Message-ID: <559022BE.2060503@mail.bihthai.net>
Date: Sun, 28 Jun 2015 23:37:18 +0700
From: Venzen Khaosan <venzen@mail.bihthai.net>
Organization: Bihthai Bai Mai
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To: Aaron Voisine <voisine@gmail.com>
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Cc: bitcoin-dev@lists.linuxfoundation.org
Subject: Re: [bitcoin-dev] The need for larger blocks
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Reply-To: venzen@mail.bihthai.net

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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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