Hearn: The resolution of the Bitcoin experiment [LWN.net]

Hearn: The resolution of the Bitcoin experiment

Posted Jan 15, 2016 21:26 UTC (Fri) by Cyberax (✭ supporter ✭, #52523)
In reply to: Hearn: The resolution of the Bitcoin experiment by ken
Parent article: Hearn: The resolution of the Bitcoin experiment

> to what end ??? if the clients do not accept the data they mine anymore.
Which clients? Nobody controls the developers of client applications, they do whatever they want.

What do you think client developers are going to do when faced with two choices: support the old blockchain that is steadily growing and is used by pretty much all other clients or fork to a new blockchain that has no clients and uncertain future?

Keep in mind, that we're talking about actual clients that do actual business transactions. Not a group of people who want to accumulate more "coins" by doing nothing.

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Hearn: The resolution of the Bitcoin experiment

Posted Jan 15, 2016 21:39 UTC (Fri) by ken (subscriber, #625) [Link] (7 responses)

>> to what end ??? if the clients do not accept the data they mine anymore.

>Which clients? Nobody controls the developers of client applications, they do >whatever they want.

But ?? that is exactly my point! if the miners is the problem they will lose as there is much much more users "clients" that can change the protocol regardless of what the current miners wants.

Hearn: The resolution of the Bitcoin experiment

Posted Jan 16, 2016 0:18 UTC (Sat) by Cyberax (✭ supporter ✭, #52523) [Link]

> But ?? that is exactly my point! if the miners is the problem they will lose as there is much much more users "clients" that can change the protocol regardless of what the current miners wants.
Why? Clients do not particularly care about miners. In fact, sky-high cost of new blockchain blocks is a selling point for them.

It's a free market! With all the problems of monopolies and externality costs.

Hearn: The resolution of the Bitcoin experiment

Posted Jan 21, 2016 21:34 UTC (Thu) by Fats (guest, #14882) [Link] (5 responses)

> But ?? that is exactly my point! if the miners is the problem they will lose as there is much much more users "clients" that can change the protocol regardless of what the current miners wants.

No, clients only generate transactions and transactions only have value if included in a block by a miner. A cryptocurrency using another hash functions can hardly be called bitcoins. Clients already have the choice of a whole bunch of alternative cryptocurrencies but the only one that currently can be used for anything more than a curiosity is bitcoin.

Hearn: The resolution of the Bitcoin experiment

Posted Jan 21, 2016 22:20 UTC (Thu) by nybble41 (subscriber, #55106) [Link] (4 responses)

> No, clients only generate transactions and transactions only have value if included in a block by a miner.

Clients also validate the blocks they receive before appending them to their own local copy of the blockchain. If a block isn't seen as valid by a majority of clients, regardless of how many miners approve of it, then the block is effectively not part of the blockchain. Clients will not show the transactions in that block as confirmed (including the coinbase transaction though which the miner gets paid), or recognize other blocks which depend on those transactions as valid. As a result, miners cannot effectively avoid following any rules which most clients choose to enforce.

Miners do have more power when it comes to *rejecting* blocks, since even if you get a majority of other clients to accept your block as valid, the other miners can simply ignore it and build a longer alternative blockchain by virtue of having significantly more computing power at their disposal; the longest valid chain will be seen as the authoritative ledger. Changing this property would make it much more difficult to ensure convergence.

A change in the hash function would be a rule enforced by the clients. Assuming a majority of clients backed the change, miners who continued to use the old hash function would find that their blocks carry little weight. Transactions spending the mining reward and fees from blocks using the old hash function would only be seen as valid by a minority of clients, who in turn would only be able to spend what they receive within the limited circle of clients following the old rules; network effects would push the remaining holdouts, both miners and clients, to switch to the new hash function.

Hearn: The resolution of the Bitcoin experiment

Posted Jan 21, 2016 22:42 UTC (Thu) by Fats (guest, #14882) [Link] (3 responses)

>Clients also validate the blocks they receive before appending them to their own local copy of the blockchain. If a block isn't seen as valid by a majority of clients, regardless of how many miners approve of it, then the block is effectively not part of the blockchain. Clients will not show the transactions in that block as confirmed (including the coinbase transaction though which the miner gets paid), or recognize other blocks which depend on those transactions as valid. As a result, miners cannot effectively avoid following any rules which most clients choose to enforce.

Again no, miners are by design the entities in bitcoin that enforces rules and build the blockchain. Clients who don't follow will in the end not be possible anymore to generate transactions that will be included in blocks mined by the miners. Of course you can ignore bitcoins send to you in a block you don't like but you can't send bitcoins a second time that is already in a block accepted by the miners.

Hearn: The resolution of the Bitcoin experiment

Posted Jan 21, 2016 23:04 UTC (Thu) by nybble41 (subscriber, #55106) [Link] (2 responses)

> miners are by design the entities in bitcoin that enforces rules and build the blockchain.

Again no, miners may build the blockchain, but by design all nodes enforce the rules. (And any node that contributes to building the blockchain is a miner by definition, so the first part is a tautology.)

> Clients who don't follow will in the end not be possible anymore to generate transactions that will be included in blocks mined by the miners.

In blocks mined by the miners using the old rules, you mean—blocks which will be ignored by the majority of clients following the new rules. No loss there. Clients will just get their transactions included in other blocks mined according to the new rules.

> Of course you can ignore bitcoins send to you in a block you don't like but you can't send bitcoins a second time that is already in a block accepted by the miners.

You can if the other block wasn't accepted by most clients because it didn't follow their rules. Those clients will not see your transaction as double-spending, because they don't acknowledge the existence of the other block or the conflicting transaction it carried.

To change the rules to allow previously invalid transactions or blocks you need the support of a majority of the miners, because a majority of miners working together can always block a valid transaction from appearing in the blockchain. However, to prohibit previously valid transactions or blocks you only need the support of a majority of the clients. Even if every single (existing) miner was opposed to the change, it wouldn't be enough to make those transactions or blocks appear valid to the majority of recipients, which is where the real power lies.

Hearn: The resolution of the Bitcoin experiment

Posted Jan 21, 2016 23:20 UTC (Thu) by Fats (guest, #14882) [Link] (1 responses)

> In blocks mined by the miners using the old rules, you mean—blocks which will be ignored by the majority of clients following the new rules. No loss there. Clients will just get their transactions included in other blocks mined according to the new rules.

OK, now you are talking different. Now you are talking about a hard fork, e.g. if there are miners that use different rules the clients have the choice which miners to follow. I agree with that but that is all the power they have. But the whole scaling discussion is so difficult because hard forks are so difficult; nothing something easy the clients can choose as you seem to indicate.

Hearn: The resolution of the Bitcoin experiment

Posted Jan 22, 2016 4:56 UTC (Fri) by nybble41 (subscriber, #55106) [Link]

>> In blocks mined by the miners using the old rules, you mean—blocks which will be ignored by the majority of clients following the new rules. No loss there. Clients will just get their transactions included in other blocks mined according to the new rules.
> OK, now you are talking different. Now you are talking about a hard fork, e.g. if there are miners that use different rules the clients have the choice which miners to follow.

Actually, that is exactly what I've been saying all along. However, it's not like the miners form some sort of invite-only cartel. Clients have the option of becoming miners themselves, if no one else wants to do the job according to their specifications. Ergo, they always have a choice of miners to follow.

Hard forks are difficult for social reasons more so than technical ones. No one wants to see a situation where a significant minority backs the losing fork, even if it is short-lived. It makes for bad press. This is why hard forks generally require 95% or higher buy-in before they take effect, and why Bitcoin XT was roundly criticised for setting a lower threshold before it started accepting and mining larger blocks. However, there can be little question that it's ultimately the merchants who accept bitcoin as payment who determine the minimum standards for acceptable blocks. The miners can notarize whatever transactions they want, but they won't get any worthwhile reward unless their blocks are considered valid by the merchants holding the goods and services they wish to purchase.

Hearn: The resolution of the Bitcoin experiment

Posted Jan 16, 2016 3:12 UTC (Sat) by drag (guest, #31333) [Link] (2 responses)

> What do you think client developers are going to do when faced with two choices: support the old blockchain that is steadily growing and is used by pretty much all other clients or fork to a new blockchain that has no clients and uncertain future?

It's not a either or choice. Clients can continue to support using the old block chain, and then support using the new one.

This is the sort of thing that appears to be happening with the 'Classic Bitcoin' and it's predecessor effort 'TX' (which got shutdown due to massive DDOS attacks). I am not a big fan of bitcoin itself, but I think the concept has merit. So I am not 'hip' to all the technicalities.

This is what they claimed with TX:

> Bitcoin XT supports a larger block size.[9] As of version 0.11A the following is implemented to determine the maximum block size.[10][11]

> If a block is mined before the minimum forking date of 11 Jan 2016 00:00:00 UTC, the maximum stays at 1MB.

> According to mining consensus rules. If less than 750 of the last 1000 blocks (75%) support a bigger block size, the maximum stays at 1MB.

> After a block is encountered that triggers the 75% majority, a grace period of 2 weeks starts, during which the maximum stays at 1MB.

> Unless the above rules restrict size, the maximum block size starts at 8MB, doubling approximately every 2 years for a maximum of 10 times.

> This makes the new maximum block size range between 8MB and 8192MB depending on when the block is mined.

The thing that most people miss about free markets is that the 'client' or the 'consumer' is the one that has the real control, not the producers. Unless they face some sort of significant force/violence preventing them from acting in their own best interests.

The 'miners' can do whatever they want, but it's only the clients that assign what they doing any value. It's a lovely idea to be able to make 'free money' by mining bitcoins, but the reality is that they are compensated for providing what amounts to a public service. They are not the ones in control of the situation even though they seem to be trying to take control through other channels (DDOS, etc).

The point of bitcoin is to allow transactions _after_ the numbers are mined out. It's inevitable that the number of miners are going to drop down to small numbers because the cost of bitcoin mining is going to continue to rise exponentially as the pool of available numbers drops closer to zero. After a certain point it only becomes feasible for people with access to cheap power and cheap hardware to keep going.

I don't know if bitcoin itself is fatally flawed (it seems that it's very likely due to reasons unrelated to the newest drama or lack of active miners), but it's a massive step forward for the internet. The potential is to allow cheap and easy way to transfer wealth and lower transaction costs in significant way. a way that is not controlled by a small handful of banks (debit/credit cards) or a single company (paypal). Maybe even make things like 'micro-transactions' possible so a large number of internet folks will be able to survive the coming 'advertising market implosion' apocalypse.

So maybe not bitcoin, but what comes after bitcoin, or even after that.

Hearn: The resolution of the Bitcoin experiment

Posted Jan 19, 2016 3:32 UTC (Tue) by smoogen (subscriber, #97) [Link] (1 responses)

My limited understanding was that miners will always matter even if all the coins have been mined. Instead miners will be needed to "sign" the next block chain and are to be paid the transaction fees in that block. Thus there is always a market for a lot of miners over time as that is how the costs of who wins the "fees" gets solved.

However that may be flawed as it was from a talk a couple of years ago.

Hearn: The resolution of the Bitcoin experiment

Posted Jan 19, 2016 16:10 UTC (Tue) by drag (guest, #31333) [Link]

Could be true. I don't know enough about the technicalities. I know there is transaction fees for signing.

Looks like economic pressure worked on the Chinese minors. They seem to now be switching to 'Bitcion Classic' and are increasing their block sizes to avoid a crash in the price.

https://news.ycombinator.com/item?id=10920902