3 ms·

I agree that the throughput capabilities of Bitcoin are absurd, and that Lightning network is not a substitute for onchain transactions. However, did you know

I agree that the throughput capabilities of Bitcoin are absurd, and that Lightning network is not a substitute for onchain transactions. However, did you know that the hashrate and transaction throughput are almost entirely unrelated? Hashrate is correlated to the value of the coin that can be kept secure, not to the number of transactions per second that can be processed.

TylerE 10y ago
I dont' buy this "value of the coins" argument at all, it doesn't even make sense. And the data agrees with me: http://imgur.com/a/7Qjpa http://imgur.com/a/7Qjpa
- pdpi 10y ago
  He didn't say that the market cap of btc was tied to the hashrate (which is of course bullshit). He said that the hashrate relates to how much BTC you can keep safe, which is provably true. Let's say you control 10% of all hash power. Satoshi's paper helpfully maps out that the likelihood of you being able to pull off a double spend if I wait for 5 confirmations is 0.1%. If you were to mine honestly over 5 blocks, your expected reward is 12.5 BTC from block rewards (plus some more from fees). If you attempt to attack me, the total reward is my transaction value plus 5 blocks' worth of block rewards, so 125 BTC. At 0.1% chance of success, you need to win 12500 BTC from your double spend attack, so if you sent me less than 12375 BTC, I know that after five blocks you have no economic incentive to try to double spend. For a fixed block count before accepting the transaction (5 blocks in this example), the higher the hash power you control, the higher the probability of success for your attack, and the less money you need to double spend for the attack to be economically rational. Inversely, and precisely the GP's point, the higher the hash power, the more money you can safely transact.

3 ms·

I agree that the throughput capabilities of Bitcoin are absurd, and that Lightning network is not a substitute for onchain transactions. However, did you know

by riprowan 10y ago

TylerE 10y ago
I dont' buy this "value of the coins" argument at all, it doesn't even make sense. And the data agrees with me: http://imgur.com/a/7Qjpa http://imgur.com/a/7Qjpa
- pdpi 10y ago
  He didn't say that the market cap of btc was tied to the hashrate (which is of course bullshit). He said that the hashrate relates to how much BTC you can keep safe, which is provably true. Let's say you control 10% of all hash power. Satoshi's paper helpfully maps out that the likelihood of you being able to pull off a double spend if I wait for 5 confirmations is 0.1%. If you were to mine honestly over 5 blocks, your expected reward is 12.5 BTC from block rewards (plus some more from fees). If you attempt to attack me, the total reward is my transaction value plus 5 blocks' worth of block rewards, so 125 BTC. At 0.1% chance of success, you need to win 12500 BTC from your double spend attack, so if you sent me less than 12375 BTC, I know that after five blocks you have no economic incentive to try to double spend. For a fixed block count before accepting the transaction (5 blocks in this example), the higher the hash power you control, the higher the probability of success for your attack, and the less money you need to double spend for the attack to be economically rational. Inversely, and precisely the GP's point, the higher the hash power, the more money you can safely transact.