Thank you Alex! I couldn't agree more.

By now, we know much more about the tokens. This reduction in uncertainty has already led to a surge to 0.60$ per token from initially 0.30$.

In my opinion, the conversion offer to get Bitfinex shares is worthless. Even if everybody converts their tokens, it means that everyone has to wait three times as long to get their money back. This can seen simply by considering that token holders will be paid back first, before any dividends are emitted. But only (up to) one third of the dividends will flow to the converted token holders. Thus, it will take much longer to get the money back... if they make 10 millions in profits per year, it will take 18 years. But on the plus side, you will own a piece of Bitfinex which lasts as long as Bitfinex exists. But I would not bet on that.

So if you don't convert, what are these tokens worth? If Bitfinex continues to repay about 1.2% every month, that amounts to 14% per year. In that case, it will take roughly 7 years to get your money back. But at a price of 0.60$, it only takes about four years to get your investment back and the next three years will be profits.

In other words: if you are confident that Bitfinex can last for another four years and get your money back after that time. And if it lasts for another seven years (with flat growth), you will get a return of about 8% per year over the. That's not great, but better than nothing.

To conclude: if you have an investment opportunity that yields more than 8% per year at a similar risk, you should sell your BFX and go for that. For example, if you believe that Bitcoin will double in price every four years, that's a much better investment.

Survey Results

Summary
The main hypothesis I wanted to test is whether an entrepreneurial mindset (as opposed to a technical mindset) makes you more likely to favor big blocks. And the answer seems yes.

Intro
I thank all 269 respondents, out of which 146 have indicated a numeric block-size preference ranging between 0.5 MB and unlimited, excluding unspecific dynamic answers. All findings revolve around the question of what makes someone a big-blocker or a small-blocker. In here, I consider everyone who wants a block size limit of less than 4 MB to be a small-blocker and those who prefer 4 MB or more to be big-blockers. This somewhat arbitrary decision was taken before analyzing the data. The median being 8 MB, I ended up with 103 big-blockers and 44 small-blockers. This is not representative for bitcoin-users in general and mostly reflects the fact that I received more responses from /r/btc readers than from /r/bitcoin readers.

Findings

• There is a deep divide between readers of the traditional two forums and readers of /r/btc. Among /r/bitcoin and bitcointalk readers, 39% are big-blockers, whereas 94% of the /r/btc readers are big-blocker. Among those reading other news sources first, 76% are big-blockers. This was by far the most statistically significant finding (t-stat 6.6). While this is not surprising to anyone paying attention, it is still worrying to see such a schism.
• Small-blockers are more likely to see the future of Bitcoin in a settlement system (24%) or digital gold (17%) than big-blockers (10% settlement, 6% gold). This confirms the widespread suspicion that the block-size disagreement is related to what we want Bitcoin to be, although not to the extent I would have expected to see. The "electronic cash system" still clearly wins among every group.
• The amount of Bitcoins you own does not seem of much relevance here.
• Small-blockers are more likely to find technology more important than business strategy, are more likely to have written Bitcoin-related code, and are more likely to have founded a company.
• Big-blockers tend to emphasize the importance of business strategy relative to technology, are more likely to like "Swiss bank account in your pocket" tagline, and are more likely to have plans to found a company.

Comment
I see the block-size decision as a trade-off between a technical risk (loss of decentralization, hard fork, etc.) and a business risk (missing the window of opportunity for growth). If correct, this would mean that people with higher technical awareness would tend to favor smaller blocks while those with an entrepreneurial background would favor bigger blocks. Anecdotal evidence supports this, with entrepreneurs like Erik Voerhees being a big-blocker, and a considerable number of core-devs being small-blockers. This survey also supports this hypothesis with statistical significance (p-value of 0.03), but not to same extent as your preferred news source determines your opinion (p-value of 0.00002). Social scientist usually accept a hypothesis if a p-value of 0.05 or lower is reached.

Personality Test
An accessible way to present these findings is to run a regression on many parameters at once and use the most relevant ones to construct a "personality test" like one can find them in certain women's magazines. This is not very scientific, but fun.

You start with 2 points.

• If your primary Bitcoin news source is /r/bitcoin or bitcointalk, subtract 4 points.
• If you believe that for Internet companies, technology is a more important success factor than business strategy, subtract 3 points.
• If you have written Bitcoin-related source code that others use, subtract 2 points.
• If you have plans to found a company, add 2 points.
• If you have already founded a company, subtract 2 points. (This goes counter my hypothesis, but is neutralized by other factors.)
• If you believe that ten years from now, Bitcoin will rather be seen as "digital gold" than electronic cash or a settlement system, subtract 2 points.
• If you find the tagline "Bitcoin: a Swiss bank account in your pocket" catchy, add 2 points.
• If you find the tagline "Blocks are like penises: the bigger the better" catchy, add 2 points.[1]
• If you find the tagline "Decentralized Bitcoin must not become centralized Bankcoin." catchy, subtract 1 point.

If you end up with a positive amount of points, you are more likely to be a big-blocker, and vice versa.

Disclaimer
This survey does not hold up to scientific standards. While it statistically confirms my hypothesis, I would have hoped for stronger results.

[1] This admittedly crude tagline irritated some of you. This is an identity play in accordance with Scott Adam's persuasion stack (http://blog.dilbert.com/post/136950092871/why-would-a-man-vote-for-hillary-clinton). An association between big-blockers and their anatomy is planted into the reader's brain. If Scott is right, this will work much better than any argument based on reason.

So it is a netting system without counterparty risk? Note that some parts of the traditional banking system also have mechanisms in place to eliminate counterparty risk (at least for practical purposes). See for example http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2331355 by Mancini et al, who show that the design of the European repo market is less vulnerable to counterparty risk than the American one. Generally, I don't think that the term "netting" implies that there must be a counterparty risk.

I closely follow Bitcoin since early 2011.


No, this is not an academic question, it is a strategic business question revolving about what we want Bitcoin to be. If Bitcoin was a startup, there would probably be a board meeting to decide whether Bitcoin should go after the "electronic cash" market or after the "settlement platform market". The blocksize debate really is a clash of two conflicting visions.

By "aggregate", I mean the net difference. Banks call this process "netting". For example if 1302 transactions moved 10 million from bank A to B and 917 transactions moved 12 million from bank B to A on a given they, they'll simply transact the net amount of 2 million over night in one single transaction. See https://en.wikipedia.org/wiki/Clearing_House_Interbank_Payments_System for an example of such a system. In fact, this resembles the Lightning network, which also only transfers net amounts on the blockchain (if I understood it correctly). However, it is not how the Bitcoin blockchain works, because the blocks in Bitcoin still contain every individual transaction. There is no netting.

Given your scrutiny, the "that's right" was maybe written too hastily. I just wanted to confirm that I do not intend to start a new technical discussion on a topic discussed many times before. Instead, I intended to find out more about the psychology and motivations behind that technical discussion. Given the available choices, the "development & technical discussion" still seemed like the best fit. Would you have preferred the general section?

Tomorrow evening.

Obviously, this is a gross - but intentional - simplification. The question aims at finding out whether you see the Bitcoin system as something that is mainly used for everyday transactions (a cash system and probably the original vision by Satoshi), is mainly used for bulk settlement of transaction with everyday transactions happening off-chain (e.g. through the Lightning network), or if you think the digital gold use case will dominate. As you have correctly noticed, these scenarios can coexist to a certain degree. The goal of this question was never technical accuracy, but to capture a sentiment. For example, I would guess that you would probably feel most comfortable choosing the settlement answer, if any.

See above. In banking, a settlement system usually is a system to periodically update a coarse-grained ledger with the an aggregate of finer-grained transactions. This is similar to concepts like the Lightning network that uses on-chain transactions to settle aggregates of many smaller transactions.

No, they are not exclusive. But usually, settlement networks are designed to be used for settling an net aggregate of transactions. This implies that it is too expensive or otherwise too inconvenient to send every single transaction directly to the settlement network. If that was not the case, there would be no point in using an upper layer. Insofar, these use-cases are somewhat exclusive.


That's right. The aim of the poll was to find out more about the psychology behind this technical discussion, and not hard technical facts themselves. The reasoning behind the last question was to have a neutral, a small block, and a big block tagline. In any case, the answers are as expected: those who favor bigger blocks tend to find the admittedly crude tagline you quoted funny, while those who believe that the proper technique on top (e.g. Lightning) trumps plain size find it rather tasteless.

In case you are familiar with Scott Adams' hilarious blog (See http://blog.dilbert.com/post/136950092871/why-would-a-man-vote-for-hillary-clinton), this can also be seen as an identity-play. Instead of using reason for persuasion, an association between big-blockers and their anatomy is planted into every reader's brain. If Scott Adams is right, this will work much better than any argument based on reason.

[Edit: the survey is closed and the results here: https://bitcointalk.org/index.php?topic=1405124.msg14275503#msg14275503]

I have created a quick survey about the block-size limit and would love to hear your answers:
https://docs.google.com/forms/d/18JfNC21Jo1adTI6YNxiFrw4BXRAbI4LrdWx2hFbWSJY/viewform

University of Zurich performs an experiment that rewards participants in Bitcoins:
https://docs.google.com/forms/d/1IrJJn7Th9veghxfirrj3aQqx23nhDBhUIBGspfaybS4/viewform

That's probably the first time Bitcoin is used for scientific research. Bitcoin is a great choice as it allows for anonymous incentives.

Reddit discussion:
http://www.reddit.com/r/Bitcoin/comments/2pzc4h/play_a_game_earn_bitcoins_for_science/

Fortunately, my wife has a masters in European VAT (among other degrees). I showed her the question and she is confident that the court won't rule the stupid way. Doing so would cause too many complications. For example, a miner not subject to VAT selling Bitcoins to the exchange could charge 119€ and keep all the 119€ for himself, while the exchange could reclaim 19€ from the tax authorities (Urproduzenten rule in German, not sure how it is called in English).

Edit: you should check out the more more accurate comments on reddit.

And it can also be fatal to blindly trust a professional. If it is important, you cannot get around understanding it yourself.

It is more subtle than that. The VAT directive defines "‘Supply of services’ shall mean any transaction which does not constitute a supply of goods". However, "transaction" is earlier defined as supply of a good or service (article 2). Thus, all the directive says in the end is that "transactions" = "supply of goods or services", without defining more closely what a service is.

It boils down to the question what the service is, that a Bitcoin exchange provides. The reasonable interpretation is that the service an exchange provides just consists of the matching of buyers and sellers. Thus, VAT should only apply to that service, and not the exchanged amounts. Similarily, ebay only charges VAT on its fees, and not the value of the traded goods.

Now, what makes this all so confusing, is that there are exemptions for financial services such as running an exchange, which raises the seperate question of whether VAT applies to the fees or not.

Actually, things can be out of scope regarding VAT. VAT is charged on the delivery of goods and services. So if transferring Bitcoins is neither a delivery of a good nor a service, Bitcoin is out of scope.

Yes, it all seems to be only about VAT on the fee, and not the whole transaction, which makes everything much less dramatic.


@D.H: Thanks for the clarification! Unfortunately, this is often not reported correctly.

@D.H. can you clarify the following question:

Assume your business sells 2 BTC to me for 1000€ and that the VAT rate is 20%. Furthermore, you charge a transaction fee of 10€. Do I need to actually pay

(a) 1010€, consisting of 1000€ + 10€ fee
(b) 1012€, consisting of 1000€ + 10€ fee + 2€ VAT on fee
(c) 1212€, consisting of 1000€ + 10€ fee + 202€ VAT on everything

What most seem to fear is case (c), which would indeed be catastrophic. I don't understand the legalese of the English question, but the German translation of the question to the court only asks about case (b).

So is the question only about whether (a) or (b) applies?

Edit: after reading it again, it seems even more subtle: the German version asks whether case (c) applies in cases where the exchange adds an implicit fee to the exchange rate. I.e. the real exchange rate is 1:500, but the exchange is giving you 1:505, thereby embedding the fee in the exchange rate. Of course, there is a chance that the court will go further and also hint at the answers to other questions. But the question itself seems to be very narrow and specific.

Assuming Auroracoin can reach its goal of becoming a widely used currency in Iceland, we can calculate its potential market value as follows: there are 500 billion Icelandic Krona (ISK) in circulation (http://www.tradingeconomics.com/iceland/money-supply-m1). That's worth about 5 billion USD or about 15'000 USD per inhabitant. Let's say Auroracoin reaches 10% of that within three years. In that case, we could expect it to be worth about 1'500 USD per inhabitant or 50 USD each. Right now it is trading somewhat below 0.01 BTC or about 4 USD each. So if you believe that it will be successful, you can get a tenfold return within three years - which is good. If there's an 80% chance of failure, the investment looks less positive (100% expected upside within three years), but still positive.

It has come to my attention that Photonic Mining announced some form of collaboration with us on https://cryptostocks.com/announcements/1343. This is *not* true.

It is true that I contacted them, saying that it would be nice to meet for a coffee. However, they declined in grammatically incorrect German, saying that they are too busy drafting an LOI with a big investor... my suspicion is that this a lie and that they are not even based in Zurich.

Firstbits are essential if one wants to verify Casascius coins...