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If you mean "why can't the size of the pages in the ledger be increased?" then the TLDR answer is that Bitcoin is stuck in a rut.

https://en.bitcoin.it/wiki/Blo...

If you mean "Why can't we create yet another cryptocoin with a bigger page size?" then:

a) It's unlikely to happen in practice. The world's reaction to Yet Another Cryptocoin isn't going to be "Yes, please!".
b) No page size will be big enough for a cryptocoin to be used as a general-purpose payment system at a worldwide level that needs tens of millions of transactions per second.

There's also the problem of what happens when all the Bitcoins have been found and the miners aren't interested in signing any more pages of the ledger. The amount of work needed to falsify the ledger will drop dramatically and the miners will be sitting there with a whole lot of mining hardware sat there doing nothing.

"does this also mean that remaining crypto-coins can be instantly discovered?"

No, that's not how the minting of new coins work, at all.

There are theoretical issues where someone might learn your private key from seeing a transaction, but they're mitigated for all new addresses and usage.

https://en.bitcoin.it/wiki/Qua...

^^ THIS.

Only a complete noob is using a GPU to mine.

* Mining Hardware Comparison
* Non-specialized Hardware comparison

^^ THIS.

Only a complete noob is using a GPU to mine.

* Mining Hardware Comparison
* Non-specialized Hardware comparison

Most things can be explained very simply, this guy takes forever to say simple things, sounds more like a salesperson than a tech talk, I dont find him very convincing on that basis alone but whatever, to your points.

1. Takes him 10 minutes to say increase the blocksize and another 14 minutes to say Lightning network or sidechain.
https://en.bitcoin.it/wiki/Blo...
Sidechains are divorced from the block so require other layers of trust and are therefore not blockchain.

2. complete waste of my time, was a sales pitch more than anything.

3. 51% attack is completely possible, in 2 cases especially.
        a. The network has fallen out of favor and everyone has moved on to the new bestest coin ever, and the only people left on the old garbage coin for slow people are just hacking it to get whatever 'value' they think they can steal and its trivial to have enough processing power.
        b. New super good coin is 'worth' a bajillion megabucks and now its trivial to spend 1 billion dollars to do an attack.

https://blockchain.info/pools
Only 3 of the top 4 pools need to conspire to further their own self interest, less than that is necessary for shorter term control of the network, even if they are able to disrupt the network for their own purposes with 30% of the hash rate.

One of the biggest failures of new technology, especially when advocates are vociferously certain that its so perfect and cannot fail is a lack of imagination, this has taken down the most secure certain absolutely guaranteed 'things' time and time again. Someone will find a hole and take advantage of it over and over in ways not originally even considered.

Maybe there is a simply a spam attack possible that delays all transactions for many hours or days.
Maybe there is a trust attack where proof appears from multiple sources.
When does a classic man in the middle attack become 'worth it', impersonate the work originator.
Who knows.

Thats if its not regulated out of use by governments in short order anyways.

4. was a sales pitch again.

In practice Bitcoin is a complete failure, too expensive, too slow, doesn't scale, too much risk, not convenient.
Blockchain may be interesting but V2.0 looks useless so far. No reason it can't be looked at some more but my original descriptions stand from where I sit.

Other than the lack of a widely used multi-site micropayment service that respects viewers' privacy.

You could use satoshis. They are currently worth about a hundredth of a US cent, so can be used for very small transactions.

Of course, there is also a $30 blockchain transaction fee, and it takes a week to clear, so it isn't a perfect solution.

because wallets can be lost/stolen/hacked.

That's why they created multisignature. You need cooperation between multiple people to perform an transaction.

You can also make a paper wallet, cut it into pieces and give each piece to a different person.

There are some elaborate hardware wallets. There are many other methods, including just printing it off on paper.

Up to a point, this is true. Bitcoins are already mined by dedicated hashing machines, containing hardware whose express and only purpose is to calculate SHA-256 hashes as fast as possible. Today, the fastest of these machines is capable of 10,000 mega-hashes per joule of power consumed (from this page https://en.bitcoin.it/wiki/Min...).

I'm a little skeptical of this number, since it's an order of magnitude larger than everything else on the same page, and I haven't found any independent sources confirming it, but in any case, once you've put your hashing process into specialised hardware, the only thing that'll make it faster is pretty much a smaller process size on your silicon. I can't see this being done just for the purpose of mining bitcoins.

I *think* there may be a fundamental error with the article linked by the OP. The author of that article, Eric Holthaus, argues that because the value of Bitcoins is increasing due to speculation, so of course more and more people will jump in to the task of mining new Bitcoins.

Except of course that can't happen forever, thanks to the design of Bitcoin. As this page explains quite nicely...

https://en.bitcoin.it/wiki/Con...

there is actually a finite limit to the number of Bitcoins that will ever be created. To quote the explainer,

"Bitcoins are created each time a user discovers a new block. The rate of block creation is adjusted every 2016 blocks to aim for a constant two week adjustment period (equivalent to 6 per hour.) The number of bitcoins generated per block is set to decrease geometrically, with a 50% reduction every 210,000 blocks, or approximately four years. The result is that the number of bitcoins in existence is not expected to exceed 21 million.[2] Speculated justifications for the unintuitive value "21 million" are that it matches a 4-year reward halving schedule; or the ultimate total number of Satoshis that will be mined is close to the maximum capacity of a 64-bit floating point number."

So, in other words, although in theory the folks who mine new blocks are going to continue to get paid in Bitcoins, the value they receive will dimish to tiny fractions. Eventually we should get to the point where we continue to need new blocks to host transactions, but miners will receive virtually nothing for their efforts - certainly far less in value terms than the cost of the electricity required to solve the math problems.

That may be why we're seeing a peak in activity now - i.e. whilst the cost-benefit favours mining. The moment that balance tips the other way, we're likely to see significant changes in both mining activity and the perceived value of Bitcoins.

And for those unwilling to open the link, the analysis predicts [with reasonable give-or-take accuracy] that Bitcoin will hit the limit by 2024, when miners will be paid approx 6.5 Bitcoins per block.

As at today, miners are paid 12.5 Bitcoins per mined block. This is set to halve come 2021 [down to 6.25 per block] so we might see negative pressure on Bitcoin value when that happens.

But, based on what I've read, the linked article might be missing a few key points...

> Why do you think mining with JS can't be very efficient?
> I don't see a fundamental reason why this should be dramatically slower than native mining.

Hello, McFly. Are blind to what native hardware can do???

BitCoin comparison:

* CPU = 66.6 Mhash/s (Core i7 3930k)
* GPU = 865 Mhash/s (ATI 6990)
* FPGA = 25,200 Mhash/s
* ASIC = 14,000,000 Mhash/s (AntMiner S9)

Even with Monero:

* CPU = 1280 (AMD Threadripper 1950X)
* GPU = 16032 (8X SAPPHIRE RX VEGA 64 )

CPUs are crap for bitcoin mining. QED.

References:

* https://en.bitcoin.it/wiki/Min...
* https://en.bitcoin.it/wiki/Non...
* http://monerobenchmarks.info/

> Why do you think mining with JS can't be very efficient?
> I don't see a fundamental reason why this should be dramatically slower than native mining.

Hello, McFly. Are blind to what native hardware can do???

BitCoin comparison:

* CPU = 66.6 Mhash/s (Core i7 3930k)
* GPU = 865 Mhash/s (ATI 6990)
* FPGA = 25,200 Mhash/s
* ASIC = 14,000,000 Mhash/s (AntMiner S9)

Even with Monero:

* CPU = 1280 (AMD Threadripper 1950X)
* GPU = 16032 (8X SAPPHIRE RX VEGA 64 )

CPUs are crap for bitcoin mining. QED.

References:

* https://en.bitcoin.it/wiki/Min...
* https://en.bitcoin.it/wiki/Non...
* http://monerobenchmarks.info/

No it does not take less electricity to mine if there are fewer miners. It takes EXACTLY the same amount of electricity. the ratio of the mining cost to the rewards would be the same evenif there was one miner.

Eh what?
1 miner doing mining with a 500W (1Mh/s) machine. Network adjust difficultly to allow for 1 block mined every 10 minutes.. total mining power is 500W and will result in 1 block every 10 minutes... Ie 6 blocks per hour for 500W..
100 miners doing mining with 500W (1Mh/s) machines.. Network adjust difficultly to allow for 1 block every 10 minutes.. Total mining power is 50KW and will result in 1 block every 10 minutes..

It does take a bit of time for the network to adjust difficulty, but it slowly (adjustments made every 2000-ish blocks) adjust the difficulty to allow for 1 block every 10 minutes for the whole network.

So lets say we allow for the network to adjust to each of these situations.
Total of 1 miner would mine 12.50*6 (=75) bitcoins in one hour at a cost of 0.5KW. (6.6Wh per bitcoin)
Total of 100 miners would mine 12.5*6 (=75) bitcoins in one our at a cost of 50KW. (666Wh per bitcoin)

https://en.bitcoin.it/wiki/Dif...

If North Korea is building up a bitcoin stash, then maybe there would be some way for the NSA to cripple the bitcoin currency and wipe out North Korea's savings..

Best of luck, bitcoin thrives in hostile byzantine environments and will only grow stronger with attacks. The war on drugs is an easier task to accomplish than stopping bitcoin. Whether nation states understand this or not , they heavily subsidize the value of bitcoin with their laws and regulations. Bitcoins primary raison d'être is for regulatory arbitrage. Thus the best way to undermine bitcoin would be to start legalizing everything and removing all regulations which indirectly subsidize the value of bitcoin.

Either they could find some vulnerability in the blockchain protocols or, through hacking, infiltrate and damage (okay steal) enough digital wallets as to undermine people's confidence in the currency..

They have to compete with all other hackers and nation states who are trying to collect upon a multibillion dollar bug bounty. Any successful attacks may temporarily drop confidence in bitcoin , sure ,but there are enough of us bootstrapped to see the project through regardless the risks involved.

If people can't rely on it, or if it's too easily stolen then that trust goes out the window and the value of the bitcoins will crash.

Theft , asset forfeiture , hyperinflation , bail ins , bail outs , ect , happen all the time with fiat. Bitcoin just has to do moderately better than any competing currency in any aspect that makes currency valuable(scarcity, fungibility, ect...) to retain value and be used. Since bitcoin is worldwide, all it takes is one country to monetary flaws to see an influx of new bitcoin investors as an exit to their countries problems. We are seeing this already in Argentina and Venezuela.

Would a working quantum computer be able to do bitcoin (or other blockchain algorithms) calculations at speeds far greater than conventional or even specialized CPUs?

Right now, no . In the future , possibly weaken bitcoins security assumptions, but this would undermine the whole financial system as well. Bitcoin also has some easy solutions if this occurs = https://en.bitcoin.it/wiki/Qua...

(It would be ironic if so; they'd be going from "hard" currencies to something that is completely abstract).

Hmmm... fiat currencies and traditional finance is far from "hard" and really abstract.

How is that hacking or bad for bitcoin (it's bad in that it's less decentralized) but that is not hacking.

Everyone is using ASICS now. One cannot CPU or GPU mine anymore.

GPUs produced hashrates of below 1GH/s and using 450w/hr (motherboard+cpu+ gpu)
Then ASICs came out hashing at 100GH/s for the same wattage; then 400GH for the same wattage and now 14TH/s (14,000 GH/s) for 4 times the wattage.

This makes the BTC mining community more centralized but it isn't a hack and it isn't directly harmful until there is a 51% attack.

https://en.bitcoin.it/wiki/Non...
https://en.bitcoin.it/wiki/Min...

How is that hacking or bad for bitcoin (it's bad in that it's less decentralized) but that is not hacking.

Everyone is using ASICS now. One cannot CPU or GPU mine anymore.

GPUs produced hashrates of below 1GH/s and using 450w/hr (motherboard+cpu+ gpu)
Then ASICs came out hashing at 100GH/s for the same wattage; then 400GH for the same wattage and now 14TH/s (14,000 GH/s) for 4 times the wattage.

This makes the BTC mining community more centralized but it isn't a hack and it isn't directly harmful until there is a 51% attack.

https://en.bitcoin.it/wiki/Non...
https://en.bitcoin.it/wiki/Min...

My understanding is that as of now the coins are separate, you have one on ledger A and one on ledger B and never the twain shall meet.

The fact that we are debating about the logical consequences of the fork worries me deeply. Shouldn't the Bitcoin specification be so clearly written that the consequences of the fork are immediately deducible?

The real problem is that we aren't being provided with explicit details about how the fork works, or even about the way that Bitcoin works. After all, there is no official Bitcoin specification. Instead, there's only a reference implementation written in C, and we're supposed to read the C code if we want to know how Bitcoin works.

The high transaction fees could be solved but there is currently a deadlock within the Bitcoin community.
Two feasible solutions are on the table, but there is no consensus:

a) Increasing the block size, allows for more transactions to be processed within each 10 minute block. The downside is that the blockchain will grow at a multiple of the current rate. Generally favored by large miners. Decentralizes the network. Is only a short-term solution because it only scales linearly.

b) SegWit & Lightning. As far as I understand it, Lightning is 2nd layer on top of the blockchain that allows for much faster and cheaper transactions.

Other coins have already begun to adopt SegWit, most notably Litecoin, the early fork of Bitcoin.

The high transaction fees could be solved but there is currently a deadlock within the Bitcoin community.
Two feasible solutions are on the table, but there is no consensus:

a) Increasing the block size, allows for more transactions to be processed within each 10 minute block. The downside is that the blockchain will grow at a multiple of the current rate. Generally favored by large miners. Decentralizes the network. Is only a short-term solution because it only scales linearly.

b) SegWit & Lightning. As far as I understand it, Lightning is 2nd layer on top of the blockchain that allows for much faster and cheaper transactions.

Other coins have already begun to adopt SegWit, most notably Litecoin, the early fork of Bitcoin.

Bitcoin transactions need to be "confirmed" by miners to be put into the blockchain and made official. In order to incentivize miners to do this, the Bitcoin protocol supports a transaction fee in the transaction that goes to the miner who confirms it.

Currently, the floor fee most miners will use is 220 satoshis per byte, or 49,720 satoshis for the median transaction size (https://bitcoinfees.21.co/). That's about $0.66.

If the reward of mining bitcoins drops below the cost of the electricity to do so, it would be balanced by an increase in the transaction fee. Theoretically, the reward of mining bitcoins could drop to zero and transaction fees could still make it profitable by confirming transactions.

More info: https://en.bitcoin.it/wiki/Transaction_fees

The article states "the server", implying there was only 1. I'd be surprised if the guy actually mined anything, and I don't see any way he made enough to cover the fine. That doesn't even take into account lawyers fees and diminished career opportunities.

This can be used for bitcoin mining

Nope. You cannot mine bitcoins profitably with a GPU. Not even FPGAs are sufficient. You need ASICs.

A GPU can give you a few mega-hashes per joule. An FPGA can do about 20 MH/j. The best ASICs can do about 10,000. It is not even close.

Mining hardware comparison.

Keeping them in sync??!?

I use a deterministic wallet.. No need to keep them in sync, just don't lose that initial seed.
https://en.bitcoin.it/wiki/Det...

Please refrain from making incorrect statements in areas where you lack in knowledge..

Where's your math? This whole 5-point score rant is basically a big long ad-hominem argument, with not even a single link to back up your claims (who disagrees with Gavin?...).

If you want more transactions per minute, you're going to need a higher limit; a higher limit puts more stress on the nodes and the network. That's where the argument lies.

Adoption rises and technology progresses, so, from continuity, there is some point in time where the higher stress is not as much an issue, and we will need the room for more transactions. Gavin et al say that point is not far, and we should take action now to avoid problems later. I think hearing the arguments so far, I agree with them.

What makes them attractive to bitcoin miners is they have less powerful cores but have many more of them.

That's part of it, but there's also that only AMD had hardware support for 32-bit integer right rotation.

I'm afraid I do understand it. The whole point of the "merchant services" apps are to allow the merchants to handle payment in Bitcoin. I'm staring right at 20 or so "merchant services" for precisely such use at https://en.bitcoin.it/wiki/How....

Many of the apps seem to be horrible, and send far too much information to central money exchanges, many including online wallet systems, which should not be trusted. The overlap of such tools with online wallets is as unsurprising as in-store credit cards, and I'm afraid that due to their novelty and lack of regulatory awareness many are quite flawed if not outright corrupt.

> cause untraceable transactions

And this differs from cash, how? And...what's so untraceable about bitcoin, considering every transaction *permanently and publicly stored*. It's such a pain in the ass to anonymize, that even Dread Pirate Roberts seemingly got sick of it.

WhilenI agre with your comments re: Bitcoin anonymity it does differ from ash in that I need to actually hand you cash rather than make a payment from McD's via free WiFi. cash transactions are limited by the need to to a face to face exchange.

> cause untraceable transactions

And this differs from cash, how? And...what's so untraceable about bitcoin, considering every transaction *permanently and publicly stored*. It's such a pain in the ass to anonymize, that even Dread Pirate Roberts seemingly got sick of it.

The judicial system is, at heart, a method of resolving disputes. Sometimes those are disputes between civilians (civil suits) and sometimes they are criminal cases, disputes between people and the state.

The most obvious and easy place to start is with small claims courts. Commercial arbitration handles many disputes that would otherwise end up in small claims courts, but we don't exploit this anywhere near enough. Most people just rely on their bank to act as a dispute mediator via the credit card chargeback mechanism, but this is a one-size-fits-all solution and banks are often not good at mediating disputes. There's lots of fraud and problematic outcomes.

The place where most of the better-law-through-tech research is happening right now is the Bitcoin community, because of the general focus on decentralisation, global trade and frequent desire to avoid relying on government. So we have for example BitRated which is a platform for doing dispute mediated Bitcoin transactions, where anyone can be the dispute mediator. So you can get a fluid, international market of specialised judges who are experts in very particular types of transactions, like software contracts etc where "I didn't get software of sufficient quality" is not a dispute that makes sense to handle via a chargeback. And it can all happen over the internet.

That's a very simple example. More complex examples involve specifying a contract in the form of a computer program and then effectively having the program be the "judge". I wrote about how to implement this, again with Bitcoin, several years ago. The technology is not that complicated actually. The hard part is figuring out the right user interfaces to make it easy. Presumably only very simple and precise contracts could be managed that way, so there's still open research in how to craft these digital contracts such that you can escape back to human judgement if there's an exceptional case.

When it comes to criminal rather than commercial cases, probably the best way to apply technology to reduce costs is to allow remote lawyering. That is, you should be able to outsource your legal representation to someone who isn't physically present. They may be rather good and experienced, but just lives out in rural areas or in a country where the cost of living is cheaper. The issue here is not really technical but rather just institutional inertia.

The UK is putting its judicial system under tremendous financial pressure at the moment, to the extent that some criminal cases are just being abandoned because there's insufficient money to run them. They're (finally!) starting to experiment with allowing small claims court cases to be resolved over the phone, and also looking at decriminalising TV license violations to reduce pressure on the system. But you get the idea - the judicial system innovates extremely slowly even when being sliced to the bone. So don't hold your breath.

So someone promises you annual rates of return of 200 to 300% and you believe them.

Bitcoin, of course, very specifically goes out of their way to indicate that there is no such promise.

True. Bitcoin was just the new shiny in an old scam.

So someone promises you annual rates of return of 200 to 300% and you believe them.

Bitcoin, of course, very specifically goes out of their way to indicate that there is no such promise.

The other big issue I've always worried about is deflation.

Inflation is good for an economy because it means that your money sitting under your mattress is slowly losing value, so you have to spend that money via economic activity or investment. If the money supply is fixed then it gains more value sitting under your mattress than being saved. People stop spending and the economy suffers. This is one of the big reasons that leaving the gold standard was considered to be a good thing.

Bitcoin addresses this argument though I'm not sure I buy their explanation.

1) Off-chain transactions can be instantaneous (e.g. both merchant and customer have coinbase.com accounts). But even for on-chain transactions, there is little reason to wait for the first confirmation (about 10 min); once the transaction has propagated (a few seconds) you can be fairly sure the payment will eventually go through (assuming a standard mining fee was included). It's not worth the risk of being caught attempting a double-spend for a coffee.

2) https://en.bitcoin.it/wiki/Sca...

3) Anonymity (the lack privacy) is an issue. This is mitigated if you use off-chain transactions. In theory you could also use coinjoin and stealth addresses (implemented in DarkWallet) to have a bit more privacy. But certainly if privacy/money-laundering is your main concern, use cash.

OK...did you find this page? Did you click the link on that page pointing to the debate on the topic here? Did you try searching Google using "fractional reserve" site:bitcointalk.org?

OK...did you find this page? Did you click the link on that page pointing to the debate on the topic here? Did you try searching Google using "fractional reserve" site:bitcointalk.org?

>the economy is actually more stable after we left the gold standard.

of course it is, and it had all signs of getting worse if kept on the gold standard. That fiat currency problem is so born out in human history, that most religions of any size has rules against being a lender or a borrower, or hoarder of money because banking with a fiat currency guarantees endless bust/boom cycles, with a regulated banking and flexible money supply the inevitable crash in money supply can be reduced or illuminated.

    It is odd that proponents of going to a fiat currency, thing that a gold standard is a fix to fractional reserve, but in reality it is what originally cause fractional reserve banking. IE it is a pain to carry gold, and to try and verify it's value over each transaction (people slugging gold coins, trimming edges...) The fix was banking, take your gold in and trade it for a paper IOU that is easier to trade/carry... Then the bank realizes it can loan out that gold in it's vault for money, and you have fractional reserve banking. Same is true of bitcoin, also since it is a pain for me to walk to the neighbor, hand him a USB chain, then force him to get online and verify it for a cost. So it will inevitably have offline paper IOU's as well (or rather already existed, and are coming back, see Casascius coins)

This doesn't seem correct. I have checked the available docs: https://en.bitcoin.it/wiki/Wea... Even if you control the blockchain you still have to broadcast it otherwise the chain will split and the broadcasted one would become the real one.

The difficulty is updated every 2016 blocks, or roughly every two weeks. If the amount resources spent on mining was suddenly reduced extensively, the mining would just go much slower until the next update, so no one would be able to take advantage of that (although it could be problematic for bitcoin, if e.g. the update went from 10 minutes to 100 minutes). After the next difficulty update, the difficulty would be low, but if the mining pools were back up, you would not be able to control bitcoin. Even if the update rate goes to 1 minute, this will only persist for 201,6 minutes, or a few hours.

All of this is assuming that no other response was done in the two weeks after the DDOS.

• An infinite sequence of nothing-up-my-sleeve numbers are taken as an infinte sequence of ECC public keys. Searching the pow involves finding distinguished points along a Pollard's rho DLP solution trying to crack the key. When the key is cracked the problem is advanced to the next key.
• People can then encrypt messages with all of the keys between now and sometime in the future and network will crack them, achieving a timelock.
• Probably incompatible with merged mining and other POW schemes.
• Making the difficulty adaptive either makes far in the future messages impossible (because the problem size wouldn't be known long in advance), or requires increasingly big headers as the difficulty would require working on multiple problems concurrently.
• The obvious constructions using ECDLP as the asymmetric problem are not progress free.

How's about backing stock contracts with Bitcoin and remove some trust from the system.

https://en.bitcoin.it/wiki/Sma...

Actually, you are liable to pay capital gains (or deduct capital losses) on currency trading: http://www.fxop.com/Forex%20Ta... is but one of sites that will explain in more detail. Or go straight to the horses mouth: https://en.bitcoin.it/wiki/Tax...

The question is what can you GET for them... Right now? Not much.

You really need to update your anti-Bitcoin propaganda. Between Bitcoinstore, Overstock.com, TigerDirect, Fancy, eGifter, and Gyft you can get quite a bit for a bitcoin these days, and that's not counting all these other merchants:

Trade page at the Bitcoin Wiki

The description of off-chain transactions mention that one way to do it is through the use of trusted third parties such as Mt. Gox! It does proceed to describe how a system could potentially be designed with auditing that can prove if fraud is happening, which would be an improvement, but it does not suggest any way to avoid such fraud [...] Requiring manual action to increase the transaction volume could protect against some kinds of DoS attacks, which would be possible, if there was no limit.

There is no consensus yet as to how to avoid this fraud (which is why it shouldn't be on the wiki), but IMHO we should consider Open-Transactions servers. We could for example use multiple servers and trusted computing to vote (p2sh) on where large balances go, which would be much more secure than lone servers run by a single party like MtGox.

Transaction fees prevent DoS attacks too, even with infinite block size.

That being said, I still think that off-chain transactions are a bit of a kluge. Some way of infinitely scaling in-chain transactions, while still providing an incentive to mine long-term, would be awesome.

Sorry to reply off-topic, but this part isn't true. We'll just start using more off-chain transactions.

That's actually not off-topic at all. The description of off-chain transactions mention that one way to do it is through the use of trusted third parties such as Mt. Gox! It does proceed to describe how a system could potentially be designed with auditing that can prove if fraud is happening, which would be an improvement, but it does not suggest any way to avoid such fraud.

If we forked every time transaction volume neared the limit then there would be no point in any limit at all

Sure there would. Requiring manual action to increase the transaction volume could protect against some kinds of DoS attacks, which would be possible, if there was no limit.

You can validate the chain of block headers without ever seeing the content of the blocks. The signature on individual transactions and their ancestors can be validated without ever seeing the full blocks, you just need a path from the block header to the transaction, which is only logarithmic in size. There are two reasons this is insufficient to solve the scalability problem. First of all the number of ancestors of a transaction could grow exponentially over time. Secondly checking for double spending requires a complete view of all the transactions in all the blocks. Solve those two problems, and you have solved the scalability problem.

You don't seem to understand the purpose of Bitcoin, or what a Ponzi scheme is. Ponzi schemes have nothing to do with exchanging money for virtual items, and Bitcoin itself has nothing to do with investment (although some people might use it for speculative reasons). The cause of all these recent Bitcoin problems is shady characters running the exchanges. But that is a problem with all currency, virtual or not.

You don't seem to understand why Bitcoins are a Ponzi scheme (and neither does the GP who brought it up.)

Bitcoin mining is designed to decrease over time until all 21 million coins have been mined. This means that the folks who got in early (i.e. the inventors) make out like bandits and the late arrivals are left holding the bag. The best part is that they have all sorts of true believers out there running interference for them in tech forums like /. It's like printing (real) money. Oh, wait...

This was a KNOWN and PUBLISHED flaw since 2011, along with clear instructions about how to avoid it. Any casual first-time programmer of bitcoin would have seen this when learning how to program bitcoin (it's on the Wiki: https://en.bitcoin.it/wiki/Tra...). Mt. Gox, having been around since 2010, could have not noticed I suppose, except that Gavin Andreson (the lead bitcoin developer) is on record as having warned them about this flaw multiple times. And it was brought up in a Bitcoin Foundation meeting where Karpeles was present.

When I see how much hardware and electricity is being wasted on these various mining processes, I can only shake my head.

I wonder if you have any idea what you are shaking you head at. Everyone who claims to be concerned about bitcoin power consumption never actually says what it is. I suspect they have never bothered to do the calculation.

It isn't hard. The mining network currently does roughly 38e15 Hashes/second. An ASIC miner (if you aren't using one of these the returns are lower than the power bills) does around 1e9 Hashes/Joule.. So the power consumption of the mining network is 38e6 Joules/second, or 38MWatts.

The world's power consumption is about 143,851 TW Hours for 2008, which works out at an average power consumption of 16,421 TWatts. From that we can deduce:

Bitcoin uses 0.0002% of the worlds energy.

[...] otherwise a surprise 51% attack from a botnet could steal all of your bitcoins.

This is patently false. A 51% attack cannot steal anybody's bitcoins. Stealing coins requires knowing somebody's private key, which amounts to cracking ECDSA, and if somebody can do that they don't need 51% of the computing power to mount it.

Here is what a 51% attacker can and cannot do:

An attacker that controls more than 50% of the network's computing power can, for the time that he is in control, exclude and modify the ordering of transactions. This allows him to:

* Reverse transactions that he sends while he's in control. This has the potential to double-spend transactions that previously had already been seen in the block chain.
* Prevent some or all transactions from gaining any confirmations
* Prevent some or all other miners from mining any valid blocks

The attacker can't:
* Reverse other people's transactions
* Prevent transactions from being sent at all (they'll show as 0/unconfirmed)
* Change the number of coins generated per block
* Create coins out of thin air
* Send coins that never belonged to him

As to:

If you own bitcoin, it's in your interest to invest heavily in mining even after the gold rush is over [...]

Right. Everyone who actually uses bitcoin will have an interest in making sure there's enough computing power out there to prevent even those weaknesses that remain. Plus, note that a 51% attacker doesn't gain that much, financially, from exploiting those weaknesses. They can't really steal very many coins. The most they can do is double-spend, but for large transactions, people will want to wait for at least a few confirmations, which makes the double-spending almost impossible. What a 51% attacker can really do is screw over the network and attempt to destroy it, but if they're investing that much in the computing power, they're financially better off just legitimately mining for the fees. Then they too have a vested interest in perpetuating the integrity of the network.

using some algorithm I'm currently unfamiliar with so will not bother to explain in detail but the point is it exists, take a share of the transaction they facilitated as a "transaction fee"

The sender in the transaction specifies the transaction fee. The wiki has more info.

"the person attempting to make a transaction can include any fee or none at all in the transaction. On the other hand, nobody mining new bitcoins necessarily needs to accept the transactions and include them in the new block being created. The transaction fee is therefore an incentive on the part of the bitcoin user to make sure that a particular transaction will get included into the next block which is generated. It is envisioned that over time the cumulative effect of collecting transaction fees will allow somebody creating new blocks to "earn" more bitcoins than will be mined from new bitcoins created by the new block itself. This is also an incentive to keep trying to create new blocks even if the value of the newly created block from the mining activity is zero in the far future. "

except the problem of criminals leveraging other peoples resources. When you can utilise bots to farm for you you can effectively undercut other peoples market making any legitimate miner completely unprofitable.

Said like a person who doesn't have a clue about the shear amount of resources being thrown at bitcoin mining.

Currently, the bitcoin mining network is doing 6,549,663,840,000,000 SHA-256 hashes per second. Lets say you have a botnet of 1 million Haswell's. The fastest Intel CPU there is, a Xeon, and it can't do more than 20M hashes per second. So your 1 million Haswell botnet will manage to capture 0.3% of the bitcoin networks mining power.

Yes, people have speculated in the past that bitcoin might be susceptible to botnets. Even if was true the vulnerability window has well and truly closed.