reject your sense of injury and the injury itself disappears.”
― Marcus Aurelius
People got complacent after 50 years of relative financial stability and dismantled the very regulations that enabled that stability.
Go figure.
}
"Orkses never lose a battle. If we win we win, if we die we die fightin so it don't count. If we runs for it we don't die neither, cos we can come back for annuver go, see!".
Plus with the freezes there's no promise you'll be able to withdraw your money anyway
it kind of undermines the idea of a cybercurrency when the only safe place for it is on a usb stick in your mattress. The longer it goes on the more Bitcoin acts like gold.
It's not like regular currency hasn't had issues with banks before.
Well. They've fixed that.
It's no free lunch though. Deposit insurance is limited and there are arguments that it leads to depositors placing less oversight onto banks which makes it easier for banks to engage in shenanigans that lead to taxpayer bailouts.
Those arguments are stupid. The average person lacks both the time and the expertise to oversee the activity of their local bank and that's if the bank is being open and honest. If its not, then you are shit out of luck. That's why we had government oversight with regulations to do it for us.
Until as Jephery pointed out, they dismantled it.
The sky was full of stars, every star an exploding ship. One of ours.
Posts
I don't know enough about the technical aspects of bitcoin to be sure if there is a way of verifying if your transaction has been accepted into the blockchain if neither the ID nor the amount can be trusted to verify your transactions. I do think it's rather interesting that one poor design is keeping another poor design in check, apparently completely by accident.
The problem is the equation gets more and more complex. Meaning mining operations will only ever make money is the price of Bitcoins continues to rise. Eventually you'll hit a point where the equipment and electricity for mining will never pay for itself.
but it's a poor assumption that it will always g pup.
The value drops a bit and suddenly your mining farm is a waste of space
imgur.com/gallery/hQQFgef
Really it seems like a huge issue that the amount of work that needs to be done to process a transaction scales not only with the frequency of transactions, but also with the number of users (assuming the description on the previous page is accurate). Unless I'm misunderstanding, that means that as the number of users increases, the work required to prevent a backlog increases exponentially (each user is one more validation required, and presumably that user also makes transactions since y'know user).
This may be a stupid question, but is there a reason that the majority of the entire network is required to validate all transactions rather than it being sufficient if both parties in the transaction agree on the sum and then later that the coins were actually transferred?
No, the rate limit is to prevent the total size from growing too quickly
The amount of work required to process transactions is (extremely close to) independent of the frequency of transactions, if we assume that there isn't an artificial block size limit. That work is ultimately only done by one user, even though everyone is trying to do it, and it solves a block. Every other user merely then verifies that the work was done, which is a much quicker process.
You send me 1BTC, and we both agree that's happened. Tomorrow, I claim that in fact, that has not happened. How do we resolve that?
By ensuring the majority of the network agrees that the transaction happened, I can't turn around tomorrow and claim that you haven't sent me my bitcoin.
As mentioned, transaction fees.
I'm curious how those would be collected and passed on, though. At some point, obviously, mining is no longer economically viable for the mined bitcoins alone. However, at that point transaction fees may become a viable alternative for mined bitcoins to encourage mining. However, the mining pool, from what I can tell, has no way to actually...collect those? So how does that work? Obviously a major exchange could create some sort of arrangement with a mining pool, kicking back collected transaction fees in exchange for processing power, but with the number of pools and exchanges that just seems like a clusterfuck waiting to happen.
This is, of course, the problem with the decentralized nature of the thing.
I think you've confused transaction fees on a BTC transaction (when sending from address to address) with fees on an exchange (when buying or selling BTC for fiat on somewhere like MtGox). The former are the ones expected to support miners once the block reward drops to a negligible amount. The latter have nothing to do with the miners.
When you make a BTC transaction, you have the option to attach a fee to it. This is a tip for miners to incentivise them to include your transaction in the next block they find - if they do so, they get the fee, as well as the normal block reward. This is also a reason for a finite block size - with only so many transactions that can be included in the next block, people attach a larger fee to be included in the next block.
It's like having your door jammed half open while acting as a load-bearing support for the ceiling - you may want it in that position now so just you can get in/out, but if in the future you ever wanted it fully open or closed you can't do so without the roof falling in.
EDIT: I like how they can apparently expend the time/money to fly around the world to protest, yet only hold up these discreet 12" x 16" cards.
the best part?
scroll halfway down and review the "members' sentiments" (86% Bullish, 14% Bearish...)
I think you're right about Gox, but at the same time that also points to the other reason that exchanges can differ quite a bit...there's so much friction in moving between bitcoin and real-live money, and enough volatility, that taking advantage of what seems like an arbitrage opportunity is actually fairly risky, and probably not as lucrative as it seems regardless.
Crazies be crazy and stupids be stupid.
They aren't mutually exclusive.
Expecting consistency of thought from the horrifying intersection of anarcho-libertarian-conspiracy thought is aiming just a tad high.
pretty much federal reserver i'd imagine.
I missed you bitcoin thread.
Is it not a huge indicator that mount gox is screwed that they value the coin lower than the other exchanges? How would that even work? MtGox hold the coins but wont pay the dollers- so the keep the more valuable coins?
That was my initial assumption after posting how I thought something like a btc exchange would work.
They don't work as expected, they hold onto something. It feels like they're trying to make a "float" to earn money off of.
Floats are great when your economy works and you can make money off your money.
I have to be missing something here...
Because mt Gox is grossly mismanaged and possibly completely lacking in liquidity, that $300 is basically a bet that you will still get your BTC for your $300.
So it seems the market is willing to bet about 50/50 (300 vs 600) that Mt Gox is actually not a giant money pit at the moment.
Which seems optimistic.
it kind of undermines the idea of a cybercurrency when the only safe place for it is on a usb stick in your mattress. The longer it goes on the more Bitcoin acts like gold.
Because when Gox say they'll sell you a coin, what they mean is they'll take your money and let you look at the appearance of a coin in your Gox wallet.
You want to take it out to do something with it? Good luck with that.
It's not like regular currency hasn't had issues with banks before.
― Marcus Aurelius
Path of Exile: themightypuck
The vastly different valuations on the different exchanges are basically the sign that one or all of them are shit and illiquid.
Well. They've fixed that.
It's no free lunch though. Deposit insurance is limited and there are arguments that it leads to depositors placing less oversight onto banks which makes it easier for banks to engage in shenanigans that lead to taxpayer bailouts.
― Marcus Aurelius
Path of Exile: themightypuck
Go figure.
"Orkses never lose a battle. If we win we win, if we die we die fightin so it don't count. If we runs for it we don't die neither, cos we can come back for annuver go, see!".
Those arguments are stupid. The average person lacks both the time and the expertise to oversee the activity of their local bank and that's if the bank is being open and honest. If its not, then you are shit out of luck. That's why we had government oversight with regulations to do it for us.
Until as Jephery pointed out, they dismantled it.