How the Bitcoin protocol actually works DDI

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Bitcoin Technology

/bitcoin is amazing and we love it but sometimes it's nice to have an area dedicated to the technical details and interesting projects of bitcoin so this exists to complement /bitcoin, Feel free to X-Post if you think your article is relevant to both /bitcoin and /bitcointechnology This subreddit is for all proposals, articles, questions and answers on bitcoin related technology DO NOT POST icos, pricing, memes, scams, etc here as they will be removed.
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Eidoo Wallet App's official subreddit

Fast, easy, and not only a Multicurrency Wallet: it's a hybrid exchange too. It’s Eidoo. This is Eidoo App's official subreddit where we talk only about Eidoo and its ecosystem.
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Everyone (particularly BTC fans) should read and reread this until they understand what problem Bitcoin was created to solve, and how it solved the problem. Even if you don't understand the technical details, every token owner should understand the basic value proposition of the token they hold.

This was spurred by a recent conversation with a BTC maximalist who obviously hasn't read the white paper and wasn't even aware it contained a description of the "problem statement" that Bitcoin was intended to solve.
I encourage someone who still has posting privileges in rbitcoin to post the following text there along with the emphasis so that it can reach more BTC holders.
emphasis mine

INTRODUCTION

Commerce on the Internet has come to rely almost exclusively on financial institutions serving as trusted third parties to process electronic payments. While the system works well enough for most transactions, it still suffers from the inherent weaknesses of the trust based model. Completely non-reversible transactions are not really possible, since financial institutions cannot avoid mediating disputes. The cost of mediation increases transaction costs, limiting the minimum practical transaction size and cutting off the possibility for small casual transactions, and there is a broader cost in the loss of ability to make non-reversible payments for non- reversible services. With the possibility of reversal, the need for trust spreads. Merchants must be wary of their customers, hassling them for more information than they would otherwise need. A certain percentage of fraud is accepted as unavoidable. These costs and payment uncertainties can be avoided in person by using physical currency, but no mechanism exists to make payments over a communications channel without a trusted party.
What is needed is an electronic payment system based on cryptographic proof instead of trust, allowing any two willing parties to transact directly with each other without the need for a trusted third party. Transactions that are computationally impractical to reverse would protect sellers from fraud, and routine escrow mechanisms could easily be implemented to protect buyers. In this paper, we propose a solution to the double-spending problem using a peer-to-peer distributed timestamp server to generate computational proof of the chronological order of transactions. The system is secure as long as honest nodes collectively control more CPU power than any cooperating group of attacker nodes.

TRANSACTIONS

We define an electronic coin as a chain of digital signatures. Each owner transfers the coin to the next by digitally signing a hash of the previous transaction and the public key of the next owner and adding these to the end of the coin. A payee can verify the signatures to verify the chain of ownership.
The problem of course is the payee can't verify that one of the owners did not double-spend the coin. A common solution is to introduce a trusted central authority, or mint, that checks every transaction for double spending. After each transaction, the coin must be returned to the mint to issue a new coin, and only coins issued directly from the mint are trusted not to be double-spent. The problem with this solution is that the fate of the entire money system depends on the company running the mint, with every transaction having to go through them, just like a bank.
We need a way for the payee to know that the previous owners did not sign any earlier transactions. For our purposes, the earliest transaction is the one that counts, so we don't care about later attempts to double-spend. The only way to confirm the absence of a transaction is to be aware of all transactions. In the mint based model, the mint was aware of all transactions and decided which arrived first. To accomplish this without a trusted party, transactions must be publicly announced [1], and we need a system for participants to agree on a single history of the order in which they were received. The payee needs proof that at the time of each transaction, the majority of nodes agreed it was the first received.
http://bitcoin.com/bitcoin.pdf
submitted by jessquit to btc [link] [comments]

This is the definition of FUD. How to subvert consensus and turn bitcoin into something else.

We have a problem. We now have a small group of core devs who are now developing an altcoin under the guise that it is still bitcoin.
This is what it has got to. A bunch of unsubstantiated opinions and logical fallacies with the sole intent of creating FUD.
Lets go through and dissect this.
Gavin Andresen has been advocating strongly that Bitcoin’s blocks need to be permitted to be much larger. Earlier this year, he announced plans to release code that implements larger block sizes via a “hard fork” — a non-backwards-compatible change — against the wishes of most other Bitcoin Core developers, and encourage miners and merchants to adopt his code.
This makes it seem like people are not asking for this change, which they are.
Yesterday, he released a draft BIP, a proposal for how the protocol should change, along with draft code that implements his proposal. But even if one agrees with Gavin’s vision for what the technical features of Bitcoin ought to be, his proposal is an irresponsibly risky path forward.
If everyone agrees, how is it irresponsible?
This has nothing to do with what block sizes should be, but instead about Bitcoin’s much greater experiment: in the absence of a central authority, can people come to agreement on what money to use?
Here we see they try and move the goal post to try and say the debate is actually not about block size limit (since they already lost debate before it started).
It’s useful to step back and think about why anyone might ascribe any value at all to a virtual currency. There are certainly many technical features a currency must have to be a candidate for being worth anything (if you can’t transact it, or if there’s no way to secure it, or there is an infinite amount of it, it’s probably not very useful). But looking past the technical issues, the more fundamental test you’d apply when deciding whether to use a given coin as money is whether you think everyone else will treat it as money too. In particular, if at some point in the future you worried that what you thought was money was not actually considered money by others, then you would probably choose something else to be a store of value.
He is trying to insinuate that bitcoin with a larger block size limit will be worthless. No evidence of course.
This is the most important lens through which we should view Gavin’s proposal. If you have a money that other people accept, under what circumstances should you change it to be a different, new money? That is exactly what a hard fork entails: Gavin is asking 75% of miners to switch to a new currency with new and different properties. If they do so, then they will trigger a permanent change to the consensus rules for those running Gavin’s software. The idea is that if everyone goes along with it and changes their software to match, then we can still call it Bitcoin, and the lack of backwards compatibility is a non-issue (since no one will be around running incompatible code).
So why might everyone switch to a new currency? One reason is if the current one is clearly broken — something like the March 2013 fork, where a latent bug in the reference implementation caused the network to split. In that situation, it was clear to everyone there was a problem, and running software that is buggy was clearly not in anyone’s interest (whether or not others kept running the buggy software). If a hard fork is required to make your money have any utility at all, you’re likely to choose to do it (as long as you believe your solution is the same one everyone else will be deploying!).
But if what you’re using isn’t clearly broken or if there are multiple incompatible choices of code to use to implement a bug fix, the decision is much more difficult. Somehow you have to coordinate your actions with everyone else. And what if there are dissenters? Is it worth risking splitting the network in two (or more)? Under what circumstances is that risk worth taking? Naively, we might reason that a majority in favor of a given hard-fork proposal might refrain from advancing it if they believe there’s a meaningful minority opposed to it, because splitting the network makes the currency less valuable for everyone.
Bitcoin is broken though. It's just that a problem has not arisen from it yet. It can be likened to a tooth on a gear in a large complex machine being broken. The machine works perfectly until that tooth is needed and then it stops working properly. Just because we haven't got to that tooth yet doesn't mean the machine doesn't need fixing.
However, the majority might employ some game theory of their own, and reason that if there are enough of them, then perhaps the minority will feel coerced into going along with a change, because the minority risks the same downsides to splitting the network that the majority does. By proposing a miner vote with a 75% trigger to hard fork the network, Gavin’s proposal is a big game of chicken — with no good outcome for anyone.
This is completely opinion. It is my opinion that not changing the protocol because of an extreme minority is an even larger problem for bitcoin. This is what I would call 'real centralisation' rather than the completely ludicrous meaning of centralisation you come up with later on.
I think this is the existential question for Bitcoin (or any other decentralized digital currency). If splitting the network in two is an easy thing for a majority to decide to do in the face of obvious opposition, then each of us must worry that we might someday be on the wrong side of a future split. Equally, one could interpret such an outcome differently: if Bitcoin’s network can split because there exists some person or people who are able to change the currency against the wishes of others, then perhaps it’s incorrect to think of it as lacking a central authority.
This is such a stupid way of framing this I don't even know where to begin. Firstly, the very fact that this argument has been going on for YEARS now shows that it is the opposite of "easy". You seem to have just swapped the word "possible" with "easy". "if Bitcoin’s original concept and functionality can be co opted because there exists some person or people who are able to change the currency against the wishes of others, then perhaps it’s incorrect to think of it as lacking a central authority." FTFY
Taking either of these interpretations to their logical conclusion suggests that Bitcoin would be an essentially failed experiment. Because however you look at it, it would make much more sense to trust a known authority to run your digital currency (whether that’s a company or a government): many of the technical advantages of Bitcoin could remain and, indeed, future improvements could be more efficient to deploy, if we could jettison the technical baggage that comes from working on a decentralized currency. Of course, you also lose whatever hope you might have had that Bitcoin would be better than any currency backed by a central authority. Still, there could be something beneficial to society even in this case, and maybe Bitcoin could morph into a much better version of Paypal or Visa, and maybe that’s the local maximum that Gavin’s path forward could lead to. This may even be a net win for society compared with the status quo; however it would be an obviously disappointing outcome for many who have different, longer-term aspirations for the technology.
This argument is literally "central authority = vast majority of bitcoin miners, community and nodes deciding for themselves rather than a very small group of specific devs".
It’s fair to ask, if 75% of miners voting on what the hard fork should be is a bad idea, then what is a better trigger? This is a central challenge with hard forking changes to Bitcoin — I don’t think anyone knows the answer to that question. Pieter Wuille brought up this topic on the bitcoin-development mailing list and pointed out that any trigger using miner voting as a component should have a 100% threshold for the vote, because the whole point is that hard forks should not happen before everyone has had a chance to upgrade, so if some miners clearly haven’t upgraded their software, then it’s risky to change consensus while blocks may still be mined on the deprecated chain (which could cause confusion for users who haven’t upgraded). I think that is a reasonable point of view, and Gavin’s response to that appears to be (from the draft BIP):
Sure, so a single person can decide on what the decision is for the entire bitcoin network. What was that about "centralisation" again?
This statement leaves me wondering whether an increase in mining centralization might cause Gavin or others, when proposing a future hard fork, to reduce this trigger down further? Could a 60% miner vote be appropriate the next time someone presses for a hard fork if there’s a 38% hash-rate mining pool in existence?
100% baseless conjecture. "What if next time Gavin wants to add in a contract that allows him to eat your first born child?"
The problem is more complex than this, because miners shouldn’t want to vote in favor of a hard fork if they don’t believe that users will want to switch. But we also don’t have a great way of knowing what code users want to be running
I call this the "we can't know anything" argument. It is used when something that it is pretty self evident cannot be proved as a 100% fact.
(users themselves are likely not aware of the technical details that go into Bitcoin, and so sensibly rely on the advice of technical experts to decide what software is worth running).
What he is saying he is "even if users do want a larger block size limit, they are all too stupid to decide". Which is obviously completely ignorant to that fact that a large percentage of the bitcoin community have been around for a while and in fact DO understand a lot about the technical details of bitcoin.
Still, miners shouldn’t want to trigger a hard fork unless there is obviously no meaningful dissent, for the reasons above — and surely a 24.99% hash power mining operation represents significant risk of the network splitting in a meaningful way.
Maybe. So discuss the merits of realistic alternatives to the threshold rather than attempting to make the fork more contentious.
And that is not taking into account the already clear dissent from the people who are most expert in the field. Under some circumstances it may be difficult to tell whether there is unanimity or near-unanimity amongst people that a particular change to Bitcoin may be a good idea (say, to fix a known bug), but this isn’t one of those situations.
Actually it has been pretty clear we have moved a lot closer to consensus within the technical community of bitcoin in the past weeks. The only dissent that is left is from people who are refusing to budge an inch. Screaming for 100% consensus while refusing to budge an inch is logically the equivalent of saying "do what I say".
However, Gavin has a high profile, and as the technical leader of the project until last year, many still view him as the face of Bitcoin. He may have the power to sway users, merchants, and miners to go along with his code change against the advice of the other technical leaders. I urge rejection of consensus code changes that have not been accepted into Bitcoin Core, and in particular I would urge rejection of Gavin’s proposed code.
People support Gavin not because he is the face of bitcoin but because he has actually made excellent well thought out arguments on all different levels; technical, economic and conceptual. He was worked to make a fair compromise which takes everyones opinions into account (other than people who are not working towards anything) while still trying to progress bitcoin as it was originally intended.
This is contrary to yourself who has not provided a single relevant, technical argument and has only provide extremely weak logical arguments.
Much of the block size debate has been about technical tradeoffs, and especially concerns about scaling versus decentralization.
This is the only technical argument I have ever heard from you and it is based on the false dilemma fallacy that;
Block Size Limit > 1MB = 100% centralisation
OR
Block Size Limit > 1MB = more centralisation
The first argument is obviously false. The second argument is less obviously false. It is likely that running a node requiring extra resources could decrease the percentage of nodes from users, but allowing bitcoin to scale will increase the number of users and therefore increase the number of nodes. At best this isn't an argument for either side since it's just speculation.
Virtually everyone working on the project appears to believe it is important and valuable to figure out how to scale the network’s capacity, but there are differing opinions about how to go about it. I expect we’ll see technical consensus ultimately reached about deploying a different solution to increase block sizes, to give us a way forward with a much lower risk of splitting the network. But whether or not you agree with Gavin’s technical view on block sizes, the philosophy behind decentralized currencies is fundamentally incompatible with deploying his code in the way that he proposes.
Again, this is the "my way or the highway" approach.
I originally thought that these devs were well intentioned. After reading this (and all the other posts), without seeing a single valuable argument against raising the block size limit, I have come to the conclusion that there are specifically deployed FUD tactics at hand to prevent or delay it from happening to turn bitcoin into the vision that they have for it. Back to my original point; these two devs /nullc and /adam3us plus a handful of what I call "helpers" are purposely trying to spread Fear, Uncertainty and Doubt. These are not intelligent or logical arguments even though they are coming from intelligent and logical people. The tactic is to call for 100% consensus while at the same time trying to create as much contention as possible, for example using the title "How the Bitcoin experiment might fail".
What these people want is for users to solely rely on the lightning network and for bitcoin to become inaccessible to the average user. They will try to delay and prevent bitcoin being upgraded as long as possible and as soon bitcoin starts to reach it's transaction limit they will then use this to accelerate development of the lightning network and say that it is the only option. This is the reason why they are calling for the lightning network to be implemented first than the block size limit increase, because it would not be as successful if it was released afterwards. If you don't believe this what they want bitcoin to become as soon as possible, ask them.
submitted by singularity87 to Bitcoin [link] [comments]

u/fresheneesz u/JustSomeBadAdvice have an insanely long, extremely detailed discussion about minute technicalities of bitcoin. Every post is a wall of text. They kept it civil.

submitted by batbitcoin to bestof [link] [comments]

u/fresheneesz u/JustSomeBadAdvice have an insanely long, extremely detailed discussion about minute technicalities of bitcoin. Every post is a wall of text. They kept it civil. [xpost from r/BitcoinDiscussion]

submitted by BestOfNoPoliticsBot to BestOfNoPolitics [link] [comments]

Roger Ver is a Villain

I know a few of the technical details of bitcoin, but other than that, I'm pretty new to bitcoin. I've spent the past few days lurking on btc (owned by Ver) and I have a Bitcoin.com wallet (one of Ver's projects). I've been seeing more an more that Roger Ver is a shady character and I want to know why. I'm reaching out to bitcoin because I don't think I'll get a straight answer on btc. Can somebody please explain to me what makes Roger shady and how he is ruining bitcoin? If you can, please link to your sources 1) for integrity, and 2) because I want to learn as much as I can about it. Thank you!
submitted by the_glord_cthulhu to Bitcoin [link] [comments]

A Response to Oleg Andreev's Bitcoin Maximalism

Let me begin by saying that I have great respect to Oleg, and that he undoubtedly knows vastly more about the technical details of Bitcoin and software development than I do. So, I don't take challenging his views on Bitcoin lightly.
At the same time, I think that I understand network effects, the history of disruptive technologies and human nature well enough to question the logic and conclusion of his recent post on Bitcoin Maximalism (http://blog.oleganza.com/post/140634349543/bitcoin-maximalism). While I actually hope that Oleg is right in his conclusion that Bitcoin is indomitable, I'm concerned that he and other long-time Bitcoin maximalists are presently engaging in the all-too-natural human tendency of "whistling through the graveyard" rather than acting nimbly to scale Bitcoin as soon as possible.
Oleg's case for Bitcoin maximalism hinges upon three key assumptions: (1) that the dominate blockchain will always be the most secure one, (2) that Bitcoin can and will adapt quickly enough to avoid being overtaken by any initially-less-secure-but-more-agile competitor, and (3) that Bitcoin's failure to dominate would so undermine trust in consensus blockchains in general that none could successfully supersede it.
Unfortunately, none of these assumptions are likely valid for reasons I will explain.
While I agree that the dominant blockchain will likely be the most secure at scale, nothing permits me to believe that it will start as such, and the history of disruptive technologies suggests strongly otherwise.
Successfully disruptive technologies have several well-documented characteristics (see, e.g., the books "Zero to One" by Peter Theil or "Exponential Organizations" by Salim Ismail, or this article in Harvard Business Review: https://hbr.org/2015/12/what-is-disruptive-innovation). Disruptive technologies, by definition, do not succeed by attacking establishment business models directly and from the outset. Rather, they establish beachheads in new, unassuming and initially nonthreatening markets. As they experience growth in these areas, the technology gets refined, quality improves, and even more novel use cases become apparent. A virtuous cycle ensues.
These improvements in quality (or in the case of blockchains, security) are deceptively immaterial at first but proceed exponentially nonetheless. With disruptive technologies, quality eventually becomes "good enough" that it begins taking market share from entrenched interests in mature markets due to its lower cost, even though such markets were not its original target and even though it's is still qualitatively inferior. And then, eventually, a tipping point occurs: The quality produced by the new technology comes to match or exceed that offered by the old, but still at a lower cost. Total disruption ensues.
Despite that nearly everyone recognizes Bitcoin's extremely disruptive potential, it has failed to follow this well-known disruptive trajectory. Seven years in, Bitcoin still lacks even its first "killer application". How can this be?
The answer seems clear: While potentially disruptive by nature, Bitcoin has not been deployed in a disruptive manner. Rather than first targeting undeveloped markets and novel use cases for blockchain technology, Bitcoin Bitcoin aims at the very heart of the establishment by seeking to disrupt money itself, even to the exclusion of initially more modest and unassuming opportunities. Attacking the establishment at its core is undoubtedly a ballsy approach, but it is not a disruptive one.
In fact, money myopia limits Bitcoin's disruptive potential in several important ways.
First, money myopia makes many Bitcoiners hostile to non-monetary uses of the Bitcoin blockchain, with many of them deriding most all non-monetary uses as "spam". And yet, it's exactly these novel, unassuming, non-monetary use cases where we would expect any truly disruptive blockchain technology to first establish itself, and where blockchains will almost certainly find their first "killer app". Bitcoin has no killer app to date because it has neglected, indeed derided, these novel uses in favor of preparing for direct battle with the establishment in its most fortified citadel--money.
Second, money myopia causes even those Bitcoiners who value non-monetary use cases to overweight the importance of security (quality) and underweight the importance of adaptability (usefulness) and low cost. By definition, truly disruptive technologies are always built on the latter two attributes (high adaptability/usefulness and low cost) and never the former (high initial quality).
Confidence in Bitcoin's ability to strike directly at the core of the establishment, at money, rather than evolving in a truly disruptive way by supporting more unassuming use cases, is anchored in a nearly-religious conviction by many Bitcoiners that, in free markets, "good money always drives out the bad", and that bitcoin is the best money ever invented. Many Bitcoiners actively anticipate an imminent fiat apocalypse, which will be quickly followed by the Second Coming of commodity money in the form of bitcoin.
However, even if true, the final fall of fiat could take decades during which a more useful and adaptable (though initially less secure) competitor to Bitcoin becomes the universal public blockchain (thanks to insurmountable network effects fueled by novel use cases). Such a competitor won't challenge the establishment directly, and therefore won't initially share Bitcoin's aspirations as money. Rather, like most disruptive technologies, it will gain a foothold in less threatening ways--for instance by establishing itself as the backbone of the Internet of Things; by better and more cheaply facilitating registration, identity, escrow, or clearing services; by making smart contracting easy and seamless; by hosting numerous important and influential Distributed Autonomous Organizations; by being the most accessible and useful blockchain platform for developers, etc.
While initially lagging Bitcoin at first, the quality (security) of this competitor will improve consistently and exponentially over time. As it does so, even more use cases will become apparent. Eventually, and likely far sooner than any anticipated fiat apocalypse, the security of this competitor will become good enough that it begins taking market share from entrenched interests in mature markets (including Bitcoin's market) as a consequence of its lower cost and "good enough security", even though such markets were never its original target. And then, eventually, a tipping point will occur: The quality/security of the competitor will match or exceed that offered not just by Bitcoin, but by the old fiat currencies as well, but still at a lower cost. At that a point, total disruption is nigh and a new money is potentially born.
Oleg insists that we needn't worry about alternative cryptocurrencies proceeding via this disruptive trajectory to gain an insurmountable advantage over Bitcoin because the competitive advantages of any such competitors will, "with full support from all major [bitcoin] holders", quickly be subsumed into Bitcoin via defensive hard or soft forks.
Perhaps. But given recent history, why should we have any confidence in Bitcoin's ability to agilely implement defensive forks in a timely manner? After all, humans have an uncanny ability to rationalize away threats until those threats are too great to overcome. This is, after all, the secret to every disruptive technology's success. This rationalizing tendency is troubling enough when just a small group of knowledgable decision makers must be persuaded to act to defensively, but the challenge is exponentially greater when "75%", or even "overwhelming consensus", is required (as is currently the case with most all proposed Bitcoin hard forks).
I submit that it's only a matter of time before remaining competitive in the blockchain space will require repeated nimble hard forks and not merely soft ones. And yet, given that humans rarely act with "overwhelming consensus" except in matters so trivial as to be inconsequential or of such grave importance as to constitute a clear and present existential threat, I'm doubtful of Bitcoin's ability to defensively outmaneuver an approaching threat. When existential threats approach exponentially, as they do in network-effect driven technologies like blockchains, the danger may not be "clear and present" enough to forge hard-fork consensus until it's already too late.
Oleg then extends his arguments in defense of Bitcoin maximalism by taking some shots at the only visible threat to Bitcoin maximalism currently, Ethereum. Some of his criticisms of Ethereum are accurate and some are not. But, they are mostly irrelevant regardless.
For instance, even if true, none of his criticisms prevent Ethereum from gaining a beachhead in unassuming niches only to later disrupt Bitcoin as the dominant form of crypto money (assuming sufficient improvements in quality/security over time). For instance, should Ethereum's market cap and fabulous PR continue during a time when Bitcoin's price takes a precipitous fall--perhaps due to the latter's real or perceived intractability--resulting bandwagon and network effects may be too much for Bitcoin to overcome.
Given that the social and economic influence of current Bitcoin stakeholders is trivial compared to the overall size of the blockchain marketplace opportunity, especially when non-monetary use cases are considered, the winner of the Blockchain race will be determined not by existing Bitcoin stakeholders, as Oleg suggests, by the coming tidal wave of new blockchain adopters (both corporate and individual). If history is any guide (consider how Web 2.0 developed, for example), these new adopters are likely to be swayed more by irrational factors like branding, reputation, peer pressure, usefulness and familiarity than by reasoned judgement or a critical analysis of the security features of each platform. Since most new users won't be looking to use blockchains as money initially, they will not share Core's security-at-all-costs biases and will instead favor the most accessible, useful and popular platforms.
Given how Bitcoin stakeholders are currently managing the platform, Bitcoin will almost certainly not be the most accessible, useful, and popular blockchain, at least when nonmonetary uses are considered. Bitcoin's insistence on extreme security limits its usefulness for all the many potential non-monetary uses noted above, making less expensive and more nimble options more appealing in these important use cases.
Consequently, Bitcoin's ultimate success as money hinges almost entirely upon the technical impossibility of any more nimble blockchain ever achieving Bitcoin's level of quality and security, or else upon the quasi-religious conviction of Bitcoiners that good money drives out not only the bad, but also the "good enough" version that any successful blockchain is likely to offer.
In a last ditch defense of Bitcoin maximalism, Oleg finally argues that markets abandoning Bitcoin for something else like Ethereum would be "eternal proof that [blockchain] consensus [mechanisms are] not safe long-term and can be sabotaged infinite number of times to satisfy politics du jour", rendering them all useless. Essentially, he argues that if Bitcoin can't be the main universal blockchain forever and always by insulating itself from social whims, then the loss of confidence in blockchain consensus algorithms in general will be such that none other could supersede it.
This fixation with making Bitocoin immune from social whims and preferences is troubling. Contrary to common wisdom, blockchains are not secured by hashing but rather by economics. Without a market for mined coins, mining doesn't happen in sufficient quantity to secure the network. Over any reasonable time frame, the security of the Bitcoin network is therefore a direct function of the market value of the coins mined. This recognition that blockchains are ultimately secured by the economic value of their tokens and not by hashing is one reason why a well-conceived and implemented Proof of Stake algorithm stands at least a fighting chance of superseding more resource-intensive Proof of Work methodologies.
Regardless, the key insight is that markets don't exist separate and apart from humans. Markets are complexly socially-determined, and therefore subject to all the extremes of human emotions (bubbles and crashes, for example.)
Consequently, Oleg's contention that that the one true blockchain will be the most immune from social influences, or else that all blockchains will be proven worthless for failing to sufficiently resist them, contains an inherent logical contradiction: Only a blockchain immune from market influence, and therefore lacking sufficient market value, can be mostly free of social influences. By definition, any such blockchain will be highly insecure.
It is unlikely therefore that the universal public blockchain will be the most removed and insulated from societal influences. Rather, it will thrive upon social factors, becoming a creature of it. Such a blockchain will be "secure enough" to resist censorship by empowered minorities (even nation states) while also proving adaptable to the whims of the worldwide economic majority. The latter (social adaptability and usefulness) gives the blockchain token economic value while the former (censorship resistance) serves to preserve said value indefinitely, preventing those in power from co-opting or skimming it.
Oleg's idea that the markets must find the right balance between adaptability, low cost and security on the first attempt or not at all is unsupported by history or logic. As always, markets will proceed via trial-and-error, via "discovery", until the proper balance is achieved. As with any discovery process, there will likely be spectacular failures along the way, but these failures won't permanently tarnish the reputation and usability of blockchains anymore than early plane crashes permanently tarnished the reputation and usability of airplanes.
In the end, the question we should all be asking ourselves is simply this: Which implementation of blockchain technology is most likely to first strike the socially-useful balance between "good enough" security, high adaptability/usefulness and low cost? Will it be the most secure but least adaptable and more expensive implementation, or will it be a more adaptable but inexpensive and reasonably secure one that improves over time?
If the history of disruptive technology is any guide, the answer is obvious: The winning platform is almost certain to be the one that costs less and iterates the fastest. Anytime finding the right answer to question depends upon rolling dice (discovery), the person (or implementation) rolling the fastest usually wins. Free markets invariably outperform command-and-control ones simply because the former sees vastly more rolls of the dice in a given amount of time.
In conclusion, quality/security, adaptability/usefulness and low cost are competing objectives in the blockchain space. Because finding the right balance between them will almost certainly be a result of trial and error, of discovery, the winner of the blockchain battle isn't likely to gain scale as the most secure, expensive and intractable option, but rather as the cheapest and most adaptable while being "secure enough" initially for niche uses.
Then, like with all disruptive technologies, quality (security) will improve over time, resulting in even more use cases, more social acceptance, more economic value, and therefore more security. Eventually, it's security will rival Bitcoin's and then even that of fiat currencies, at which point it will have the social acceptance, economic might, and network effect advantages to serve as a funding currency for speculative attacks on fiat. If those attacks are sufficiently successful, it may well inherit Bitcoin's dream of becoming the new stateless currency.
Bitcoin's fate is not yet sealed. It still has huge network effect advantages that can be exploited. But, those advantages won't long persist if Bitcoin doesn't make itself more usable for non-monetary purposes, even at the cost of a little less security in the short-term.
submitted by Wefivekings to ethereum [link] [comments]

u/fresheneesz u/JustSomeBadAdvice have an insanely long, extremely detailed discussion about minute technicalities of bitcoin. Every post is a wall of text. They kept it civil.

submitted by unremovable to unremovable [link] [comments]

Comparing the Monero and Ethereum approach to Bitcoin's proves something isn't quite right with btc even without knowing any of the technical details.

Eth and xmr aren't going to put all the eggs in one basket - a future unknown solution which no one has developed and tested yet and instead are working in multiple scaling solutions and not limiting the 1st layer. Xmr and eth have multiple highly skilled teams working on several solutions while the BTC devs chill waiting for third party vaporware to appear and solve EVERYTHING - that's because Blockstream didn't want btc to scale.
submitted by unitedstatian to btc [link] [comments]

BIP X? Decaying dynamic block size cap as a function of fullnes & average fee

BIP X? Decaying dynamic block size cap as a function of fullnes & average fee
Introduction & motivation
We need something fresh. I've been following this and the "other" sub-reddit from sidelines for a while, and now I feel the need to attempt to contribute constructively, by introducing some fresh ideas (fresh as far as I’m aware). Personally, I prefer BIP101 over BIP100 or over status quo and think BIP100 is something to avoid as it may not be such a good idea to give any specific group dynamic control of system parameters (in this case, the miners). I believe all parameters need to be predictable to ensure stability, utility and fair game for all participants. But this is just me, and it doesn’t really matter what I believe. I only want to present something, and then see if it sticks.
Goals
  1. Have downwards pressure on the cap as to stimulate the fee market and address fears of cap reaching infinity.
  2. Have the cap be re-adjusted based on actual usage as to ensure adequate capacity.
  3. Use fees as a parameter when re-adjusting the cap as to diminish influence of spam or low fee transactions and in a way which would allow fee market to develop before raising the cap.
  4. Be predictable enough to enable all participants to plan their operations or responses to change.
  5. Have same rules for all participants - no voting, no easy manipulation with mechanism to achieve an increase. Any changes should be done dynamically as a response to change in actual usage.
  6. Keep the 1MiB cap as a minimum, for safety/historic purpose.
  7. KISS (Keep It Simple Stupid)
The Proposal
Have the maximum block size be determined in the following way:
If (block_size(i-1) > max_block_size(i-1)*0.5) and avg_fee_per_kb(i-1,i-1) >= avg_fee_per_kb(i-947,i-2)*(256/259)) Then Max_block_size(i) = Max_block_size(i-1)*(259/256) Else Max_block_size(i) = max(max_block_size(i-1)*(4093/4096), 1MiB) 
Explanation
Two conditions need to be met for an increase.
  1. Previous block must have been more than half-full.
  2. Previous block average fee/kb must have been greater than the average fee/kb calculated over last 946 blocks (approx 1 week) multiplied by (256/259).
When they're met, the cap is increased by factor of (259/256). As you can see, the increase is allowed only if the average fee/kb is maintained or is growing. Win for all.
If conditions for an increase would be met for every block, the cap could theoretically quadruple by the end of the day (in 119 blocks). However, that would be unlikely considering that an increase in block size would likely dilute the average fee/kb and that they would need to be filled more than 50%. If it would not get diluted and there are enough transaction to trigger increases, well, so be it - good for the miners as it means new space is filled with more profit (increased avg. fee/kb + more transactions). If the fees are not maintained, block cap will keep reducing at a rate (4093/4096) which would halve the size in about 1 week (946 blocks).
With this, raising the cap would be a continuous struggle, but also a response to actual need to raise it. Each bump in the up direction would take 16 blocks to return down back to "normal" unless another bump would be triggered in the meantime. It would be hard for any entity with limited supply of bitcoin to maintain the cap higher then actually required. However, if everybody is pushing for their place in the block (fee market), the condition under 2. should be regularly triggered until some equilibrium is reached.
Well, this wraps it up, What do you think?
End notes
I don't know the technical details of bitcoin implementation. Maybe the above would be impractical to implement, violating goal 7. Maybe it would be too fast changing, violating goal 4. I cannot say. Anyway, I had this idea and tried to formulate it a bit and give it some initial structure. Maybe it gives someone skilled something to start with, a fresh idea. Take it or leave it - I don't care. If it grows, it would make me happy. If not, well, I tried :)
submitted by Rariro to bitcoinxt [link] [comments]

When mining, does one also include Merkle root data into block header when testing for hashes?

I am just a beginner trying to understand technical details of bitcoin. As far as I know, the Merkle root of a block works to provide summarizing hash of list of transactions. If Merklee root is included when testing for hashes to mine a bitcoin, this means that mining/proof-of-work depends on transactions chosen to be processed as block, right?
submitted by fatherobst to Bitcoin [link] [comments]

12-27 16:12 - 'Roger Ver is a Villain' (self.Bitcoin) by /u/the_glord_cthulhu removed from /r/Bitcoin within 41-51min

'''
I know a few of the technical details of bitcoin, but other than that, I'm pretty new to bitcoin. I've spent the past few days lurking on btc (owned by Ver) and I have a Bitcoin.com wallet (one of Ver's projects). I've been seeing more an more that Roger Ver is a shady character and I want to know why. I'm reaching out to bitcoin because I don't think I'll get a straight answer on btc. Can somebody please explain to me what makes Roger shady and how he is ruining bitcoin? If you can, please link to your sources 1) for integrity, and 2) because I want to learn as much as I can about it. Thank you!
'''
Roger Ver is a Villain
Go1dfish undelete link
unreddit undelete link
Author: the_glord_cthulhu
submitted by removalbot to removalbot [link] [comments]

[uncensored-r/Bitcoin] Roger Ver is a Villain

The following post by the_glord_cthulhu is being replicated because the post has been silently removed.
The original post can be found(in censored form) at this link:
np.reddit.com/ Bitcoin/comments/7mflfr
The original post's content was as follows:
I know a few of the technical details of bitcoin, but other than that, I'm pretty new to bitcoin. I've spent the past few days lurking on btc (owned by Ver) and I have a Bitcoin.com wallet (one of Ver's projects). I've been seeing more an more that Roger Ver is a shady character and I want to know why. I'm reaching out to bitcoin because I don't think I'll get a straight answer on btc. Can somebody please explain to me what makes Roger shady and how he is ruining bitcoin? If you can, please link to your sources 1) for integrity, and 2) because I want to learn as much as I can about it. Thank you!
submitted by censorship_notifier to noncensored_bitcoin [link] [comments]

BIP X? Decaying dynamic block size cap as a function of fullnes & average fee

BIP X? Decaying dynamic block size cap as a function of fullnes & average fee
Introduction & motivation
We need something fresh. I've been following this and the "other" sub-reddit from sidelines for a while, and now I feel the need to attempt to contribute constructively, by introducing some fresh ideas (fresh as far as I’m aware). Personally, I prefer BIP101 over BIP100 or over status quo and think BIP100 is something to avoid as it may not be such a good idea to give any specific group dynamic control of system parameters (in this case, the miners). I believe all parameters need to be predictable to ensure stability, utility and fair game for all participants. But this is just me, and it doesn’t really matter what I believe. I only want to present something, and then see if it sticks.
Goals
  1. Have downwards pressure on the cap as to stimulate the fee market and address fears of cap reaching infinity.
  2. Have the cap be re-adjusted based on actual usage as to ensure adequate capacity.
  3. Use fees as a parameter when re-adjusting the cap as to diminish influence of spam or low fee transactions and in a way which would allow fee market to develop before raising the cap.
  4. Be predictable enough to enable all participants to plan their operations or responses to change.
  5. Have same rules for all participants - no voting, no easy manipulation with mechanism to achieve an increase. Any changes should be done dynamically as a response to change in actual usage.
  6. Keep the 1MiB cap as a minimum, for safety/historic purpose.
  7. KISS (Keep It Simple Stupid)
The Proposal
Have the maximum block size be determined in the following way:
If (block_size(i-1) > max_block_size(i-1)*0.5) and avg_fee_per_kb(i-1,i-1) >= avg_fee_per_kb(i-947,i-2)*(256/259)) Then Max_block_size(i) = Max_block_size(i-1)*(259/256) Else Max_block_size(i) = max(max_block_size(i-1)*(4093/4096), 1MiB) 
Explanation
Two conditions need to be met for an increase.
  1. Previous block must have been more than half-full.
  2. Previous block average fee/kb must have been greater than the average fee/kb calculated over last 946 blocks (approx 1 week) multiplied by (256/259).
When they're met, the cap is increased by factor of (259/256). As you can see, the increase is allowed only if the average fee/kb is maintained or is growing. Win for all.
If conditions for an increase would be met for every block, the cap could theoretically quadruple by the end of the day (in 119 blocks). However, that would be unlikely considering that an increase in block size would likely dilute the average fee/kb and that they would need to be filled more than 50%. If it would not get diluted and there are enough transaction to trigger increases, well, so be it - good for the miners as it means new space is filled with more profit (increased avg. fee/kb + more transactions). If the fees are not maintained, block cap will keep reducing at a rate (4093/4096) which would halve the size in about 1 week (946 blocks).
With this, raising the cap would be a continuous struggle, but also a response to actual need to raise it. Each bump in the up direction would take 16 blocks to return down back to "normal" unless another bump would be triggered in the meantime. It would be hard for any entity with limited supply of bitcoin to maintain the cap higher then actually required. However, if everybody is pushing for their place in the block (fee market), the condition under 2. should be regularly triggered until some equilibrium is reached.
Well, this wraps it up, What do you think?
End notes
I don't know the technical details of bitcoin implementation. Maybe the above would be impractical to implement, violating goal 7. Maybe it would be too fast changing, violating goal 4. I cannot say. Anyway, I had this idea and tried to formulate it a bit and give it some initial structure. Maybe it gives someone skilled something to start with, a fresh idea. Take it or leave it - I don't care. If it grows, it would make me happy. If not, well, I tried :)
submitted by Rariro to Bitcoin [link] [comments]

Help - recovery of old wallet

Hello. Firstly, I am not familiar with a lot of the technicalities/details of bitcoin.
Basically a couple of years ago I bought some bitcoin with the aim of using silk road to purchase candies and whatnot. I probably didn't research bitcoin and how to use it as well as I should have. Anyway, long story short, I believe I have some bitcoin (what was about $20 worth, now worth significantly more) in the wallet. I don't have ANY of the files any more (don't even know the name of the wallet software I was using), but I do have all of the details (words, passwords, address etc.). Can someone help me out with a simple guide to try to recover the wallet - if that is indeed possible.
Thank you!
submitted by hazdwag to Bitcoin [link] [comments]

08-01 20:02 - 'Do we own both BTC and BCH now?' (self.Bitcoin) by /u/olemetry removed from /r/Bitcoin within 0-9min

'''
Sorry, I don't know all the technical details of Bitcoin, but if one were to have their own private keys (paper wallet, etc.), does one own the exact same quantity of BCH as BTC?
'''
Do we own both BTC and BCH now?
Go1dfish undelete link
unreddit undelete link
Author: olemetry
submitted by removalbot to removalbot [link] [comments]

the white paper with all of its technical details, presented on a glass-like, scratch resistance, high-gloss panel /r/Bitcoin

the white paper with all of its technical details, presented on a glass-like, scratch resistance, high-gloss panel /Bitcoin submitted by SimilarAdvantage to BitcoinAll [link] [comments]

Comparing the Monero and Ethereum approach to Bitcoin's proves something isn't quite right with btc even without knowing any of the technical details. /r/btc

Comparing the Monero and Ethereum approach to Bitcoin's proves something isn't quite right with btc even without knowing any of the technical details. /btc submitted by HiIAMCaptainObvious to BitcoinAll [link] [comments]

Thoughts from Russia (repost from Har01d)

I rarely post anything on the forums because I don’t speak English as fluently as I want, but this situation is an extraordinary case, so I think I can’t resist the temptation to write about it in my broken English :) What happened with all this Blockstream, BIPs & XT mess is just a solid presentation of Bitcoin’s weakest sides and flaws. Here are three main problems that I see:
  1. Blockstream is a cancer for Bitcoin
Personally, I can’t (or I don’t want to) believe that just $21M, which Blockstream has got from a bunch of investors, will actually ruin Bitcoin as we know it now. The problem is that many people just don’t understand the simplest thing: if someone has invested the money in something, they want to get it back in the future. So one way or another, Blockstream is a commercial company, which wants to benefit from the Lightning Network (or the sidechains).
It is absolutely obvious that the smaller the block size is, the more money Blockstream will make. Let’s theorize for a moment, that BIP100 has been implemented and miners have voted for 1 KB blocks, so 1 block = 1 transaction. That would be the perfect situation for Blockstream, because as they can take fees in the LN, they would be the only entity who is economically motivated to pay a very big fee for creating a clearing transaction in the blockchain. So the entire blockchain from this moment would consist of single clearing transactions. Now let’s get back to the ground and suppose that we will have 1 MB or 2 MB, or even 10 MB blocks implemented by BIP100, but this size will not rise in the future. Well, now it all depends on how big will Bitcoin grow. If in 2020 we will have 1.000.000 transactions each 10 minutes and the same 1 MB blocks, the calculation is simple and not really different from 1 KB blocks. Let’s suppose that Blockstream will get $0.05 for each transaction on the LN as a fee, so for a million LN-transactions the total fee would be $50.000. Now, if Blockstream will use the blockchain for the clearing transactions, they could use the entire 1 MB (~1.500 transactions) for this purpose. $50.000 / 1.500 transactions = $33 per transaction. So no one will have an incentive to push a transaction for $33 in the blockchain while there will be an option to use a sidechain for $0.05. I understand that these calculations are awfully approximate, but this is the economic model of Blockstream. And this is the end of Bitcoin’s “be your own bank” as we know it know, because Blockstream is a centralized thing, you know: “Sorry, you are banned from the Lightning Network because you haven’t verified your ID”. And I have another thought about Blockstream I can’t stop think about. How in the world do you think they have convinced the investors (who merely understand technical details of Bitcoin protocol) that sidechains is what is needed for Bitcoin? Right, they said exactly the following: “Bitcoin has a flow: the block size is limited and can’t be increased, because it’s hardcoded. We solve this problem!”. Now it’s not surprising that investors must be puzzled about what’s going on now with all this FUD, because they weren’t told that there were other solutions. And that’s exactly why there is so many censorship on the main Bitcoin boards nowadays: if the investors realize that people don’t want to use sidechains, they will not invest more money. Since the Blockstream team consists of the Core’s developers… It’s that simple.
  1. It is not that obvious who decides the future for Bitcoin. Despite the fact that in theory it is the “economic majority” who should decide the future for Bitcoin, miners still can destroy it in the process Many people theorize that the majority of miners will not do anything stupid (like accepting 1 KB block size limit or raising the 21M bitcoins limit) because “the price will momentarily go down to zero and the miners will lose their money”. Yes, they will. And you will too. Or may be they do something stupid and the price will just slightly go down. The global problem is if for any reason in the world the majority would want to “commit a suicide”, they actually could do it. For example, they could be confused by the greedy guys like Blockstream… Anything. And there is literally nothing anyone could do to stop them.
  2. The censorship on top of the fact that many people don’t understand how Bitcoin (and the Bitcoin consensus in particular) works Well, I was very confused when I got to know that Theymos was banning all the “irrelevant” discussions. I don’t know whether he is paid by Blockstream or he isn’t, but that’s not the problem. The problem is that here in the Russian section there are almost no discussions about the Blockstream problem at all! Everybody just thinks that “Bitcoin XT will ruin Bitcoin, because it is a fork, so the best option is to sit still and have 1 MB blocks”. That’s all. And that’s because all articles here in the Russian section are translated from the western media. So the people who doesn’t speak English just can’t dig into the problem. And, in my opinion, the problem is not with the Russian section. I believe that there can be a similar problem in the Chinese one. And this problem is a real one, because all top miners are from China. I don’t know what can I do about it
Well, I believe if XT won’t succeed and Blockstream’s solution will get accepted, I will have only one option: to sell my coins, as it is the only way I can “vote”. That’s sad, but I don’t believe that sidechains are the true Bitcoin. And as the conclusion, I’d like to say that it’s all about corruption. Well, here we have corrupted Core developers, who develop a commercial project on top of Bitcoin. Bitcoin was invented as a replacement for traditional money to “fix” some economical problems. If you look at the big picture, it would be interesting to think, that at some point in time, fiat money (which were backed by gold) were invented to “fix” some problems too. And in time, some people corrupted the idea of fiat money with the current banking system. My point is that if Bitcoin can be broken by corrupted people, it will inevitably be broken. And my biggest fear it has already happened.
submitted by jupiter0 to bitcoin_uncensored [link] [comments]

I am not technical. I need help recovering unconfirmed funds from an old MultiBitHD transaction. I will give you 20% of the transaction if your advice leads to successful recovery of these funds. Details in thread. /r/Bitcoin

I am not technical. I need help recovering unconfirmed funds from an old MultiBitHD transaction. I will give you 20% of the transaction if your advice leads to successful recovery of these funds. Details in thread. /Bitcoin submitted by BitcoinAllBot to BitcoinAll [link] [comments]

@juggwizard I've found that doing a detailed walk through of Bitcoin's technical and price history puts skeptics in… https://t.co/Pvj0G2mL4a - Crypto Insider Info - Whales's

Posted at: April 23, 2018 at 07:02AM
By:
@juggwizard I've found that doing a detailed walk through of Bitcoin's technical and price history puts skeptics in… https://t.co/Pvj0G2mL4a
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submitted by cryptotradingbot to cryptobots [link] [comments]

BitcoinAll comment: I'm not a big fan some of the technical details of the specific thing people have promoted for Bitcoin. I saw that there is a proposal for litecoin now which is closer to wh. Join the conversation!

BitcoinAll comment: I'm not a big fan some of the technical details of the specific thing people have promoted for Bitcoin. I saw that there is a proposal for litecoin now which is closer to wh. Join the conversation! submitted by BitcoinAllBot to BitcoinAll [link] [comments]

What's a good introduction to the technical details of the blockchain? /r/Bitcoin

What's a good introduction to the technical details of the blockchain? /Bitcoin submitted by BitcoinAllBot to BitcoinAll [link] [comments]

But how does bitcoin actually work? - YouTube What is a Bitcoin? How ? #A-Z Complete details about Bitcoin Bitcoin Transaction Details - Part 2 #BITCOIN Technical Analysis ~ #BTC details you DESERVE ... Own Your Data on Bitcoin: Technical and Product Details

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But how does bitcoin actually work? - YouTube

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