
The Schism Over Bitcoin Is How Bitcoin Is Supposed to Work - bootload
http://www.wired.com/2016/02/the-schism-over-bitcoin-is-how-bitcoin-is-supposed-to-work/
======
pflats
"He also complained of denial-of-service attacks against Coinbase and others,
while The New York Times reported that some developers had received death
threats.

[...]

But he raises a good point—denial-of-service attacks and death threats
notwithstanding.

[...]

This is pretty much how things are supposed to work. Sure, [...] the election
tactics got out of hand at times. But, well, this is the internet."

This is a hell of a thing to yadda yadda. Calling DDOSes and death threats
"election tactics" is ridiculous. If running X version of bitcoin is voting,
then it's not a (free) election if you interrupt people on the way to the
polls and intimidate them when they're not backing your candidate.

------
clarkmoody
A critical distinction between democracy and Bitcoin is that Bitcoin is an
_opt-in_ system.

Let's say alternative Bitcoin software causes a hard-fork in the blockchain:
you now how two currencies. The parties involved on each side of the chain
might decide that it's worth it to keep two competing currencies going, or
they may reconcile the fork and return to running compatible software. In the
end, the voluntary choices of the parties determine where they go (informed by
economic incentives, of course).

Democracy is a system in which some group of people hold _coercive power_ over
the rest of the population. If the rules change (income tax, imminent domain),
there is no opt-out short of leaving your property, family, career and moving
to another country. Your compliance with the new rules of the game is ensured
at the end of a gun.

~~~
lumberjack
The only distinction is that democracy has widespread support whereas Bitcoin
does not. "Coercion" is simply what happens when society decides unilaterally
to do things any one way.

~~~
clarkmoody
First: "Society decides." Society is not an entity that can reason or take
action.

Second: Are you saying that if Bitcoin had as many users as democracies that
there would be no remaining distinction between the two systems?

~~~
Anonobread
What outsiders don't seem to understand is the people shouting "Bitcoin is or
should be a democracy" the loudest are the ones who stand to benefit the most
from seizing power from the current core developers.

As if those people have any intention whatsoever to listen to the opinions of
billions of poor people when making technical protocol decisions. They don't
want real democracy - they want _their_ democracy where they're in control.
And for anyone wondering what that control looks like, here are some direct
quotes from the "democracy" crew:

Gavin Andresen: "there will be big companies spending lots of engineering
dollars on their own highly optimized versions of bitcoin. I bet there will be
alternative, secure-and-trusted, very-high-speed network connections between
major bitcoin transaction processors. Maybe it will just be bitcoin
transactions flying across the existing Visa/MasterCard/etc networks" [1]

Gavin Andresen: "I think long-term the chain will not be secured purely by
proof-of-work. I think when the Bitcoin network was tiny running solely on
people's home computers proof-of-work was the right way to secure the chain"
[2]

Gavin Andresen: "bitcoin is already more decentralised than it needs to be"
[3]

Mike Hearn: "probably 2 or 3 racks of machines" [4]

Gavin Andresen: No, it's completely distributed at the moment. That will begin
to change as we scale up. I don't want to oversell BitCoin. As we scale up
there will be bumps along the way. I'm confident of it. Why? For example, as
the volume of transactions come up--right now, I can run BitCoin on my
personal computer and communicate over my DSL line; and I get every single
transaction that's happening everywhere in the world. As we scale up, that
won't be possible any more. If there are millions of bitcoin transactions
happening every second, that will be a great problem for BitCoin to have--
means it is very popular, very trusted--but obviously I won't be able to run
it on my own personal computer. It will take dedicated fleets of computers
with high-speed network interfaces, and that kind of big iron to actually do
all that transaction processing. I'm confident that will happen and that will
evolve. But right now all the people trying to generate bitcoins on their own
computers and who like the fact that they can be a self-contained unit, I
think they may not be so happy if BitCoin gets really big and they can no
longer do that.

[1]:
[https://bitcointalk.org/?topic=3118.0](https://bitcointalk.org/?topic=3118.0)

[2]: [https://lists.linuxfoundation.org/pipermail/bitcoin-
dev/2015...](https://lists.linuxfoundation.org/pipermail/bitcoin-
dev/2015-May/008094.html)

[3]: [http://www.bitcoin.kn/2015/09/adam-back-gavin-andresen-
block...](http://www.bitcoin.kn/2015/09/adam-back-gavin-andresen-block-size-
increase/)

[4]:
[https://en.bitcoin.it/w/index.php?title=Scalability&oldid=35...](https://en.bitcoin.it/w/index.php?title=Scalability&oldid=3555)

IOW, the goal of their democracy is to usurp control of full nodes from
individual hands and make that into a Corporate-dominated service. It would
basically turn Bitcoin into an enterprise database that most people are stuck
accessing as a proprietary SaaS.

~~~
MCRed
Consider that much of the opposition to Core comes from the perception that
Blockstream, which employs many of the core developers, is usurping it to be a
high-fee, low-transaction network so that they can incentivize (and profit
from) the use of their lighting network.

That's why the opposition is called "classic" not "bitcoin democracy". Their
position is they are getting back to what bitcoin should have been.

And bitcoin originally had larger than 2mb blocks. The 1mb block limit was a
short term solution to a problem that existed back then... that was never
lifted.

~~~
Anonobread
The performance test data shows 32MB blocks are the absolute maximum block
size that can be handled on desktop PCs today [1]:

> After simulating the creation of blocks up to 32 MB in size, we have arrived
> at some interesting conclusions:

\- a 32 MB block, when filled with simple P2PKH transactions, can hold
approximately 167,000 transactions, which, assuming a block is mined every 10
minutes, translates to approximately 270 tps

\- a single machine acting as a full node takes approximately 10 minutes to
verify and process a 32 MB block, meaning that a 32 MB block size is near the
maximum one could expect to handle with 1 machine acting as a full node

\- a CPU profile of the time spent processing a 32 MB block by a full node is
dominated by ECDSA signature verification, meaning that with the current
infrastructure and computer hardware, scaling above 300 tps would require a
clustered full node where ECDSA signature checking is load balanced across
multiple machines.

In addition:

> Aside from the obvious network and storage constraints of running a full
> Bitcoin node at large block sizes, it appears the Bitcoin network is capable
> of handling a substantially higher transaction volume than it does
> currently. The CPU time being dominated by ECDSA signature checks at high
> transaction rates suggests a clustered full node architecture could process
> credit-card-like transaction rates by using a load balancing / offload
> approach to ECDSA signature checking, e.g. a full node with a 10 machine
> cluster would top out at >2,000 tps.

> The resources and know-how required to run a clustered node like this may
> impose a significant centralizing force on Bitcoin. Backpressure against the
> centralization of Bitcoin may well drive alternative solutions to having all
> transactions on-chain. Alternatively, it may end up that Bitcoin adoption
> grows slowly enough that the computing power of a single node grows quickly
> enough to avoid requiring a clustered full node architecture.

Under Gavin Andresen's original plan, the 32MB limit could've been crossed in
Jan 2018 when the size doubled to 40MB. Importantly, Gavin has since dropped
the idea for a block size of 2MB. Hence you really can't claim that your _own_
preferred plan for block size won't result in "a high-fee, low-transaction
network". It's 2MB - that's a very far cry from VISA and it's only 0.4MB more
than the scaling roadmap - that's a difference of at worst 3 tps out of VISA's
56,000.

Unless your intent is to quite literally put 100% of Bitcoin full nodes in
datacenters, it's as clear as day that raising and re-raising block size ad
infinitum doesn't work, as it usurps control of full nodes from individuals.
It effectively turns Bitcoin into an enterprise database only accessible to
the rest of us through garbage proprietary SaaS platforms. Clearly this isn't
a benefit and we should be pulling out every possible stop to avoid it from
happening. Look, if your vision for Bitcoin is that it should be like
Parse.com for credit cards, I'm sorry but we're just going to have to agree to
disagree.

~~~
aback
> Unless your intent is to quite literally put 100% of Bitcoin full nodes in
> datacenters

It is a fallacy to think that unless people can run nodes on dial-up in
basements, the Bitcoin network has failed in its mission.

Thousands of nodes running in data centers all over the world can provide a
scalable, fault-tolerant, censorship-resistant, decentralized relay network.

------
nickik
Their is no "supposed to" in Bitcoin. Its an experiment that went totally
insane. It does not have any way of finding agreement that ankered within the
blockchain. The potential value that could be destroyed is so big that it
compels people to find some kind of agreemnt.

Newer blockchains are already learning from these problems and are innovating.
Bitshares for example has the goverment structure built in, most of the
paramaters can be chainged by voting.

Now that does not make it democracy as we know it, because the power of the
vote is based on how much stack you have. Its essentially a company with stack
holders.

Doing a democracy as we have it in real live will be hard because of the
identity problem.

Bitcoin need some way to resolve these conflicts and if possible root the
choices in the blockchain itself.

This issue really forces you to think about how we make choices in groupes,
and what is "fair".

Their is a lot of research on this in political economics. James Buchanen had
interesting things to say about the Economic of Club and the Economics of
Constitution.

I also recommend,"Choosing in Groups: Analytical Politics Revisited"

~~~
the_rosentotter
I don't think there is a problem with the way bitcoin works. The majority of
miners, i.e. the people who actually have invested the money to run the
network, decide what software to run, and therefore what bitcoin is.

Bitcoin depends entirely on the self-interest of the involved parties to not
destroy the system they have invested so much in. That's how much of the real
world works too.

~~~
TD-Linux
No, the miners don't decide what Bitcoin is. If a miner produces an invalid
block, other Bitcoin nodes will reject it.

It's true that the recent hard fork proposals have keyed off miner voting, but
they wouldn't have to - they could just activate at a certain time, block
height, strawpoll vote API, or whatever.

------
ChemicalWarfare
I fail to see how "DDOS and death threats" == "democracy".

All of this has been covered/talked about ad nauseam, as far as I'm concerned
what this comes down to is 2 basic facts:

1\. There's a core development team (with it's fair share of internal politics
and power struggles) who is supposedly looking out for potential issues
affecting Bitcoin's operational health. Once they agree on the change and
implement it, there's no "voting" by any other players in the Bitcoin
ecosystem. They just do what they think is best.

2\. There's a disproportionate amount of hashing power concentrated in large
mining pools. This would be bad enough but what makes it even worse is the
heaviest hitters are in China and are unified against the biggest proposed
change SOME of the core team members like Mike were/are advocating.

So now how this standstill will resolve - remains to be seen. There are
multiple factors at play but as of right now the situation isn't pretty. To
claim that "this is how bitcoin is supposed to work" is to agree with Mike in
saying that it is messed up beyond recognition :)

~~~
MCRed
The voting is built into the bitcoin protocol-- the miners that find the next
block are voting for the piece of software they are running. If there is a
schism and some miners are running other software then two chains could --
COULD -- emerge-- but one will rapidly become the dominant one. ( for a period
the two chains will effectively double everyone's bitcoins, but the losing
chains coins will rapidly lose value as hashing power switches to the dominant
chain.)

This could be chaotic so the debate is really how to avoid two co-existing
chains in hard fork situation.

But bitcoin itself is, every 10 minutes, voting for what the "right" chain is,
which is defined as the longest.

Right now today if you're mining on a block and find out that there is a
longer chain, the node switches.

~~~
maaku
> Right now today if you're mining on a block and find out that there is a
> longer chain, the node switches.

Not if the longer chain is invalid under your node's consensus rules. The rule
is "most-work _valid_ chain."

------
creeble
I think the problem is precisely that it is (maybe) a democracy -- and that's
not what people expected. They expected a distributed, "trust free" network
for clearing transactions.

And no such thing exists, as it turns out. How can this _not_ be bitcoin's
practical death?

~~~
TD-Linux
Well, so far none of the chain forks have been accepted by the network, so I
wouldn't call it dead yet.

It really isn't a democracy - there is no method to force the minority into
the majority's will. If a controversial chain fork happens, there will now be
two Bitcoin currencies. Those on the original chain won't be forced to switch.

~~~
MCRed
They won't be forced to switch but they will be highly incentivized to do so,
as people in the minority coin sell them out to buy the majority coin.

Will be really interesting if any exchanges support this concept of two
bitcoin chains coexisting. I bet they don't.

~~~
TD-Linux
Right, but it's also hard to define the "majority" and "minority" coin here.
You could define "majority" based on "most hashpower", but say that chain is
being mined exclusively by the 3 largest China-based miners, would it still be
considered the most valuable? Or maybe only by one miner, like when ghash.io
was over 50%?

If the exchanges don't support the concept, it'll still at least be up to the
user to figure out which chain the exchange is on.

------
kleer001
Without a direct quote from Satoshi Nakamoto (whom ever they are) during the
launch of Bitcoin, or a direct quote from the original whitepaper I'm not
going to buy what Wired says is how Bitcoin is "supposed to work". One,
because either of those quotes would show some deep digging on the author's
part. And two either of those quotes would actually support the premise.

~~~
MCRed
The white paper goes into the issue to some extent with the "longest chain
wins" method, which is effectively, hash power based voting for bitcoin
software. (the software with the most hash power wins.)

~~~
Lawtonfogle
And since hash power correlates with wealth, this means the wealthiest (who
care enough to hash) win.

------
zekevermillion
There is no ruler. The user can choose the software to run. It's possible
there will be multiple protocols that claim to be Bitcoin. It would be nice if
some general consensus emerged not to use the Bitcoin name for specifications
that introduce substantial changes to the underlying economics or reward
structure of the protocol. But even if there's no consensus on semantics, each
group can choose to ignore the other and the only consequence will be that I
have to check who is speaking before I conclude they mean the same thing I do
when I say "Bitcoin".

~~~
bdamm
There can only be one blockchain though. As far as I know, any long standing
blockchain has a unique name.

~~~
zekevermillion
If you hard-fork the Bitcoin blockchain, but users continue to run
implementations of both, then you have two separate blockchains that are both
called "Bitcoin". We could call one of these "XT" or "Bitcoin Prime" I
suppose.

------
pash
_> “Bitcoin is not having a crisis. It’s having an election,” says Brian
Armstrong, the CEO of Coinbase, a very well funded startup based in San
Francisco. “The [prevailing] mental model for what’s going on is a split, a
divide in the community. But the right model is an election.” ... Bitcoin is
designed to operate as a democracy, and indeed, it’s deep into a major
election. This is pretty much how things are supposed to work._

Is it? That's really what this is all about.

Unlike a constitutional political system, Bitcoin has no explicit meta-rules
that govern how to change its basic rules. On one side of the present "civil
war" over the size of transaction blocks is a group that wants to make a minor
technical change to the protocol to allow it to support a higher volume of
transactions; and on the other side is a group that doesn't want that to
happen.

But these groups really represent two sides of a more substantial debate. One
side is advocating for the first deliberate change to the protocol's basic
rules, and the other side is saying, no, you can't do that. Michael Marquardt
(aka theymos), who controls bitcoin.org, bitcointalk.org, and /r/Bitcoin, and
who is a vehement proponent of the status quo, has made plain his position in
this meta-debate: "Bitcoin is not a democracy."

And that's the position taken by several Core developers, who insist that the
block-size is a "technical issue" over which users and stakeholders should
have no say. Gregory Maxwell, a vocal Core developer on the status-quo side of
the debate, and many others, object to changing the protocol in ways that
could cause a fork in the blockchain, with clients following one set of rules
going one way and clients following other rules going another. It's an
objection in principle as much as a practical concern: nobody should be
coerced into submitting to a new set of rules by the risk of being separated
from the mainstream of the Bitcoin community, and that means we have to stick
with the present rules. (Its exponents call this philosophy "consensus".)

So it's the newest setting for the oldest and most basic conundrum of
politics: bad rules are bad, but so is changing the rules of the game halfway
through. Artificially constrained blocks are driving up the cost of
transacting in bitcoin and hampering the currency's adoption; but rules are
rules, say people like Maxwell and his colleagues at Blockstream, who have
carefully arranged their lives and built their businesses on the assumption
that the present rules will be the future rules. (Blockstream is a company
that employs several Core developers and is building a mechanism for
transacting in bitcoin off the blockchain, i.e., a mechanism for providing
more transaction capacity to an artificially limited protocol.)

And Maxwell and his colleagues have a point. We are, after all, talking about
the rules of a currency that was created in part to take away from central
bankers, politicians, and the masses the ability to change the rules of the
game halfway through. If the block-size limit can be changed, what's to
prevent people from changing more important rules, like the one that keeps
bitcoin's money supply from growing without bound?

Still, as the saying goes, rules are made to be broken—and the peasants do
tend to revolt.

 _Edit: I edited my comment to properly attribute to Marquardt words that I
mistakenly recalled coming from Maxwell. I also tried to clarify a couple of
points._

~~~
mike_hearn
_> We are, after all, talking about the rules of a currency that was created
in part to take away from central bankers, politicians, and the masses_

Ah, no we are not. The last part, about "the masses", was tacked on later by
the people who fear democracy. That was never a part of the original vision.
Quoting the white paper:

"The proof-of-work also solves the problem of determining representation in
majority decision making."

Indeed, it'd have been a nonsensical goal to try and stop "the masses"
changing Bitcoin, because "the masses" are the only thing that give a currency
its value and attempting to produce a currency that literally nobody can
change, even if the vast majority of people decide to change it, is simply not
possible to do with software. That's why we call it soft-ware.

Unfortunately, the Bitcoin community has been completely wrecked by people who
truly, deeply believe that "decentralised" money means "money controlled by a
tiny cabal of developers" rather than the more obvious interpretation of
"money controlled by its users".

~~~
Animats
_" The proof-of-work also solves the problem of determining representation in
majority decision making."_

Right. The miners rule Bitcoin. That's the way it was set up. The big miners
are[1]:

    
    
        F2pool     28%
        AntPool    22%
        BitFury    16%
        BTCCpool   12%
        all others 22% 
    

All the miners listed are in China. They all communicate and have issued joint
statements in the past.[2] Their position is that the next block size jump
should be to 8MB, but there's no rush to implement it.

What bugs Gavin and the "core Bitcoin developers" is that they're not in
charge. The "Bitcoin Foundation" is broke and irrelevant.[3]

The original idea of Bitcoin was that mining would be something done as an
idle activity on user's PCs. Today, Bitcoin mining is done in big sheds
holding thousands of racks of special-purpose machines, located in cold
climates and near power stations.

[1] [https://blockchain.info/pools](https://blockchain.info/pools) [2]
[http://imgur.com/JUnQcue](http://imgur.com/JUnQcue) [3]
[http://www.bloomberg.com/news/articles/2015-12-30/the-
final-...](http://www.bloomberg.com/news/articles/2015-12-30/the-final-days-
of-the-bitcoin-foundation-)

~~~
the_rosentotter
Kinda weird how "China!" is somehow an argument against the big miners all by
itself.

Anyone is free to set up a larger mining operation if they are so inclined.
Until then, the bitcoin community can't be anything but extremely pleased with
how much processing power the Chinese miners are contributing to the system.

> The original idea of Bitcoin was that mining would be something done as an
> idle activity on user's PCs.

I don't have a quote handy, but as far as I know that is not true. Satoshi
expected mining to eventually be run out of large data centers.

~~~
cookiecaper
>Anyone is free to set up a larger mining operation if they are so inclined.

Sure, all they need are the tens of millions necessary not only to buy the
equipment but also to develop their own competitive custom ASICs.

The biggest problem with btc mining is that it's no longer feasible to make an
impact with commodity hardware. I think to the extent that Satoshi may or may
not have foreseen that, he assumed that the specialized hardware would
_become_ commoditized and that users would still have the power to make a
meaningful vote. This didn't happen because the Bitcoin network punishes a
faster network with increased difficulty, so as soon as you release your ASIC
to the masses, the network raises the difficulty to neuter the effects.
However, if you keep your hardware private, you can profit from the hardware
without making such a large impact that the network edges you out. This allows
the biggest miners to find several blocks per day (which is 25 "new" bitcoins
+ any attached as fees).

Given those incentives, it's only logical that the best hardware would be used
privately and that the vote of the everyday bitcoin user (who was _also_
supposed to be a miner) is irrelevant.

------
Anonobread
> It’s like a Visa payment network that’s controlled not by Visa, but by the
> people—one that is open to all and that can move money more cheaply and
> efficiently. That’s something we should all care about.

The USD doesn't compete against VISA. Gold doesn't compete against VISA. BTC
doesn't compete against VISA.

Please, will someone inform these poor journalists that it's sheer folly to
pit a currency or a commodity against a Corporation? American Express isn't
competing against gold bullion, and VISA isn't competing against BTC. VISA is
competing against Coinbase and Xapo.

------
oska
Bram Cohen, creator of BitTorrent, knows a thing or two about how to
successfully engineer a decentralised, peer to peer protocol.

Bram wrote about the manufacturing of this ‘fake crisis’ back in June of last
year [1]. He wrote a subsequent post after Mike Hearn's big ragequit in
January [2]. And he's written another short post just today [3]. I'd suggest
reading these if you want to get some balance to this highly one-sided and
simplistic article by Cade Metz in _Wired_.

[1] [https://medium.com/@bramcohen/bitcoin-s-ironic-
crisis-32226a...](https://medium.com/@bramcohen/bitcoin-s-ironic-
crisis-32226a85e39f#.hvgkb4vxz)

[2] [https://medium.com/@bramcohen/whiny-ragequitting-
cab164b1e88...](https://medium.com/@bramcohen/whiny-ragequitting-
cab164b1e88#.1pmjtdg6v)

[3] [https://medium.com/@bramcohen/double-billing-is-not-
healthy-...](https://medium.com/@bramcohen/double-billing-is-not-healthy-
competition-b698c345b11e#.hjwrfhn1g)

------
LoSboccacc
yeah, and oxidation is how we're supposed to die, how stuff works or not and
their effect being beneficial or not are orthogonal.

------
bobby_9x
Yeah, maybe. But all of the security problems, the fact that the average user
won't ever understand it, and the massive swings in value will stop me from
ever taking it seriously

~~~
ryangittins
How much does an average credit card user understand about what happens when
they swipe it?

~~~
pif
They don't care "how" it works. They know there is _a_ responsible subject
(VISA, Mastercard, ...) behind the curtains, and they know such responsible
subject to be have obtained clearing from the local government. When you
invest money into bitcoins, who is your guarantee?

~~~
realusername
I'm not even sure people differentiate between their banks and the company
behind the type of card itself, to them it's just "a credit card".

------
panamafrank
I'm not going to bother reading what Wired have written, i'll just assume it's
nonsense if the HN comments concur.

------
rsync
A fascinating bit of self-analysis as I see this headline appear on HN ...

I typically don't find wired.com headlines interesting and typically don't
follow their links. However, this headline _did_ pique my interest ...

... and I didn't follow it because I am not interested in the "deal" that
wired.com offered the other day. I have neither a dollar I want to pay them
nor do I intend to disable any adblocking.

Or whatever the deal was. Who cares. The bottom line is, I didn't read it.

