Did Bitcoin just prove it can't scale?
The past few days have shown what happens when many people attempt many transactions using Bitcoin. The network slowed to a crawl. Transaction prices went through the roof. And we still are at a point where only a tiny fraction of people are using Bitcoin, and only a tiny fraction of all financial transactions are using Bitcoin.
How is this expected to work with 7 billion people using it for every tiny financial transaction? I don't think it can.
I have owned BTC for 5 years and I am enjoying the rally, but with the high transaction fees, back log, and long transaction times, I wonder how well it can really work as a replacement for banks.
Am I wrong?
500 comments
[ 2.7 ms ] story [ 320 ms ] threadMaybe it's more proof that no one cares?
The block size hasn't increased. Instead, a new chain forked out with an 8MB block size, it's called Bitcoin cash.
Lightning network hasn't launched yet. A few people are testing alpha on the main net and that's it. (Btw I'm a skeptic of lightning network so i'm not advocating lightning network here).
Lightning works. You can go download the repo and make apps with it today.
I am starting to feel like you guys all live in a different earth than me. On the earth I live, SegWit did not increase 4x block size.
> Lightning works. You can go download the repo and make apps with it today.
Everyone I know who has ACTUALLY downloaded and run the node thinks is extremely underwhelmed. I suggest you follow your own advice and go download lightning network client and run it yourself and try to use it and see what happens. Then we can talk.
And Lightning, yup. I tried to use two Lightning implementations on the test net and neither worked, but they have been declared "ready!" by fans.
And Lightning deserves skepticism. Releasing software 1.0 means nothing: it requires a totally new infrastructure, with new wallets (again) which have to be online to receive money, hubs which don't exist at all today, liquidity providers willing to leave money locked in channels, (but hey, at least we didn't have to upgrade full nodes) and has completely different failure modes than the blockchain on top of the failure modes that are already there. As far as I understand it isn't even possible to receive more money than you already have with Lightning, and any part you open a channel with can block your funds for as long as the channel timeout has been set (and you don't want short/underfunded channels or you may end up paying more in transactions than you would have with a pure blockchain).
Also the opening and closing of channels means that if Lightning is actually successful the current block sizes won't be sufficient. It's at least one transaction to open the channel and another to close it, and because you want to keep a warm channel so you can buy coffee, you will want to do that whether you end up using the channel or not, but you also don't want it very long otherwise your money will be stuck if the channel goes down. So essentially you need to pay subscription fees to the blockchain for using the channels as well as well as commission to the channels for providing liquidity to you.
Maybe some super-centralized thing will come out of it and we'll all connect to the Coinbase Channel or something to do trustless centralized off-chain transactions (as opposed to trusted centralized off-chain transactions that they provide now) but even that has a host of problems when you think about it.
It's... a complicated system. It's cool and very interesting but it won't happen overnight and it's not guaranteed to actually work.
That's as if there was a frenzy to buy a new brand of car and no-one cared that the cars' engines actually break down after 50 meters.
That being said, I think it's true - but it's a hint that the current "mass adoption" is mainly fueled by speculators and not by people who genuinely believe in it's purpose as a currency.
LN is years from being actually usable by the masses. This is from their developers themselves.
> Maybe it's more proof that no one cares?
That's a pretty idiotic thing to say. The technology isn't ready yet despite the developers being aware of the problem for, as you say, years.
But what about the new problems it would introduce? I run a full node and even now it eats a significant portion of my bandwidth. With even larger blocks I would probably drop off the network altogether. And I'm sure I'm not the only one out there in this situation. Therefore, I don't think Core developers are exaggerating in their concerns about the centralization pressure caused by overly large blocks.
Moreover, wouldn't increasing the block size simply kick the can down the road? One advantage of the current fee pressure is that it strongly encourages the development of 2nd layer solutions. There are right now at least three independent teams working on Lightning Network implementations and they seem to be making quick progress...
Not everyone need to run a full node.
> Moreover, wouldn't increasing the block size simply kick the can down the road?
If you see it only as a temporary measure then sure. But it would for the time being solve Bitcoin's very urgent current problems.
Also any 2nd layer solutions require a blocksize increase, so the argument is kinda backwards.
> One advantage of the current fee pressure is that it strongly encourages the development of 2nd layer solutions.
Which is basically Core/Blocktream's plan. 2nd layer solutions is their whole business model...
But why opt out of something that we know works for a solution which isn't ready and may not even work?
Scaling should be done both on-chain and off-chain. Favoring one to the exclusion of the other is just wrong.
It was the first. It was the genesis idea. But good lord, do we think it's the actual solution? What would be the odds?
I imagine that Bitcoin will play its part as the public face of the blockchain revolution, but something else - or many other somethings - will be the successors that we actually use in the future. (Pick your own alt-coin as the successor; good luck.)
If I had a large holding in Bitcoin now I would be cashing out or I'd be nervous. I'm not saying it won't go higher, I'm saying that at some point its demise is inevitable. Might be quick, might be slow, but it'll happen because Bitcoin is not the technically best solution in this incredibly exciting field. It's not even close.
Not only that, but it's shown that it doesn't have the ability to make the changes necessary to innovate and stay current.
As a deflationary currency, bitcoin would be a hypothetically good store of value if a bitcoin actually had any intrinsic or even just de facto value. But it clearly doesn’t: it’s only the conversion to and from USD (and others) that has given it any value at all as an investment vehicle to some. And _that_ value isn’t guaranteed preserved one bit.
The crux of the matter lies with your last sentence: "They simply need to be desired by the market"
Ergo, the quality of an asset as a "store of value" (the point of contention I was addressing in my comment) is directly mapped to the desire. BTC's desire is insanely volatile, automatically making it a poor store of value.
My point is precisely that all assets used as currency are oftentimes intrinsically worthless. It's the demand - and the liquidity it provides converting to and fro said currency from other goods or currencies - that makes it a value storage vehicle. BTC, as a "value storage vehicle," is a very poor choice. Gold isn't.
If you step back and look at any kind of "libertarian" driven project this becomes a problem. When everybody who makes something inherently distrusts authority or having anybody "in charge", you can never really build anything big. I'd say bitcoin provides good evidence that to make any big change in a system the buck always has to stop with some individual.
With nobody in charge, you'll just drift around at the same local maximum--sometimes going up a bit, sometimes going down a bit, but never moving to an even larger but different source of value.
I dunno... just a thought....
So taking this into account, when the shackles of Bitcoin's simplicity and limitations become unbearable, the network will evolve through protocol upgrades or through a contentious fork where the hash power and development resources will move to. In either case your coins and value are retained.
Linux vs Windows allover, in fintech infrastructure and protocolls.
That is the reason why anyone can't just create a new coin and expect everyone else to value it, but that doesn't mean there can't be any viable competitors. And if a competitor with a sufficient advantage got popular enough, it could take the lead.
For example, the hack Bitcoin used to become popular was to be deflationary, which encourages speculation. That got the value up before it was cool, but it stays deflationary -- even gets more so -- once it's popular, and the consequent speculation causes high volatility. Once you're popular, being deflationary becomes a liability instead of an asset.
It's possible for a coin not to be deflationary and have the supply set by computing costs. If the value of the coin falls below the energy cost of creating them, people stop creating more of them and the value stabilizes there (so it doesn't keep going down). But as demand for the coin increases the value rises above the threshold and people start mining again (so it doesn't keep going up).
That stability would be a huge advantage. But it's not possible to convert Bitcoin to that because its deflationary nature is priced into its value. Making it non-deflationary would make it worthless to speculators, which would eliminate most of its current valuation.
So all it would take is for a non-deflationary coin to become popular enough for people to trust it not to disappear overnight and the people using it for transactions rather than speculation would prefer it over Bitcoin.
It's possible to validate transactions with proof of work and compensate the work with transaction fees rather than the creation of new coins.
If your crypto-coin starts life with all the coins instantly sprung into existence, that means everybody gets to buy their coins from you--the founder. There is a name for this--it is a pre-mine scam. All you do is mine most of the coins yourself, then go pimp your coin so it gets some buyers, and sell them all off for a sweet profit.
But the amount of work required to validate a transaction need not be as much as it takes to create a coin, and people will continue to be willing to pay someone 5c to do 4c worth of computation to validate their transaction.
Mining isn’t used to validate transactions. You can validate transactions without mining. It’s purpose is to secure the network. The network validates transactions using asynchronous cryptography and nodes only transmit valid transactions. Mining secures those transactions from being overwritten.
If superior technology comes along, what will prevent Bitcoin from adopting this, and using its network effect to outmaneuver a competing blockchain?
A couple of months ago, the Bitcoin network adopted the SegWit protocol change, which could be considered a minor fix (no major improvements to scalability). If the Bitcoin network can agree to adopt a minor fix, why wouldn’t it be able to agree to adopt a major scalability improvement as well?
Changing consensus rules is only easy if the network is centralized. That's not something I want to have in my money.
If new technology demonstrates it's value beyond doubt, upgrading the network will have vast consensus.
Right now, the top 3 crypto-tokens are Ethereum-based, as are 89 of the Top 100:
https://coinmarketcap.com/tokens/
Word-find "token" here to see what the word means in this context:
https://en.wikipedia.org/wiki/Ethereum
There's what I call the "football" effect. The player jumps on the football after a fumble, and while he's the first to grab it, there's a handful of 250 pound guys about to jump on top of him.
Bitcoin is the first to the football, but over the long term I think it's going to get inevitably crushed.
Perhaps Bitcoin will fail at some point in the distant future, but for the time being it is absolutely the most influential cryptocurrency, this can easily be seen by all altcoins' value being pegged to their BTC conversion rate.
Just curious here: What would you say are technically better solutions than bitcoin?
Why didn't these technologies succeed? Because none of those properties have any business advantage over boring, simple, centralized credit-card processing and back then everything was sealed up in patents until it missed the boat.
https://bitcoin.org/en/release/v0.12.0#signature-validation-...
My guess is that this is less of factor than you think. I don't think that HTML/CSS/JS is the best technical solution for creating websites, and yet that is what all browsers use and there are few signs that that is changing anytime soon.
Whatever technology replaces Bitcoin is likely something you can buy with Bitcoin. That's why people rush to buy something which obviously isn't "ready" (but maybe "good enough"). It's speculative, but do not think that people who invested a lot in this didn't think this through at least as much as you have.
Now THAT is the speculation to end all speculations.
Yeah, it's not like I can go on to /r/bitcoin and read multiple dedicated screeds along the lines of "I'm recommending my friends to invest savings in BTC for retirement". Whereupon someone replies "They should keep something in a Roth IRA for diversity", and the OP comments, "What's a Roth IRA?"
Yes, there are sophisticated investors.
But in a lot of cases, the only thoughts going through peoples heads is "Get Rich Quick". There's more discussion of "what color Lamborghini am I buying?" than anything else on those forums right now than anything else. Well, beside 'HODL! HODL! Even if the market corrects $10,000 tomorrow, HODL!'.
Most of the time it feels like these discussions are stuck rehashing old arguments in circles, but this was truly innovative. Thank you for not being predictable.
As for the argument itself, I think you are correct not to make any investment decisions based on what you described.
It's a mistake to look at recent news, because this has been known since the very beginning.
> A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution.
A peer-to-peer network without going through a financial institution. The design was certainly intended to scale up to large numbers of small transactions.
It has however bootstrapped a few potentials. Until its decided which that might be, bitcoin kinda serves its purpose.
So what's the point of it again?
The design can of course support more transactions than it currently does but that is being worked against by this group.
Credit payments may seem instantaneous but they are not. Research the gold standard and who actually stores the gold not the paper receipts for it.
The endgame for bitcoin...Transaction fees? Popup currencies ala private currency?
I hope we are solving some fun math problems with all this distributed hash power.
https://www.tik.ee.ethz.ch/file/716b955c130e6c703fac336ea17b...
https://www.google.com.au/search?q=bitcoin+site:news.ycombin...
Your link shows some early posts on HN about BitCoin
How do you know when his parents got interested in BitCoin?
(Otherwise, how can you demonstrate his statement is incorrect?)
You should appreciate your parents while they're there, they are finite beings.
But that's all really beside the point. Someone was comparing HN to their parents, to imply that HN is full of old farts, whereas I used the same shitty associative logic to say that anybody who compares things to their parents probably still lives with them. Fun stuff!
Naturally, the blockchain will have to be hierarchical, or find ways to compact it.
There are security features built into each bill that help me establishing if it's legit or not, that I can do myself without third parties.
Banks decide where and when to create this debt so yes, money production is indeed decentralized.
If you’re referring to actual coinage and notes then yes, facilities are indeed centralized, but with electronic debit cards the lines are blurred further
I brought this up with some ethereum devs at one point in a forum a year or two ago, and they addressed the questions pretty openly and graciously, but I still wonder about it. Essentially, they talked about the presumption of branches, subchains, etc. When that happens it seems the system would be a little more complicated than the classic crypto-libertarian currency model.
These chains get pretty large, and the overhead in terms of time and storage space seems well beyond what most people are used to now. Maybe people just have to get used to 15 minute payments, and having an extra drive or computer for financial transactions, as the cost of decentralized finance and economics, but from the current vantage point it seems burdensome to me, and only more so as adoption would grow.
But a transaction to set up a channel needs to hit the chain first. What's the intended workflow for occasionally (once every few weeks) instantaneously ordering pizza via Lightning? Would I have to set up a very long lived channel with my preferred pizza place in advance?
Lightning allows sub-second transactions with finality of settlement for any routable path along a peer-to-peer network of payment channels. Because of the six degrees of Kevin Bacon idea, anyone can pay anyone else on the network with a dozen or so different hops in the worst case, each hop taking a really small fee, like a hundredth of a percent. A true peer-to-peer electronic cash system, if you will.
As in this example, your long-lived channels as an individual are likely to be with your employer or payroll company, your mortgage company, your telco, your favorite restaurants, and other other regular payments you make or sources of income. As an organization your channels will probably be with your suppliers (accounts payable) and major customers (accounts receivable), as well as payroll and office supply companies, etc. But you're able to reach everyone on the network through these starting points. This allows you to do things like proactively "pull" in funds from accounts receivable to cover expenses, by routing through that part of the network. It maps pretty well onto both the individual and corporate use cases.
It also allows micropayment in bitcoin again.. the cost of a payment is basically the cost of maintaining these online routable nodes, and the message communication, which is probably sub-cents in the limit. It's possible you can, e.g., do a 5-cent payment per article view on a news website, or per song played on a future Spotify, etc.
"Full nodes are the most secure way to use Bitcoin, they do not suffer from many attacks that affect lightweight wallets...[a]s explained previously, full nodes enforce the consensus rules no matter what. However, lightweight nodes do not do this."
However I admit much of my assumptions are just from reading the original paper so i'm probably over-simplifying. I guess it would make sense they need some history but not sure why they would need all of it since the previous blocks are confirmed?
Unless I'm missing something something pretty big about how Bitcoin's blockchain works.
Root node back others networks (think top level domains and delegated subdomains). IMO, it needs to be _very_ expensive to keep minimal blockchain size and avoid spam.
As long as the value of newly minted bitcoins makes it profitable to buy mining hardware and burn off power to earn them, the amount of power used by bitcoin miners will increase.
So, way before Bitcoin miners consume all of the world’s energy, either energy prices or mining hardware prices will increase, or the bitcoin price will fall, to make mining unprofitable.
No. Bitcoin could work exactly the same even without any more hash power, or energy consumption, ever being added.
This is because mining is only a competition to produce a block and defines the security of Bitcoin. But it has no bearing on how many transactions the network can process.
Any scaling that happens is completely orthogonal.
https://lightning.network/
tl;dr: a network of off-chain, transitive payment channels. two on-chain transactions (to fund and settle channel) allow for ~unlimited, ~free, ~instant transactions across a p2p network of nodes off-chain
To this critique, some reply that merchants will just start trading unsettled (off-chain) LN transactions to pay their suppliers, but no one has presented any model of how this would work in a real economy, with merchants needing to pay suppliers, who need to pay their suppliers, who need to pay their employees.
Bitcoin is 9 year old tech--that is an eternity in tech. Lightning network has been touted as "the scaling solution" for many of those years and has yet to see any use. And even then, the scaling solution Lightning Network provides is "don't use bitcoin". All the solutions for bitcoins scaling problems boil down to "don't use bitcoin".
So if the only way to scale Bitcoin is to not use it... again... what is the point?
Things like sidechains, cross-chain atomic swaps, various block space usage improvements (eg. Schnorr signatures) are also in the pipeline right now, all of which could further improve throughput.
So while LN may not be the silver bullet, it makes me hopeful that at least from a technical perspective, Bitcoin will be able to scale to become a global currency.
Does being unsuitable as a currency mean it's also unsuitable as a 'store of value'? The answer to that isn't obvious to me.
The value of the US dollar comes in part from our ability to pay taxes with it (and perhaps ultimately from the US military). Cryptocurrency has no central authority to enforce its value via taxes or military, and isn't particularly suitable for day-to-day transactions. Without either of those properties, I have a hard to imagining it being a particularly good store of value. But we'll see. I think we're all watching an interesting experiment unfold in real time.
I don't think the current price of btc has anything to do with whatever utility it may or may not have as a currency or store of value. The price is entirely informed by speculators hoping to sell it the following day for 100% ROI. I think a collapse is inevitable.
It doesn't come from either of those things. It only has value because people believe it does, otherwise they would all try to get rid of it as quickly as possible.
Yes it does. You have to pay your taxes in U.S. dollars, so people have to use it. That's one of the purposes of taxes: so that the government-issued currency is used.
Of course, banks know this (it is the core of their business) and will therefore denominate loans in USD to avoid the risk of an unfavorable conversion during such a proceeding. Such an unfavorable conversion is exactly what the creditors in the MtGox bankruptcy are facing, because the proceeding involved converting their BTC accounts into JPY according to the exchange rate in 2014. Due to the change in BTC prices recently, that means that under the law the creditors will be fully repaid using what BTC assets MtGox still has, despite the fact that the creditors would receive a far greater payout if they received the amount of BTC that had been in their accounts at the time of the hack.
Beyond debts, there are also torts. Suppose I crash my car into your house and you sue me for the damage I caused. The courts will order me to pay in USD; so again, the courts are creating USD demand by creating an obligation to pay with USD.
So the demand for USD is only indirectly due to demand for goods and services; after all, there must be some reason why merchants are pricing their wares in USD. The direct driver of demand is the law itself, hence "fiat" currency.
That's exactly what I was saying: the goods and services are priced in USD because the legal structures require USD. I just used taxes as the most simple example.
But the whole point of the legal structures requiring USD is to get people to offer goods and services for sale in exchange for it. That way the government can purchase goods and services from the private sector to use as public goods, without having to first "get the money" from somewhere else.
If you want a challenge, try explaining why the Somali dollar still held its value despite being a fiat currency that lacked a government to back up its value for well over a decade.
Have you ever asked yourself why they believe that? It's because they can pay their taxes with it, but also, as it says right on the front, "this note is legal tender for all debts, public and private." As long as the US government is still a thing, this phrase means what it says. I haven't seen anything so far to convince me that BTC has more stability or longevity than the US or EU (or Britain...).
The dollar bill is worth 1 USD because the government asserts that.
That doesn't make 1 USD anything. It just means the dollar bill is worth 1 USD.
The government has no power to prop up the value of the USD if the world decides it's worthless.
I don't see "the world" deciding USD is worthless anytime soon: people in third world nations keep pristine US cash in their closets as a store of value; a lot of international trade uses dollars as a common currency; etc. If "the world" decides that dollars are worthless, that will be the least of my problems while I'm cowering in the bomb shelter I don't have.
Same for BTC.
The US government has plenty of military power that it can and does use for this exact reason.
The other way around: If you can't buy most stuff with it (the case right now) and can't convert it into your everyday currency (maybe happens if the exchanges suddenly go down for some reason, even only temporarily), what's the value of Bitcoin?
Selling it to someone else for more than you paid next week.
Meanwhile, keeping with that analogy, actually selling gold takes quite a long time when you hold the physical asset yourself, and the fees are not small there either, as validation needs to be performed to confirm the gold you're supplying is authentic.
Truly, I hate the analogy, because digital assets like this are supposed to be better, not just as bad, as their physical counterparts.
What if a law is passed that allows BTC currency conversion only to a small amount per day, because of whatever reason?
Currencies like the USD don’t have this property. There is no need to exchange your money to make it valuable.
That's not sustainable though when you have perfect replacements readily available.
Does this have something to do with aftermath of Vietnam War in 1970s? US got broke, to recover, they made a pact with Saudis, ditched gold and use USD instead for reference currency, and oil transactions are in USD (i.e. 'petrodollars')
Then things went downhill globally.
humans trade on credit not by exchange. Always have done.
Give it ~30 years, for the cost of CPU time/storage space/internet speed to cost 0.1% of what it does today, and — in combination with off-chain clearing — this becomes feasible.
For Bitcoin to even work as money in the first place, people need to store their savings in bitcoins. This transition will take at least ~30 years anyway, which leaves ample time for computing costs to fall to a level where 1GB blocks are realistic. Combined with an off-chain clearing protocol (like Stroem[1]) for consumer-to-merchant payments, this should allow Bitcoin to scale to ~10bn people.
[1] https://www.strawpay.com/docs/stroem-payment-system.pdf
a. Block size - This was increased in bitcoin cash. What many people are not aware of is the paper 'Information propagation in the bitcoin network' by Decker and Wattenhofer in 2013. The average time for a block to be seen by a node is ~13 secs. As per the paper:
"For blocks, whose size is larger than 20kB, each kilobyte costs an additional 80ms delay until a majority knows about the block." -'Information propagation in the bitcoin network.
So, increasing the block without increasing the block time actually increases chances of double spending. But, increasing block time is well simply delaying the payments.
b. Lightning network - Off-chain transactions. Fascinating idea. The problem is it goes to a form of centralization. And if things hold the companies running these channels will invariably meddle in some transactions. But the stated goal of bitcoin was -
Commerce on the Internet has come to rely almost exclusively on financial institutions serving as trusted third parties to process electronic payments. While the system works well enough for most transactions, it still suffers from the inherent weaknesses of the trust based model. Completely non-reversible transactions are not really possible, since financial institutions cannot avoid mediating disputes. The cost of mediation increases transaction costs, limiting the minimum practical transaction size and cutting off the possibility for small casual transactions, and there is a broader cost in the loss of ability to make non-reversible payments for nonreversible services. With the possibility of reversal, the need for trust spreads. Merchants must be wary of their customers, hassling them for more information than they would otherwise need. A certain percentage of fraud is accepted as unavoidable. These costs and payment uncertainties can be avoided in person by using physical currency, but no mechanism exists to make payments over a communications channel without a trusted party
It's not like PayPal where if you want to pay using PayPal you have to use PayPal-the-company. With Lightning, if you want to pay using Lightning you can use any route you like over the Lightning Network to reach the recipient of the payment.
[1] - https://en.bitcoin.it/wiki/Address_reuse
There have been multiple attempts at scaling Bitcoin on-chain by raising the blocksize. They have all been unsuccessful because they have been blocked by the Core developers and their supporters using censorship, troll campaigns, ddos and abuse. It's not due to technical reasons but because they want to redirect scaling off-chain, using technology they coveniently develop. The very same developers actually supported bigger blocks a couple of years ago but changed their tone to support the scaling approach their company favors. After the last attempt (Segwit2x) it's clear Bitcoin won't scale on-chain.
However the technical limits of the technology ha never been reached, tested or even been fully researched. Bitcoin Cash is for example a fork which aims to scale on-chain by increasing the block size. If all transactions from Bitcoin would be done on Bitcoin Cash the network would work fine today.
Where the actual limit is we don't know. It's probably not possible to support every financial transaction for everyone. For that we do need off-chain scaling in addition to many other improvements.
But how does that benefit them? Lightning network is open source, so it's not like they can make money on transaction fees.
Good reason to believe the entire thing was simply the old system attempting to hijack bitcoin.
https://www.reddit.com/r/btc/comments/7fsbw5/divorcing_the_s...
selling a SaaS (presumably with support) to enterprises is a bad thing now?
>Good reason to believe the entire thing was simply the old system attempting to hijack bitcoin.
>https://www.reddit.com/r/btc/comments/7fsbw5/divorcing_the_s....
most of the post wasn't really relevant to the on-chain vs off-chain discussion, so i'm going to quote (what i think is) the relevant bits
>The divorce of the transaction layer from the settlement layer enables corrupt influence and tampering within the system in much the exact same way as the fiat system. [...] The core treachery that has been inflicted upon the project is what? You guessed it; to divorce the settlement and transaction layers from one another, which makes it once again subject to the exact same weaknesses as gold in the modern world with its laughable 542 to 1 paper to physical transaction to settlement layer.
how i'm understanding the argument it is that by separating the transaction/settlement layer, it would lead to fractional reserve banking, as seen in fiat currencies. how does lighting network achieve that? to start a payment channel that can handle x BTC in net transactions, you have to lock x BTC beforehand, so it's not like using lighting network is equivalent to issuing IOUs for bitcoin. am i missing something?
For reference this is a year-old article from Gregory Maxwell, a prominent Bitcoin Core developer, explaining his view: https://www.reddit.com/r/Bitcoin/comments/438hx0/a_trip_to_t...
I think Greg is right. And at least this scaling situation puts a lot of pressure on Bitcoin blockchain and accelerates whole ecosystem to quickly develop and deploy layer-2 solutions like Lighting Networks or parallel 2-way-pegged solutions like sidechains. Which is in my opinion a good thing even for the price of hampering Bitcoin growth in short-term.
And from technical point it is beneficial that Bitcoin Cash folks forked the chain and will experiment with their own scaling solutions. It will be interesting to watch future technical developments on both sides.
For reference here's a paper by Peter R, a prominent Bitcoin Unlimited developer, arguing that a blocksize limit is unnecessary: https://www.bitcoinunlimited.info/resources/feemarket.pdf
Who's right I do not know. But even if Greg is right he's worrying about a potential problem decades from now. We have very real problems right now we should solve first.
I would also be wary of any claims Greg makes as he has clear conflict of interests against raising the blocksize. He's one of the founders of Blockstream whose goal is to earn money developing 2nd layer solutions. With working on-chain transactions what use would their 2nd layer solutions have?
You're suggesting Bitcoin just proved it can't scale, but it actually just proved it did--just not with transaction volume. The network continued to process transactions averaging one block every ten minutes exactly as it was built to do, despite the heavy load.
To put it differently: A different online payment system could have stopped accepting transactions, or run out of resources, allow transactions it shouldn't have, disallow ones it should, or something else terrible. But Bitcoin didn't. If you wanted into the next block, you'd need to pay more, but that's (from a technical perspective) entirely by design.
What Bitcoin is proving is that it has clear and well-understood limits and continues to work well within them, and that's incredibly important for public perception. IMO, if Bitcoin's transaction capacity never scales, it'll still be a huge technological success. Other cryptocurrencies can try their hand at scaling, but Bitcoin needs to be rock solid to the extent possible for all cryptocurrencies' sake.
Wikipedia
The pro-BTC arguments are becoming absolutely inane
Wikipedia
Peer to peer cash.
Not "Gold", not "asset", but "Peer-to-Peer Electronic Cash".
https://www.investopedia.com/tech/bitcoin-vs-bitcoin-cash-wh...
It's certainly not as ridiculous an option as it was back before the difficulty adjustment fix when its supporters were promoting it as the fast option despite it usually taking days for transactions to confirm (supporters responding that block times were as low as a minute sometimes, and they were right... except it was a entirely bimodal distribution, with most of the time spent in the "hours per block" part).
However, the increased transaction capacity people are promoting is still about 100x its current transaction rate, and it's entirely unclear how well it'd handle scaling up by that much in practice. Especially since I'm pretty sure it lacks some of the scaling work that the original Bitcoin has. Also, the rampant dishonesty and all the attempts by sites and services owned by a guy with a major investment in it to trick people into thinking it is Bitcoin don't inspire confidence.
http://www.hashcash.org/papers/hashcash.pdf
And obviously it doesn't matter if the law is wrong, it's still the law. But in this instance, why do you believe it to be wrong?
Let's not get started on verification of the asset!
Seriously. And I'm not trying to be cheeky. If Bitcoin ends up only being a settlement layer, it'll still be a colossal success just being a decentralized, supply-limited, uncensorable, world-accessible payment system and store of value.
If someone else solves the scaling debacle better, I'll be the first to recommend that normal people switch to it. But it's not easy, and the world is watching Bitcoin. Governments are starting to accept its existence, big financial institutions are starting (just this month) to allow options trading, etc. That stuff is far more important even for other cryptocurrencies than low fees.
After six months of no issues with Bitcoin options trading, it's only a matter of time before other cryptocurrencies get the same treatment. That's why we need Bitcoin to be rock steady and predictable, while others can try to solve these tough problems.
“even if it's only ever used for politically sensitive transactions, and it never takes off as a consumer payment service, it will be a very big economy” https://news.ycombinator.com/item?id=5526684#5526972
The goalposts for Bitcoin have always just been “can it sustain its market cap?”
Anyone who was hoping for it to replace credit cards didn't understand the system. Lots of other folks have known the limitations of Bitcoin for years and what we're seeing today was totally predictable.
[1] yep: http://www.nasdaq.com/markets/wheat.aspx
I started using Bitcoin Cash instead and I'm loving it. All the good parts about Bitcoin Core w/o the brain dead approach to scaling.
https://fork.lol/blocks/height
As it says, "Block height. BCH is currently ahead by 9272 blocks." with the block height of both being about 500k.
In fact, with the rate that BTC gains hashing power, and its comparatively less responsive difficulty adjustment algorithm, it is expected to overtake BCH's block height in the next couple of years.
Bcash is an appropriate name for the altcoin to eliminate confusion.
Note that there is no CEO and the very same people who refer to Bitcoin Cash as Bcash refer to Ethereum Classic, Bitcoin Gold and others by their proper name...
Using your analogy Bitcoin Core is saying they are going to shut down Bitcoin service to all new users until they implement a new algorithm that hasn't been proven yet and is still years away from being ready.
Just think about it you have all this power, but you only allowed to write 1mb in 10 minutes. So yeah, if it was my database I'd reduce commit time and increase commit size. Remember blockchain is nothing more than a distributed append-only database.
Personally, I think bitcoin is good in place of wire transfer/SWIFT, but right now it can't do that because it's too volatile.
I think banks having their own blockchains (i.e. quorum from Chase) is what is going to happen.
In Bitcoin’s case, I don’t think we have a lack of CPUs though.
So, what happens when all the bitcoin are generated and mining is complete?
Bitcoin, as it stands now, is a value store, not an everyday currency.
You wouldn't buy your lunch with a sliver of gold. You'd use paper. Bitcoin is gold. Other tokens are paper currency.
We already know at least 2 obvious ways to improve the transaction flow rate of bitcoin in trustless ways, and many others are being proposed that do not also create energy arms races.
Please don't redefine success.
Arbitrarily increasing blocksize without addressing propagation delay and centralization impacts is also irresponsible.
Bitcoin has been tirelessly working on the scaling problem in a responsible way. SegWit will allow up to 12t/s. Mimble Wimble and Schnorr Signatures will further compress transaction size and increase t/s to roughly 20t/s. All this without increasing propagation delay (increasing blocksize).
Lightning network further reduces the number of onchain transactions necessary.
Rootstock adds ethereum compatible smart contracts to bitcoin as a side chain.
All these technologies responsibly scale Bitcoin. Your comment implies Bitcoin is stagnant which to me implies you don't know what you're talking about.
I wouldn't hold my breath for that. Bitcoin still is having a holy war about increasing the blocksize.
One side effect of this whole deal is it shows that it is incredibly hard, if not possible, to change a decentralized system. By its very design, it will be all but impossible to make any breaking changes to bitcoin at this point.
> Lightning network further reduces the number of onchain transactions necessary.
Besides being complete vaporware, I do love how the solution to Bitcoin's scaling problems is to not use it...
With regards to blocksize, the only reason it’s not widely embraced is because it’s known to directly impact propagation delay. One side couldn’t care less about centralization, the other side cares dearly. SegWit was activated, which compresses transaction size and doubles transactions per second without impacting propagation delay. Mimble Wimble and Schnorr signatures are coming soon, which are also soft forks and compress transaction size even further. There’s plenty of change happening that are all very intelligent scaling solutions. Big blocks are not intelligent nor difficult to implement.
source? afaik it's open source and it charges no fees.
Congratulations guys, you made the banks SWIFT 2.0. I’m sure they appreciate it very much.
It doesn't matter - it can fork. And if the fork offers something compelling, it will get used. Even Bitcoin Cash, which is not (very) compelling, is now tradable more than most altcoins.
There have even been successful atomic Bitcoin<->Litecoin cross-chain transactions with Lightning last month.
Tl,dr: each additional kB in blocksize adds approximately 80ms of delay until the majority learns about a block.
Tl,dr: each additional kB after 1mb adds an additional 80ms in propagation delay. It’s not just bandwidth that’s the problem. Nodes need to validate the block, then communicate that block to other nodes who also need to validate. Big blockers are drinking Roger Ver koolaid. The man doesn’t even know how to program, yet has convinced an army of redditors he knows best.
why does increasing propagation delay lead to centralization?
Mining a block is suppose to be a lottery, not a race.
I've learned a lot, btw... so thanks for that too.
If you've tried linking distributed Oracle databases between just a few different sites, you'd understand this has tons of failure cases and is, in fact, not a solved problem, even in the centralized world.
(Bigtable probably gets the closest these days, if you want proprietary and not globally auditable.)
That is nice. But can I, and everybody else in the USA successfully use Bitcoin on Black Friday? According to the National Retail Foundation, in 2016 over 101 million people went out on black friday to buy something. If Bitcoin could somehow 10x its transaction rate to even 40 transactions per second (which it can't and probably never will) it would take almost 30 days to process every order. At its current rate of 4tps, you are looking at about 292 days--during which, according to Wolfram Alpha, Venus will have made 1.3 trips around the sun.
So again, yeah, great job. Bitcoin solved some technical problem. Go team! But who gives a crap if some technical problem doesn't solve any real problem? Isn't that what we engineers exist to do? Solve real-world problems?
That shouldn't diminish all the other things that BTC does successfully.
b) Precious metals are too reliant on physical security. Someone can break into your house much easier than into i.e. your hardware wallet.
c) Besides these, precious metals are not a payment system, much less a programmable one. You can't code for example a logic that requires multiple untrusted parties to sign a transaction for it to complete.
Also, Bitcoin settles transactions in 30 days, merchants get their funds in 30 days if they are lucky to not have the charge back.
Apples and oranges.
That is one reason why I prefer centralised to decentralised. I have yet to see a justification for the cost of decentralisation. This cost is an important thing, not a trivial thing.
Other reasons include but are not limited to the governance mechanism of things like bitcoin not being demonstrably better than the governance systems of any other currency, but that’s a much longer topic of discussion.
If you read the original bitcoin white paper it is clearly evident that the purpose of bitcoin was as a currency. These insane fees, wait times, and rediculous technical decisions by core have made it such that bitcoin is becoming “bank coin” aka only used for settling between large groups and useless for individuals (unless you’re a speculator).
This has to change
Only made by the incompetent/corrupt developers. Regular users just don't want to pay outrageous fees.
Looking at my transaction history, of my last 10 transactions, all had fees in excess of $1, one as high as $14.
I'm not losing any sleep over it, but I'm also not going to call the fees reasonable.
Without micro payments it's stuck in a niche paying ransoms and doing drug deals
Big blockers have their Jihan and Roger coin now. Stop trying to steal the bitcoin brand. If there was consensus for big blocks then Bitcoin would have activated. Jihan and Roger couldn’t convince the educated people that their proposals would work. Now they’re throwing a tantrum.
Segwit (besides being a crappy implementation) is by far not enough scaling.
That you blame Jihan and Roger is typical stupid propaganda which doesn't belong here.
Each additional kb results in an additional 80ms of delay until the majority learns about a block. Increasing to 8mb means you’re adding a 9min delay in propagation. That is pretty much guaranteed centralization.
Perhaps you have some research you can point me to that demonstrates otherwise?
How you can conclude a 9min propagation delay for 8MB blocks is beyond me as miners are basically directly connected to each other. This is the only thing that matters decentralization wise.
Bitcoin Unlimited are successfully testing 1GB blocks: https://news.bitcoin.com/bitcoin-unlimited-reveals-gigablock...
I wonder if it could be measured the _other_ way around - i.e. are the sustained tiny blocks on BCH _increasing_ decentralisation compared to BTC right now? I can't find any good information on block propagation time though :(
No need to attack Bitcoin, just go all in on Bitcoin Cash , put your money where your mouth is, and move on.
Every attempt to date to improve transaction rates on BTC have been hampered by a small group of developers who have a vested interest in it not scaling for reasons explained here: https://www.reddit.com/r/BitcoinMarkets/comments/6rxw7k/info...
Bitcoin won't get any of the improvements you hope it will because there is too much money vested in keeping it exactly how it is today.
I understand big blockers are upset they didn’t get their way. They need to understand the reason big blocks don’t have consensus is that they increase propagation delays and propagation delays leads to centralization. Core devs are pursuing many alternative and intelligent scaling avenues.
Also, miners don’t determine consensus rules. If PoS works, another UASF initiative will arise and everyone running a node can decide the new PoW scheme. The fact that you don’t understand this leads me to believe you don’t have a good understanding of the technology yet.
> Core devs are pursuing many alternative and intelligent scaling avenues.
Their strategy of stalling for the last couple of years is the least intelligent approach they could have taken.
> Core devs are pursuing many alternative and intelligent scaling avenues.
Yes they do, that's the point of Bitcoin.
> If PoS works, another UASF initiative will arise and everyone running a node can decide the new PoW scheme
You mean if PoS works they can fork and use their altcoin.
> The fact that you don’t understand this leads me to believe you don’t have a good understanding of the technology yet.
The fact that you don't understand this leads me to believe you're either a Core shill or you have been seduced by their pretty words. The whitepaper makes all this clear.
http://www.tik.ee.ethz.ch/file/49318d3f56c1d525aabf7fda78b23...
The above directly demonstrates how block size results in significant propagation delay.
I ask you again: can you show me the research which demonstrates increasing blocksize won’t result in significant propagation delay?
As I already wrote what matters is propagation between miners which is already very fast, even according your own link, which examins propagation throughout the network as a whole not between miners specifically.
If that’s your idea of research, best of luck to bcash.
triggered
If the vast majority of users and services decided to switch to PoS tomorrow there’s absolutely nothing miners could do about it.
That said, I’m not saying it would be easy to get consensus for such a major change. Futures markets might be useful for determining how much support for a change there is.
We had a gentleman visit our booth from one of the big 4 airlines. He asked us what we were going to do to get to 1800 t/s, because that was the load requirement for the reservation system he and his division were tasked with creating, deploying and maintaining.
I’m fairly certain a currency system needs to scale beyond what a single airline needs in terms of transactions per second.
If we can improve the transaction rate without risk, then let’s do it. It just gets tiring seeing post after post suggesting it’s a valueless failure if it can’t be used for coffee. Let’s just keep it in perspective. It doesn’t need to supplant Visa to be successful.
In other words, "financial institutions" have no need for the blockchain.
Want proof? You think the NASDAQ uses anything more than a (fancy, probably very high priced, extremely robust) database to store its stuff? They deal with all kinds of people who are actively trying to fuck them over every day and every second. They have no need for the blockchain. Neither does any other "financial institution".
Why would you want Bank 2.0?
Bitcoin is more scarce and therefore better store of value than any fiat currency could ever be.
Do you not understand second layer solutions do not put your Bitcoin at risk? You commit to a payment channel which defaults to closing the channel according to original amounts when opened.. if the other party doesn't follow through. Again, your funds are not at risk so it's not like a bank, and there's no fractional reserve nor devaluing, so the SOV use case is preserved.
Not at all like current fiat money system.
The vision was, you can have transactions of any value with very minimal fees. like less than 10 cents. People would have micro transactions for all sorts of things.
But what it has now become is a place to store your money. 10X growth in one year. And you can't trust your exchange to still be there when everyone tries to convert that 10X back to cash if the price were to take a dip.
I would love to see online marketplaces taking a flat fee in cents because they can bypass dumb credit card percentage based fees and can still be profitable because they are doing it at scale processing thousands of transactions a second on a digital currency
There is also FLP impossibility, which reduces to the halting problem in an asynchronous distributed system setting.
By this logic, Bitcoin can never “scale”.
It literally stopped accepting transactions.
After 72 hours your transaction is dropped.
Without further notice. Until then you must guess if it was processed or not.
20$ transaction fee is an incentive for the users to restrain themselves to smaller number of larger transfers.
Is the limit too strict? Probably. Miners still get a lot from mining rewards and don't need to be incentivised with fees yet, but there must be some limit that will force people pay for transactions because when mining rewards end there will be nothing to keep miners mining.
The real difference is that visa has percentage fees on volume and bitcoin has fees dependent on number of transactions want to do at the moment. It's sensible since to avoid trusting single party bitcoin nodes all keep all thansactions that ever happened. Incentivising people to limit their number is a good thing for bitcoin network.
But thanks to that bitcoin won't ever be Visa 2.0
For me bitcoin for payments should work similarily to how prepaid phones work. You land in another country, you buy a card from local provider, you charge it with bitcoins and you usr it to shop.
I think bitpay is already doing something like that.
In my country (the Philippines) everyone is buying from high school kids to office workers.
The current minimum transaction fee is around $40. To exchange your bitcoin to Philippine Peso (PHP), the fixed conversion fee is 5%. If those don't seem a lot, get this: 83% of Filipinos earn below $400 a month. Most of whom I know are HODLing their bitcoin because it's too expensive to move their money. They would rather wait for their investment to reap huge gains before they cash out.
Bitcoin here is branded as a "get rich quick" investment scheme, and that's understandable, bitcoin doesn't have a valuable use case here. You can't buy anything here with bitcoin.
Use https://estimatefee.com/. Not paying enough to win the fee auction is not the same as no transactions getting through at all. You seem a bit misinformed to be using the "Dude" prologue.
K thx bay
Bitcoin Cash fixes Bitcoin by providing a capacity market, where transactions can cost whatever nodes / miners can compete at.
You’re arguing “nobody died in the titanic that didn’t pay enough”, when the problem is clearly there aren’t enough lifeboats.
https://themerkle.com/what-is-child-pay-for-parent/
There are hard physical transaction limits which cannot be surpassed without seriously compromising decentralization... To the point that what would be left of the network would essentially no longer be 'Bitcoin'. Any attempt to abstract away from the blockchain through some kind of batching or delayed settlement would completely undermine the trustless nature of Bitcoin... What would be left would be no better than the current banking system.
The whole point of a cryptocurrency is that you can have your own wallet from which you can spend without going through any intermediaries... All potential Bitcoin scalability solutions that I've heard of rely on exchanges being given more power/trust in order to abstract away from the Blockchain.