Remember those valiant new core developers, who were defending bitcoin against the fork that the Evil Lords Gavin and Mike wanted?  Seems that they now have a little ittyy bitty forklet of their own happening now...

The BND numbers that I posted are the minimum and maximum that the bagholders's should expect to get back, without being greedy.  To satisfy their expectations, they would have to find new investors willing to invest between 483 million and 17.2 billion USD in bitcoin.

The BPI could be defined as what the current holders expect to get back, minus what they would get back if they all sold their coins today with no slippage. That is, the BPI would be the BND minus the market cap, which today is 3.65 billion USD; which gives between −3.16 billion (meaning that the bagholders as a whole could profit that much) and +13.5 billion (meaning that they could have that much loss), or anything in between.

Of course.  It is only a "moral" debt, that no one has any obligation to pay...  


That is a rather indelicate way of saying, but it is precisely what it is: how big is the bag that the bag-holders are holding...

I just did an estimate of the "Bitcoin National Debt" (BND), which is the minimum amount that the bitcoin system "owes" to the people who are holding bitcoins.   It is between 483 million and 17.2 billion USD.

For example, someone who bought 10 BTC a year ago must have paid close to 600 $/Ƀ, the market price at that time.  Therefore, he must be expecting to get at least 6600 $ if he were to sell or spend those bitcoins -- the 6000 $ that he invested, plus 10%/year of return.   By doing that math for every bitcoin and adding the results we would get the BND.

Unfortunately, there is no way of knowing when any given lump of bitcoin was bought by its current owner.  The purchase may not even have been recorded in the blockchain (e.g. if it was bought in an exchange and left there).  We can only assume that the last purchase of a bitcoin that was mined on day X will (almost) surely have occurred on date X or after that.  Therefore, by looking at the minimum and maximum price in that interval, we can get uper and lower bounds to the expectations of its owner.  

For example, the 25 bitcoins that were mined on 2014-04-01 (when the price was ~450) may have been bought by their present owner(s)  on 2014-06-01 (when the price was at its highest, ~680) or on  2015-01-14 (when the price was at its lowest, ~150).  So, the current owners of those bitcoins, even if they are happy with a 10%/year return on investment, now expect to get from them between 25 × 150 $ and 25 × 680 $ plus the 10%/year.

I may post more details later if I get the time.

The deadline for victims to submit their claims was ~May 25, 2015.  The bankruptcy trustee Nobuaki Kobayashi now has until September 2015 to validate those claims and define the payouts. 

It is very unlikely that Kobayashi will try to sell the remaining bitcoins on exchanges.  Either he will return them as BTC through Kraken, or he will auction them. 

I suppose that he would like to return them as BTC, to save him the headache of organizing the auction.  (Or perhaps not, since he will charge extra for that work.)  However, he would have to convince the bankruptcy judge to authorize that; and the precedents, if not the laws, all seem to require the conversion to JPY.

I can see also some logistic obstacles to returning things in BTC.  Suppose that the spoils of MtGOX are 1 billion JPY and 200 k BTC, worth 1 + 5 = 6 G JPY in all; but the validated claims by victims add to 4 G JPY and 320 k BTC, worth 4 + 8 = 12 G JPY total.  So each victim should receive 50% of his claim, and Kobayashi would have to give out 2 G JPY and 160 k BTC.  He cannot force victims to take BTC in place of JPY, so he would have to auction 40 k BTC anyway to make those payouts. 

If the mismatch goes the other way, things will be easier because he can (legally) force the victims to accept JPY instead of some of the BTC that they claimed.  But the idiots who insist on getting refunded in BTC are going to make a big fuss anyway.

There may be also complaints by victims if the BTC price changes between the time that Kobayashi computs the payouts and the time that the victims received their BTC on Kraken.  Note that a change in the BTC price affects all payouts, even those of victims who want to be paid in JPY only.

I suspect that he will regret having admitted the possibility of a refund in BTC...

What difference do you see between the Sámi tribesmen enforcing his property rights, or the Finnish courts?  Just because the Finnish "tribesmen" pay someone to do that task for them?

In both cases, property rights exist because there is a third party that decides who (by their rules) is the proprietor, and has the power to ensure that he gets possession of the thing, by taking it away from anyone who has possession of it but (in their view) is not the proprietor.


Yes, I do claim that "property" requires an authority that can enforce it. 

Erm, I don't see how that works, sorry.  The recipient is supposed to spend that money while creating the something.  At the end of the allotted period he has spent it all, but there is no something, or it is only half finished, or it does not work.  What then?

Unless you mean a crowdfunded sale of something that already exists and is ready?  Even so, who is going to decide whether the something was delivered and meets the terms of the contract?

Actually at 5:40 PM I was planning to prepare to gather will power to start writing a quiz for my 21:00-23:00 class.  Going home now...

Neither privacy nor property are "natural".  Have a look at any of the hunter-gatherer people who still exist out there.  Nothing is more alien to their culture than "privacy", not even of thir bodies.  If they are nomadic, their material possessions are so scant that "property rights", even if they are present, play an insignificant role in their economy, and are restricted to the objects that they use and cannot be used by others at the same time.  Most of those objects need to be remade periodically.  The more settled tribes may have single family huts (without fences, walls, or locks), but many have instead big multi-family homes, and communal buildings where people spend most of their time indoors.

Most importantly, their "property rights" are not really rights, to the extent that there is no third party to enforce them.  Suppose that a bully takes the bracelet or bow from a weaker tribesman, "because I am strong and you are a wimp".  The victim will be unhappy, but so what?  If the rest of the tribe forces the bully to return the object, there you have governmet and laws, even if unformalized and unwritten.  If the others don't care, what would be the point of saying that the victim has "property rights" over the object?



Those tribes are proof that one thing does not lead to the other.


Bitcoin transfers "possession", not "property". 


I would really like to see a smart contract work without backing of police, laws, and courts.  (Note that contracts are like fire extinguishers: they are useful only when things fail to happen the way they were supposed to happen.)

The Freerealtime page today was strange:

14:53:33       29.09    3    OTO
14:50:51       29.09    18    OTO
14:33:23       29.05    56    OTO
14:33:23       29.05    50    OTO
14:33:19       29.09    200    OTO
14:24:29       29.09    1000    OTO
14:13:17       29.10    340    OTO
14:06:52       29.1122    4747    OTO
14:06:21       29.1122    4747    OTO
14:02:09       29.09    20    OTO
13:40:56       29.00    1774    OTO
13:40:04       29.14    100    OTO
13:14:35       29.14    900    OTO
13:06:50       29.11    1000    OTO
13:06:18       29.14    1000    OTO
12:55:43       29.05    100    OTO
12:48:37       29.15    100    OTO
10:38:32       29.1122    4747    OTO
10:38:11       29.00    500    OTO
10:38:04       29.19    100    OTO
10:38:00       29.50    2800    OTO
10:37:43       29.50    100    OTO
10:37:17       29.25    100    OTO
10:36:48       29.25    1000    OTO
10:36:18       29.25    1000    OTO
10:08:33       29.25    70    OTO
10:06:51       29.25    20    OTO
10:05:21       29.25    57    OTO
10:04:37       29.10    340    OTO
09:59:19       29.25    86    OTO
09:59:11       29.25    154    OTO
09:54:01       29.25    100    OTO
09:47:46       29.25    25    OTO
09:45:45       29.00    1774    OTO
09:45:35       29.25    100    OTO
09:44:56       29.29    100    OTO
09:31:03       29.95    10    OTO
09:30:11       29.95    224    OTO

Note the weird entries with "4747" shares.  The total comes out as 29562 shares, which is 6861 = 4747 + 1774 + 340 shares more than the total volume listed on the OTCQX page.

Also note that trade was rather strong but stopped just before 15:00.  Isn't the closing time 16:00?

No, the reporter read some post of mine on reddit and emailed me half a dozen questions about the cost of mining and such.  I wrote a full page back.  The first paragraph is what he picked from my reply.  The second half he picked from another page-long reddit post of mine on the Block Size Schism.  Not sure whether that is what I wrote, but it was not at all bad compared to other experiences I had with reporters...

But that is another question altogether.  The point is that the word "crime" cannot even be defined, except as "whatever the laws and courts say it is a crime".  Without laws and courts, there are just 7 billion different opinions of what ought to be a crime, and no objective way to choose among them.


Duh?



What "findamental natural law"?

If you refer to "guaranteed by math", it isn't: bitcoin is a process executed by humans with the aid of computers.  The humans are unpredictable, and their computers can be programmed to do anything.  

If you mean that "property" is a "natural" concept, you are just wrong.  Property is a cultural invention that (like "crime") did not exist before humans invented governments and laws.


How exacty? By shooting at each other?  By starting a thread on bitcointalk?

An agreement or contract is useless if there isn't an authority that can force the parties to honor it, and arbitrate disagrements.   That is why every functioning contract specifies the jurisdiction for resolving disputes over it.  The ridiculous "contract" between Roger Ver and OKCoin showed very well what happens when that clause is missing...

We must distinguish what is (not) a crime from what ought (not) to be a crime.  The former is decided by laws and courts, and its mostly useless to discuss it except with a lawyer.   For the latter, each one is entitled to his opinion, has the right to defend it on forums, TV, bars, etc.,  and should take it to his lawmakers.

So you seem to be saying that, in your opinion, the only thing that should be a crime is "initiate force on anyone".  Well, that is not my opinion.  While you may not care for my opinion, you should worry that 99.9% of mankind does not agree, either.  

Theft and most kinds of fraud, even if they don't involve any violence, are crimes in almost every country (and I say "almost" just for precaution; actually I don't know of any exception).  In fact, the earliest criminal codes that survive cover theft as well as murder and other crimes.  Corruption of public servants (paying or being paid for violations of duty) is generally a crime, even if it is one where the law most often fails.

Taking drugs ought not to be a crime in my opinion; but pushing people into drugs (whether by advertising, by example, by peer pressure, or just by making them too easily available) ought to be a crime; and, likewise, profiting from other people's addictions.   Gross negligence ought to be a crime too (like intentionally failing to provide fire exits and safety equipment, failing to do standard safety checks in the design of buildings and machines, failing do standard medical tests or to report contagious diseases, etc.) -- and indeed it is in many jurisdictions.


Again, one must distinguish what are one's rights from what one thinks that ought to be one's rights.  The former are defined by laws and courts.  For the latter, different people will have different opinions.  Without a government, those opinions are irrelevant: in a dispute, the side with more guns, more thugs, or better skills will prevail.  

In particular, without laws and courts there is no concept of "property".  Property is distinct from possession; it is the right to have possession.  If a thief takes your car, he will have possession, but the car is still your property; and the government is supposed to use its power (with force, if needed) to take the car from the thief, and give possession back to you.   On the other hand, if you default on payments and the contract says that property of the car returns to the seller, the government is bound to support him in taking the car from you.  Ditto if you have possession of money that the government thinks it is their property (i.e., unpaid taxes).

As I wrote, bitcoiners call them advantages, but for the other 99.9% they are fatal flaws.  A system that does not allow mistakes and crimes to be corrected is a stupid defective system.  Anonymous accounts are much more useful to criminals than to honest people.  The two together prevents enforcement of property rights.


1 billion users doing on average 1 payment per day would be 1 billion tx/day.

Suppose that most of the traffic gets pushed off the blockchain, e.g. to Lightning Network; even so, there will be a need for blockchain transactions.  Let's say that 25 transactions offchain for each transaction on the blockchain.  Then the bitcoin network would have to handle 40 million transactions per day.

The current capacity of the network is 300'000 transactions per day.  You don't want to operate near capacity even at peak hours, so 200'000 tx/day will probably be the limit with 1 MB blocks.  It would have to grow by a factor of 200.

That does not seem bad, but the Ligntning Network is still only a fuzzy dream. No one knows whether it is technically and economically viable, whether people will want to use it, whether it will really achieve 25:1 offchain/onchain ratio.

Note also that, in the 5 years since the 1MB limit was set, the capacity of the network has increased 0%.  How long will it take for it to increase 200x?

Some of them:

* Payments cannot be reversed, even when coins are sent to addresses that non one has the key, or as a result of crime.  That makes it unacceptable for most comercial and individual uses.

* Users are anonymous, which makes it much more attractive to criminals (much more so than cash, for obvious reasons).

* The fixed supply created the expectation of fabulous gains that turned it into a speculative pyramid schema

* That "ponzification" in turn resulted in extremely volatile price, that makes a bad currency.

* The block reward and the market price were too high, leading to a hypertrophied and unsustainable mining industry.

* For that reason, the cost per transaction is way too high.

* Mining got inevitably centralized (last time I checked, the top 5 Chinese miners had 60% of the hashpower).

* There is no mechanism to reward the relay nodes, which carry increasing load.

* Its design cannot support 1 billion users, maybe not even 10 million, even indirectly.

And a few more.  Before you say it, yes, I know that many bitcoiners see those as advantages rather than flaws.

It is written right at the beginning of Satoshi's paper, as clearly as it could be.  That is why the protocol was designed as it was, and what the project was meant to achieve.

Bitcoin is still a very remarkable computer science experiment (that has become also a social and economical experiment, in ways that surely it was not intended to be).  It was a significant advance towards solving the old problem that it set to solve.  But it did not get there yet.

I am skeptical of its longterm success because it has still many flaws, that its fans, being unable to solve, prefer to call advantages.  To fix those flaws and allow it to achieve its stated goal, we need a few more ingenious inventions; which we cannot guess when oor whether they will be made.

Even if it succeeds, it will be just a cheaper, faster, easier, and maybe safer payment system.  It will not end crime, corruption, opression, hunger, wars, abuses of cops and courts, etc..  Clever technology alone cannot fix social, political, or economical problems.  On the contrary, technology often makes the problems worse.  Which we are seeing with bitcoin...

The hard fork to increase the max block size should have been a no-brainer and a non-event, a routine maintenance  action predicted  and proposed by Satoshi himself when he added the arbitrary 1 MB limit.  Why has it become the most dreadful menace to the future of bitcoin?

My best guess is that the promises that the Blockcstream guys made to their investors, when they got their funding, depend on there being no block size increase, no matter how modest.  That would explain their uncompromising and hysterical opposition to the increase -- and the changes that they are making to the protocol.

Specifically, I guess that they promised investors that bitcoin network would become congested by 2016, and then users would be forced to move to some "overlay network" that would carry most of the payment traffic, with only occasional settlements being made on the old bitcoin network.  

Blockstream (they must have said) would then be the key player in that "overlay space", because they already were developing the technology that will make the overlay network possible (sidechains, at the time).  Moreover, since several key developers were partners or employees of Blocksrteam, they had commit control of BitcoinCore, the "official" implementation of the protocol; so they would be able to make any change that they needed to the protocol (like new opcodes), while blocking any change that competitors may need, or that might make the overlay network economically unattractive -- such as a block size increase.  

But (the investors must have asked) if the capacity of the bitcoin network itself is not increased, the number of transactions will forever be limited to 300'000 per day; so how will mining continue to be viable while the block reward gets halved?  Well, Blockstream's forecast (and this is no guess) is that by 2016, as the network becomes congested, there will arise a "fee market", where bitcoin users would have to offer higher and higher fees in order to buy space on the next block.  If the average transaction fee increased to 1.5 USD or more, the revenue from fees (450'000 USD/day) would compensate the halving of the block reward, and there would be no drop in the hashpower.    

To make that "fee market" more "efficient", Blockstream was counting on a couple of changes to the queue-management part of the core software ("replace-by-fee" and "child-pays-for-parent") that would allow clients to increment the fees of transactions that were stuck in the queue, and thus jump over other transactions with smaller fees.

According to this plan, the bitcoin network would be worth using only for large-value transactions, including the "export" of bitcoins to sidechains and settlements between the sidechains.  (Since then it became clear that sidechains will not work as intended, but Blockstream found a new vaporware to take their place in the plan, the Lightning Network.)  Most of the individual users, and services like BitPay and Bitstamp, would be forced to move to the overlay network.  

If that is the plan that they sold to their investors, their attitude would made perfect sense.  Gavin's proposal to increase the block size not only would postpone the need for the overlay network by many years, but also would show that Blockstream did not have control of the protocol.   The investors who bought those claims would be quite displeased, to put it mildly.  

So, at first Blockstream tried to block Gavin's proposal with the claim that it would make nodes terribly expensive.  Which is nonsense, since an increase in the *max size*  would not cause any immediate change to the *average size*: the latter would just continue growing (hopefully) at the current rate, and increase (gradually) beyond 1 MB only in a few years time.  But since the increase proposal has been reduced to 8 MB, they ran out of technical arguments.  So they had to resort to spreading FUD about the terrible risk of a hard fork (while doing soft forks themselves) and personal attacks on Gavin and Mike.

I have no particular admiration for Gavin.  He should have distanced himself from the Shrem Karpelès & Friends Foundation when it started to smell bad; instead, he stayed there as long as it was paying his salary, and even criticized Antonopoulos for leaving it.  And I had not noticed Mike's existence until a month ago.  

Yet I must recognize that they are only trying to keep bitcoin working for a few more years as it was intended to work, and as all the community has come to expect it to work.  Blockstream, on the other hand, is honoring their name, in an ironic and unintended way: their plan is to block the bitcoin stream, so that all the bitcoiners are forced to buy their water...

Moreover, Gavin and Mike have the prudence, competence, technical knowledge, and common sense that are needed to manage a large software project like bitcoin, that manages hundreds of millions of dollars for hundreds of thousands of users.  

Whereas the new core developers, while they may be expert cryptographers and clever hackers, clearly lack those qualities. They seem unable to understand Mike's explanation of how queues behave as the traffic approaches the channel's capacity.  They are unable to see the "fee market" will not be a market but a chaotic melee.  They cannot make any quantitative estimates of what the traffic and fees will be in their planned future. (Had they done so, they would see that an overlay network will not solve the scalability problem, either.)  

One of them explained that all wallet apps out there would have to be modified, so that, instead of just signing a transaction offline, issuing it, and disconnecting, the client would have to first check the queues at the nodes to guess an appropriate minimum fee F, then sign several transactions with fees F, 2F, 4F, 8F, etc., issue the first one, then remain connected to the network, so that his wallet app can watch the queues, re-issuing the other versions as needed in order to remain in front of the the other clients (who are of course doing the same), until the transaction is confirmed; or until the app runs out of pre-signed transactions, and has to ask the client whether he wants to keep trying, in which case he would have to sign a few more.  And tha dev called it "a trivial change", because it would require only "a few lines of code ...

And, worst of all, they want to make bitcoin unusable for its stated goal, in order to force users to move to another network that has not been designed yet, may never work, will not be like bitcoin at all, and will not solve the scalability problem either...

As you may know, I am very skeptical about the long-term success of bitcoin, and I have no love at all for the pyramid investment scheme that has been built on top of it.  Yet, I was expecting to see years of slow price decline, perhaps even delayed by another price bubble or two.  But now, after watching this war and realizing what the players are up to, my hopes for a quick, spectacularly comical collapse have been revived...

  

Ah, OK, thanks.  But it does not change the point.  If Vaultoro disappears with the clients' BTC, where will the victims press charges?  Against who? Are those the real names of the owners?

If they don't deliver the gold, then they don't need to actually buy and store it.  It is very convenient.  They just let clients play the trading game with pretend gold on their database.  And they can shave money from clients  by the usual tricks (front running, spreads, etc.) 

It is like BitReserve, that lets clients trade any foreign currencies (and also gold and silver, IIRC), with zero fees and zero spread!  How can they do that? Easy, like Vaultoro, clients can deposit BTC and withdraw only BTC.  So the forex trades are all pretend...  They promised that withdrawals in other currencies will be available "soon", but...

Erm, thanks for the compliments ...

... but I think of my cartoons are just another way of expressing myself.  Feel free to copy and reuse them as you wish, but please do not modify them to make them "say" things that I did not "say".  That is what the "ND" (no derivatives) means in the Creative Commons code.

Vaultoro sells gold for bitcoin.  Perhaps those hits were just Greek googling for "gold".

The recent price rise may not be due to Greeks buying bitcoin, but rather to non-Greeek traders buying bitcoins because they expect the Greek to buy.

Someone noted that it started as soon as negotiations collapsed and Tsipras announced the referendum.  Wasn't that too soon?  It would take time for the Greeks to open accounts at Bitstamp or Coinbase, send their money there, etc..

I wonder how many Greek have heard of bitcoin but haven't heard of Neo&Bee?

Speaking of Vaultoro, now that I have been nominated official scam-buster: I cannot find what the two young owners did before launching teh company,  the country where they are located,the name of any associated companies (auditors, insurers, the gold vault company, etc.).  I haven't looked, but I would not be surprised if they are not registered as a company anywhere.   The website seems to say that they don't require AML/KYC documents.  All are strong hints that it is a scam...