Quote from: Witrebel on December 18, 2017, 09:30:59 PM

Quote from: nullius on December 18, 2017, 05:52:52 PM

you yourself create them by hooking your gold storage wallet into a payment channel.
They require no trust, and impose no counterparty risk.
They are mathematically verifiable to represent actual gold; they are not promises to pay gold;
they can be magically transformed back into gold at any time, whenever you wish to do so.

These claims are the exact issue I need to research to gain technical understanding. Specifically, trustlessness and mathematically verifiable.

For a good overview, please see the Lightning Network whitepaper (PDF).

The security of Lightning relies on the property that in the event of any disagreement between transacting parties, either party can slam the payment channel closed by committing its current state to the blockchain. The blockchain has the final word; parties always have instantly available recourse to the blockchain; thus, the system is trustlessness. While the channel is open, it allows the parties to cooperatively keep a private ledger of their own transactions with each other (including transactions being routed on another partys behalf, from another channel).

Imagine that you and I kept a pen-and-paper accounting ledger of our Bitcoin-denominated transactions with each otherbut the ledger has the magic property that after every mutually agreed update thereof, each of us has the right bits to claim our coins on the blockchain. Thats Lightning, in a nutshell.

Quote from: Witrebel on December 18, 2017, 09:30:59 PM

Quote from: nullius on December 18, 2017, 05:52:52 PM

In your opinion, are people who use these exchanges right now really [using] Bitcoin? My opinion is, not reallynot in the fullest sense; though they can still transact in actual Bitcoin with people who really use Bitcoin per the motto, be your own bank. At least they can, if the bank deigns to so permit. I hear that Coinbase closes the accounts of people who send to or receive from addresses disliked by Coinbase.

We agree that these people are not REALLY using bitcoin. Are they doing so because they are noobs and not up to speed on best practices in crypto? Are they aware of Mt. Gox but simply trust coinbase because they are FDIC insured on the USD side? Maybe they are just in it for the speculative gains and not for the underlying tech. Or perhaps they are sensitive to the friction of on chain transaction and require more liquidity. Either way, they will need a good alternative. Perhaps the alternative is off-chain scaling.

I hate to break it to you, but the vast majority of ostensible humans are actually mewling ovine anthropoids who couldnt care less about freedom, privacy, security, self-empowerment, or being your own bank. Their very noblest aspiration is to be kept warm, well-fed, and above all, entertained. N.b. use of the passive, to be kept.

To illustrate, I distill here the essence of a conversation I once had with a person of far above-average intelligenceactually, a man with a science Ph.D.:

Bitcoin gives you ultimate power over yourself, and ultimate responsibility for yourself. Of course, these two principles are inseparable. You need no ones permission to use the system. Nobody can freeze or seize your coins. If you mess up and lose your private keys, there is no higher authority with an override switch.

(I pause, awaiting the response of being impressed.)

So if I lose it, its gone?

Yes. Bitcoin has no mercy. It is for smart, responsible people. But care of your coins is not rocket science; you can keep yourself safe with a userfriendly hardware wallet, plus a paper backup of your seed phrase locked in a safe and written into your last will and testament.

If I lose it, its just gone forever? I dont like that.

(Crickets chirping.)

Out of respect for the sacred memory of our prophet Satoshi Nakamoto, I did not mention Coinbase.

Quote from: Witrebel on December 18, 2017, 09:30:59 PM

Specifically, the notion that the original white paper was a concept. A brilliant concept that requires iteration. The store of value vs peer to peer cash identity issue is largely a matter of branding. If we continue to brand Bitcoin as both, we are forced to deliver a solution to the cup of coffee problem that exhibits virtually all characteristics of on chain transacting. If we establish that Bitcoin as it was designed, is truly a settlement layer, we can brand the new layers accordingly.

As a matter of my own original thinking (not anything I read anywhere), I myself have taken to thinking in terms of a Bitcoin ecosystem:

Bitcoin, the Satoshi network, is the foundation.
Bitcoin, the abstract currency unit, is created ex nihilo from within that foundation, secured by it, and ultimately controlled by it.
Bitcoin, the abstract currency unit, can/will also power what I think of as Bitcoin applications on additional layers which build up and outward from the foundation horizontally (sidechains) and vertically (Lightning).

Distinguishing these concepts helps think clearly about the matter. That was off-the-cuff; I should try to draw up a more formalized, more rigorous taxonomy. /* XXX TODO */

Quote from: Witrebel on December 18, 2017, 09:30:59 PM

Quote from: nullius on December 18, 2017, 05:52:52 PM

0. To keep on-chain transaction processing decentralized, outside the control of any person, entity, corporation, cartel, clique, or government. This in turn requires that any person of modest means must be able to run a full node. It is unimportant that the little people be able to use on-chain transactions to buy cups of coffee. It is an imperative absolute rule of Bitcoin that the little people must be empowered to run full nodes. If a full node were to require more resources than can be provided with an ordinary PC and a residential Internet connection, then that would not be Bitcoin anymore.

This is another issue I have yet to fully understand. How much security does a full node truly offer with no hashing power behind it?

There is a common misconception that miners provide the security of the network.

Miners have only and exactly one job: To determine the ordering of transactions in a Byzantine fault-tolerant manner, which in turn solves the double-spend problem. That is a very important job, and also quite resource-intensive; that is why miners get paid for it. Nevertheless, it is only one component in a machine with many moving parts.

You may often hear that miners validate transactions. This is a trivial half-truth: Of course, miners must independently validate transactions so as to reliably produce valid blocks. But miners are not the power responsible for enforcing the validity of transactions across the network. Full nodes do that.

Each and every full node is responsible for validation: Validation of transactions, and also validation of consensus rules. A nodes owner gains additional individual security from independently validating the blockchain; and the network as a whole gains the security of all nodes independently validating the blockchain. Observe how here as everywhere else, Bitcoin aligns the individuals selfish interest with the common interest. A node owner protects the whole network by protecting his own security, first and foremost.

The power of nodes is the reason why many ignorantly-proposed attacks by miners simply would not work. For example, a persistent mendacious bit of FUD against Segwit is the allegation that miners could steal all the funds from Segwit transactions. Well, I guess they could try, by creating a block which says pay me all the money. For that matter, a miner could create a block which pays himself 21 million (or 21 billion) bitcoins ex nihilo. Likewise, a miner could also mine a block filled with gibberish from /dev/random; and any miner could produce a block 8MB or 1GB in size. But these blocks would be invalid, and would thus be rejected by all full nodes. To nodes, it would be as if such blocks do not exist; as far as Bitcoin is concerned, they dont. Miners who tried such nonsense attacks would only be throwing away their hashpower (plus probably getting their IP addresses widely blacklisted).

Contra popular superstition, full nodes do not follow the longest chain. They follow the valid chain with the highest total POW.

SPV clients do almost blindly follow the longest chain, which is why they are vulnerable to being misled onto forkchains (among other nasty attacks).

Quote from: ir.hn on December 19, 2017, 04:52:33 AM

Lets look at that gold analogy some more.

The situation is you have one person hand delivering gold from Rome to Naples. This is bitcoin.

On chain scaling: Person makes the gold into jewelry so they can carry more, they can wear a bunch of chains and wear a bunch of rings etc.

Off chain scaling: The person carries gold IOU's so the gold doesn't actually have to move at all.

Clone scaling: You get 15 people to carry the gold instead of one person.

On-chain transactions are most analogous to physical exchange of bullion (coins and bars), not jewellery. Yes, off-chain transactions are more like gold notesbut magical, trustless notes, as I said!

There is no such thing as clone scaling. Thats more akin to eschewing gold, and using silver instead. Or in this case, brass. I would rather keep and trade my wealth in car wash tokens than in so-called clones; at least, I could get my car clean that way.

Anybody advocating forks, or this clone euphemism therefor, is in need of a dire warning:

I emphasize this, for good reason. I seem to be throwing around that link several times per day, of late. Bitcoin derives its monetary value from social factors, which are enabled but not created by its technical infrastructure. The social part requires that there can be only one Bitcoin, unique and undiluted.

This notion of so-called clone scaling is absolutely wrong from a social and monetary perspective; but from a technical perspective, its one of those ideas which is not right, and not even wrong. It does not make sense at all. That is why I seem to have ignored it above.