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Date: Mon, 06 Feb 2017 08:24:10 -0800
From: mbtc-dev@xe0.me
To: Luke Dashjr <luke@dashjr.org>, Bitcoin Protocol Discussion
	<bitcoin-dev@lists.linuxfoundation.org>
In-Reply-To: <201701280403.05558.luke@dashjr.org>
References: <201701270107.01092.luke@dashjr.org> <20170127212810.GA5856@nex>
	<CAAy62_KUSNTjivwJT87K9f1c=k-6gdaLXEBJjcy2KK+uLSTWDA@mail.gmail.com>
	<201701280403.05558.luke@dashjr.org>
Message-ID: <af8301fc246c8c3fae857167968d94d4@xe0.me>
Subject: Re: [bitcoin-dev] Three hardfork-related BIPs
Precedence: list

On 27.01.2017 20:03, Luke Dashjr via bitcoin-dev wrote:
> Assume as a premise (despite your apparent disagreement below) that for
> Bitcoin to function, a supermajority of economic activity needs to be 
> verified
> using full nodes operated by the recipient. Evidence suggests that at 
> this
> current time, at best 10% of economic activity is in fact using a full 
> node to
> verify the transaction. On this basis, it seems pretty clear that 
> serious
> action must be taken to change the status quo, and so for efforts to do 
> so
> without dropping the block size have proven ineffective.
> 
Lets think like people in sales and marketing for a moment.

There's an implicit assumption here that ANY protocol or consensus-rule 
based solution exists that would reverse the trend of diminishing full 
node verified economic activity. Since there's no economic advantage to 
running a full node, there's no inherent motivation for implementation 
(or outright purchase) of full nodes by the very large percentage of 
people who fall in the non-technical "I just want it to work, and I 
don't want my money stolen" category. Yes, anyone on this list 
understands that "don't want my money stolen" is inherently connected to 
running your own node and using it for transactions, but the average 
user does not, and even if they did, they don't have the resources (time 
and/or money) to do anything about it. Running your own full node 
increases the protection agains double spend attacks and other protocol 
bases shenanigans, but now you've taken on another set of security 
exposures related to the physical box that is running the node. 
Anti-virus, off and on-site backups, multiple boxes/devices for 
multi-sig, backup of key seeds.

Reducing (or even maintaining) the block size doesn't somehow increase 
the number of people who are capable of running full nodes, and it 
doesn't add any incentive for people already in that "capable" set to 
suddenly take up the task of running and transacting via a full node. 
I'd argue that the size of the block-chain and the time to download it 
are the least concerning aspects to anyone faced with running their own 
node and actually storing some of their wealth on it and using it for 
transactions.

You're looking for a (maybe dangerous/maybe impossible) balance between 
choking off casual (not full node) usage of bitcoin and yet trying to 
make it more popular among the people (and organizations) who have the 
capability and resources to run and transact on full nodes.

We should sit with this for a moment.

On one hand, Bitcoin may ultimately end up as digital currency "only for 
geeks and B2B transactions." I'd speculate we'd loose a big subset of 
the geeks that way too, unless they happen to do a lot of transactions 
with medium to large size businesses. (Small businesses won't be able to 
afford the expense of or the time to maintain the node.) There's some 
level of risk that this pushes bitcoin into oblivion. And is it really a 
decentralized P2P currency if it's only used by medium and large 
businesses and a small set of technically capable individuals that 
transact with those entities directly in BTC? And is it really a 
decentralized currency in this scenario if its used mainly by medium and 
large businesses, banks, and exchanges? (I've purposely excluded small 
businesses because while they like the benefits of flexible payment 
systems, more don't have the time or skill (or resources to hire the 
skill) needed to do a full node implementation.)

I feel inherent cognitive dissonance between "keep it decentralized" and 
"not useful to small business and individuals." One can make the 
argument that L2 solutions will be available for the small businesses 
and individuals but that doesn't solve the stated intent of reversing 
the trend of transactions not originating from or being received by full 
nodes. I guess you're saying bitcoin will be stronger, more resistant to 
outside power agency and censorship if its only used by exchanges, 
banks, large businesses, and die-hard technically inclined people.


On the other hand, maybe there's a scenario where an average person 
walks into a big box electronics store in any developed country and buys 
a "personal digital bank" appliance. I frame it this way because the 
majority of the worlds population is never going to run a full node on 
their desktop or laptop. There's no viable scenario where that happens. 
Laptops and desktops are already diminishing in market share due to the 
introduction of tablets and smartphones. General purpose OS's are also 
inherently un-secure, so  going down this route means we are immediately 
in the realm of lots of theft. Preventing theft (or loss due to errors) 
requires additional digital key devices, or additional devices for 
multi-sig transactions just for basic financial safety, not to mention a 
functioning backup plan, including off-site backups. 
Ransomeware/phishing protection? Checking email and surfing the web on 
the computer that holds your standard (non-multi-sig) wallet? 
Forgetaboutit. It'll never reach critical mass. It's not a viable 
proposal. Not to mention, you can't physically carry your laptop with 
you when you go to the shopping mall. In order for this appliance model 
to function, smartphone based implementations will need to interact with 
your personal or family server/appliance, and you'll need to be able to 
do multi-sig with a smartphone and another physical token you carry with 
you. Imagine a 2 of 5 multi-sig wallet where your phone and an NFC or LE 
bluetooth device are sufficient to create a transaction on your home 
node while shopping. Or your phone has a single sig wallet and you top 
it up from your appliance and it never has a high balance. In any case, 
I've made the argument before that the definition of "bitcoin protocol" 
should, in addition to the consensus protocol, probably include a secure 
API protocol between wallet client and full node, and it still seems to 
be an important missing piece. I want to be able to travel and spend BTC 
and I DON'T want to do general purpose computing like email and web 
surfing on the same computer where I have a big chunk of life savings 
stored! I think defining this API will actually really support the use 
of user controlled full nodes for transactions! Imagine Trezor owners 
using their own node for transactions! Bitpay is the only player I know 
of that provides enough of a software stack to set this up for yourself.

I think reversing the non-full node transaction trend will have to be 
based the appliance usage model. You buy a new 200-500Gb nvme SSD every 
year and put it in one of the free slots. You upgrade when all slots are 
full. This is one scenario that could put us on a trend of increasing 
transactions originating and being received by personal full nodes, i.e. 
reversing centralization trends.


If there is any solution to this problem, it will need to recognize the 
fact that the supermajority of people on the planet are not technically 
savvy nor are they inclined to take the time to learn how to protect 
themselves with basic computer security much less how to use a full node 
for bitcoin transactions. The solution, if it exists, will need to be 
handed to them, and they'll need a reason to buy it. Any solution will 
also need to recognize the fact that it will cost resources (time and 
money) to run a full node. Lots of people spend a huge portion of their 
income just to get a smartphone because it's a useful communication 
device that does lots of other useful things. There's not nearly the 
same level of need to spend on a full node for bitcoin security.

Any solution to this problem should also recognize the fact that there's 
a significant amount of work to do to have a functioning personal 
implementation of a node and to use it for transactions. Even in my 
imagined future of polished and easy to use appliances, if you have 
enough capital in BTC that you need it and you can afford to buy it, 
you're now only starting to deal with implementation issues. You've now 
become your own bank. Now you have to secure that appliance physically, 
secure and back up the key seed material, secure the devices used to 
access it, connect an app on your smartphone to the appliance so you can 
create transactions while out of your home, connect your home 
computer(s) to the appliance, do key exchange with the app/PC and the 
appliance or implement some sort of PKI on all devices. You've just 
taken on the responsibility of a bank and a sysadmin! The higher the 
balance, the more of a target you are, and the more time/money you have 
to spend mitigating risk. This is a huge centralizing force that no one 
really seems to talk about. If you're the average person, you want to 
find a trustworthy company or trusted friend/family to take care of that 
stuff for you. If you're a technically inclined person AND maybe there's 
a way to reap some of the mining reward on a small scale, you're 
slightly more interested.

As a sysadmin for many years, I've seen first hand that most people want 
tools that just work, whether its software to make spreadsheets, 
operating systems, phones, or thermostats. My point here is that the 
number of people in the world who have the technical chops to run a node 
is ALWAYS going to be vastly lower than the number of people who will be 
using bitcoin (or cryptocurrency).

Of course we can make the argument that the definition of "bitcoin" is 
by design something to be used exclusively by institutions and geeks, 
and that this definition falls out of the necessity to ensure that it 
remains decentralized and censorship resistant. However, I'm not sure 
that logic holds or that it doesn't introduce risk that that sort of 
definition drives bitcoin toward diminished relevance.

At the end of all this though experiment, I'm still convinced that if 
the tools are built to enable flexible usage of full nodes (i.e. my 
phone, tablet or desktop app interfaces with the full node) then there's 
a large potential for increased usage of full nodes.

Thanks,
G