7 ms·

This is interesting to me because it presents the blockchain size dispute in a way that seems much more sympathetic to the "no, we shouldn't increase the blockc

by manyoso 11y ago

This is interesting to me because it presents the blockchain size dispute in a way that seems much more sympathetic to the "no, we shouldn't increase the blockchain size" crowd than Mike Hearn's essay. Is it really true that the people who are objecting to increasing the blockchain size see Bitcoin turning into a reserve "currency" to hold wealth instead of a liquid currency used to make real time transactions? Is that really the debate? Because I didn't get that from Mike Hearn's essay at all...

forthefuture 11y ago
I think this touches upon an even bigger problem in the Bitcoin community. Very few people actually know what they want other than the price to go up. And those who do are all at odds with eachother because Bitcoin can't do everything at once.
- unexpand 11y ago
  The very people who want the value to go up will keep the Bitcoin alive. It is too early to proclaim it dead.
  - al2o3cr 11y ago
    LOL, that works until it doesn't. There's a name for that sort of financial scheme...
- manyoso 11y ago
  I have no history with Bitcoin, but if people want the value of Bitcoin to go up I think it'd behoove them to make Bitcoin useful to people as a solution to a problem. I'm not sure the idea of a decentralized reserve currency with unknown/random time-to-liquidity is a very useful solution to any problem. Bitcoin obviously has value right now as demonstrated by the fact that people can go out and exchange coins for things people regard as valuable, but current value is not a perfect indicator of future value and I'd argue that the current value is at least somewhat predicated on the belief that Bitcoin will eventually become a useful replacement for today's highly-liquid real-time transactional currencies. I am probably naive, but can't a solution be found by simply increasing the block chain size and then creating software that makes the verification of transactions more distributed by making the process more fine grained in terms of CPU and memory resources? In other words, split current "nodes" into a more fine grained distributed virtual node that low end computers can run?
  - zanny 11y ago
    It isn't about computational difficulty. Larger block sizes simply mean larger blockchains and more network use to transfer them around. The verification of transactions in bitcoin is central to its protocol. Its the whole reason its novel and relevant. You would have to change the proof of work system from sha256 hashing to something else to make it anything but optimal for computation on specialized ASIC hardware. If you do that, now you have another cryptocurrency - litecoin, peercoin, etc. And when you use a hashing algorithm meant to be hard for general computers (cpu or gpu) to do, and can manufacture hardware that does them much more efficiently, you end up where we are now where big miners and a handful of people represent most of bitcoins mining power.
    - Anonobread 11y ago
      No matter what crazy optimized-for-decentralization algorithm you come up with to mine cryptocurrency, large investors are going to buy a ton of it and put it in datacenters in China. Newbies and people invested in alternative attempts at Proof of Work often complain about this longstanding issue while utterly failing to solve it themselves.
      - zanny 11y ago
        Is it an issue? Of course you could spend millions to buy mining hardware. The issue in bitcoin is more that you spend millions on novel mining hardware nobody else has. If your hashing function is CPU or GPU friendly, suddenly everyone in the economy has hardware capable of potentially mining your crytocurrency. The problem with bitcoin is that those hundred million dollar datacenters are the only places top of the line SHA256 hashing hardware is found. If they were just GPU cluster datacenters, despite their scale, they still would not compete with the distributed power of millions of home users desktops to as much a ludicrous degree as modern ASIC miners are in the bitcoin space.
        Anonobread 11y ago
        > Is it an issue? Conundrum? Regardless, it's unsolvable, and I do empathize with the people who complain or offer their own (non)solutions. > If they were just GPU cluster datacenters, despite their scale, they still would not compete with the distributed power of millions of home users desktops to as much a ludicrous degree as modern ASIC miners are in the Bitcoin space. Do you suggest efficiencies of scale don't apply to GPU clusters in datacenters, or CPU clusters in datacenters? As it pertains to mining centralization, do you suggest efficiences of scale only apply to sha256 ASICs? The idea that this can be "solved" with clever code is utterly naive. The bottom line is investors in any cryptocurrency, regardless of its hashing algo, will buy up the majority of the hashing rate with high efficiency rigs in well-connected datacenters with low priced electricity. Tell me how to fix that with code. You can't do it - although I've certainly seen more than my fair share of altcoin investors try in vain to do just that.
TD-Linux 11y ago
The opinion, of course, widely varies. Mike's piece was Mike's opinion, so of course it's not going to be very sympathetic to Core developers. The limits on transaction size have been known since the beginning of Bitcoin. VISA level transaction rates require insanely high block sizes, much larger than those proposed so far. People have come up with many, many different solutions to this problem. One thrown around a lot is the lightning network [1], but it's not really a "reserve currency" in this case - it's a way to prevent a bunch of intermediate transactions from entering the blockchain forever, but it's based around advanced Bitcoin scripting usage, so it's using Bitcoin for much more than just a backing value. Keep in mind that Bitcoin currently has a $6 billion USD market cap. Breaking Bitcoin would reduce that to $0. Many people have strong motivations to be conservative with changes... [1] https://lightning.network/ https://lightning.network/
- woah 11y ago
  The Lightning network is not based on advanced Bitcoin scripting, in the sense that Bitcoin script makes it possible or something. Bitcoin script is, rather, an impediment which has added a huge amount of complexity to Lightning. The same principle expressed without Bitcoin script can be explained in a few minutes[1] 1. http://altheamesh.com/blog/universal-payment-channels/ http://altheamesh.com/blog/universal-payment-channels/
  - josephpoon 11y ago
    You are wrong. Lightning works by using smart contract logic. For Bitcoin in particular, that involves using Bitcoin scripting using real Bitcoin transactions. That blogpost is basically describing lightning. Lightning Network has explicitly described instant cross-chain swaps privately, and publicly for many months.
    - woah 11y ago
      Yes, and on a platform that allows for arbitrary logic, like a Turing-complete blockchain, or just a regular server, Lightning-like transactions are trivial. They can be described in minutes, and implemented in weeks. Due to the limitations of Bitcoin script, Lightning takes 60 pages to describe and is still not implemented. It's a revolutionary concept, hobbled by an antiquated platform.
swang 11y ago
I would say if one read's Mike's essay and assumed a few things, his opinion would be that it's a moot point. There are already people who think bitcoin is a liquid asset where trading x bitcoins can buy something of value. Those people are having a bad user experience buying stuff with bitcoin, and thus are less encouraged to use bitcoin in the future, which hurts bitcoin as a whole.
wmf 11y ago
I would put it in a slightly different way: Everyone wants "Visa" functionality, but there is a debate about whether the solution is a one-layer system where base Bitcoin provides transaction throughput or a two-layer system where transaction throughput is provided by a separate layer on top of Bitcoin.
- aurelius12 11y ago
  The trouble is that Visa functionality already exists and it already works really, really well for both consumers and merchants.
  - supster 11y ago
    The Visa fee of 1-3% is too expensive in the internet era. It made sense 50 years ago when cost of moving information was high, but now it's just rent seeking.
    - dragontamer 11y ago
      Yeah, except BTC transaction costs are skyrocketing due to the blockchain size being too small. So basically, Visa will continue being Visa, and BTC will refuse to compete against it. Honestly, the proper competition vs Visa is ACH-based transactions like Dwolla.
    - xorcist 11y ago
      It's not just the fees, but the payment processors. You need a contract with them and you need to integrate with their systems at high cost. This is something you normally solve with yet another middleman, like a bank or Stripe. In contrast, Bitcoin is permissionless. Just install the software and receive payments just like anyone else. That's what something born in the Internet age looks like.
      - yc1010 11y ago
        This, we went with Stripe before but apparently hosting is too high risk and (they claim) their banking partners did not want to do business with our little Irish startup. No such issues with bitcoin
kvnn 11y ago
The people who would very likely sway a decision on the block size are currently opposed to increasing the block size because (1) there is no immediate need to do so and (2) there is risk that there can be unintended consequences (one of which is making the network more centralized). Some people, including Hearn (who is more vitriolic than the average) believe that #1 is false and #2 is a necessary risk. If you are coming at this from reading Hearn's words, you are coming at this from an extreme perspective that would be balanced by reading Gregory Maxwell's words. I recommend http://www.truthcoin.info/blog/blocksize-conversation/ http://www.truthcoin.info/blog/blocksize-conversation/ for a critical, outside and rational perspective.
sroerick 11y ago
I think Mike Hearn's essay was pretty disingenuous. Most of the people I know who have issues with XT have issues that go far beyond forking. For example, some of the code included in XT includes blacklisting code. It also would break anonymity. I don't know if the camps is quite divided along the lines put forth in this article, but it's certainly true that XT wants to become/replace Visa. Many people have been frustrated at the XT team, because whenever these concerns are aired they are ignored. Then, arguments like Hearn's are put forward, which imply that the only thing XT does is increase scalability, and opponents just have their heads in the sand. It doesn't help that nearly every Bitcoin discussion forum has been seized by one side of the other, and moderated to all hell.
- Obi_Juan_Kenobi 11y ago
  Yeah, it'll be interesting to see how Classic does. It definitely puts some pressure on Core.
Obi_Juan_Kenobi 11y ago
The debate is very complex, with many people discussing orthogonal issues. Some are the cypherpunks that want security at all costs. They see Bitcoin as a failure unless just about anyone can operate the network. They already see mining as a failure because it's too centralized, and are staunchly opposed to anything that might increase that centralization. Ironically, I think increasing the block size would provide advantages to miners outside of the China firewall, which may have the effect of decentralizing mining a little. That's a very simple take on it, though, and only one of many factors. Interestingly, many who hold this view argue that changes can only be made to the network through strict consensus, ultimately relying on very centralized development. Others see Bitcoin as a currency that should be used at the consumer level, like cash. They want a network that grows and is predictable for investors. The possibility of expensive transactions is dangerous to business models and will stall adoption. There are some focused on the technology, and what can be built on top of bitcoin. Recognizing the network effect (more users, more value), they see using Bitcoin as a settlement layer for the various implementations on top of that. Some of these require some changes to the Bitcoin protocol, and there's much controversy in what is permissible. Lightning Network, side chains, etc. could all operate at different frequencies of Bitcoin settlement transactions. Other services would like to store information on the blockchain, using a small transaction fee to pay for immutable information storage. This could be used for contracts of all sorts. Some would see this is spam on the network, and others a huge innovation and source of value. Some will look to the early development for guidance. Satoshi wrote a lot about how the network might evolve, and it's quite clear that he thought network capacity would improve with technology. Basically, some use the argument that the 1MB limit was a stopgap, temporary limit that has passed its usefulness. The 'Bitcoin people signed up for' is one with a growing block size. You can add to that concerns about many of the core developers working at Blockstream, so might have perverse incentives to cripple Bitcoin to generate demand for their products. It's ... a little complex.

by manyoso 11y ago

forthefuture 11y ago

I think this touches upon an even bigger problem in the Bitcoin community. Very few people actually know what they want other than the price to go up. And those who do are all at odds with eachother because Bitcoin can't do everything at once.

unexpand 11y ago
The very people who want the value to go up will keep the Bitcoin alive. It is too early to proclaim it dead.
- al2o3cr 11y ago
  LOL, that works until it doesn't. There's a name for that sort of financial scheme...
manyoso 11y ago
I have no history with Bitcoin, but if people want the value of Bitcoin to go up I think it'd behoove them to make Bitcoin useful to people as a solution to a problem. I'm not sure the idea of a decentralized reserve currency with unknown/random time-to-liquidity is a very useful solution to any problem. Bitcoin obviously has value right now as demonstrated by the fact that people can go out and exchange coins for things people regard as valuable, but current value is not a perfect indicator of future value and I'd argue that the current value is at least somewhat predicated on the belief that Bitcoin will eventually become a useful replacement for today's highly-liquid real-time transactional currencies. I am probably naive, but can't a solution be found by simply increasing the block chain size and then creating software that makes the verification of transactions more distributed by making the process more fine grained in terms of CPU and memory resources? In other words, split current "nodes" into a more fine grained distributed virtual node that low end computers can run?
- zanny 11y ago
  It isn't about computational difficulty. Larger block sizes simply mean larger blockchains and more network use to transfer them around. The verification of transactions in bitcoin is central to its protocol. Its the whole reason its novel and relevant. You would have to change the proof of work system from sha256 hashing to something else to make it anything but optimal for computation on specialized ASIC hardware. If you do that, now you have another cryptocurrency - litecoin, peercoin, etc. And when you use a hashing algorithm meant to be hard for general computers (cpu or gpu) to do, and can manufacture hardware that does them much more efficiently, you end up where we are now where big miners and a handful of people represent most of bitcoins mining power.
  - Anonobread 11y ago
    No matter what crazy optimized-for-decentralization algorithm you come up with to mine cryptocurrency, large investors are going to buy a ton of it and put it in datacenters in China. Newbies and people invested in alternative attempts at Proof of Work often complain about this longstanding issue while utterly failing to solve it themselves.
    - zanny 11y ago
      Is it an issue? Of course you could spend millions to buy mining hardware. The issue in bitcoin is more that you spend millions on novel mining hardware nobody else has. If your hashing function is CPU or GPU friendly, suddenly everyone in the economy has hardware capable of potentially mining your crytocurrency. The problem with bitcoin is that those hundred million dollar datacenters are the only places top of the line SHA256 hashing hardware is found. If they were just GPU cluster datacenters, despite their scale, they still would not compete with the distributed power of millions of home users desktops to as much a ludicrous degree as modern ASIC miners are in the bitcoin space.
      - Anonobread 11y ago
        > Is it an issue? Conundrum? Regardless, it's unsolvable, and I do empathize with the people who complain or offer their own (non)solutions. > If they were just GPU cluster datacenters, despite their scale, they still would not compete with the distributed power of millions of home users desktops to as much a ludicrous degree as modern ASIC miners are in the Bitcoin space. Do you suggest efficiencies of scale don't apply to GPU clusters in datacenters, or CPU clusters in datacenters? As it pertains to mining centralization, do you suggest efficiences of scale only apply to sha256 ASICs? The idea that this can be "solved" with clever code is utterly naive. The bottom line is investors in any cryptocurrency, regardless of its hashing algo, will buy up the majority of the hashing rate with high efficiency rigs in well-connected datacenters with low priced electricity. Tell me how to fix that with code. You can't do it - although I've certainly seen more than my fair share of altcoin investors try in vain to do just that.

TD-Linux 11y ago

The opinion, of course, widely varies. Mike's piece was Mike's opinion, so of course it's not going to be very sympathetic to Core developers. The limits on transaction size have been known since the beginning of Bitcoin. VISA level transaction rates require insanely high block sizes, much larger than those proposed so far. People have come up with many, many different solutions to this problem. One thrown around a lot is the lightning network [1], but it's not really a "reserve currency" in this case - it's a way to prevent a bunch of intermediate transactions from entering the blockchain forever, but it's based around advanced Bitcoin scripting usage, so it's using Bitcoin for much more than just a backing value. Keep in mind that Bitcoin currently has a $6 billion USD market cap. Breaking Bitcoin would reduce that to $0. Many people have strong motivations to be conservative with changes... [1] https://lightning.network/ https://lightning.network/

woah 11y ago
The Lightning network is not based on advanced Bitcoin scripting, in the sense that Bitcoin script makes it possible or something. Bitcoin script is, rather, an impediment which has added a huge amount of complexity to Lightning. The same principle expressed without Bitcoin script can be explained in a few minutes[1] 1. http://altheamesh.com/blog/universal-payment-channels/ http://altheamesh.com/blog/universal-payment-channels/
- josephpoon 11y ago
  You are wrong. Lightning works by using smart contract logic. For Bitcoin in particular, that involves using Bitcoin scripting using real Bitcoin transactions. That blogpost is basically describing lightning. Lightning Network has explicitly described instant cross-chain swaps privately, and publicly for many months.
  - woah 11y ago
    Yes, and on a platform that allows for arbitrary logic, like a Turing-complete blockchain, or just a regular server, Lightning-like transactions are trivial. They can be described in minutes, and implemented in weeks. Due to the limitations of Bitcoin script, Lightning takes 60 pages to describe and is still not implemented. It's a revolutionary concept, hobbled by an antiquated platform.

swang 11y ago

I would say if one read's Mike's essay and assumed a few things, his opinion would be that it's a moot point. There are already people who think bitcoin is a liquid asset where trading x bitcoins can buy something of value. Those people are having a bad user experience buying stuff with bitcoin, and thus are less encouraged to use bitcoin in the future, which hurts bitcoin as a whole.

wmf 11y ago

I would put it in a slightly different way: Everyone wants "Visa" functionality, but there is a debate about whether the solution is a one-layer system where base Bitcoin provides transaction throughput or a two-layer system where transaction throughput is provided by a separate layer on top of Bitcoin.

aurelius12 11y ago
The trouble is that Visa functionality already exists and it already works really, really well for both consumers and merchants.
- supster 11y ago
  The Visa fee of 1-3% is too expensive in the internet era. It made sense 50 years ago when cost of moving information was high, but now it's just rent seeking.
  - dragontamer 11y ago
    Yeah, except BTC transaction costs are skyrocketing due to the blockchain size being too small. So basically, Visa will continue being Visa, and BTC will refuse to compete against it. Honestly, the proper competition vs Visa is ACH-based transactions like Dwolla.
  - xorcist 11y ago
    It's not just the fees, but the payment processors. You need a contract with them and you need to integrate with their systems at high cost. This is something you normally solve with yet another middleman, like a bank or Stripe. In contrast, Bitcoin is permissionless. Just install the software and receive payments just like anyone else. That's what something born in the Internet age looks like.
    - yc1010 11y ago
      This, we went with Stripe before but apparently hosting is too high risk and (they claim) their banking partners did not want to do business with our little Irish startup. No such issues with bitcoin

kvnn 11y ago

The people who would very likely sway a decision on the block size are currently opposed to increasing the block size because (1) there is no immediate need to do so and (2) there is risk that there can be unintended consequences (one of which is making the network more centralized). Some people, including Hearn (who is more vitriolic than the average) believe that #1 is false and #2 is a necessary risk. If you are coming at this from reading Hearn's words, you are coming at this from an extreme perspective that would be balanced by reading Gregory Maxwell's words. I recommend http://www.truthcoin.info/blog/blocksize-conversation/ http://www.truthcoin.info/blog/blocksize-conversation/ for a critical, outside and rational perspective.

sroerick 11y ago

I think Mike Hearn's essay was pretty disingenuous. Most of the people I know who have issues with XT have issues that go far beyond forking. For example, some of the code included in XT includes blacklisting code. It also would break anonymity. I don't know if the camps is quite divided along the lines put forth in this article, but it's certainly true that XT wants to become/replace Visa. Many people have been frustrated at the XT team, because whenever these concerns are aired they are ignored. Then, arguments like Hearn's are put forward, which imply that the only thing XT does is increase scalability, and opponents just have their heads in the sand. It doesn't help that nearly every Bitcoin discussion forum has been seized by one side of the other, and moderated to all hell.

Obi_Juan_Kenobi 11y ago
Yeah, it'll be interesting to see how Classic does. It definitely puts some pressure on Core.

Obi_Juan_Kenobi 11y ago

The debate is very complex, with many people discussing orthogonal issues. Some are the cypherpunks that want security at all costs. They see Bitcoin as a failure unless just about anyone can operate the network. They already see mining as a failure because it's too centralized, and are staunchly opposed to anything that might increase that centralization. Ironically, I think increasing the block size would provide advantages to miners outside of the China firewall, which may have the effect of decentralizing mining a little. That's a very simple take on it, though, and only one of many factors. Interestingly, many who hold this view argue that changes can only be made to the network through strict consensus, ultimately relying on very centralized development. Others see Bitcoin as a currency that should be used at the consumer level, like cash. They want a network that grows and is predictable for investors. The possibility of expensive transactions is dangerous to business models and will stall adoption. There are some focused on the technology, and what can be built on top of bitcoin. Recognizing the network effect (more users, more value), they see using Bitcoin as a settlement layer for the various implementations on top of that. Some of these require some changes to the Bitcoin protocol, and there's much controversy in what is permissible. Lightning Network, side chains, etc. could all operate at different frequencies of Bitcoin settlement transactions. Other services would like to store information on the blockchain, using a small transaction fee to pay for immutable information storage. This could be used for contracts of all sorts. Some would see this is spam on the network, and others a huge innovation and source of value. Some will look to the early development for guidance. Satoshi wrote a lot about how the network might evolve, and it's quite clear that he thought network capacity would improve with technology. Basically, some use the argument that the 1MB limit was a stopgap, temporary limit that has passed its usefulness. The 'Bitcoin people signed up for' is one with a growing block size. You can add to that concerns about many of the core developers working at Blockstream, so might have perverse incentives to cripple Bitcoin to generate demand for their products. It's ... a little complex.