Author Topic: Question about bitcoin and block-chain  (Read 574 times)

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Offline daniel1948

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Question about bitcoin and block-chain
« on: April 05, 2017, 09:51:38 AM »
I was listening to a podcast the other day (I don't remember which one) about one of the guys involved in the early days of bitcoin. The podcast talked about the concept of block chain as "distributed ledger." Nobody can cook the books or create false entries because everybody has a copy of the chain. If I understood them correctly, they said that everybody who owns bitcoins has a full copy of the entire block chain.

This brings up the obvious question: don't you eventually run out of storage space as the chain grows?

Even if I misunderstood, or if they misspoke, and not every own of a bitcoin keeps a full copy of the entire chain, and the chain is only kept on some number of servers or nodes or whatever, doesn't the chain eventually become so big that it would bog down? How does block chain deal with the problem of limited memory space? Or is the needed memory actually so small that with the huge amount of memory on mainframe computer today it's just not an issue?

I seem to recall a few years ago hearing that there was a problem with the transaction speed because the longer the chain gets, the more processing each transaction requires.
Daniel
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"Anyone who has ever looked into the glazed eyes of a soldier dying on the battlefield will think long and hard before starting a war."
-- Otto von Bismarck

Offline ScepticalBadger

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Re: Question about bitcoin and block-chain
« Reply #1 on: April 15, 2017, 06:09:44 PM »
To download and sync the block chain does take a long time,  it is about 110GB  at the moment.  You don't have to have the blockchain to have bitcoins though.  you can have them on shared or online wallets a bit like a bank account.  I have some on Poloniex for trading for example, but if I wanted to copy them off there onto my own wallet I would need to sync a copy of the chain to my PC.  Mobile clients can hold a smaller part of the blockchain, to prevent you spanking your mobile allowance.  You can back up your wallet by saving the private key to a file or printing it to paper, without the full chain.  There are lots of answers about the full wallets here:

https://blockchain.info/wallet/wallet-faq

Offline daniel1948

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Re: Question about bitcoin and block-chain
« Reply #2 on: April 15, 2017, 06:44:44 PM »
Thanks for the link. I don't think it answered my question, but it did provide some new information for me. The biggest new question it raised was where it said that there will never be more than 21,000,000 bitcoins, and a link to a chart showing the number of bitcoins now in circulation is between 16,200,000 and 16,300,000. An arbitrary limit on the number of coins in circulation puts severe limits on the usefulness of the currency. The ability of central banks to adjust the total money supply is critical in managing a large economy.

I've never trusted bitcoin because of the unstable conversion rate. A stable value is critical for a currency.

But I'm still fascinated by it. I wonder how much bitcoin activity is used for nefarious transactions, and how much is just people who don't trust banks and don't want to pay tax on transactions. And for all its touted security, I wonder if it's really more secure than banks, which use dollars, which are much more widely accepted and exist both electronically and as cash.
Daniel
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"Anyone who has ever looked into the glazed eyes of a soldier dying on the battlefield will think long and hard before starting a war."
-- Otto von Bismarck

Offline ScepticalBadger

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Re: Question about bitcoin and block-chain
« Reply #3 on: April 15, 2017, 07:06:37 PM »
There is a limited number of coins, and the mining difficulty changes to ensure they are not getting discovered too fast, so the currency has a predictable life.  Once they run out of coins to mine, there will be less incentive for the miners to mine, and then the chain may no longer have sufficient processing to verify it.  The only source of income then for the miners is the transaction fee, which would have to increase.

https://news.bitcoin.com/what-happens-bitcoin-miners-all-coins-mined/

 A lot of nefarious activity uses Bitcoin, but every transaction is in the Block chain, so there is a forensic trail.  If you can find out the Wallet ID of two individuals, you can find every ID that has paid into them and what they transferred between them.  This happens when Police cease computers with wallets on, they can then prosecute based on transactions found between them and other people.  Monero (XMR) on the other hand is supposed to be anonymous as it has a method of hiding the transactions from each other.

Offline daniel1948

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Re: Question about bitcoin and block-chain
« Reply #4 on: April 15, 2017, 08:30:57 PM »
Thanks. Another interesting article. I suppose there will be a constant war between criminals and cops. Just like bigger bazookas lead to heavier tanks, in a never-ending cycle, so encryption and decryption will continue to wind in a never-ending cycle.

But I think the biggest failure of bitcoin is precisely what its advocates love about it: the lack of any central authority. It's value is erratic and that makes it a very poor choice for business, which needs a stable and predictable value of money. The anti-government folks want money the government cannot interfere with, but government intervention is necessary for a smoothly-functioning money supply.

As far as gold, it's really only marginally useful as money, but it's pretty. I've mentioned before that I have a 1/5 ounce gold coin from the Isle of Mann, with two playing kittens pictured on it. It's in my display case next to my blown-glass dragon sculpture. Useless as money, but I enjoy looking at it, and the dragon guarding it.
Daniel
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"Anyone who has ever looked into the glazed eyes of a soldier dying on the battlefield will think long and hard before starting a war."
-- Otto von Bismarck

 

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