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+Date: Sun, 28 Jun 2015 23:37:18 +0700

+From: Venzen Khaosan <venzen@mail.bihthai.net>

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+Subject: Re: [bitcoin-dev] The need for larger blocks

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+

+On 06/28/2015 02:55 AM, Aaron Voisine wrote:

+> On Sat, Jun 27, 2015 at 3:19 AM, Venzen Khaosan

+> <venzen@mail.bihthai.net <mailto:venzen@mail.bihthai.net>> wrote:

+>

+>

+> That is a false assumption. Given the increased adoption of Bitcoin

+> by users and businesses during the past year, does the price chart

+> reflect greater value or price? Of course not, the price chart is

+> at terminal lows. Fact not fiction.

+>

+>

+> You're not taking speculative cycles into account. For most of 2013

+> the price was in the $100 range. Adoption as a store-of-value is

+> what determines the price over the long term, as with any monetary

+> commodity.

+

+Aaron, I am most definitely taking speculative cycles into account - I

+write Bitcoin market analysis reports on a daily basis.

+

+Since discussion is exploring notions of "value" and assumptions about

+"what increases value" I will post the following.

+

+You're correct to point to the speculative influence, since Bitcoin

+having the fundamentals it does, and being a commodity that floats

+freely in the market, without centralized control - plus being

+unregulated - it is a speculator's wildest dream come true. In this

+case its exchange value (to fiat) is based on social mood and

+perception and not on underlying (fundamental) value. I think that is

+what you imply, too.

+

+What is specifically relevant to the wider discussion, is your mention

+of *Commodity Money*, because the term accurately describes a major

+facet of Bitcoin's function and role.

+

+Bitcoin's exchange rate, as a commodity money floating freely in the

+market, will go up and down according to speculative cycles and we

+should conceptually separate its valuation in fiat terms, from its

+fundamental value which is: mathematical consensus, cryptographic

+transaction security and censorship resistance, etc. These values are

+critically reliant on Bitcoin's *degree of decentralization* for them

+to remain true and for Bitcoin to retain its meaning, and, therefore,

+its value. That is what I point out when I say "greater adoption has

+not reflected in the price chart". And that may remain the case for

+evermore because the value is in the protocol, the blockchain and its

+utility and degree of decentralization, not in the chart or the size

+of the user base (however, I'm by no means proposing that the user

+base be limited - only that it be grown with primary reference to the

+requirements imposed by decentralization).

+

+I argue that we already know what the value of Bitcoin is. In its

+current form Bitcoin most likely fulfills 80% or 90% of its eventual

+fully evolved value. Increased adoption will not strengthen the

+fundamentals, so let's proceed with scaling that will safeguard

+Bitcoin's fundamental value and implement protections that ensure

+quality of decentralization.

+

+Given the start of a new speculative cycle for Bitcoin and the

+possibility of a global liquidity crisis in the coming months or

+years, block utilization may increase more rapidly than suggested by

+current trends. Utilization may ramp up in a spike, so I agree with

+suggestions made here for starting tests of a larger blocksize

+(2-8MB), or for speeding up blocktime (whichever is technically

+preferred).

+

+Gavin Andresen has committed (if i recall correctly) to tests of 8MB

+blocks, so a different size test can be agreed by Core developers.

+Once test data and fork outcomes can be reviewed then decision making

+has actual parameters to proceed from.

+

+Venzen Khaosan

+

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