"The problem is that transaction fees easily become a significant part of the total cost to the end user meaning that Bitcoin becomes unattractive for all but large purchases."
This is NOT a quality of Bitcoin, only the Bitcoin implementation called "Core". This "problem" was solved by Satoshi himself and has been activated in the chain, Bitcoin Cash.
The whole argument in this article is baseless and assumes that for some reason the "Core" implementation is the only one possible.
It also assumes there is no incentive/demand for "Layer 2" solutions, like Liquid, Lightning Network, Bisq. There's lots of room for experimentation, but I'm very opposed to "big blocks" (as the above poster has mentioned). If you'd like to hear why, and in fact should maybe be even smaller, I suggest this brief explanation: https://www.youtube.com/watch?v=CqNEQS80-h4
There's always someone ready to say that 2KB/s is too much for servers. There is never a real explanation or evidence of course, just vague hand waving, predictions about the future, assertions they hope people won't think about or validate, etc.
The person in this video was adamant that the sun revolves around the earth (yes really) possibly stemming from radical religious beliefs that most reasonable people would take as a sign of mental illness. Don't forget that he is essentially arguing that something that already works won't work.
I can't believe anyone would believe that cryptocurrency blocks can't go over 1 MB every 10 minutes when plenty already have. Most users don't even sync with the main chain even though they can. The whole thing is mind melting.
Why keep doing this? The second layer stuff is a solution in search of a problem and everyone behind it keeps trying to convince everyone there is a problem.
Why would that be true and why would you think that?
Do you realize that even a poorly made hash table can be updated 10 million times per second on single core of a 14 year old computer? Weren't you the same person saying that a node that just has to download blocks and send them out couldn't be run on a VPS for some reason?
Are you sure you understand these things and haven't just been reading misinformation?
Core is the only implementation anyone really cares about, a hard fork can do arbitrary things, the problem is people need to use it, and they aren't using bitcoin cash.
The actual bitcoin people care about has massive transaction fees (sometimes peaking above $20+), its nearly unusable as a currency.
The very same claim was made after the January 2018 bubble burst... Truth is that the hash rate is going up over time[0] and this is not really a problem. There are also too many misunderstandings in this article for me to bother listing them one by one.
For example there's no growth in the value of transactions. And that is so because Bitcoin is the same useful (or useless) as it was years ago. The main use case is shuffling of the funds between exchanges to help "the industry" rip off the stupid money. :)
It's irrelevant what the hashrate has been, there are a plethora of reasons for it, not the least of which is speculation for future gains. It is straightforward logic that if there comes a time when total compensation for mining is lower than today, then there will certainly, eventually, be less mining, and therefore a less secure blockchain (but possibly still secure enough). If at the time equal security was demanded there would be no choice but to raise fees to incentivise equal mining.
But this whole small transaction dream is a foregone conclusion. Even now it's clear that Bitcoin works best with fewer, larger, higher fee transactions. Miner compensation is one reason, but there are many: blockchain size, centralization, latency, etc. PoW blockchains are clearly suited as settlement layers.
This article is bad.
1. The cost the mine a resource trends towards the value of the resource. As Bitcoin value goes up and down, hash rate tracks it going up and down. Increases in efficiency allow you to hash more at lower cost. However this is a red herring, as waste is required for POW, because: https://en.wikipedia.org/wiki/Signalling_theory
Thus, money wasted on hardware and electricity tracks Bitcoin price, and hash rate itself is a function of efficiency times energy waste while staying under BTC price profitability cap.
2. Most blockchains are empty, and they all work "decently." As decently as the worlds most expensive and slowest databases can be. What blockchains need is not higher TPS or lower fees, but more users. They say the demand for unlimited free storage is infinite, so a fee market must always exist, bounded by storage costs (and duplication across many nodes.)
By the way, when I say most blockchains are empty, the amount of fee revenue generated per chain per day is PITIFUL and falls of amazingly fast. https://coinmetrics.io/charts/#assets=btc,bch_roll=7_left=Fe... says:
BTC $342,000 in fees per day.
ETH $95,000 in fees per day.
BCH $130 in fees a day
3. 1000tps is already in production by zkrollups and optimistic rollups on ETH. See it in production at loopring.io. There's more BTC wrapped on ETH than in lightning on BTC.
Disclaimer: I founded the #76 highest marketcap cryptocurrency, and one of its features is not paying miners block rewards, only fees.
P.S. Scaling is cured enough for now using zkrollups. The market for slow, expensive databases should always be restricted to things that REQUIRE censorship resistance, and most things do not.
19 comments
[ 4.0 ms ] story [ 63.3 ms ] threadThis is NOT a quality of Bitcoin, only the Bitcoin implementation called "Core". This "problem" was solved by Satoshi himself and has been activated in the chain, Bitcoin Cash.
The whole argument in this article is baseless and assumes that for some reason the "Core" implementation is the only one possible.
The person in this video was adamant that the sun revolves around the earth (yes really) possibly stemming from radical religious beliefs that most reasonable people would take as a sign of mental illness. Don't forget that he is essentially arguing that something that already works won't work.
I can't believe anyone would believe that cryptocurrency blocks can't go over 1 MB every 10 minutes when plenty already have. Most users don't even sync with the main chain even though they can. The whole thing is mind melting.
Why keep doing this? The second layer stuff is a solution in search of a problem and everyone behind it keeps trying to convince everyone there is a problem.
Do you realize that even a poorly made hash table can be updated 10 million times per second on single core of a 14 year old computer? Weren't you the same person saying that a node that just has to download blocks and send them out couldn't be run on a VPS for some reason?
Are you sure you understand these things and haven't just been reading misinformation?
I hadn't clicked on the link above but after reading your comment, I immediately knew we're talking about Luke Dashjr. :)
I remember back when I mined, his pool Eligius would embed bible verses into the mined blocks. We had quite a chat about it back then.
The actual bitcoin people care about has massive transaction fees (sometimes peaking above $20+), its nearly unusable as a currency.
0. https://www.blockchain.com/en/charts/hash-rate
For example there's no growth in the value of transactions. And that is so because Bitcoin is the same useful (or useless) as it was years ago. The main use case is shuffling of the funds between exchanges to help "the industry" rip off the stupid money. :)
But this whole small transaction dream is a foregone conclusion. Even now it's clear that Bitcoin works best with fewer, larger, higher fee transactions. Miner compensation is one reason, but there are many: blockchain size, centralization, latency, etc. PoW blockchains are clearly suited as settlement layers.
Thus, money wasted on hardware and electricity tracks Bitcoin price, and hash rate itself is a function of efficiency times energy waste while staying under BTC price profitability cap.
2. Most blockchains are empty, and they all work "decently." As decently as the worlds most expensive and slowest databases can be. What blockchains need is not higher TPS or lower fees, but more users. They say the demand for unlimited free storage is infinite, so a fee market must always exist, bounded by storage costs (and duplication across many nodes.)
By the way, when I say most blockchains are empty, the amount of fee revenue generated per chain per day is PITIFUL and falls of amazingly fast. https://coinmetrics.io/charts/#assets=btc,bch_roll=7_left=Fe... says: BTC $342,000 in fees per day. ETH $95,000 in fees per day. BCH $130 in fees a day
3. 1000tps is already in production by zkrollups and optimistic rollups on ETH. See it in production at loopring.io. There's more BTC wrapped on ETH than in lightning on BTC.
Disclaimer: I founded the #76 highest marketcap cryptocurrency, and one of its features is not paying miners block rewards, only fees.
P.S. Scaling is cured enough for now using zkrollups. The market for slow, expensive databases should always be restricted to things that REQUIRE censorship resistance, and most things do not.