Gerald Davis is wrong. Here's why.

Friday, 06 February, Year 7 d.Tr. | Author: Mircea Popescu

Gerald Davis, aka deathandtaxes, is a man who had tried to run a Bitcoin business as a law abiding US citizen, and has been shut down for his troubles, by that Behemoth. No consideration whatsoever given to his stellar reputation (which he has thoroughly earned and entirely deserves). No consideration whatsoever given to his culture and intelligence (I have no doubt that one could not find, anywhere in the basements where these rats dwell, drawing paychecks against the public treasury, anyone more qualified to think about Bitcoin). No consideration given to his absolutely clean business practice. He was just shut down, and that's that.i

I have no idea what he's been doing for a living in the years elapsed since then - if anything, then definitely not anything related to Bitcoin as a free entreprise. Maybe he's working a garden or teaching yoga. Maybe he's earning his living as a Bitcoin expert in the pay of those who do not wish to see Bitcoin free entreprise generally, and certainly not to the degree displayed by the free world. Whichever of these it is, he's free to enlighten the world - I am curious like anyone's curious. What he can't do is pretend like "it doesn't matter". It does.

He has graced the retard forum with a lengthy essay, which is the subject of our discussion here. I will quote, and comment.

Permanently keeping the 1MB (anti-spam) restriction is a great idea ...
Today at 01:31:00 AM #1

Permanently keeping the 1MB (anti-spam) restriction is a great idea ... if you are a bank. When those in favor of keeping the limit in place, say that Bitcoin can still be a financial backbone of sorts they don't know how right they are. The problem isn't a limit in general but that 1MB is so low that under any meaningful adoption scenario it will push all individual users off the blockchain to rely on trusted third parties. In essence you will probably be priced out of the blockchain and the blockchain becomes yet another network you will never have direct (peer) access to, just like FedWire, SWIFT, and other private closed transfer networks.

The tendecy of fundamentally etatist writers to reference the USD and generally fiat considerations has been grilled before. This goes deeper than that : Davis pointedly omits to mention MPEx.

Mere preeminence given to the very obsolete piles of fiat crap we're here to not merely replace, but out and out render impossible for all time is insulting to the intelligence of free men, and little more. The pretense, however, that the Bitcoin success does not exist where it patently does, now that's disgraceful. That's how reputations are ruined. That is how one knows the paid agents of the enemy from the mere gullible, the mere bumbling idiots. It's one thing to sort the graduate class of Princeton according to height, first the white boys as a group, then the black boys as another group. It's stupid, it's racist, it's nothing you'd want to see. But to pretend the black boys do not at all exist, that's too much.

Meanwhile : MPEx is the thing that sent the SEC packing. Who else, of all these "community minded" Cominform herd ? Who else ?

MPEx popped the Pirate bubble. And you, all of you, and yes Gerald, you included in that "you". You "the community" of gullible idiots, you "the community" of bumbling fools are still yet to apologize. Not your fault, right ? Great. And if MPEx the "private closed transfer networks" weren't here to fix your problems for you, Bitcoin would have been forgotten entirely by 2013. "We don't know that", right ? Yes, that's right : you don't know that. That and plenty of other things, including exactly what your name is, every other day.

MPEx was here, to bust the MtGox bubble, and to bust the scam foundation, and generally to keep the light shining. Yes, it's a "private closed transfer network". Who exactly do you think is going to stand up to the banks of this world, to the powers of this world ? Gerald Davies ? Charlie Shrem ? Gavin Assassinsen ? How do you know who can beat back Omidyar on his own chosen field ? Oh let me guess, "the community", right ? Please, send some changetips, it'll totally work.

MPEx is there, like it or not, want it or not. Whether you're able to come to terms with its continued existence, and its continued successii. Whatever your emotional issues clouding the matter. It's there. And the list starts with it.

It's there, and the list starts with it to everyone's benefit so far.

There is no realistic scenario where a permanently capped Bitcoin network can have meaningful adoption and still enable direct access to the blockchain. To be clear by direct access I mean an individual transacting on chain without relying on intermediaries or trusted third parties.

Scenarios as discussed by the conclave of the inept are not a meaningful point of concern. What this is normally called is "appeal to ignorance", such as "there is no realistic scenario where swallowing pills cures poxes". Sure, there isn't. All sorts of "there isn't a realistic scenario" held the stage across the ages, such as "there's no realistic scenario where washing hands before delivering baby reduces peripueral fever".

Much more importantly, the intellectual situation of the author belies a fundamental incongruity with the new world we're here to help birth : he argues as to purposes. This is irrelevant. We're not here for a purpose, we're here for a cause, the difference is marked and all important. Arguing as to what "the effects" of this or that may be is exactly the mode of pseudologic that got you in the bind you're in, and in the bind out of which Satoshi aimed to extract you. It's the paper bag, or if you will the meta-problem.

Here's the scenario one could "not think of" : Joe dies. Joe does not want to give Obama most of his wealth. Instead of having his life's work inherited by the emperor, like in the final days of the Roman empire, he'd much prefer to have it inherited by his son, so that son can start his accumulation with a head start, and one day amass enough power to change the world in his own taste. Joe, in other words, is not retarded, he's not about to exchange power for the mere fetish of power. So a transaction is broadcast, splitting his fortune on the blockchain, according to his wishes. Has an individual "transacted on chain without relying on intermediaries or trusted third parties" ? I guess not. Technically, Joe has not, he's dead, and I've not had the foresight to name the heirs, so they have not, either.

Let's try again. I wish to buy a house. You wish to sell me a house. I pop open my wallet, and send you the half a Bitcoin or whatever it is houses like ours cost at this point in time. Has an individual transacted ? Definitely. Does this completely dispell the "doesn't exist a scenario" scenario ? Surely. Does that make a difference ?

No, it does not. It does not, for a most prosaic reason : Gerald Davis is a contemptible worm. He is not merely lying : he is intelligent and informed enough to know he's lying, and does it nevertheless. The fact that he's done it in the first place, the fact that he does not fear public ridicule more than he fears his masters, the fact that he's - provedly - willing to fuck a goat with cameras rolling satisfy that point : no, he's not going to stop. Because the only thing you can do, once you've lost your good name, is to continue whatever you did that lost it. Right ?

Can we stop talking about a cup of coffee please?

Yes please, can we stop talking about all the relevant things and instead focus on bugaboos and nonsense ? How is the welfare state supposed to advance its agenda while people keep focusing on the sensible points! Also in this line, "XII. The current 1Mb limit is arbitrary. We want to change it. Please ignore the fact that the discussion is about whether to change or not to change, and please ignore that the onus is on whoever proposes change to justify it. Instead, buy into our pretense that the discussion is about "which arbitrary value". Because we're idiots, and so should be you!".

You may have heard someone say something like "Every $5 starbucks coffee doesn't need to be on the blockchain so there is no need to raise the limit". The implied message is that while the cost of the limit is that trivial purchases will be knocked off chain you will still have direct access to the blockchain for everything else, but the 1MB restriction puts such a chokehold on transaction capacity that even larger more meaningful transactions will eventually be knocked off as well.

This is nonsense of the first degree : if at some point the incentives are in fact of the nature of changing anything, discussion of changing that something may be had.

Discussion of changing something may not be had on the strength of mere possibility, perceived by marginal elements, outcast elements, loud nobodies. To make it perfectly clear : you might change the color you've painted your walls. At some point. When you think it's been long enough since you last painted them. When you want to change it for whatever reason. The opinion of some random pickpocket that was arrested in front of your house, and of some bum that would like to move from pissing on your dumpster to living in your bedroom do NOT figure at any point in this equation. Because it is your house, and neither Gavin, nor Gerald, nor the rest of these schmucks have any sort of involvement whatsoever with, again, your house.

As a greater and greater portion of the overall transaction volume occurs off chain with third parties (aggregators) those entity will make arrangements with each other to allow cross entity off chain transactions and then settle the difference. With as little as 250,000 txns per day, it doesn't take a very large transaction volume before settlements between these trusted third parties alone fill the block space. At that point it doesn't matter if you want to use a third party or not, you no longer have meaningful direct access to the blockchain because it will be space will be priced to a point where individual transactions are just not economical anymore.

This directly reduces to "If Bitcoin is unwilling to implement the changes the USG wants implemented, then other (which ? we don't know, magical future "other") services will come along that will!" I'm sure they will. Actually, they already exist. You know, Western Union and Visa and Paypal and what have you. Square, Circle, Derpy. They, however, will not be successful. The USG can't magically invent its own Bitcoin to replace Bitcoin, as much as it would love to. How will these magical future things settle ? Oh, on Bitcoin ? And how would they prevent anyone so inclined from popping up a node, making their own wallet, whatever ? Oh, they couldn't ?! So then... what is the argument again ?

The argument, again, is the contemptible scum calling white black and black white. The first 170k blocks took 1 Gb. The next 170k blocks took 35Gb. If the next 170k blocks take 1.25 Tb then the only certain matter is that no ordinary individual will be participating to direct, on the blockchain transactions by 2020 2010. Simply because he won't be able to store the - hold your breath why don't you - 1.25 * 35 (6 * 365 * 24 * 6 / 170000) = 914 Terabytes required by then. Just downloading that much would cost something between 45`000 and 90`000 dollars.iii Yes, that's right. And yeah, I'm sure they'll go down a lot before the decade's out. It certainly looks like where things are headed, zek-side.

So, yeah, what can I tell you, let's talk about how becoming bigger makes everything bigger and pretend we don't notice that our proposal makes things untenable. Who exactly, of the "community" of wholly astroturfed "support" can afford 90k, or 45k, or even as much as one crisp new thousand dollars bill to pay for a private gavincoin wallet ? Oh, but that's not a problem because... wait, what were we discussing ?

We'll now skip a lot more of this "let's try to misrepresent sanity as somehow afflicted by all the evil results of our proposed nonsense", as it's pretty tedious to keep re-reading the same recycled crap.

The issue is that a 1MB restricted Bitcoin network provides so little transaction capacity (probably a lot less than you think)

The issue is not yet that.

The issue is that USGavin has no authority to cause a fork. That is the issue, currently.

Whether 1 MB provides too little, too much, not enough or so on capacity will become an issue once someone who isn't on the dark side raises the point.

Until and unless that happens, the issue is and remains whether the Princeton graduate, Amherst Mass residing, "Africa saving" USG tool has any space to open his fucking mouth among Bitcoin folk. And. He. Does. Not.

If you think this type of scenario is impossible then you probably don't realize how tiny the current transaction capacity is. We are talking a mere 10,000 or so transactions per hour. What happens in transaction demand is 10x or 100x that. 90% or 99% of it will occur off chain and that tiny on chain capacity will be swallowed up by just settlements between third parties.

Ever heard that statistic about how "1% of the world's population controls 40%of the world's wealth" ? Well a) it's perfectly true and b) it's exactly how finance works. The day where 1% of Bitcoin transactions by count happens on chain will be also be the day where 40% of the Bitcoin transactions by value happen on chain.

Much more importantly :

  • if you can afford to trade on the chain today and
  • if you do not willingly give your bitcoins over to some scammer and
  • Bitcoin grows to where 99% of the transactions are forced to happen off-chain
  • Then you will necessarily still afford to trade on chain.

That's what it is : the scary 90% 99%s etc do not affect you. They are a point of concern to all the other schmucks, the ones that are underweight Bitcoin. This includes the poor in whatever muddy shithole just as well as it includes the United States Government. Which, for all its "full faith and credit", is desperately underweight Bitcoin, and desperately rues the day when you will make your power felt.

That's what's at stake here : redistribution, from us, to "them". Whether they're misrepresented as "they of the future" or "they of the past" or whatever else, this cartoon explains it best :

oglaf-hotbuttons2

There are they who are massively unrepresented in Bitcoin. Normally they'd just inflate it away, to make things "fairer". But they can't, because Bitcoin is specifically designed to kill that. As a political gesture, intentionally, purposefully and deliberately. Because that is evil. So they're stuck arguing all sorts of insanities, as to the cast votes of future babies, as to the "inexistent scenarios" that are plain as day, as to "fairness" and generally, exactly what the beggar says.

Exactly what the beggar says, so he can continue smoking dope and "hanging around" while you wake up to go to work, to pay your college debt (which college he got for free, but whatever man).

The good news is that it's once again not a matter of what you think. Whether you fall for this scam or not (and on the historical record of 'the community' you most probably are going toiv ) will strictly have an impact on your own personal bottom line. Whether your own son or your own daughter will matter or not in the future is what is being discussed here. The meta problem, the greater, systemic problem is already settled : I already declared MPEx will not tolerate this fork, and without MPEx no fork of this network can succeed, should it have complete agreement of everyone on the forums and everyone else. That is what a consensus system really is.

The average txn size is going to be larger due to factors like uncompressed keys being used, more complex scripts, and a limited number output selection.

This inadvertently brings us to some of the real sore spots behind the recent failure of the proposed scamcoin. Specifically : Gavin not being able to push his destruction of Bitcoin through means that all the crud they've accumulated over the past few years, in a pointed, direct and quite obvious attempt to weaken and eventually destroy Bitcoin will be naturally shaken off.

(It actually gets a lot worse than that, because Bitcoin 0.5.3 is currently being maintained, and by a much saner set of developers - meaning that all the expert effort put into subversion since then is as good as lost. The irony hasn't escaped anyone, of course).

Good riddance.

1MB doesn't can't even keep up with existing non-retail payment networks.
Going back to that coffee meme, the implied message is that 1MB is fine unless for everything else. You know substantial stuff like paying your mortgage, business deals, major capital expenditures, or paying a supplier for inventory. This just isn't the case though. Do you know anyone who pays for coffee with a bank wire? The FedWire service (run by US federal reserve) processes ~150 million bank wires annually. The FedWire service only operates in the US. Internationally the largest clearinghouse is SWIFT and it processes more than 5 billion transfers annually. The US ACH network is even larger with 19 billion transactions annually (excluding converted checks). There are also about 2 billion international remittances annually (western union, moneygram, and other networks). A 1MB restricted Bitcoin network couldn't even keep up with these transfer networks even if you forget about retail sales completely. The idea keeping the 1MB restriction, only keeps limits the utility of small payments is simply incorrect.

What is incorrect ? The idea that "innovation" consists of mimicking the already present and the proposition that it is incumbent upon Bitcoin to adapt to "the world as it is". Rather exactly the opposite : the world as it is, in all its details and to whatever degree it takes, whoever bleeds and whoever cries, will adapt to Bitcoin. Entirely and perfectly or else it gets the hose again.

So, if Bitcoin needs to ever change, it will change for Bitcoin reasons, and at the behest of Bitcoin people. Not "because US Fed", and not "because Gavin Assassinsen". These considerations about what the world does or doesn't do, likes or doesn't like, bla bla... Nobody cares.

Bitcoin reasons. Bitcoin people. Fuck fiat with a bent pitchfork.

The future cost of the network will need to rise to ensure that attacks are not economical and non-economic attacks are prohibitively expense relative to the benefit for the attacker. It may not rise linearly but it will need to rise. If someday one Bitcoin is worth $10,000 and we are still only spending $300 million a year on security we probably are going to have a problem. Now advocates of keeping the limit may argue that the majority of the network cost won't be paid by fees for many years but the reality is that with the limit on potential transactions there are only two other ways to balance the equation and that is much higher fees or much lower security.

If Bitcoin can't pay for its own security, it is best to find this out sooner rather than later. Moreover, from my unique vantage point I have seen sovereigns try to pose a problem for Bitcoin, and I have seen them fail miserably and without exception. I am not terribly concerned, and unlike pretty much everyone else publicly involved in discussing Bitcoin, I actually know what I'm talking about.

Nice going on the FUD and all that, but so far, the Bitcoin side of the score table has run the counter over a few times, and the US side of the scoring table is still at zero. Notwhitstanding the epic differential in resources spent for this result.

———
  1. And if you're curious to see how that personal failure of his (in standing up to the bullies) was received, sure, here you go :

    gerald-davis-mpoe-pr

    Puts Shrem's misadventure in some perspective, one should hope. []

  2. Guess what ? The entire conclave of fiat VC powered derps, the Bitpays and Coinbases and whatnot of this world have not managed together the income that MPEx manages alone. And yet... they pay tax to the USG. MPEx pays tax to Bitcoin's sovereign. []
  3. Current badwidth costs are from 50 to 100 dollars per terabyte, providing of course you are me - which is to say very rich and powerful, and thus able to shrug and go "retail is for suckers" in any direction. []
  4. Where is that scamcoin, by the way ? Gone the way of the "honor program" and Gerald's honor ? Aww. []
Category: Bitcoin
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9 Responses

  1. It is "terabyte", not "terrabyte".

  2. Mircea Popescu`s avatar
    2
    Mircea Popescu 
    Friday, 6 February 2015

    So it is.

  3. Its clear that there is no absolute consensus on this move, I can't understand why they are willing to risk Bitcoin on something that is not necessary now, if was necessary we could gather enough consensus for a safe change...

  4. Mircea Popescu`s avatar
    4
    Mircea Popescu 
    Saturday, 7 February 2015

    Because it's not theirs.

    You understand this much ? People uninvolved in valuable, exciting and important things are always willing to "risk them". Why not ?

  5. It was more of a rhetorical question, one can certainly awe at the amount of Yes Man. Btw do you have plans for a win32 version of the original client, this is sticking to Satoshi words: http://thebitcoin.foundation/index.html

  6. Mircea Popescu`s avatar
    6
    Mircea Popescu 
    Saturday, 7 February 2015

    I personally am not involved to that degree. From what I can ascertain the main priorities of the Bitcoin Foundation currently revolve around source code - one could compile for absolutely any platform they choose. Due to the particular proclivities of people collected in #bitcoin-assets (and of thinking people in general) a BSD version for instance seems likely to happen before a Win32 version. But the largest determining factor in this is, of course, whether someone shows up that cares enough about Windows to make Bitcoin for it (as, unlike most any other - sane - environment, the average Windows user can not reasonably be expected to make things for his own self).

  7. Anyone who wants a win32 version can go and put the crud removed by the 'goodbye-win32' patch back in. Result will build using mingw32.

    I specifically will not do this. And come to think of it, that patch was mine.

    The best time to quit Winblows was perhaps a decade ago. The second-best time is - now.

  8. Mircea Popescu`s avatar
    8
    Mircea Popescu 
    Saturday, 7 February 2015

    Definitely now, just in time to catch no-linux-left situation.

    Systemd ftw!

  9. got it thanks, always wanted to try BSD.

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