Tag Archive | cryptos

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.

 

How Coinbase is Saving the Crypto Market

People like to talk shit about Coinbase. And, in a lot of ways, I get it. They certainly didn’t make it easy for people to retrieve their Bitcoin Cash (much less Bitcoin Gold–which may not be retrievable at all), but at least they’ve done better on that front than Jaxx. But there’s more to it than that. There’s also some elitism, which I also get. I have the same elitism, as a tech person, toward Apple users in general, but especially people with iPhones. I refused to watch Rick & Morty for a long time, simply because it was popular. And people who played Final Fantasy XI absolutely hated World of Warcraft players. There’s this whole “Our thing is more complex and cool than your thing. Our thing is for the hardcore, freaking noobs!” aspect to it. Then there’s the fact that Coinbase holds onto your private keys, but the only people who care about this also know how easy it is to get around–simply send the cryptos to another wallet.

A lot of these types would deny that Coinbase is doing anything good, despite how they are attempting to stand up to the IRS to protect their users from invasion by government goons. The government, predictably, doesn’t like that it has no idea who has crypto and who doesn’t, and the best way to find out that info is to break into Coinbase’s vault, steal their records, and create a database of known crypto users to watch. They’re actively attempting to do this, and Coinbase is attempting to stop it. If I was CEO, I would be preparing to close my U.S. operations and permanently wipe all our data before the U.S. government could get their hands on it. Coinbase is also attempting to bring in huge investors–people who would be dropping millions at a time on crypto purchases, and Coinbase has a phenomenal track record of security and protection.

But there’s one other thing they do that they’re often criticized for, when, in reality, it’s the best thing that they do:

Coinbase is notoriously unwilling to put new coins on its store.

This draws the ire of people who love Ethereum and the seventy-six million different bullshit Ethereum tokens available. I could create an Ethereum token right now if I cared to, and it costs almost nothing to do. Ethereum is a good idea, but there’s no gatekeeper to it, and anyone with a half-baked idea can create an Ethereum token, get some momentum going for it, and land it under dApps in Coinomi’s Ethereum wallet. If that wasn’t enough, there are thousands of entire cryptocurrencies that use their own blockchain and programming, some of them ridiculously niche and with less-than-half-baked concepts behind them.

Take Potcoin, for example. It’s a standard proof-of-stake coin long after Blackcoin proved that Proof of Stake is viable. So what is it? It’s a cryptocurrency that is essentially riding on the fact that it has “pot” in the name to be successful. It wants to be the primary payment method for the legal marijuana industry.

That’s stupid, and the exact opposite of what currencies are supposed to do. An Ethereum token would have been more suitable for this, but no. They went and created a currency. I don’t like the token idea anyway. I’ve long ripped into gaming companies like Microsoft and Nintendo for making you buy 800 Microsoft Points to buy a $10 game, instead of just buying the $10 game. They do this because they sell Microsoft Points in uneven packs. Maybe 1000 or 2000. The goal is for the person to have some “points” left over that are too small in quantity to use, forcing them to either pay more money to bring them up to a usable quantity (there’s nothing on the Microsoft Store for 100 points, after all), or to abandon the remainders as lost forever. This is an insidious way of charging people an extra $2 or $3 here or there, without their realizing it and without their noticing it. It’s a way of nickel and diming customers to death, and gaming companies are really nickel and diming their customers these days, with pre-orders, season passes, digital deluxe editions, Complete Editions, Definitive Editions, Collections, remakes, rereleases, and shitloads of DLC, not all of which is even covered by the season pass that players stupidly pay $30 for. But anyway.

So what they want to do, in effect, is bring that business model to the marijuana industry. There’s no other way to put it. That’s precisely what they want to do. They want to create “tokens” that customers have to use to buy pot. And since it’s Proof of Stake and they’re certainly holding half of that stake, every single purchase gets them more tokens–not to mention often leaving customers with quantities of tokens that can’t be used, just like Microsoft, Sony, and Nintendo do. We’ve been down this game before. I play the browser-based game Tribal Wars, and it does exactly the same thing. Due to selling some in-game resources, I ended up with 5 Premium Points that were utterly unusable. This is by design. It is a principle that is built into such systems. They don’t care if you have 0.0002 tokens that you will never, ever be able to use. Actually, they do care, and they want you to end up in that position. Because that’s free money for them.

There are tons of these currencies. Potcoin is just the most obvious example, by trying to frame itself as a token when it’s defined as a currency, setting such a horrifically stupid role for itself, and calling itself “potcoin” on the hope that the stoner crypto people will go “Hur hurr hurr, I want to hold some potcoin! yeah! Pot is awesome!”

There remain to this day people who think the Tool song “The Pot” is about marijuana. In fact, it’s a reference to “the pot calling the kettle black.” Maynard did this on purpose, of course, using lyrics like “You must have been high” throughout the song. For whatever reason, “pot” is a word that gets people to love the thing, presumably still in that high school mentality where it’s cool to be dumb and nothing is cooler than pot.

Let me just whip up Coinomi and look at random coins that I know nothing about:

  • Bitsend
  • Belacoin
  • Britcoin
  • Canada eCoin
  • Cannacoin (with a pot leaf as its logo, naturally–good, we certainly needed two marijuana coins)
  • Digibyte
  • Digitalcoin
  • EDRCoin
  • Feathercoin
  • GCRCoin
  • Hempcoin (ooh, THREE of them!…

You know, finding the third mariuana cryptocurrency just proves my point better than anything I could write, and I don’t think I’m even running the latest version of Coinomi on the phone I’m looking at. This is a disaster waiting to happen. It is classic market oversaturation. We need only look to 1983 and the video game crash of the same year to see exactly how this plays out.

If I cited your coin as a shitcoin above and you feel that this is in error, reach out to me at aria@anarchistshemale.com, and I’ll interview you for my new show, No Gods, No Masters, and we can clear the air. However, the odds are against you. However much you might think otherwise, chances are that yours is a shitcoin. I excuse Blackcoin only because it’s the world’s first 100% Proof of Stake coin, and it has been around now for nearly 4 years. I’ll be surprised if half of these are still here four years from now.

Video game makers and console manufacturers of the 80s did nothing to protect their hardware or their software, which I’m okay with them doing as long as there are no laws against piracy. They have every right to attempt to protect their products from being copied. But we have every right to attempt to bypass that protection. Anyway, what followed was predictable. People began releasing clones of clones of clones of clones of inferior games, and the market was flooded with Pak-Man, Tax Man, Pac-Man, Capman, APacman, and so on, and, in a lot of cases, consumers didn’t know the difference. Like an average person looking at Bitcoin, Bitcoin Cash, Bitsend, Bitcoinplus, Bitcoin Gold, and Bitcore. It confuses them, and I have to think some of this is intentional.

A flood of overhyped, bullshit games called E.T.: The Extra Terrestrial finally broke the camel’s back, but it was a long series of abuses and shitty products that led up to that. Consumers had simply had enough by the time Atari showed its own abject disdain for consumers by releasing that ungodly abomination as a completed game. By that point, they’d already been ripped off by Protector, which was a ripoff of Helper Jet, which was a ripoff of Laser Ship, was a ripoff of Defender. The consumer had already lost hundreds buying shitty games, and the overhyped E.T. was simply the last one–pretty much because it was so hyped (much like Bitcoin is becoming).

Everyday I see ads for “Don’t buy Bitcoin! Look at these 5 cryptos that are certain to pass Bitcoin!!!!!!11!11” bullshit. Have you been to Novacoin lately? They’re closing, but there seemed like thousands of freaking coins on that site, almost all of them junk. You could even see people in the chatroom call them out for being junk and scams. Novacoin and Coinomi’s standards are way too low, evidently.

Coinbase, thank goodness, is acting as the Nintendo of cryptocurrencies. They have tight and rigid standards for cryptos and whether they will or won’t add them, and we should all be on our knees thanking them for this. If Joe Plumber decides he wants to see what “all that thar Bittlecoon stuff is about,” he’s going to google it, and he’ll almost certainly end up on Coinbase. There, he will be introduced to three safe, secure, reliable, non-scam coins: Bitcoin, Ethereum, and Litecoin, in a safe and relatively risk-free environment. He won’t be flooded with a hundred different cryptocurrencies and left feeling like an idiot who picks one at random because he doesn’t want to feel like an idiot and wants to feel like he knows what he’s doing. He’ll see three.

Odds are, he won’t ever hear the words “Hempcoin” or “Belacoin” or “Cannacoin,” and thank God for that. Because most of these shitcoins are going to go under within a year or two, and do you know what would happen if the masses of people poured their money into these shitcoins, and then had the shitcoins vanish?

That’s right: a crash. And an enormous one.

In fact, due to Coinomi, Jaxx, Novacoin, Kraken, etc.’s looser standards, a crash is inevitable. Coinbase is merely delaying it. They can’t prevent it entirely, not when so many people want to create shitcoins that serve no purpose except to scam people out of money and then fade into oblivion because they never had more than a half-baked idea in the first place.

I’m not saying people who genuinely believe in Hempcoin shouldn’t be able to get it, and shouldn’t be able to store it in a wallet. Obviously, I’m not saying that. But I’m saying until your shitcoin has truly proven itself–I’d say that 2 years of survival should be the bare minimum requirement–you should be stuck using a coin-specific wallet.

Oh, look. Orangecoin no longer exists. I’m so surprised.

Buying shitcoins like Orangecoin and Hempcoin simply shouldn’t be so easy that stupid and careless people can do it accidentally. Careless and stupid people exist. We know they do. And if we don’t want government to step in and protect them from the consequences of being careless and stupid, then it’s on us to do so. It’s on Coinbase, Coinomi, Kraken, Novacoin, and Jaxx to do, and Coinbase is the only one stepping up to do it. I’m not saying bail people out. And I’m damned sure not saying let government get involved. In fact, I want you people (whoever is out there making bullshit currencies and bullshit ethereum tokens) to stop doing it so that the government doesn’t get involved. They will. They’ve done it before, man. And “Wah! We lost our money because we couldn’t be bothered to do any research before dropping our life savings into something!” has always been the excuse used for government power grabs. You think they won’t crush Coinbase if they get a good enough excuse? This is stuff that we can’t afford, in the long-run, to allow to happen.

We have to stop this. We have to prevent the crash. This means you, jackasses who made Britcoin, jackasses who made Putincoin, jackasses who made three separate marijuana coins. If you don’t have the self-restraint to not serve out bullshit, then Coinomi, Jaxx, et al. will have to step up and stop you. We need them to, and we need you to go away. And we need to be thankful that Coinbase’s extreme reluctance to add new coins is keeping cryptos accessible and relatively safe for the masses. Because if the ordinary person was presented with Coinomi’s massive list of coins the first time they went to purchase, we’d already have experienced the crash by now.