Tag Archive | cryptocurrency

Why Bitcoin Block Size Definitions Must Be Removed

When I saw the news that Valve had dropped support for Bitcoin, my first thought was, “Wait a minute, Valve accepts Bitcoin? How did I not know that? It’s at the intersection between the two of the three biggest areas of my life (the other being music–so yes, writing about gaming and cryptocurrency while listening to music puts me as close to Nirvana as I can get).”

Then it occurred to me that I haven’t bought a game since April anyway. In fact, the last game that I purchased was Rise of the Tomb Raider. I still love video games, but… Why would I buy The Witcher 3 when The Witcher 2 failed to impress me any more than The Witcher had? Why would I buy Civilization 6 when it realistically offered no more enjoyment than could be had from playing another few games of Civilization 5? Video games are increasingly samey as they move into a homogeneous, genre-less blob. But that’s another matter.

Valve cited as their reasons high transaction fees and the volatility of Bitcoin. The former is what I really want to discuss, and the latter is something I’ll only mention briefly.

Volatility

If by “volatility” people mean “has an unmistakable trend toward increasing in value exponentially,” then sure. Technically, yes, the value of Bitcoin is volatile. It changes often. I fail to see this as a problem when that “change” is overwhelmingly toward the positive end of the spectrum, to the tune of increases from $650 this time last year to nearly $20,000 today. If that kind of “volatile” scares people away, I don’t know what to tell them. Yes, it dipped back to $8000 after it broke $10,000 the first time. Then, as I predicted, within a few days it had reached yet a new plateau of $15,000. Treating its volatility as a problem requires a strange sort of short-sightedness. Yes, if we zoom in on Bitcoin’s value graph to a specific one hour period, we would see a snapshot of “Oh, no, it lost 20% of its value in a few hours!” But if we zoom back a little, to two months, we’ll see an entirely different picture.

“I don’t want a currency that gains value” is essentially what people are saying when they criticize Bitcoin’s volatility.

What can we say to them?

Have fun with your Federal Reserve Notes, dumb ass.

High Transaction Fees

The more I’ve dug into cryptocurrencies–and I’ve really dug into them in the last few months–the more apparent it has become that Bitcoin exists for the miners. Earlier today, I paid more than $25 in Bitcoin transaction fees to move about twice that in Bitcoin. That’s right. To move 0.005 BTC, I paid a transaction fee of roughly 0.002 BTC. This makes Western Union look like a bargain. It makes sales tax look acceptable. My USD bank doesn’t charge me that much through an entire month, and they typically process hundreds of my transactions.

Yes, this is necessary. I’m sorry, but we have to keep this in perspective in-line with the ordinary person’s expectations. In a given month, my bank charges me $7.95, and that’s only if I have the account below a specific balance. If I’m above that balance, they charge me nothing. They provide me with a new debit card every two years, do all the back-end stuff, have security systems in place, and all that other crap, and they charge me roughly $2 a week for this service, while a typical week will see at least 15 transactions. So the typical transaction through my bank costs me about fifteen cents or so, if I’m being lazy, and that’s only if I keep my balance below a certain amount.

With cryptos, it’s slightly different, of course. Although they have the ledgers, miners do not have the wallets. In the U.S. banking system, banks basically have both. If Coinomi had Bitcoin miners that processed your transactions for really low fees as long as the transaction originated with a Coinomi wallet going to a Coinomi wallet, we would be somewhat closer to what the average person expects, but banking systems make their money by loaning out your money. We wouldn’t tolerate Coinomi doing that with our cryptocurrencies, and they can’t do that anyway, since they don’t have the private keys. This gets into the differences between cryptocurrencies and the banking system, though, and there’s no reason to get into all of that.

Proof of Work clearly has the problem that the algorithm, becoming progressively more difficult, requires ever more processing power, and therefore gets increasingly expensive. The end result is that fewer and fewer people can afford the overhead, transaction fees have to increase, and the power is concentrated into the hands of an ever smaller number of people. Inevitably, we will see 3 or 4 major mining companies, with everyone else having been eliminated from the game. Even Proof of Work proponents (I take neither side) see this as a problem, hence we now have Bitcoin Gold, which forked from Bitcoin with the intention of being ASIC-resistant, hopefully side-stepping this issue. We also have the attempt to create a shitcoin known as Bitcoin Platinum, where the guy who had the idea basically laid out Bitcoin Gold, but was too dense to realize what he wanted already existed. There is also Vertcoin, which shares a number of similarities to Bitcoin Gold, though it’s called “the poor man’s Bitcoin,” aiming to take similar measures to combat this inherent problem to Proof of Work.

The Simplest Solutions

Satoshi implemented block sizes in 2013 (I believe it was 2013–it was long after Bitcoin came into existence, at least) in order to make DDoS attacks on the network prohibitively expensive. Most DDoS attacks consist of sending unreal amounts of very small packets (such as the Dyn attack), clogging the network and grinding it to a halt. These packets are usually no greater than 1 KB in size–1/1024 the size of a Bitcoin block. This effectively makes attacking the Bitcoin network about 1024 times as expensive (in financial terms, processing power, and bandwidth requirements–one would need to generate hundreds of gigabytes a second to accomplish it). Sorry. I know this is getting kinda technical.

The irony is that a congressional official was criticized years ago for describing the Internet as “a series of tubes,” but the truth is that he wasn’t really wrong. And those tubes can get clogged. Let’s not get into that, either.

By requiring that any transmission on the Bitcoin network be at least 1 Megabyte in size, the problem was averted and Bitcoin was allowed to grow without fear of DDoS attacks, which would have undermined confidence and stability during critical periods of its lifespan. However, that time has passed. Today, DDoSing the Bitcoin network is prohibitively expensive, but block sizes have nothing to do it. It’s because the Bitcoin network has more processing power than the Tor network. It’s because the Bitcoin network is massive, and miners are already programmed to take the highest value blocks. So what’s the solution I’m getting at?

Remove the block definition entirely.

Let each miner define their own blocksize. If a miner attempts to take seventy transactions and cram them into a single block that is 80 MB, the incentive is certainly there. Grabbing seventy transaction fees all at once would be great, wouldn’t it?

Except oh no!

While that greedy idiot was trying to calculate that gargantuan block, someone less stupid will grab five of those transactions, crunch them into a block, do the calculations, and add them to the blockchain while the other one was still trying to sort out its mess. The greedy one’s efforts would be instantly curtailed, all of its calculations invalidated as it synced with the network and found that the transaction IDs it was trying to process already had been processed. Miners would be encouraged to grab as many transactions as they could, but not so many that they would run the risk of other miners beating them to it.

Are you seeing the problem?

Block size definitions have created a monopoly among miners, and they are using it to beat the ever loving shit out of us, and we are doing nothing about it, presumably because so few people understand the situation.

Miners don’t have to compete with one another, because blocks are pre-defined. There is obviously still some competition, because miners have to have rigs powerful enough to actually be quick enough to mine a block, but that’s not where the real competition lies. Where does the real competition lie?

Transaction fees.

Instead of miners competing with one another for transactions, the end users are competing with one another to get their transactions processed in a decent timeframe, and sometimes just to get them processed at all. The Bitcoin network already slows down during periods of high congestion, and transaction fees increase to absurd degrees. I’ve seen 1500 Satoshis per byte. So if the Bitcoin network is going to slow down either way, why are we paying these ridiculous fees?

Let’s be clear about something. Miners want higher fees. Of course they do! Why wouldn’t they?

But here’s the snag: higher fees encourage holding and strongly discourage spending or moving. This destroys Bitcoin’s viability as a currency. It has become an asset. It has become a stock, not just in the eyes of the masses who hungrily lick their lips at “all the money” they didn’t make, but to the Bitcoin miners as well, and, evidently, to most of the powers that be in the Bitcoin community. SegWit was a not-very-good idea on its own, but S2X had merit for the 2X part, but the whole thing crumbled. Why? Because miners began pulling out. Why did they pull out? Because the show was over, they could do so without losing face publicly, and they didn’t like the idea of doing twice the work for the same amount of money.

We have to be honest about this stuff and what’s actually happening in the Bitcoin world. The existence of the block definition has created a price floor and a bottleneck. Widening this bottleneck failed, but wasn’t ever going to work out in the long-run anyway. It has pitted you and me against one another to get our transactions processed, instead of pitting miners against one another to be the first to process our transactions. It has become entirely backward.

Bitcoin exists now for the miners, and only for the miners.

Well, and for the people who want it to be an asset instead of a currency.

But it doesn’t exist for you and me.

Valve, perhaps the most benign and progressive company that ever existed (seriously, Valve has quite a culture), has dropped support for Bitcoin at a time when Bitcoin needs to be getting more companies to support it. But it is going the opposite direction. Hint, hint, people.

Remove the blocksize definition from Bitcoin entirely. Let the miners fight over our transactions. Don’t let us fight over the miners. Bitcoin must exist for us, not for the miners. It’s already set on the wrong path. And there’s so much money at stake that I sincerely doubt it can be changed. But if Bitcoin is to survive, it has to change.

it cannot be stated too many times:

Miners should be competing with one another to get to our transactions first; we should not be competing with one another to get to the miners first.

The block size definition is what has created this bottlenecked mess.

This article not bought and paid for by Peter Ver. I dare people who parrot such nonsense to dispute anything I said.

 

Cryptocurrency Check & the Bitcoin Silver Scam

After bitching repeatedly about how other people need to do something to help protect consumers from shitcoins and scamcoins before too many ICOs run off with people’s money (and seeing Bitcoin Silver do exactly that), I laid out a plan and got to work on Cryptocurrency Check / Crypto Check. I prefer CryptoCheck, which is the name I went with on Facebook (although the page URL is https://facebook.com/cryptocurrencycheck ). The website URL is https://cryptocurrencycheck.org.

What is this for?

There are a lot of scamcoins and shitcoins out there, and, as I detailed at length in my previous post, these pose a serious risk to the type of consumer that doesn’t look into things much before they buy them. I’m well aware that this won’t change simply because there’s a Wiki that explains cryptocurrencies in terms that ordinary people can understand, and if they’re not inclined to Google something before they drop $5,000 on it, then they won’t find my new project in the first place (note: I’m looking for help, because this is a massive undertaking). However, maybe we can get to a point where ICOs have “CryptoCheck Approved!” on their websites before they go live. Maybe we can get to a point where people responding to ICO news with “This ICO is marked as a scam by CryptoCheck” will prevent these ICOs from gaining traction in the first place. These people do it because there’s money in it. Bitcoin Silver ran off with nearly 400 ETH this month, and there is no indication that people who gave them Ethereum will ever see that money again.

I want the site to be useful. To that end, the main page features a list of currencies already investigated. As you see, I’ve yet to do Bitcoin, Bitcoin Cash, Ethereum, Litecoin, Dogecoin, Ripple, DASH, Bitcoin Gold, and countless others. This truly is a massive undertaking, because it involves actual investigation. At the very least, the whitepaper has to be examined, carefully inspected, and judged impartially. The website has to be inspected and investigated. The developers, if possible, have to be reached out to. And then they have to convince me that it’s not a scamcoin or shitcoin. I haven’t even defined on the site yet what “scamcoin” and “shitcoin” mean, because there’s so much to be done. I’m working on it, though, as you can see on the site. Not all of the links are dead! lol

I want an ICO to be announced and to have people across the world immediately tag CryptoCheck to look into it, and I want people saying “I’m not giving you guys a single Satoshi until you’ve been cleared by CryptoCheck.” And I want CryptoCheck to have a sterling reputation for being reliable, fair, honest, and diligent–and for erring on the consumers’ side when we make mistakes. Because “scamcoin” and “shitcoin” are judgement calls–this is stated on the site. It’s something you can only decide after digging deep into the currency and getting a feel for what you’ve learned. It’s an art, not a science, and there will be mistakes. But my goal is to protect consumers. I do not care one tiny bit if we cost a legitimate ICO 1,270 Ethereum in investors.

One too many cries of “We sank our life savings into something that turned out to be a scam!” will get the government involved, and everyone will suffer for it. We can say until we’re blue in the face “Caveat emptor, dude, you should look into things before buying them lol,” but it won’t stop the government from getting involved. Nor will it do anything to get people to start looking into things. We have to be more responsible. That starts with CryptoCheck and things like it. We already know that some people out there will blithely walk right into a scam.

And the other thing?

The site has two purposes wrapped up in one larger purpose. The larger purpose is to help and protect the masses in regard to cryptocurrencies. This is not limited to simply checking out potential scams. That’s not the biggest problem confronting cryptos today. No, today the biggest problem is a reckless overabundance of jargon, technical bullshit, and complexity that serves only to intimidate people and keep them from getting involved. The premier website for all things Bitcoin, https://bitcoin.com, has fallen into this; in a recent article, they repeatedly referred to Bitcoin as “segwit.” This is not only unclear, unhelpful, and inaccurate, it’s intimidating to people who would otherwise make their first Bitcoin purchase, because no matter how hard they look, they won’t find “Segwit” listed on any exchange, and Bitcoin.com knows this. This is nothing more than a continuation of their insistence that “Bitcoin Cash is the real Bitcoin,” which evidently leaves them unable to simply call Bitcoin “Bitcoin.”

That sort of thing isn’t helping. It’s hurting. If people Google “Bitcoin,” they will almost certainly land on Bitcoin.com, where they will be treated to confusing articles and technical jargon, none of which makes sense to a person who isn’t already knowledgeable about Bitcoin, and the only explanation is buried deep in the archives from several weeks ago. It’s an absolute disgrace, and they should collectively be ashamed of themselves for fostering confusion and intentionally raising the barrier of entry to keep people out of cryptocurrencies.

This past week on “The Call to Freedom,” we had on Peter Ver (we also had on Janko33, a developer of Blackcoin), who alleged that the Bitcoin Core team is actively trying to kill Bitcoin. That may be, but so is he, whether he means to be or not. Raising the barrier of how much knowledge is needed to enter the cryptocurrency market means demand will not increase, and this was his camp’s side sowing this confusion.

Nothing is ever presented in plain language for ordinary people to understand. They don’t really need to know about Byzantine Fault Tolerances, you know? They don’t care about that, and such language will only chase them away. They need to know why cryptos are safe, secure, and reliable. They don’t need to know why you think cryptocurrencies are revolutionizing the world. They need it explained to them in terms they understand.

It’s not because they’re stupid that people need the technical bullshit ignored in favor of realistic, ordinary terminology that they actually understand. It’s because they’re unfamiliar with the subject, terminology, and (often) technology. The only context they have for understanding what a “wallet” is… is the leather thing they fold and put in their purse or pocket. So when you talk about “wallet addresses,” you lose them. Their wallet doesn’t have an address. “Its address is my back pocket!” they might say, roll their eyes at the absurdity and unfamiliarity of what you’re saying, and walk away from cryptocurrencies. Explaining crypto wallets with the analogy of a debit card, with the card number being the Public Key and the PIN being the Private Key, will make infinitely more sense to them (and it will actually be more accurate, since crypto wallets don’t actually hold any currency–they just access the places where that currency is held). They understand a wallet as something they take out of their pocket, put money in, and put back into their pocket. Tell them to download a wallet, and they’re smart enough to extrapolate the basic idea (it will be something that holds money), but they’ll misinterpret and misunderstand, coming to the conclusion that the software on their phone or PC actually contains their money.

As a culture, we don’t want this. I promise you that we don’t want this. Those trying to overcomplicate the matter and keep it so technically confusing that laypeople can’t enter do not have cryptocurrency’s best interests at heart; they are more concerned with their ego and their feeling of how much smarter they are than everyone else. We have to fight this culture of arrogant elitism if we want mass adoption, and that means putting an end to the unnecessary jargon and the intentional overcomplication and obfuscation.

Bitcoin Silver

If you take nothing else away from this article, let it be that Bitcoin Silver is a scam. If anyone offers to sell it to you, do not accept it. For one, they will probably never actually have the tokens. The last thing we’ve heard from Bitcoin Silver is that the ICO is “ending soon.” It ended 3 days ago. Their Twitter account did not announce the end of the sale, which is a concern since their Ethereum addresses are still active and accepting coinage. Compare that to Airswap, who regularly communicated with users during their ICO, used an automated system to accept payments that rejected payments outside of the allotted times, and announced the end of each sale on Twitter. These unnamed, mysterious people responsible for Bitcoin Silver almost certainly took the 390 Ethereum they made and ran. They didn’t even bother to announce the end of the ICO, for fuck’s sake.

And look at them contradicting their own whitepaper right here:

But Bitcoin Silver isn’t what motivated me to make the site. I’ve been going on about this problem for weeks, if not months, and laying the responsibility on Jaxx and Coinomi to fix. That’s true–they certainly should do more to fix it. But I can do something, too. There is a Blackcoin QR on the main page (it’ll be buried in the site in a few days), and the site will only ever accept Blackcoin, because it has the lowest fees of all the respectable coins. Why Jimmy Wales needs millions of dollars to operate Wikipedia is anyone’s guess. I need I think $9 a month. But I’ll pay that myself as long as I have to, because this is something that needs to be done. Information about all of these coins needs to be in one place. A Cryptocurrency Users’ Guide, if you will. A catalogue, perhaps. What is the word I’m looking for? A Buyers’ Guide. There we go.

Needing Help

I’m looking for help, but not employees. All work will be voluntary, and not paid. Maybe one day CryptoCheck will have the resources to pay people, but that day isn’t today. But if you believe in the ideas I’ve outlined, help me do it. Get in touch with me at aria@cryptocurrencycheck.org or aria@anarchistshemale.com. They both go to the same place, so it doesn’t matter which you use. Cryptocurrency is what WE make it. So let’s make it something awesome.