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Drivechain developer Paul Sztorc has the cryptocurrency community riled up over his latest blog “Security Budget in the Long Run.” The essay discusses the economics of BTC network fees over a long period of time and suggests rather than giving up the fees to competition, a dominant protocol should collect fees “from all networks.”
Unraveling Bitcoin’s Security Budget
Paul Sztorc has written another thought-provoking essay that has got many of the ‘bitcoin intellectuals’ talking. “Security Budget in the Long Run” speaks on how BTC could theoretically collect fees after many decades. Sztorc refers to this as the “security budget,” which is basically what participants are paying in order to prevent double spends and 51 percent attacks. Over the last few years during the scaling debate, many industry members showed concern about the block subsidy i.e the freshly minted coins and transaction fees miners get when they randomly find a block. A block needs to be instantly profitable to mine and Sztorc believes the block subsidy will continue to give the network more security in the future.
“Even though it “halves” once every four years (effectively falling by a factor of 0.84 per year), it hits for full force no matter how high the BTC exchange rate climbs,” Sztorc’s paper explains. “As long as annual appreciation 19%+, it fully compensates for the PP lost to the halvening.”
Sztorc then discussed the various theories people have used in the past, in order to describe what will offset the block subsidy when the block reward shrinks to zero. Many believe a relatively high fee market is needed for onchain transactions (txn) and most people wanting txn with cheaper fees will use the Lightning Network. For instance, Sztorc quotes the Bitcoin Core developer Greg Maxwell and other crypto luminaries for championing high fees back in 2017. The paper also underscores the rise of altcoins grabbing far more attention after BTC network fees crossed over $ 1 per txn and continued to rise.
“Furthermore, this (true) premise — that Altcoin-payments are indeed substitutes for Bitcoin-payments — is occasionally explicitly admitted, even by hardcore maximalists — Especially during the last fee run-up in late 2017,” Sztorc’s paper details.
The essay further states:
To me, this data refutes the theory that users will pay high BTC fees willingly. In fact, they seem to have only ever paid high fees unwillingly — during a brief “bubble” time (of relative panic and FOMO).
Lightning and Alternative Fee Sources
The blockchain researcher further digresses into theories of onboarding users onto the Lightning Network (LN) and the protocol’s theoretical alternative fee sources. Sztorc says that if the LN is successful then many transactions can be crammed into two onchain transactions. However, Sztorc has a hard time understanding how the LN will boost fees and guesses that they “cannot realistically increase by more than two orders of magnitude.” After detailing theories people have on how the LN can create a thriving economic system, Sztorc’s new paper details that he doesn’t have much faith in the user experience.
“LN also comes with new risks — the LN-design is very clever at minimizing these risks, but they are still there and will still be annoying to users,” Sztorc notes. “Users will prefer not to put up with them — So they will tend to prefer an Altcoin on-chain-txn over a mainchain-LN-txn.”
Merged Mining and Sidechains
Sztorc concludes his paper by discussing two of his favorite subjects — merged mining and sidechains. Essentially the programmer says merge mined sidechains can do whatever altcoins can do and then some. Concepts like Drivechain could theoretically create large block sidechains that process millions of transactions per day. Sztorc’s paper says the Bitcoin network needs a high-security budget in order to prevent 51 percent attacks. In a sense, alternative chains will subdue the chances of a market-clearing fee rate, especially when higher fees begin to dominate and start showing signs of time dependency. Sztorc’s paper emphasizes how competition will make it difficult for BTC to collect miner fees and instead every network in existence should be a subsidy for BTC.
“A better way, is to attempt to devour the entire payments market and claim all of its fee revenues,” Sztorc concedes. “This can be done using merge mined Sidechains, without any decentralization loss.”
Of course, not everyone agreed with Sztorc’s assessment concerning long term security for the BTC network. After the founder of Coinmetrics, Nic Carter called the paper a “stunner” and “outstanding as usual,” many other developers and crypto luminaries threw in their two cents. BTC developer Eric Lombrozo said the essay was a “good read” but is “still very concerned about the economics of sidechains remaining viable unless we substantially alter the trust model.”
A few bitcoiners responding were very stubborn, wholeheartedly insisting that a relatively high fee market is necessary to subsidize miners and higher fees will also mean BTC is successful. Veteran cryptographer Nick Szabo emphasized that he believes there are a few “bad assumptions” in Sztorc’s post. Szabo detailed that he has only seen one good argument for security under a transaction fee-only system. “That’s the volatility of fees, which seem to behave nonlinearly as blocks become full,” explained Szabo.
The many responses to Sztorc’s paper underlined the fact that BTC developers and maximalist proponents are still dead set on growing the fee market and LN solutions. It doesn’t seem like merged mined sidechains will be accepted anytime soon, unless it is enforced in a permissionless manner. Currently, a few alternative chains piggyback off of BTC in some form or another like Counterparty, Omnilayer, RSK, and Veriblock and there are more projects like the Stacks blockchain on the horizon. Core developers have been stubborn about Drivechain for quite some time and the issues stem from a deep distrust of miners. This is ironic given that their work is what secures the network and defines Nakamoto consensus.
What do you think about Paul Sztorc’s post concerning block subsidy and BTC’s security over the long run? Let us know in the comments section below.
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The post Drivechain Creator’s Latest Paper Sparks Debate Over Bitcoin’s Future Security appeared first on Bitcoin News.
21 is a number that holds deep symbology to bitcoiners. In addition to denoting the total number of bitcoins, in millions, that will ever be issued, it’s inspired scores of cryptocurrency business names, websites, and merchandise designs. Despite its assumed inviolability, some members of the community are opposed to Bitcoin’s rigidly set 21 million supply. If they have their way, that arbitrary cap will be lifted. For many devout bitcoiners, this suggestion is sacrilegious.
Bitcoin’s Fixed Supply – Arbitrary or Mandatory?
At a “Satoshi’s Roundtable” event last week, decried by some as Bitcoin’s very own version of Bilderberg, the prospect of raising BTC’s 21 million cap was raised. It was Matt Luongo who floated the proposal, in response to a discussion about anticipated adoption of the Lightning Network (LN). With the block reward halving every four years, and onchain transaction volume likely to be low in future should LN take off, there will be little incentive for miners to secure the network. This could lead to it being vulnerable to 51 percent attacks that would undo the trust instilled in the Bitcoin network over many years.
An argument has also been made for increasing the 21 million supply of Bitcoin Cash in future, on similar grounds. Due to the network’s low fees, miners would theoretically have little economic incentive to secure the network once the block reward diminishes.
I was the guy that said we might have to one day raise the Bitcoin supply cap. Fight me. https://t.co/ysqHHdcggf
— Matt Luongo (@mhluongo) February 4, 2019
Luongo’s suggestion of raising BTC’s total supply is intended to incentivize mining in a future of minimal block rewards and minimal onchain volume. While there may be an economic and security case for doing so, it is a matter that resonates strongly – even emotionally – with a sizeable portion of the Bitcoin community. There are also those who are motivated by purely financial reasons. The fact that there will never be more than 21 million bitcoins is what gives the currency its digital scarcity. Raising the fixed cap, even by a fraction, could dilute the value of everyone’s holdings, it is feared, and consign BTC to the status of an EOS-style inflationary cryptocurrency.
A Controversial Proposal That’s Sparked Intense Debate
Numerous Bitcoin luminaries have waded into the debate regarding Bitcoin’s supply following the Satoshi’s Roundtable discussion. Nick Szabo insisted that decreased hash power due to lower mining rewards would not have a significant impact on security, but conceded that “it may require recipients of very-high-value transactions to wait more blocks before relying on them.” Cobra Bitcoin took a more combative approach, tweeting “There will only ever be 21 million bitcoins. If you have a problem with that, get the fuck out of our community because you aren’t welcome.” To this, Matt Luongo responded:
This stuff has to work … If the stars align and this becomes an issue do you sacrifice a core tenet of the community or the entire security of the chain?
It is not entirely known why Satoshi chose 21 million as the number of coins to be issued, though it is speculated that this ties in with the halving reward schedule that occurs every four years. Alternatively, it could be because the total number of sats that will ever be created approximately mirrors the maximum capacity of a 64-bit floating point number.
Given that there was no mention of Bitcoin’s proposed supply in Satoshi’s seminal whitepaper, perhaps the number itself was never particularly significant to him. Whatever the case, 21 million has come to be one of Bitcoin’s defining features, and any attempt to meddle with the magic number is liable to be treated as heresy. Future generations of bitcoiners may be more receptive to raising the supply, but in the here and now, that notion seems untenable.
Do you think Bitcoin’s supply should ever be increased? Let us know in the comments section below.
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The post Proposal to Increase Bitcoin’s 21 Million Supply Sparks Debate appeared first on Bitcoin News.
The government of Emmanuel Macron kicked off a “great national debate” intended to channel the anger of the “yellow-vest” protest movement and shield the French president’s pro-business agenda.
WSJ.com: What’s News Europe
Over the last few months, there’s been a lot of discussion about the company Ripple Labs and the digital token XRP. A recently published report on the market valuation of XRP, authored by the cryptocurrency data startup Messari, has caused quite a stir among the community. After Messari’s founder Ryan Selkis shared an article concerning the XRP study, he claims someone called his phone and harassed him.
High up Ripple Community Members and Executives Asked to Denounce Harassment
If you’ve been involved in the cryptocurrency scene on social media or forums, you probably noticed the intense debate between XRP proponents and other digital currency communities. There have been many fierce arguments in regard to Ripple Labs and XRP’s relationship, the billions of tokens held in escrow, and whether or not the network even deserves to be called a “blockchain.” Moreover, XRP has done well, as far as fiat value is concerned and has garnered a lot of attention and supporters over the last two years. More recently, however, there have been talks about a group of proponents the community has dubbed the “XRP army” and if someone makes a negative statement about the token, then a swarm of supporters will rebuke the statement and say very negative things about the individual. On Jan. 24, Messari founder Ryan Selkis shared the story about how the cryptocurrency data startup had contested XRP’s market capitalization and he received a lot of backlash on social media.
Many XRP supporters called Messari’s study “FUD” and a Ripple spokesperson said the report had “several inaccurate assumptions.” Selkis says his team sent the entire report to well known Ripple community members and executives in advance and also highlighted things they needed clarity on. Ripple chief executive Brad Garlinghouse also dismissed Messari’s study and asked: “When will media coverage of this industry mature?” However, soon after that, things went from a simple discussion to alleged harassment. According to Selkis, someone called him after the Messari study was published and intimidated him.
“Someone just called me from a Nashville number and recited my wife’s birthday to me — Then hung up — [Brad Garlinghouse] these are the type of animals you and your fucking company enable,” explained Selkis on Twitter.
After Selkis made the statement, a person responded by saying: “FYI Ryan bro, you took the first shots.” Selkis continued by saying he will be getting the FBI involved if there are a total of three harassment calls. Messari’s founder stated:
I want Ripple, [Brad Garlinghouse, Monica Long, Cory Johnson, Joel Katz, and Warren Anderson] to denounce any XRP community threats against my family. I’m going to the FBI and local police after three calls — Ensuring our family doesn’t get swatted.
Community Members Discuss Past Memories of Crypto-Harassment and Threats
The harassment has brought back memories of other cryptocurrency industry members and developers who have also been harassed in the past. The well known bitcoin developer Jeff Garzik had a similar experience when he was the lead maintainer of the Segwit2x project. “This is what happened to me and my family during Segwit2x brouhaha and local police and the FBI were called then, too — There are some sick parts of this community,” Garzik explained on Twitter in response to the statements Selkis made.
In response to Garzik’s tweet, Bitcoin developer Jameson Lopp asked him: “On a scale of 0 to 10 how helpful did you find law enforcement to be?” Lopp was also harassed last year allegedly because of the Segwit2x scaling debate as well. In fact, the developer was “swatted,” an act when someone calls the local swat police to barge down on someone’s home when they haven’t committed a crime. During the early morning hours, Durham, North Carolina police were dispatched to Lopp’s home as they were told there was a hostage situation.
So far there’s been a lot of community response on forums and social media in regard to Selkis telling Ripple executives and developers they should denounce this behavior.
What do you think about the so-called “XRP army” on forums and social media? What do you think about the experience Selkis has had with Ripple’s most faithful proponents? Let us know what you think about this subject in the comments section below.
Image credits: Shutterstock, and Twitter.
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The post ‘XRP Army’ Accused of Harrassment After Intense Debate Over the Token’s Market Cap appeared first on Bitcoin News.
Thousands of protesters took to the streets across France on Saturday for the 10th consecutive weekend of demonstrations, despite efforts by President Emmanuel Macron to channel yellow-vest anger through public debates over the next two months.
WSJ.com: What’s News Europe
Tucker Carlson: Beto O’Rourke isn’t into details in the immigration debate. But he knows walls are ‘bad’January 17, 2019 | dailybusinessnews
Tucker Carlson: Beto O’Rourke isn’t into details. He’s into big ideas.
GOP’s Steve Scalise shuts down Twitter debate on taxes with Ocasio-Cortez after ‘radical followers’ allude to Virginia shootingJanuary 6, 2019 | dailybusinessnews
U.S. Rep. Steve Scalise, R-La., abruptly ended a Twitter debate with newcomer Democrat Alexandria Ocasio-Cortez of New York early Sunday after at least three commenters made references to the June 2017 shooting in which Scalise and three other people were shot by a left-wing activist.
To kickstart the weekend, we’ve curated a handful of short but compelling stories from across the crypto sphere. First up, we’ll revisit the fallout from Wallet Fail’s demonstration of hardware wallet cracking. We’ll then move on to a Patreon alternative that’s powered by cryptocurrency and a viral tweetstorm about everything that’s allegedly wrong with Ethereum.
More Hardware Wallet Manufacturers Respond to Hacking Claims
As we reported yesterday, a team known as Wallet Fail have captured attention after demonstrating how to crack several cryptocurrency hardware wallets. Ledger and Trezor, the manufacturers whose devices were exploited at the 35C3 conference, were swift to issue rebuttals and reassurances, emphasizing the impracticality of an attacker implementing one of Wallet Fail’s methods in the wild. Since we reported on the story, a number of other hardware wallet companies have also responded to the presentation.
“Keepkey did not have prior knowledge of this vulnerability through our responsible disclosure program,” tweeted the wallet manufacturer, but explained that “The Keepkey dev team is working on a fix.” They then stressed that “all users should make sure their physical device is in a safe place, as the attacker must have physical access to be successful.” Coldcard, meanwhile, pointed out that its own device wasn’t referenced in Wallet Fail’s presentation, and used the opportunity to boast that, unlike the competition, its own wallet doesn’t fail. The Wallet Fail team, for its part, has denied allegations that it didn’t disclose the vulnerabilities it found to manufacturers in advance of its presentation:
— WALLET.FAIL (@walletfail) December 28, 2018
Bitcoin-Based Patreon Alternative Tallycoin Takes Off
In the wake of widespread controversy over Patreon liberally banning content creators, a bitcoin-based alternative has begun to gain traction. Tallycoin takes the model popularized by Patreon and Gofundme and adapts it for P2P cash in the form of BTC. Unlike Patreon, which charges 5 percent, Tallycoin takes zero fees, with all funding going directly to the creator’s bitcoin wallet. Regular BTC and Lightning Network payments are accepted, and while the user interface is simple, the platform demonstrates the potential for a censorship-resistant Patreon alternative.
Tuur Demeester’s Anti-Ethereum Rant Goes Viral
On Friday, prominent bitcoiner Tuur Demeester embarked on a 50-strong Twitter rant about everything he deemed to be wrong with Ethereum. From scaling to decentralization and from use cases to monetary supply, he left no stone unturned, describing the project as “at best a science experiment.” “I agree with Ethereum developer Vlad Zamfir that it’s not money, not safe, and not scalable,” he continued.
1/ People often ask me why I’m so “against” Ethereum. Why do I go out of my way to point out flaws or make analogies that put it in a bad light?
— Tuur Demeester (@TuurDemeester) December 28, 2018
Demonstrating that there are two sides to every tweetstorm, Bryant Eisenbach issued a point-by-point rebuttal of Demeester’s lengthy indictment on Ethereum. While Adamant Capital founder Tuur Demeester’s rant caught plenty of flak from Ethereum proponents, Bitcoin maximalists such as Jimmy Song were swift to endorse his critique. The thread also prompted intense discussion on the Ethereum subreddit where a few feathers were rustled.
Kraken Launches BCH and XRP Margin Trading
Finally, margin trading for bitcoin cash and ripple has been enabled on Kraken. The U.S. cryptocurrency exchange now enables retail and institutional clients to obtain leverage on both coins, with the borrowing limit depending on the level of the account in question. Bitcoin cash can be traded with up to 3x leverage and ripple with 5x.
We have enabled margin trading for Bitcoin Cash (BCH) and Ripple (XRP)! The addition expands our margin offering to 8 assets. Read more on our blog: https://t.co/DSBaMBdOR7
— Kraken Exchange (@krakenfx) December 29, 2018
What are your thoughts on today’s news tidbits as featured in The Daily? Let us know in the comments section below.
Images courtesy of Shutterstock.
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The post The Daily: Wallet Hacking Debate Heats Up, Bitcoin-Based Patreon Alternative Emerges appeared first on Bitcoin News.
Over the last few weeks, the Bitcoin Cash (BCH) community has been discussing how miners and nodes will handle bigger blocks in the future to encourage mass adoption. A company called Bloxroute has been coming up a lot lately, as it aims to resolve the block propagation bottleneck.
Bloxroute Claims It Offers Greater Efficiency
Bloxroute claims it can provide more efficient block propagation for blockchains. The organization has been discussed a lot in the weeks since researchers noted issues with block propagation after the BCH and BSV chains processed a few big blocks. Bloxroute says it supports any blockchain underneath the system by broadcasting block data in the exact same manner for every user in a neutral fashion.
“In particular, Bloxroute propagates blocks without knowledge of the transactions they contain, their number, and the ‘wallets’ or addresses involved. Miners are free to include arbitrary transactions in a block,” the Bloxroute whitepaper explains. “Furthermore, Bloxroute cannot infer the above characteristics even when colluding with other nodes, or by analyzing blocks’ timing and size — Bloxroute cannot favor specific nodes by providing them blocks ahead of others, and cannot prevent any node from joining the system and utilizing it.”
Noticing Block Propagation Difficulties
Big blocks have been a topic of intense discussion over the last few weeks, especially within the Bitcoin Cash community. The week before the Nov. 15 hard fork, a few sizable blocks were processed on the BCH chain, including numerous 32MB blocks. After the blockchain split, BSV miners processed a 64MB block, marking the largest onchain block ever mined on a blockchain. However, huge blocks that have been mined in the past and blocks above a certain threshold usually have issues propagating across the network. This was noticed by many observers when BMG pool mined a 23.15MB Bitcoin Cash block that took well over an hour to propagate correctly.
“It took 85 minutes to find this block and the mempool was continuously growing at a rate that seems to be close to the limit nodes can accept transactions,” observed Jochen Hoenicke, the cryptocurrency developer otherwise known as “Johoe.”
Researchers noticed these issues when the concession of 32MB blocks was mined on the BCH chain. And the 64MB block found by BSV miners also had significant issues and took an extremely long time to propagate — some believe the BSV stress test pretty much DDoSed the nascent network. Another recent post on r/BTC explains how the BSV chain is showing issues with stuck Child-Pays-for-Parent (CPFP) transactions.
Hash War Winners or ‘Bloody Socialists’?
Since these issues started appearing, Bloxroute has come up more and more in the block size debate among people like Cornell University professor Emin Gün Sirer and Nchain’s chief scientist, Craig Wright. For instance, Gün Sirer told his Twitter followers on Nov. 23 that the hash war had shown that Bloxroute is an interesting protocol.
“The big winner in the hash war was, oddly, Bloxroute Labs. Coingeek demonstrated the importance of block propagation by accidentally selfish mining themselves. Anyone building high-performance blockchains needs to pay attention to the kind of things Bloxroute focuses on,” he said.
However, Wright and supporters of BSV don’t seem to see many benefits with Bloxroute’s technology. “[Bloxroute] will never see the light of day with SV. In Bitcoin … miners vote and miners can choose to orphan blocks,” Wright recently detailed to his Twitter followers. “Basically, this is the complete opposite of everything Bitcoin is about. And it also does not work.”
In another tweet, Wright claimed that Bloxroute proponents are “bloody socialists” and if miners cannot vote they are “neutered.” He continued by stating:
It is not scaling, it is removing miners from having a say.
Whether or not people agree with Bloxroute’s business model, its success or failure will be decided by the free market. If blockchain developers find use cases with this kind of system, it could theoretically thrive or simply introduce more problems. But no one can stop Bloxroute, as it’s free to provide these types of services in a permissionless fashion.
Uri Klarman, CEO of Bloxroute Labs, responded to Gün Sirer’s statements on Nov. 25, after the BSV chain had processed some larger blocks.
“Here’s why Bloxroute Labs is the big winner of the hash war: *Any* blockchain doing large blocks needs them to quickly reach other miners. Otherwise, they will mine empty blocks based on header and forks (orphans) — BSV just showed 30MB block take 20 minutes since they lack layer 0,” Klarman said.
What do you think about the Bloxroute protocol and business model? Let us know in the comments section below.
Images via Shutterstock, Bloxroute Labs, Twitter, and Pixabay.
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The post Bloxroute Joins the Block Size Debate With New Block Propagation Service appeared first on Bitcoin News.
A teenage boy has died after being knocked unconscious during a Thai kickboxing match on Saturday, according to a local police source.
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