The Bitcoin Group #143 – Price Volatility – Suits not Nerds – ICO Mania – Silbert Accords

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Tone Vays ( )
Chris DeRose ( )
Gabriel D Vine ( )
Jeffrey Jones ( )
and Thomas Hunt ( )


Bitcoin blew past its record and soared to $2,800 in just a few hours — and now it's plunging

Bitcoin 'nerds' give way to Wall Street suits at digital currency conference

Chat app Kik takes on Facebook with developer ecosystem built on the blockchain

Entrepreneur Vinny Lingham to Announce ICO at Consensus 2017

ICO Report: Brave Software

Bitcoin Scaling Agreement at Consensus 2017

Unrealistic Timeframe: Bitcoin Core Developers Criticize Bitcoin Scaling Agreement

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33 thoughts on “The Bitcoin Group #143 – Price Volatility – Suits not Nerds – ICO Mania – Silbert Accords

    1. Bill Addison, The problems with this idea are as follows: (1) Bitcoin is only capable of 3 tx/s (2) Development is slow and virutally non-existent thanks to (2a) Miner consolidation, aka consensus centralization (2b) Development consolidation, aka Blockstream aka Corporate Centralization.

      While Bitcoin maximalism is an interesting proposition, the technical limitations and governance inadequacies do not allow it to scale as needed.

      Diversity otherwise known as “competition” is necessary to a “free-market.” Aside: I’ve always found it interesting that people who identify as libertarian become authoritarian when it’s in their best interest

    2. If bitcoin is used to consolidate or resolve aggregate transactions via secondary layers, 3 tx/s becomes less critical. Presumably with LN tx/s will increase significantly. Miner consolidation is a problem for all pow blockchains. I think you mean that consensus is slow, not that dev is slow – this is a positive point considering the status quo. Dev consolidation can be negated through alternate implementations of bitcoin like bcoin (javascript implementation written completely from scratch) for example. Diversity/competition can be derived from alternate implementations rather than alternate blockchains resulting in diversity where it counts, while homogeny where beneficial, i.e. within the most secure, decentralised and immutable ledger, the bitcoin blockchain.

    3. I can see where you’re coming from, and I really like some of the dynamics and solutions you’re thinking about. Really good stuff, thanks for sharing.

      You lose me at “most secure” blockchain, as it is an opinion. It’s only a fact if the only metric for “security” considered is hashpower, but I’ll catch upon that. Most blockchains are “secure” and I am actually no aware of a single double-spend, signature bypass, brute force on a private key or any other blockchain related vulnerability on any blockchain as of today. But if you have some evidence of the contrary, please share it (I guess The DAO kind of applies, but this was a contract error, not related to blockchain security).

      Bitcoin has the largest mining network in terms of hashpower, but it’s irrelevant when comparing with consensus algorithms that don’t rely on arbitrary work. Comparisons between consensus algorithms is no small task, either, at least not this early in the experiment known as cryptocurrency. Security is more than just the mining power behind a network, it’s also the dynamics of how that security is achieved and defined. As mining becomes more concentrated, the likelihood of system manipulation becomes more feasible and profitable. A less common example of this is false transactions to create bloated blocks and slower speeds, speed scarcity? (not sure the correct term for that), which increases fees in fee market, and this manipulation is nearly impossible to prove. That said, an attack like this becomes irrelevant with the introduction of LN, assuming consensus can be achieved.

      While the underlying theory that is “self-interest protects the system through the inherent economic preservation” holds true in a decentralized trust-less system, it becomes less and less true in a trust-less consolidated oligopoly. A simple example of a feasible exit-strategy could be establishing a “miner coup.” It would be relatively easy to short BTC against Alts, and/or Fiat on margins and then introduce problems into the system, driving it’s price down, and reaping huge profits on the short. All it takes is consensus amongst 2-3 of the mining giants, and this is entirely possible. While unlikely, this “possibility” threatens the proposed security of the network substantially. The continuous consolidation of power is and will continue to be a threat to the PoW algorithm. It’s not hard to debate that a mining oligopoly undermines the security of the network.

      Another issue with PoW at present is that it is incredibly energy intensive during a time of increasing energy costs and the decline of fossil fuel availability. When understanding energy consumption on a global scale, we’re entering a parabolic phase of human reproduction and subsequently energy consumption. This is not an irrelevant subject to consider. When energy is factored in, the scalability potential of a consensus algorithm that exhibits ever-increasing difficulty requirements during a period of parabolic energy scarcity is challenged.

      I respect your insights on Bitcoin Maximalism, as they mirror my own opinions from 2011-2013 that I have since abandoned. I can relate. Part of me hopes that you’re right, but the other part hopes you’re wrong. It’s my personal experience (subsequently an anecdote) as a programmer than monolithic programming is unstable and most often unscalable when dealing with large systems. But who knows, after all, this is all still an experiment (even Bitcoin)

    4. well said. it’s funny how so many fanboys don’t want to discuss the real issues with bitcoin simply b/c they want to believe it’s perfect as is. it is far from perfect and if we don’t get real about its problems, they’re only going to get worse.

    1. There is definitely development, but the problem is that the governance is flawed. Miner centralization has made it impossible to innovate, because innovation threatens the miners’ bottom line. On the other side, Blockstream has corporate motivation and also has heavy influence (debatable an authoritarian control) in development. The relationship between these two extremes is troubling. UASF would be a good balance/check, but is far from perfect and doesn’t solve the greater governance issue. Lightning network would be a step in the right direction IMO, as it would enable Bitcoin to facilitate fast speeds and low fees for smaller transactions. This alone would help mitigate Bitcoins identity crisis, being “am I digital gold, or digital cash.” Until that question is answered, development will be unlikely to move past the present stalemate.

      In the end, the transaction throughput of the Bitcoin network doesn’t scale (yet) to allow it to become more relevant in the real world. It’s transaction limit is around 7tx/s, which is 1/10000th of VISA. Ironically, the “scammer” known as Dan Larimer the above maximalists love to hate on, developed one of the fastest blockchain frameworks ever created at 100k tx/s (graphene, the foundation of Bitshares and STEEM). They employ a “genetic fallacy” on all his creations to discredit their viability. I will agree though, that Dan Larimer’s technology prowess has very little social or real-world economic intelligence, and thus, his projects have been met with contention by the general crypto-public, myself included. But objectively, his technology is far superior in terms of throughput, and even remains more decentralized than Bitcoin despite being a semi-trustless system, as opposed to a 100% trustless system like Bitcoin.

      Bitcoin: 6 mining conglomerates, Bitshares: ~20 committee members (tx validation nodes). Bitcoin: 40 minute-12 hour transaction speeds, Bitshares ~3 seconds. It’s these details the above maximalists don’t ever really consider, and instead just repeat the same subjective ad hominem logic-less claims in order to protect their economic interests. Don’t blame them as this is human nature, but I strongly believe this channel would be far more constructive in the crypto-space if they introduced panel members that could bring debate to the conversation, instead of this channel being an ever-perpetuated circle-jerk of an echo chamber.

    1. centralized exchanges can do a lot of messed up stuff, but at least there are a lot of them now so they can’t keep it up for long without getting called up on it by arbitragers

    2. Gabriel Vine I can’t help but feeling there’s some manipulation going on right now. just the way btc, eth, and ltc all move together in unison on gdax seems very unlikely. it’s as if ltc is being suppressed/controlled for some reason, and btc being prevented from bubbling up too high. you’d think one of them would go on a run without the others, but they’re all moving together, even eth. just a gut feeling, but seems fishy, and possible from coinbase’s end.

    3. Since crypto exchanges in general are full-reserve, there is no manipulation per se, just market players. Now of course if you have an infinite supply of fiat (WHICH PLAYERS IN THE SYSTEM DO) you can do a certain amount, but it’s not like the fully fictional “markets” of Old Finance where both sides of the coin (asset AND unit of account) are fractional-reserve meaningless database entries.

    4. Since crypto exchanges in general are full-reserve, there is no manipulation per se, just market players. Now of course if you have an infinite supply of fiat (WHICH PLAYERS IN THE SYSTEM DO) you can do a certain amount, but it’s not like the fully fictional “markets” of Old Finance where both sides of the coin (asset AND unit of account) are fractional-reserve meaningless database entries.

    1. thanks gonbop, great to see you here in the comments!

      the pause was not fault of Thomas or anyone else, I just couldn’t make the showtime for a few weeks 🙂

  1. Awesome discussion gents. Actually wasn’t AWARE of this point of view. Thank you for shaking my brain a bit. Based on discussion I would be interested in a good checklist of qualities/characteristics of SUSTAINABLE and VALUABLE coins and models of new projects that would address the criticisms at most of the new alt coins? i.e. there is a limit on coins. There is this kind of or that kind of connection to the value of the coin. or there should be a certain % of coin going towards x or y.. it would be cool to create a gradient of characteristics from good for the people versus good for the centralized moneygrubber.

    1. jihan has the money to mine mine any new coin cuz us americans let the Chinese rule the mining world  and thats whst he wants that’s why he wants a 2nd coin he knows it would be exp since its from btc ur wrong vortex  ur risking a lot for an unknown plz go to my channel watch a couple video and tell me what u think plz

  2. Great discussions! So good to hear people talk rationally about Bitcoin and the realities of what’s happening in the crypto currency world at the moment.

  3. Hang in there Vortex. The dream still lives. BTC isn’t just an investment, its a cause. Seriously believe that the rise of BTC is the one thing that can save the western world from itself. Great comments though.

  4. paraphrase:”i would walk into the Blockstream side room where Adam Back &
    Andrew Poelstra, and nobody would ever be in there. Matt Corallo would
    be coming in and out, but no one even knows who these people are. like
    nobody cares”

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