Wow!  Well, I was thinking of a rich but relatively dumb attacker... 

Maybe... but the price was generally dropping at the previous auctions, and the known winners were long-term investors.  This one may be different.

Bids for this auction were made on 2015-11-05, when the extraordinary September-October rally had just peaked, the price was still around 410 USD, and it was uncertain whether it would continue rising.  Perhaps a short-term trader posted a relatively high bid, hoping for further rises; and then got scared/disappointed by the drop, so now that he got the coins he is selling them in anticipation of further drops.

Even without stress tests, the average number of transactions per day (in 7 day running average) has climbed from ~130'000 in September to ~160'000 now, with a peak of 210'000 on 2015-11-05 (click "raw values" on that graph). 

This increase does not seem to be due to a stress test, but simply to the rapid changes in bitcoin price over the last month, that seem to have prompted many people to deposit and withdraw BTC from exchanges.  It may also be due in part to Sergei Mavrodi's onging Global MMM ponzi, that uses bitcoins only and may have made millions of victims all over the world, but mostly in China.

However, the prospects for a true good spam attack are getting better and better.  The effective capacity of the Bitcoin network seems to be about 240'000 tx/day.  Therefore, by issuing only 120'000 tx/day, with suitable fees, an attacker could block 40'000 legitimate transactiions each day and hold them in the queue to the end of the attack. 

It is not possible to guess what fees the attacker would have to pay, but if there are 40'000 tx/day  that would not pay more than $1 in fees, he would have to burn at most $120'000 per day to keep them in limbo.

I don't have enough knowledge of the field to look for bugs.  However, the paper has been circulated for a month or so, at least, and was presented at the Monteral scaling conference.  So, if there are bugs, they must not be very obvious.

On the other hand, it is hard to foresee all the bad things that could happen in systems that that include human elements.  One example of a problem that was not quite foreseen when bitcoin was designed is the extreme concentration of bitcoin mining (with 54% of the hashrate now in the hands three Chinese pools).  The protocol becoming the property of a single company was another.  The fast price rise (that made the block reward be worth ~$8/tx) was yet another.  

So, who knows what failure modes the "NG" blockchain coudl have.

Anyway, I see little chance that the proposal will be implemented in bitcoin.  There is already too much software developed out there that assumes the current design.  Implementing a change of that magnitude would be like swimming in molasses.  Maybe some altcoin will adopt the idea.

The connection to "Cumberland Mining" seems pretty clear, but from that to Blythe Masters it is rather forced, to say the least.

Digital Assets Holdings has its own bitcoin trading branch (Genesis) as well as the BIT/GBTC bitcoin fund (issued by the Grayscale branch).  So it would be no surprise if they had bid for the USMS coins.  If they could snatch them below market and find private buyers at market, why not? Business is business.

However, I don't see any real evidence that Genesis or other Digital Assets Holdings subsidiaries submitted bids for those coins, much less that they got any.  Did I miss something?  "Masters is buying bitcoins" seems to be just a blind guess. 

Moreover, according to the reddit sleuths, the Cumberland lot was split off into smaller pieces, with fees being paid out of one 6000 BTC piece. So they may have been acting mostly as a syndicate, and that 6000 BTC block may be their own slice.

That article is based on an old email interview.  At the time we had rather optimistic estimates of the network's capacity.  Today, thanks to the "stress tests", we know that it is only ~240'000 tx/day, not 350'000.  Moreover, traffic has increased, and it probably hit that wall for several hours on 2015-11-05, at or just after the peak of the "MMM bubble". 

The article does not report well what I wrote.  The author seemed bent on pushing the idea that the price is determined by the energy spent.  I insisted that the causality goes the other way -- speculation defines the price, and the price then determines the energy consumed -- but he mostly ignored that nuance.

PS. Not that the distance matters, but that private school is in São Paulo (city). I am in Campinas, about 100 km NW of São Paulo. Both cities are in the State of São Paulo.

More worring than that guy was this talk by a prof at FGV, a prestigious economics and management school in Rio de Janeiro.  It was like Andreas in 2013, only that less coherent... 

Thank god, no.  It is a minor private school in São Paulo, and the course is a weekend extension one.

Time to refusbish my warning blurb...

The LN guys just invented the brick, and Blockstream is assuming that by next year there will be cities with skyscrapers and bridges over the oceans.


IIRC, in the whitepaper he says that banks provide fairly good privacy, and coinjoin-like mixing can get fairly close to that...

Well, some come here BECAUSE of the governance:

Ronnie Biggs

William Frederick Koch

Josef Mengele

 

That is a sensible view, and close to what bitcoin was conceived and built for. 

However, Satoshi's stated goal was to remove the need for a trusted third party in peer-to-peer payments.  That is not the same as "censorship resistant" and does not imply it.  It does not imply anonymity or privacy, much less immunity from laws.  These goals that were tacked onto it afterwards, by others; it is not surprising that bitcoin fails to

With that caveat, I could almost say that that is my view too: bitcoin should not be used for ordinary payments -- person-to-person, e-commerce, remittance, settlement.  It should be used only in cases where the absence of a trusted intermediary is necessary or clearly advantageous. But "almost", because I believe that bitcoin's flaws will prevent even that use.

However, this view (in either version) is irrelevant for the community.  Neither Blockstream nor the big-blockians will accept it.  Both want the price of bitcoin to "go to the moon", which requires massive use.  Only that Blockstream wants to start pushing traffic offchain by next year, assuming that the LN will be ready by then; whereas the big-blockians want to keep it on-chain at least for a few more years.


If bitcoin were to evolve in this direction (which practically nobody wants) then one could begin by imposing a significant minimum fee, say 0.25 to 1.00 USD.  My guess is that it would cut down traffic by 90%.  But neither side wants that, either.

By the way, note that, for this purpose, other altcoins would be almost as good as Bitcoin. 

Brazil is far from being the best country in the world, but it is still better than average, I dare say.  It is big and varied enough for you to find a niche of your liking.  (Unless you crave for skiing, kangaroos, salt flats, bears, cranberry sauce, volcanoes, sandstorms, yetis, tornadoes, edelweisses, or earthquakes; you will have trouble finding those here.)  Quite a few Americans and Europeans who come here love it enough to stay.

Well, you should ask them.  They seem to believe that it would make bitcoin more attarctive or valuable.  I myself don't see why.

What I can see is that Blockstream will profit (or thinks that it will profit) if e-commerce uses of bitcoin get pushed to off-chain solutions, like the Lightning network; because their business plan seems to be to provide software tools for such off-chain services (like the Liquid inter-exchange settlement tool that they just announced).

Perhaps the e-commerce traffic that will not fit in the Bitcoin blockchain will be picked up by Viacoin, the altcoin created by Core developer BTCDrak, which has hired Peter Todd as CTO.

That is the stated Blocksrteam/small-blockian view: bitcoin should be used only for large-value settlements between institutions, like the Lightning network hubs -- not for ordinary e-purchases by ordinary citizens.

Well, bitcoin is not to be used for ordinary e-commerce payments, its first move advantage is not worth much.

Litecoin and Dogecoin are already there.  WIth some PR and a couple of legal exchanges in the US and Europe, Litecoin or some other new coin could take over many uses of bitcoin, if it offered faster service and/or lower fees.  That would cost a few M$, but much less than 1 G$.  Bitcoin's recurrent traffic jams at peak hours would be the best marketing, for free.

That is the hope of the small-blockians, who look forward to the "fee market" as a way to raise the fees "naturally" to compensate for the harlving of the reward.

However, I don't expect the fees to rise significantly.  After some initial mega-jams, things should settle down with the average traffic somewhat below the capacity (say, 2.6 tx/s, as in my example).   In that state,  the minimum fee will usually provide confirmation within a day, and confirmation in less than 1 hour will usually be achieved with relatively modest fees.   The traffic will not increase further because of the unpredictable delays, which will occur even if everybody ends up paying 100 $/tx of fees.

Not very well, but considering that I am minority in many aspects, and the depth of corruption and crime in the country, it could be worse.  I got the President that I voted for, in the last 4 elections, and was rather happy with the results.  I got a mayor, but he was murdered shortly after taking office.  I got a federal congressman but he was jailed after his term ended, for having put a banker in jail for a few hours. 

But it still a lot better than when the military decided what was best for all of us.

I don't see why the buyer of public property should have more right to remain anonymous than a contractor who gets hired by the government.  In both cases there is a commercial transaction where some valuabe property is exchanged by some amount of money.  Why should the two be treated differently?

But, anyway, the identity of the buyers is not so important.  The public surely should have the right to know the price that they paid.

It is not surprising that the USMS would rather not publish that information.  If the public gets to know that a 1 M$ home was auctioned off by 50 k$, there would be nasty articles and blogposts, suspicion of fraud, etc. -- even if there was no foul play.   But FOIA was meant to overcome that petty motivation for government secrecy.

That is how *I* see it, and what the Constitution is supposed to say.  That is how you should see it in your country too. 

Unfortunately, as in your country, there are many, many government officials who steal my property, or mismanage it, or deny my rights to it.  Of course I resent it.  I try to fight those abuses by protesting and voting, and hope that enough other Brazilians will do the same.


A large majority of us Brazilians have agreed to let the government use some of our common property for certain uses, like schools, roads, parks, etc.  I approve such arrangements in principle; in some of those that I disapprove, I am willing to submit to the majority; and in some others I protest and vote agains, as above.

That is nonsense.  Someone with no idea of how things work just tossed a number.

Once the average traffic (transactions issued per day by all users) exceeds the effective capacity of the network (about 240'000 tx/day, 2.8 tx/s), there will be a steadily growing backlog of unconfirmed transactions.  There will not be a fixed delay: the average delay will keep increasing, day after day.

If the traffic were to be 300'000 tx/day (3.5 tx/s), for example, the backlog would grow at the rate of ~60'000 tx per day (~0.7 tx/s).  The transactions received in one day will take 300'000/240'000*24 = 30 hours to be confirmed; so the average delay for 1-confirmation will keep growing by 6 hours every day.  

If the transactions were serviced first-in, first-out, then all transactions sent in the same hour would be delayed by about the same (but always growing) number of hours.   Since the processing priority is largely determined by the fees paid, however, some transactions may be processed in the next block, independently of the backlog, while others will be delayed even more than they would with the fair policy.   However, there will be no way to estimate the fee needed to get your transaction confirmed in the next block, or within X hours; because that depends on the fees of transactions that will be issued before your confirmation -- by clients who will want their transactions to be processed before yours.

But that regime cannot last for long, of course.  Clients will give up on bitcoin, until traffic drops below the capacity -- say to 220'000 tx/day (~2.6 tx/s). Then, part of the time, there will be no backlog: all transactions will confirm in the next block, even if they pay the minimal fee.  However, the traffic varies a lot depending on time of day and day of the week.  During peak hours and peak days, the traffic will be quite a bit more than 2.8 tx/s. Then there will be a temporary backlog, lasting several hours, that will be cleared slowly when the traffic subsides.  

As before, the backlog and the average confirmation delay will keep growing while the traffic exceeds the capacity.  The delay for your transaction, specifically, will depend on its fee, on the transactions that are waiting in the queue, and on the transactions that will be issued by other clients until your transaction is confirmed.  On some occasions, many transactions may get delayed by several hours, perhaps by a day or two.