SoylentNews is people
SoylentNews
I witnessed the events as they unfolded yesterday, I'll try to give as objective summary as possible. Here's what happened:
The bitcoin blocksize is currently limited to 1MB. Two out of five bitcoin developers who have access to repository are worried that this is not enough to compete with VISA (in the number of transactions processed per second). The dispute to increase the blocksize has been ongoing for months. The two developers suggested to use the bitcoin built-in voting process (which has been designed in it ages ago), where the voting goes as follows:
1. the software is updated in such a way that larger block sizes are not used unless 750 out of past 1000 blocks are mined by miners who in the blockheader say "yes to bigger blocksize".
2. If such blocks (which are still below 1MB, but simply have this "yes" vote) are not mined, then the status-quo remains and nothing happens.
Three other developers have blocked any commits, and dedicated themselves to maintain the even stronger status-quo, by simply disallowing such vote to proceed. The two other developers finally decided to publish a new bitcoin client, called bitcoin XT, which has only one small change that would allow such voting to proceed. The linked blogpost presents one side of this argument, honestly I couldn't find a blogpost that would present the opposing viewpoint. If someone here has a link to nice writeup done by the other side of this argument please let us know.
The bitcoin reddit got furious yesterday night (to the point of a civil war with moderators), when the top voted and most discussed thread "why is bitcoin forking?" was deleted by one of the moderators. Interesting to note, that it had 528 upvotes at the moment of deletion and currently it has 687 upvotes, and also googling for 'why is bitcoin forking' links to this deleted thread. Before it was deleted the discussion seemed reasonable, now it's just a Streisand effect about censorship and about how few influential people are trying to prevent the voting from happening.
What it means for regular bitcoin users? Here's how it goes:
1. If the voting rejects the larger blocksize then both bitcoin clients, 'bitcoin' and 'bitcoin XT' will work as normal on the same blockchain. And in fact nothing will happen, people will be able to choose which client to use and eventually the 'bitcoin XT' will lose its momentum, fade out and stop being used.
2. If the voting goes in favor of larger blocksize, then both bitcoin clients will start operating on two different blockchains. The 'bitcoin XT' blockchain will have 75% of hashing power (by the definition of how this vote is implemented), and the 'bitcoin' blockchain wil have the remaining 25% of hashing power. Shops and exchanges will run aghast in circles trying to protect from double spending by quickly upgrading their software to use the stronger 'bitcoin XT' blockchain. The weaker blockchain with only 25% hashing power will be susceptible to attacks. And whatever bitcoins you have right now will co-exist twice in each of those blockchains. You would be able to spend them in one of the blockchains and keep them for yourself in the other blockchain. People who have changed to 'bitcoin XT' client beforehand will be safe from whatever might happen with the weaker chain, since their clients work with both blockchains, until they acquire the voting 75% majority.
The voting process as it happens can be seen live on site that shows number of clients and mined blocks that opted for larger blocksize.
I know that perhaps I am not as objective as I wanted to be. I tried to present the facts only, if I failed, then blame me and correct me in the comments. Happy discussing!
(Score: 5, Insightful) by bradley13 on Sunday August 16 2015, @05:02PM
Why is it more absurd than what happens with the currencies we are accustomed to? At least the Bitcoin fork is up-front, and the potential problems are well-understood, as are the solution. In the most simplest case: just sit on your bitcoings until the fracas is over - they will be valid regardless of the outcome. Moreover, because the total money supply is limited, your money will retain its value (as a proportion of the total currency available).
With national fiat currencies, you have less transparency. Your government can inflate away the value right under your feet. Most Western governments are busy doing exactly this: as they push more and more money into circulation, the value of that money decreases. Those dollars (or Euros, or whatever) in your bank account are losing value every year - depending on the country you are in, probably somewhere between 5% and 10% net annually. There is essentially nothing you can do to stop this.
As an earlier poster pointed out: the biggest danger that Bitcoin faces is its own success. If it actually becomes a viable means of exchange, expect governments to step in and try to control it. They won't want the competition, because otherwise their currencies might just become worthless.
Everyone is somebody else's weirdo.
(Score: 5, Insightful) by SubiculumHammer on Sunday August 16 2015, @05:15PM
And the lack of sufficient inflation for growth or ability to set monetary policy according to economic conditions is why Bitcoin won't ever be a primary currency anywhere. Bitcoin is a rentseekers wet dream, but we will not stand for it.
(Score: 3, Interesting) by JNCF on Sunday August 16 2015, @05:53PM
the lack of sufficient inflation for growth
Bitcoin is designed to be deflationary, but other crypto currencies (like Dogecoin) are inflationary. I feel taht the inflationary/deflationary argument can be totally separated from your next point, which goes to the heart of this blockchain business.
or ability to set monetary policy according to economic conditions
The ability to set monetary policy is also the ability to game monetary policy. I understand that this power can be used in ways that encourage a stronger economy, but I also understand that it is currently being run by corrupt bankers. I don't even think we can effectively reform it (or any part of this system). Replacement seems like a better option, in the long run.
Here's a video [youtube.com] of a US Senator (Sanders) asking Ben Bernanke to disclose which banks got 2.2 trillion dollars worth of loans. That knowledge is a secret which the Federal Reserve does not have to disclose.
(Score: 1) by Francis on Sunday August 16 2015, @08:14PM
Inflation is barely any better than deflation. Ideally it should be set up so that coins come and go roughly proportionally to the amount of coins actually being used. Which is an incredibly difficult problem to solve.
I've never been opposed to the concept of virtual currency, but one that's designed to be deflationary where people early on pay very little for wealth that becomes very expensive with no contribution to anything is a really bad idea.
(Score: 1, Informative) by Anonymous Coward on Monday August 17 2015, @03:37AM
Do you rent or own?
If you rent the deflation can be fine.
If you buy *anything* on credit you do not want deflation. When I say anything I mean anything. Such as a budget deficit or a home loan.
Do you buy or sell?
If you buy things it can be a bit tough because today you buy something but if you waited 1 day deflation would have made your cash worth more and you could buy more.
If you sell you can have a hard time selling things unless you sell goods people absolutely need.
That is what deflation does.
(Score: 2) by JNCF on Tuesday August 18 2015, @04:00AM
I'm not making an argument for or against inflation.
(Score: 5, Informative) by Justin Case on Sunday August 16 2015, @06:47PM
> the [Bitcoin] lack of [government] ability to set monetary policy
That's a feature, not a bug.
(Score: 0) by Anonymous Coward on Sunday August 16 2015, @06:28PM
they will be valid regardless of the outcome
Which i think is the entire key to this, there is no need to be concerned. However if everyone freaks out, their value could crash. ( just like the stock market crash here in the US )
(Score: 1) by tftp on Sunday August 16 2015, @07:33PM
In the most simplest case: just sit on your bitcoings until the fracas is over - they will be valid regardless of the outcome.
That is not quite so, and the summary above even explains why. If the 75% win the vote, the 25% will lose it, and the blockchain will be forked. Your coins will be in both blockchains, and the 25% blockchain becomes immediately vulnerable to the hashing speed of 75%. At the same time, two blockchains allow double-spending, as your purchase will be recorded in one blockchain, not in both. This will create a terrible mess among those few who use BTC. In essence, all merchants would have to choose which blockchain to follow, instantly - or else they'd be paid with coins from a defunct blockchain, and perhaps even stolen from legitimate holders by the overwhelming hashing power of 75%. But when will the vote's results be known? It's not a discrete event, it's a process... have I mentioned already that it will be a mess?
(Score: 2) by sjames on Sunday August 16 2015, @08:55PM
So you should clear the transaction through both block chains for now. That way, no matter which wins in the end, the correct holder of the coins is recorded. Or, just hold (do not transact) until the results are clear.
(Score: 1) by tftp on Sunday August 16 2015, @09:34PM
You paint a dark future for exchanges. Which BTC, from what blockchain, do they convert to other currencies? They also have to make a choice, like merchants - and also instantly, and also all together (otherwise one could double-spend BTC_25% in one store and BTC_75% in another.) This requires nearly omniscience on part of participants. Forking money is not easy. I guess it's good that hardly anyone of importance uses it :-)
(Score: 2) by sjames on Monday August 17 2015, @01:31PM
If I temporarily require that the coins be transferred in BTC_25 and BTC_75 until the clear winner is determined how will you double spend? I'll have a pretty good clue what happened if your transfer to me fails on one or the other.
Of course, none of this matters unless/until 75% of miners vote for the larger size. If they do, you would be pretty safe going with BTC_75 since mining in BTC_25 would become unprofitable rapidly.
(Score: 0) by Anonymous Coward on Monday August 17 2015, @01:49PM
As long as forks are done in a nice civil manner like this, where nothing but the voting option is added, it's simple -- use the voting fork, and vote whichever way you want. If the option wins the vote with 75%, your client will automatically start using the option and follow the supermajority blockchain. If it never does make the 75%, it makes no difference, as both clients work on the same blockchain. This doesn't require omniscience, as you can switch clients long before the blockchain actually splits.
It could become a problem if the fork is directly incompatible (so the blockchain splits immediately, instead of after a voting process lasting a theoretical minimum of 750 blocks), or if the change being voted on is so undesirable that one might rather use the <25% blockchain rather than adopt the new change (but is such a change even likely to get 75% voting for?).
(Score: 2) by frojack on Sunday August 16 2015, @09:25PM
Actually TFS said:
The weaker blockchain with only 25% hashing power will be susceptible to attacks. And whatever bitcoins you have right now will co-exist twice in each of those blockchains. You would be able to spend them in one of the blockchains and keep them for yourself in the other blockchain.
That alone would suggest some solution would have to be found, such that the old blockchain would be (some how) forcibly converted, and eliminated in the old blockchain. Not sure if or how this might be done.
But allowing both to exist, and handling both with the same client, seems fraught with peril.
In the real world, in war zones, or potential war zones, currency at risk of capture in the event of an invasion would be replaced with a provisional currency that could be quickly disowned. See https://en.wikipedia.org/wiki/Hawaii_overprint_note [wikipedia.org]
No, you are mistaken. I've always had this sig.
(Score: 1) by fraxinus-tree on Monday August 17 2015, @08:55PM
Bitcoin is specifically designed to survive forks. Small forks happen every now and then. At least one "big" fork happened in the past around a malicious transaction exploiting a bug in the client. Nothing bad really happened, transactions settled in the longer chain at the end.
(Score: 2) by Bot on Sunday August 16 2015, @08:20PM
Indeed, if stuff equivalent to fractional reserve banking, loans for amounts that ensure they cannot be realistically be returned, quantitative easing, were employed in bitcoin economy, many people would leave in disgust.
Account abandoned.
(Score: 3, Interesting) by Beryllium Sphere (r) on Sunday August 16 2015, @10:59PM
The gold standard means your currency unit is tied to the value of a rock and the money supply depends on gold mining technology and exploration, not the needs of the economy. The only non-emotional argument in favor of it is that it's better than irresponsibly managed paper money.
Money is simply inherently weird.