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Bitcoin will soon block small transaction outputs

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Re: Bitcoin will soon block small transaction outputs

#81
post #79
post #70

Earlier quoted context omitted.

It doesn't have to be, but the larger the value is, the more bitcoin being "wasted" tracking smart property.

Bitcoin may be finite in number, but it's ultimately infinitely divisible, so it does not matter how many bitcoins are "wasted". Regardless, any property worth tracking in such a scheme is likely worth enough to justify a $0.01 investment in bitcoin.

> Bitcoin may be finite in number, but it's ultimately infinitely divisible, so it does not matter how many bitcoins are "wasted".

Correct.

> Regardless, any property worth tracking in such a scheme is likely worth enough to justify a $0.01 investment in bitcoin.

A doubling of the current price would make transactions of less than 1 US penny impossible. So, if the price goes up 10x, it would be 5 pennies. 100x, 50 cents. 1000x, 5 dollars. So, yeah, it does seem like a non-issue.

However, this policy clearly rules out microtransactions.

Re: Bitcoin will soon block small transaction outputs

#82
post #67
post #23

Small value amounts are useful for smart property: https://en.bitcoin.it/wiki/Smart_Property The tl;dr: Represent a piece of property, say a stock certificate, as a small value of bitcoin. By transferring the bitcoin to another user, you are transferring the ownership of the property. This can be useful for creating distributed markets where property can be traded for bitcoins without requiring a trusted intermediary…

The problem is that Bitcoin is a distributed network, and therefore the whole blockchain needs to be replicated across all the computers across all the network. Right now, the blockchain is around 9GB, most of it because of "dust" - that is, if you want to set up your own Bitcoin node, you need to download 9GB of data. And this is growing quite fast. The practice of microtransactions was abused a lot - for example, S…

Actually, it was recently stated by a developer on #bitcoin-dev that it is an issue of the total set of unspent transaction outputs (i.e., what all nodes must maintain in memory), not total blockchain size (which only nodes that need to do complete validation actually need).

Of course, it may be that all the developers are not of one mind on this.

Re: Bitcoin will soon block small transaction outputs

#83

This sucks. I thought one of the killer apps for bitcoin was going to be micropayments. Oh well maybe the world will switch to litecoin.

Funny, I always thought of it as a near perfect store of value and nothing more. The fact of the matter is that this is all Bitcoin has been used for so far (no company has used Bitcoins thus far for micropayments) so I think it will continue to evolve into an even more perfect store of value as time goes on.

Check out http://bitvisitor.com -- they pay out hourly in > 10^-5 BTC increments (~$0.0012 at current prices). There are totally legitimate reasons to allow micro-transactions.

Re: Bitcoin will soon block small transaction outputs

#84
post #67
post #23

Small value amounts are useful for smart property: https://en.bitcoin.it/wiki/Smart_Property The tl;dr: Represent a piece of property, say a stock certificate, as a small value of bitcoin. By transferring the bitcoin to another user, you are transferring the ownership of the property. This can be useful for creating distributed markets where property can be traded for bitcoins without requiring a trusted intermediary…

The problem is that Bitcoin is a distributed network, and therefore the whole blockchain needs to be replicated across all the computers across all the network. Right now, the blockchain is around 9GB, most of it because of "dust" - that is, if you want to set up your own Bitcoin node, you need to download 9GB of data. And this is growing quite fast. The practice of microtransactions was abused a lot - for example, S…

How can Bitcoin network maintain integrity in a imaginary future where it has gained significant traction and there are millions or even more transactions happening every single second?

Re: Bitcoin will soon block small transaction outputs

#85
post #67

Earlier quoted context omitted.

The problem is that Bitcoin is a distributed network, and therefore the whole blockchain needs to be replicated across all the computers across all the network. Right now, the blockchain is around 9GB, most of it because of "dust" - that is, if you want to set up your own Bitcoin node, you need to download 9GB of data. And this is growing quite fast. The practice of microtransactions was abused a lot - for example, S…

How can Bitcoin network maintain integrity in a imaginary future where it has gained significant traction and there are millions or even more transactions happening every single second?

That's a good question - I'm not proficient in this area, but I think there are some cleanup ideas floating around.

Re: Bitcoin will soon block small transaction outputs

#86
post #79
post #70

Earlier quoted context omitted.

It doesn't have to be, but the larger the value is, the more bitcoin being "wasted" tracking smart property.

Bitcoin may be finite in number, but it's ultimately infinitely divisible, so it does not matter how many bitcoins are "wasted". Regardless, any property worth tracking in such a scheme is likely worth enough to justify a $0.01 investment in bitcoin.

The problem is that this minimum transaction size may change in the future. So, lets say you set 10 X MIN_VALUE to equal one stock certificate. If the MIN_VALUE adds a couple zeroes in the future, anyone with less than 10 certificates just lost their property.

Also, maybe you want to allow the user to transfer fractions of your property issue. Stocks can go up 10000x in value and you don't want the issuer to have to perform stock splits. If there is no minimum transaction value, this is easy. With minimum transaction values, the value of a single certificate in bitcoin becomes much more important.

The point is, there are valid reasons to transact small amounts of bitcoin that do not involve micro-transactions. If the user is willing to pay the transaction fee, these should be allowed. The developers are limiting the useful (and profitable) application of the network to fix an issue that can be solved by other means.

Re: Bitcoin will soon block small transaction outputs

#87
post #23

Small value amounts are useful for smart property: https://en.bitcoin.it/wiki/Smart_Property The tl;dr: Represent a piece of property, say a stock certificate, as a small value of bitcoin. By transferring the bitcoin to another user, you are transferring the ownership of the property. This can be useful for creating distributed markets where property can be traded for bitcoins without requiring a trusted intermediary…

Why not forward your suggestion to the lead developer? https://news.ycombinator.com/item?id=5660244

They are aware of the issue. There is a long discussion of it in the linked pull request comments.

My interpretation is that they do not see this application as important enough to take into account in their updates. This is a perfectly valid stance, and they are the developers doing the work; I just don't agree with it.

Re: Bitcoin will soon block small transaction outputs

#88
post #77
post #24

Earlier quoted context omitted.

If micropayments are ever to be possible, sub-penny transactions need to happen. If 10^6 people send you $0.001, you get $1k....

> If 10^6 people send you $0.001, you get $1k.... Is this sarcasm? 0.01US$ might be worth nothing in the US, but might be worth something in some poorer countries.

Shh, economics. This is why people in developing (or not developing) regions will continue to use mobile phone minutes as a medium of exchange rather than adopting btc.

There are a number of effective "we're gonna change the world" platforms in the bitcoin world.

1) No centralized bank or government control of value/transactions/etc. 2) Anonymous wealth control 3) Microtransactions 4) Non-repudiable 'instant' transactions

These are not exclusive, nor a complete list. For example, I'm very much a fan of #3 and #4 because I have been hoping for years that we can create a sustainable system for implementing many of the commercial aspects, including transclusion, of the Xanadu goals.

All of us are ignorant or dismissive of some basic facts, whether technical, political, or economical. For example, people are very fascinated with identifying the high-net-worth btc holders. While the effort to track their accounts and transfers was originally non-trivial, people spent a lot of time developing tools and methods for correlating accumulation and distribution. It's a short hop from there to tying an account to human entities.

It's not that this was unforeseeable, but that the effort seemed too much to worry about. However, one should probably assume that any effort distributed across the Internet will attract the attention of those people who have the time and inclination to grind away at tasks considered to be pointless by the vast majority. For some, it's a way of counting coup, and you'll never escape that.

The 'opportunity' that the limitation on transaction size creates is a value-added service for micropayments. In effect, a merchant would keep a ledger of microtransactions that could be remitted at any time. You could do this today with Mt. Gox, for example.

The downside of this is much the same as with a conventional financial system. That is, people are morons and principles have a price. Many of the systems built to date have been compromised (Mt. Gox, Bitcoinica, etc.) or misappropriated completely (BTCST, Bitcoinica, etc.). It is unlikely (but possible) that an entity with technical and legal competence and a scrupled imperative will bridge the gap for microtransactions on a long-term basis.

If it were to happen, one would still have a centralized 'bank' that would have to follow practices that would compromise anonymity due to AML and KYC regulations because bitcoin services are not a competitive market at this time.

Re: Bitcoin will soon block small transaction outputs

#89
post #61
post #23

Small value amounts are useful for smart property: https://en.bitcoin.it/wiki/Smart_Property The tl;dr: Represent a piece of property, say a stock certificate, as a small value of bitcoin. By transferring the bitcoin to another user, you are transferring the ownership of the property. This can be useful for creating distributed markets where property can be traded for bitcoins without requiring a trusted intermediary…

Why does the deposited amount of Bitcoin for smart property have to be a small value?

It doesn't need to be. But it helps. Imagine if you wanted to create a bunch of smart properties which had very little intrinsic dollar values(lets say, collectible sports cards) - you would be forced to spend a bunch of money to do so.

Re: Bitcoin will soon block small transaction outputs

#90

Earlier quoted context omitted.

You should be able to send whatever value you want, as long as you pay a fee for the resources used. Why should it take hours for my Bitcoin client to sync (and therefore for me to do anything with my Bitcoins) because people want to encode URLs in the blockchain? In a few years, it could take days to sync a new client. What kind of banking system would that be?

Can't you submit transaction before it syncs as long as you you're confident the transaction will be valid? For a business, they could maintain a current sync and you submit your transmitting address to them and they can verify, that way your smartphone doesn't have to get bogged down with the task of anything other than signing the transaction.

If I recall, the standard Bitcoin client doesn't work until the blockchain is synced. I've had to wait an hour to do a transaction I wanted to do because I hadn't opened it in a few months.
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