sipa changed the topic of #bitcoin-wizards to: This channel is for discussing theoretical ideas with regard to cryptocurrencies, not about short-term Bitcoin development | http://bitcoin.ninja/ | This channel is logged. | For logs and more information, visit http://bitcoin.ninja
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<bsm117532> adlai: Since you mentioned me and I had some more time today...a braid with rewards proportional to area: http://imgur.com/ntYgBAN
<bsm117532> Successive colors are "cohorts" -- analog of a bitcoin block.
<adlai> is there significance to the Z ordering of the two "overlapping" green beads?
<bsm117532> No. I'm not entirely happy with how the library I'm using chooses to plot these. I might try to fix that...
<bsm117532> The last thing I need to figure out is a rewards algorithm that punishes miners for making beads with very-old parents. It expands the size of the cohort, which an attacker might use strategically... I'm thinking with a steep enough rewards function, beads could have zero reward when their parents are too old, giving a criteria to toss out too-old beads.
<bsm117532> The algorithm I presented in HK (used on this graph) is linear, but I think that's not enough, it should probably be quadratic or quartic or gaussian...
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<bsm117532> jtremback: Basically we discuss research papers here. ;-)
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<bsm117532> There's also the problem of deciding on a retargeting algorithm for this structure...
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<jtremback> bsm117532 your beads scheme does not have one global ledger?
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<bsm117532> jtremback: It is a single global ledger. It's just a different arrangement for blocks, allowing for the fact that blocks can be produced simultaneously on opposite sides of the planet (orphans or stale blocks in bitcoin lingo).
<jtremback> ok, so they do not need to be ordered as strictly?
<bsm117532> If such blocks have no conflicts (no double spends) then I need to tie them together, so blocks have to have multiple parents. That realization alone leads to a Directed Acyclic Graph (which my graphs are).
<jtremback> does every node verify every transaction?
<bsm117532> They are less strictly ordered than a blockchain. Blocks can be "parallel" if they have no double-spends. (I call them "siblings")
<bsm117532> Yes every node verifies every transaction. But step 2 for me is sharding so every node doesn't have to verify every transaction. But that goal is orthogonal to eliminating the orphan problem.
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<bsm117532> jtremback: You might be interested in my blog post on the subject, which explains my plan of attack to these problems: http://blog.sldx.com/three-challenges-for-scaling-bitcoin/
<jtremback> cool, thanks
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<jtremback> oooh i like #2
<jtremback> so, maybe 21 inc is not so silly after all?
<jtremback> doesn't the sharding in #3 effectively reduce the security?
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<bsm117532> Not necessarily. The question is: how do I know that the remainder of the blockchain that I'm not holding does not contain a double spend, follows the rules, does not allocate more coins, etc. There are other ways to do this, via passing proofs about the parts of the blockchain you don't hold.
<jtremback> in #2 i'm not sure I understand the point of using an asic
<jtremback> I guess if nobody used asics an attacker could do a sybil attack with some
<jtremback> ?
<bsm117532> That's only because bitcoin is currently ASIC-oriented.
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<jtremback> how is this edge mining attackable?
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<bsm117532> There's a strong desire in the community to move to a non-asic algorithm that can be run on commodity hardware, but I argue this creates an "external majority" problem where there's tons of commodity hardware out there that can be reallocated to mine. (It has been done with javascript, virii, worms, etc in the early days)
<bsm117532> I personally prefer ASIC mining, but it has a different centralization problem surrounding the creation of the ASICs themselves. :-/ Pick your poison.
<bsm117532> Re: edge mining, we had an interesting conversation the other day: https://botbot.me/freenode/bitcoin-wizards/ scroll back to Feb 13 starting with Taek's comment.
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<jtremback> I don't really understand it. How is edge mining anything more than anti-spam?
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<jtremback> the ability to do work on one transaction doesn't mean that it's not a double spend
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<bsm117532> Edge mining *IS* anti-spam. The rule regarding highest work decides which among double-spends to choose.
<bsm117532> Point is, this is not something an attacker has control over.
<bsm117532> Particularly with braids combined with edge mining, the attacker's idea would be to promptly introduce a spend, and wait for the merchant to accept it, introducing a double-spend later. This double-spend can only overtake the rest of the network if the attacker has > 50% of the hashpower, per Satoshi's original analysis.
<bsm117532> If the attacker introduces both sides of the double-spend simultaneously (something that is possible with braids) he doesn't have control over which gets selected, because it depends mostly on how other miners build their blocks. Also, the wise merchant will quickly detect the double-spend since enough confirmations have not pased.
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<smooth> bsm117532: the idea that there is no external majority with ASICs is a myth, especially after a halving. But even otherwise, there may be many more ASICs that just haven't been put into production for whatever reason
<smooth> at one time ASICMINER claimed to have multiples of deployed hashrate in inventory
<smooth> at best it is weak protection from anything
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<bsm117532> As I said, "pick your poison". Neither is a magic bullet.
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<bsm117532> I'd argue for an open source ASIC design, with wide and multiple manufacturers, and contractual agreements to sell the chips and not mine with them.
<smooth> agree there, just think it is dangerously wrong to assume all asics within a reasonable range of efficiency are mining
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<smooth> i have some in my garage sitting idle :)
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<bsm117532> Anything that can be run on commodity hardware has a 10000x external majority. How to co-opt that majority into mining is an exercise left for the reader. ;-)
<smooth> maybe im waiting for an attacker to call me up and rent them :)
* bsm117532 jots down smooth's phone number...
<smooth> im not sure the readily-deployable external majority is that high even with commodity hardware
<bsm117532> Two words: google datacenter
<smooth> for example, when any altcoin is hot (probably ethereum now) you can see a direct effect on cloud mining prices
<smooth> yes, but google is using it
<smooth> er, not cloud minnig.
<smooth> cloud computing i meant
<smooth> cloud gpus in this case
<bsm117532> I mean, any operator of a large amount of hardware (cloud provider) could be re-provisioned to allocate idle time to mining.
<smooth> yes i would expect that to happen longer term
<bsm117532> If your coin is only as secure as cloud mining is not-idle, I'd call that not secure.
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<smooth> but what happens now is they offer idle time at low prices and people rent it to mine
<bsm117532> That's an interesting dynamic...
<smooth> when there is a hot altcoin like eth, it is very hard to find spare capacity. many vendors sell out or increase prices, etc.
<bsm117532> There goes my plans for world domination...
<smooth> you know the market does its thing...
<smooth> i mean it is very hard to create a situation where a large entity can't take over
<bsm117532> But if the operator could make even more money by mining ETH and selling it, why are they renting it a lower price?
<smooth> google could deploy its datacenter but it could also get chips made easily enough
<smooth> i would say because the market is not mature enough
<smooth> and also kind of small
<bsm117532> Chips have a substantial lead time in their development, and don't all come out all at once. A datacenter can be redeployed instantaneously, essentially.
<smooth> how much can you really make mining eth compared to a real business.....but some small cloud computing operations probably do mine themselves
<bsm117532> If I was running a cloud computing operation, I'd use idle CPU for mining...
<smooth> they can come online at once, if that's what is desired
<smooth> i bet some smaller ones do. for larger ones it probably creates too many problems to bother
<bsm117532> Well, with ASICs then you'd have to wait for the end of a manufacturing run, warehousing them, installing them, and letting the first ones sit idle while the last one is installed.
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<bsm117532> poison...
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<smooth> nah just wait till the halving and buy on the used market
<moa> "... mining eth compared to a real business ..."
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<bsm117532> moa: WeChat is over there ---->
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<bsm117532> The halving formula was such a bad idea. Satoshi clearly wasn't a math major...it's easy enough to make the reward continuous and not have these spikes.
<smooth> true that
<smooth> but then again my asic gear isn't sitting in my garage because of halving either
<HostFat> how do you know that these spikes are a part of his idea?
<bsm117532> Explain? Why do you have idle asic gear?
<moa> the halving formula is a great idea
<HostFat> aren't*
<smooth> bsm117532: because it is slightly below profitable
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<bsm117532> smooth: That's not likely to improve soon.
<smooth> when btc spiked up close to 500 usd recently i was getting it ready
<bsm117532> moa: the halving formula is so dumb. How is it better than a smooth curve?
<smooth> but you are right, with the halving coming soon it will quite possibly not happen
<bsm117532> smooth: I predict Ethereum will have a better year than BTC.
<bsm117532> But neither will go away.
<smooth> starting from now or starting from jan 1? :)
<moa> the halving formula is a great idea ... just to balance your unsupported contention
<bsm117532> Both.
<bsm117532> moa: justification?
<moa> you go first
<moa> it was your statement
<bsm117532> Discontinuous perturbations on the market cause ripples.
<smooth> hmm, i think i would pick btc from now
<moa> ripples create interest
<bsm117532> Only from speculators, and they're worthless.
<moa> hah
<HostFat> lol
<bsm117532> Also, Ripple is worthless.
<smooth> hehe
<moa> now we're into social theory
<bsm117532> Didn't mean to go there...
<moa> halving is simple and unlikely to be gamed
<bsm117532> Any time I take a market and I introduce a discontinuous perturbation, it will cause reactions and reactions to the reactions and oscillations.
<bsm117532> Bitcoin is pretty weird in the fact that it's scheduled, so people have a lot of time to make their plans.
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<bsm117532> But I argue it would still be better with a continuous curve.
<smooth> if you believe the external majority theory then you have to believe that halvings are terrible i think
<moa> I would argue it is good enough
<bsm117532> The discontinuous nature of Bitcoin may not affect the bitcoin price, but it will cause discontinous fluctuations in secondary markets (dumping of ASIC hardware)
<smooth> because of the unnecessary security vulnerability
<CubicEarth> bsm117532: Or at least much smaller steps. Adjusting monthly perhaps.
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<smooth> CubicEarth: the obvious is on difficulty adjustment (nominal 14 days)
<bsm117532> CubicEarth: There's no reason why the reward can't be adjusted with every single retargeting. Many altcoins do it.
<CubicEarth> smooth: Yes
<CubicEarth> bsm117532: Yes
<bsm117532> smooth: What security vulnerability?
<smooth> the hash rate dropping in half overnight
<smooth> potentially ymmv, etc.
<smooth> the argument has been made it could drop 100% overnight
<bsm117532> I've been arguing for some time that the halvings create "dark hashpower" that can/will be used to attack the network later.
<smooth> if all miners have a profit margin <50%
<smooth> bsm117532: yes thats exactly what i meant about external majority theory and halvings being inconsistent
<bsm117532> In fact, it creates ~50% dark hashpower with each halving, under naive assumptions...
<smooth> there is >0% dark hashpower before the halving so after it would always be >50% under those assumptions
<bsm117532> Yep.
<moa> any evidence for this "dark" hashpower?
<bsm117532> => Halving is bad, smaller steps would be better.
<bsm117532> moa: his name is smooth.
<moa> 1 ASIC in a garage?
<smooth> its not 1 but really the concept is pretty obvious
<smooth> if you have a spectrum of efficiencies there will always be something that is not quite break even
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<moa> it seems to totally discount any price changes that comme into profitably though?
<smooth> that just moves the line, right? there is still a line.
<bsm117532> Or her, hell if I know. All I know is that smooth can't possibly have a wife.
<smooth> i mean if we woke up tomorrwo and btc was 1 million USD we might mine on GPUs
<moa> but is it really 'dark' if it is uneconomic then?
<smooth> certainly with all old asics at a minimum
<bsm117532> smooth: How quickly do you respond to price fluctuations?
<moa> seems more like dead than dark
<smooth> bsm117532: in the past i had it automated. Since small scale mining doesn't really work any more its more like a day or two.
<bsm117532> I'm sure it can be modeled simply with a time constant...
<CubicEarth> bsm117532: That would depend on how volatile the price has been recently
<bsm117532> smooth: And you watch the market daily?
<smooth> no, but if it moves a lot i generally hear about it...
<moa> if all the old mining GPUS come back on-line I not sure they would even make a dent in hashpower total relatively anyway?
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<bsm117532> CubicEarth: I'm referrring only to how quickly someone notices and brings their hardware online. On average, with many participants, I can model this with a time constant.
<smooth> moa: it was an extreme example, but i dont know gpus there are in the world, id guess quite a lot
<smooth> there are large data centers with many gpus in them, similar scale to btc mining farms...
<moa> yeah but relative to ASIC hashpower they are a blip
<bsm117532> It's naive to assume that GPU/CPU farms won't arise, on the same scale as current Bitcoin ASIC mining operations.
<CubicEarth> bsm117532: Yeah, and what I'm saying is: If the price swings 1000% week to week, people are going automate their on- and off-lining of hashing. If the price and difficulty have been steady for months... then people will not invest time into flexibility
<smooth> CubicEarth: thats exactly what i did when i had close-to-profitable equipment
<bsm117532> CubicEarth: I see what you're saying.
<CubicEarth> Kinda the same way that organisms can evolve to evolve faster, or evolve to be more stable.
<bsm117532> No assets swing that wildly. A few percent at most. Any readily traded assets has a thin margin to profitability.
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<bsm117532> Mine at night on the grid, during the day if you have a solar installation...
<bsm117532> Any serious large scale miner would do both.
<CubicEarth> bsm117532: Sure, I was just trying to illustrate my idea with an exaggerated example
<smooth> bsm117532: bitcoin price swings much, much faster than it makes sense to buy and sell hardwware, if the latter is even practical at all
<bsm117532> Not 1000%.
<smooth> maybe close to that in 2013, but mostly not
<bsm117532> How many people have on/offlining hardware/software for their mining operations, depending on the Bitcoin price and electricity price? I'd guess it's very very small.
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<smooth> probably not...i like that they don't it subsidized me
<CubicEarth> I think we can all agree a 1000% rise would be nice. Very nice.
<bsm117532> the capital costs of the mining hardware make it worthwhile to find cheaper electricity, and move there...
<smooth> bsm117532: thats only correct if the price volatility is low (as it was in most of 2015)
<smooth> for most of bitcoin's history the price volatility was not low at all
<bsm117532> smooth: that has been speculation based. Here on out I'd bet you we won't see nearly as much voltility.
<smooth> of course it is speculation based
<bsm117532> Professional market makers and traders are in the game now, and they tend to damp out volatility.
<smooth> id say thats somewhat off topic
<CubicEarth> my favorite thing that works against volatility is that the big holders can only dump once. I mean sure they can buy back, but I don't think that is how it tends to work in bitcoin.
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<smooth> getting back to mining, to be honest ive become somewhat negative on the whole concept. I mean how much of a security margin can we really expect from the premise of 50% being honest not only right now but at every point in time?
<bsm117532> smooth: If you can invent an algorithm that can identify the "honest" from the "fraudulent" when the "honest" have less than 50%, I'd like to see it.
<smooth> obviously i can't
<smooth> otherwise you would have seen it :)
<bsm117532> I'd almost argue that's a law of nature. The honest are defined by the majority...
<smooth> the honest in bitcoin are sort of defined by extending the longest chain, i think
<bsm117532> correct, but that's circular.
<smooth> not sure i see the cirularity
<smooth> i mean there is a longest chain, someone either is or isn't extending it
<bsm117532> Longest chain defines honest. Honest defines longest chain.
<moa> i think you're mixing up subjective and objective definitions of "honesty"
<moa> the longest is the longest is all you can say
<smooth> i dont see how honest defines the longest chain
<bsm117532> It's an often-made mistake. I'd argue "honest" is not a consideration on the table.
<smooth> okay then, just substitute mining on the longest chain vs. not mining on the longest chain
<bsm117532> which is to say, it's way to fuzzy and sqishy to define honest in a cryptographic manner. "longest chain" is extremely clear.
<smooth> and leave the moral baggage out of it
<moa> well the longest chain could be provably 'dishonest' with double-spending etc, etc if there was a successful 51% attack
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<bsm117532> It's best to dump moral baggage, including the words 'honest', 'fraudulent', and 'trustworthy' and design protocols without need of those concepts.
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<smooth> moa: how can you prove that the longest chain is dishonest?
<smooth> thats exactly the challenge that bsm117532 made earlier
<bsm117532> One person's honest is another person's fraudulent. To smooth's earlier challenge, I suspect one can prove this can never be better than 50%.
<smooth> bsm117532: moa specifically mentioned double spending, but i dont see how you can prove that the LC is double spending
<bsm117532> LC?
<smooth> longest chain
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<bsm117532> That's easy...a double spend exists on an alternate chain.
<bsm117532> Only the owner of that UTXO can create such a thing.
<smooth> if you define that as dishonest yes
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<bsm117532> Exactly, there are quite a lot of legitimate reasons why someone might submit a double spend of their coins. (e.g. wait a while, no coins move, submit another -- might even be to the same vendor!)
<bsm117532> This is one of the reasons behind the new bitcoin RBF code by petertodd.
<smooth> even if you define it as dishonest you cant say which one is the wrong one other than longest chain
<smooth> you could burn both but that opens the obvious abuse
<bsm117532> One of the points of this, in my mind, is to drop the morality of the "honest transaction" and settle one, in the interest of creating faster settlement networks.
<bsm117532> The fear of transaction reversal is what causes T+3 to be a thing.
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<kanzure> verifiable-c verification stuff http://vst.cs.princeton.edu/
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<kanzure> "This is a full verification of SHA256 in Coq using the VST framework. A macro-expanded SHA256 reference implementation from OpenSSL is verified with respect to a functional implementation of the same function. This guarantees safety and correctness w.r.t the Coq spec when the program is compiled by CompCert"
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