6 ms·

As someone who has been closely following Bitcoin since 2011, I do not think that article captures the current situation very well. Yes, there is a concentratio

by Hermel 10y ago

As someone who has been closely following Bitcoin since 2011, I do not think that article captures the current situation very well. Yes, there is a concentration of mining power in China, owed to their low costs of electricity. But it does not seem like the Chinese have found a way to use that power yet. In practice, it is a number of Western developers around Gregory Maxwell and Blockstream that calls the shots, aided by /r/bitcoin admin Theymos who recklessly removes posts that do not fit their agenda (I've received two temporary bans myself for mentioning ethereum in a comment). I really hope that the Chinese miners start to make use of their power and move Bitcoin back towards its original vision. The block size limit of 1 MB was a temporary hack and the core devs who oppose an increase are in an obvious conflict of interest: if Bitcoin can scale the way its inventor envisioned (namely by simply increasing the block size limit every now and then), the business case of the company they work for falls apart. (Blockstream, who develops the Lightning Network, which aims at scaling Bitcoin by building another layer on top.) What makes me hope is this sentence from the article: "He said in an email this week that if the core programmers did not increase the number of transactions going through the network by July, he would begin looking for alternatives to expand the network." Recently, I spoke to an executive of another large Chinese mining company, and he shares that opinion. If the "core team" continues to refuse to increase the block size limit, they will stop applying core's updates. For that case, some members already threatened to go nuclear and change the proof-of-work protocol, making all existing mining hardware obsolete - which is quite worrying and shows that Bitcoin development currently is not in the best possible hands.

redcalx 10y ago
> threatened to go nuclear and change the proof-of-work protocol, No miner with any significant amount of hash power would install such a release.
- riprowan 10y ago
  I think the point is that fullnodes / holders would raise their own hashpower and mine the spinoff coin themselves.
CydeWeys 10y ago
> if Bitcoin can scale the way its inventor envisioned (namely by simply increasing the block size limit every now and then) It's not nearly that simple. There are two main reasons why "simply increasing the block size" is neither safe nor simple: 1. Centralization. Running a full node is already quite a commitment. The bandwidth requirements are high, the storage requirements are high, and it takes many days to sync the full blockchain. Many people already do not bother doing it because it is such a bother. Running a VM in the cloud as a full node is not that cheap. All of these problems scale linearly with increased block size. A really large block size that causes most existing full nodes to give up and stop relaying would not be worth it for the network in the end. 2. Bitcoin is vulnerable to (and has been subject to) attacks by way of computationally expensive transactions that scale polynomially with the maximum size of a block. This has not been completely solved yet. Right now the worst possible block verification time is on the order of 10-30 minutes for an average CPU acting as a relaying node. "Simply" increasing the block size a great deal without first fixing this issue (and it's a hard issue to fix) could potentially lead to entire network collapse if a single attack block gets mined and then chokes all nodes for days.
- Hermel 10y ago
  > Centralization. Running a full node is already quite a commitment. The problem is not the resources needed to run a full node. The problem is a lack of incentives. If you want to have lots of full nodes running in the long run, you need to focus on those that do not do so for idealistic reasons, most notably the miners, payment processors, and exchanges. They all have advantages by doing so. Blockchain.info, for example, runs a full node to be able to display incoming transactions and to monitor the network. Adopting this view, the way forward is to grow Bitcoin as much as possible. The more users there are, the larger the ecosystem becomes and the more players there are that benefit from running a full node. We can't rely on the early enthusiasts. We need growth. > Bitcoin is vulnerable to (and has been subject to) attacks by way of computationally expensive transactions If you are referring to what I think, then there is a simple fix: do not allow larger transactions than before when increasing the block size. AFAIK, this is what Bitcoin Classic does.
  - 10y ago
codingmyway 10y ago
Some increase is warranted but constantly increasing the block size is not scalable and the block limit incentivises the payment of fees which makes it harder spam the the network. There has to be a price for using the main bitcoin blockchain. The proposal to be able to increase the fee by creating a child transaction is needed and means that real transactions can still get processed, if they pay for it. Anybody with small transactions not worth paying the market fee for should do it off-chain using the lightning network or other exchange. Yes, that means reliance on centralised exchanges but most users don't care and they can be regulated which most people prefer. If you are a diehard libertarian you can still stay decentralised and somewhat anonymous if you are willing to pay the price or take the volatility risk of using another blockchain like LiteCoin.
- Hermel 10y ago
  Average transaction fees are at an all-time high currently, namely about 0.25 USD per transaction: https://blockchain.info/charts/transaction-fees-usd?timespan=all&showDataPoints=false&daysAverageString=7&show_header=true&scale=0&address= https://blockchain.info/charts/transaction-fees-usd?timespan... This is a level where fees start to hurt by destroying previously viable business cases. It is also equivalent to costs of 500'000 USD per GB of storage on the block chain. I agree that block chain storage should not be given away for free, but 0.25 USD per transaction is too much. Everyone would win if we would allow for more. More users could use Bitcoin, more startups could build on Bitcoin, and the miners would earn more money (thanks to more transaction). The only ones who would not benefit is blockstream, as the demand for their competing solution is reduced. Here is how Satoshi saw scalability: https://bitcointalk.org/index.php?topic=149668.msg1596879#msg1596879 https://bitcointalk.org/index.php?topic=149668.msg1596879#ms...
  - codingmyway 10y ago
    Blockstream isn't competing with the blockchain. Their's is one solution to the problem and others are needed as well, the lightning network being another, which is a competitor. Competing off chain solutions to the scaling issue is exactly what we need providing that the main chain is kept secure. Once the extra off-chain capacity comes online fees will reduce again.
curiousgal 10y ago
>I've received two temporary bans myself for mentioning ethereum in a comment You should've seen r/Bitcoin following the DAO debacle, nothing posted/discussed but that.
toomim 10y ago
> Yes, there is a concentration of mining power in China, owed to their low costs of electricity. It's actually due more to the low costs of building a datacenter. The electricity prices in WA state, for example, are lower.
- joe_the_user 10y ago
  I don't know a huge amount about bitcoin but I know that China has a large number of wealthy individuals wanting to move capital out of the country in various ways. Turning influence or Renminbi into power, turning that power into bitcoins and then into dollars/Western currency would look like a good deal to a significant number of people regardless of the exact rate.
  - placeybordeaux 10y ago
    I have assumed that this is the basic story. Bitcoin has provided a way to move funds out of China, and has provided a place to store value that can't be easily seized by law enforcement.

by Hermel 10y ago

redcalx 10y ago

> threatened to go nuclear and change the proof-of-work protocol, No miner with any significant amount of hash power would install such a release.

riprowan 10y ago
I think the point is that fullnodes / holders would raise their own hashpower and mine the spinoff coin themselves.

CydeWeys 10y ago

> if Bitcoin can scale the way its inventor envisioned (namely by simply increasing the block size limit every now and then) It's not nearly that simple. There are two main reasons why "simply increasing the block size" is neither safe nor simple: 1. Centralization. Running a full node is already quite a commitment. The bandwidth requirements are high, the storage requirements are high, and it takes many days to sync the full blockchain. Many people already do not bother doing it because it is such a bother. Running a VM in the cloud as a full node is not that cheap. All of these problems scale linearly with increased block size. A really large block size that causes most existing full nodes to give up and stop relaying would not be worth it for the network in the end. 2. Bitcoin is vulnerable to (and has been subject to) attacks by way of computationally expensive transactions that scale polynomially with the maximum size of a block. This has not been completely solved yet. Right now the worst possible block verification time is on the order of 10-30 minutes for an average CPU acting as a relaying node. "Simply" increasing the block size a great deal without first fixing this issue (and it's a hard issue to fix) could potentially lead to entire network collapse if a single attack block gets mined and then chokes all nodes for days.

Hermel 10y ago
> Centralization. Running a full node is already quite a commitment. The problem is not the resources needed to run a full node. The problem is a lack of incentives. If you want to have lots of full nodes running in the long run, you need to focus on those that do not do so for idealistic reasons, most notably the miners, payment processors, and exchanges. They all have advantages by doing so. Blockchain.info, for example, runs a full node to be able to display incoming transactions and to monitor the network. Adopting this view, the way forward is to grow Bitcoin as much as possible. The more users there are, the larger the ecosystem becomes and the more players there are that benefit from running a full node. We can't rely on the early enthusiasts. We need growth. > Bitcoin is vulnerable to (and has been subject to) attacks by way of computationally expensive transactions If you are referring to what I think, then there is a simple fix: do not allow larger transactions than before when increasing the block size. AFAIK, this is what Bitcoin Classic does.
- 10y ago

codingmyway 10y ago

Some increase is warranted but constantly increasing the block size is not scalable and the block limit incentivises the payment of fees which makes it harder spam the the network. There has to be a price for using the main bitcoin blockchain. The proposal to be able to increase the fee by creating a child transaction is needed and means that real transactions can still get processed, if they pay for it. Anybody with small transactions not worth paying the market fee for should do it off-chain using the lightning network or other exchange. Yes, that means reliance on centralised exchanges but most users don't care and they can be regulated which most people prefer. If you are a diehard libertarian you can still stay decentralised and somewhat anonymous if you are willing to pay the price or take the volatility risk of using another blockchain like LiteCoin.

Hermel 10y ago
Average transaction fees are at an all-time high currently, namely about 0.25 USD per transaction: https://blockchain.info/charts/transaction-fees-usd?timespan=all&showDataPoints=false&daysAverageString=7&show_header=true&scale=0&address= https://blockchain.info/charts/transaction-fees-usd?timespan... This is a level where fees start to hurt by destroying previously viable business cases. It is also equivalent to costs of 500'000 USD per GB of storage on the block chain. I agree that block chain storage should not be given away for free, but 0.25 USD per transaction is too much. Everyone would win if we would allow for more. More users could use Bitcoin, more startups could build on Bitcoin, and the miners would earn more money (thanks to more transaction). The only ones who would not benefit is blockstream, as the demand for their competing solution is reduced. Here is how Satoshi saw scalability: https://bitcointalk.org/index.php?topic=149668.msg1596879#msg1596879 https://bitcointalk.org/index.php?topic=149668.msg1596879#ms...
- codingmyway 10y ago
  Blockstream isn't competing with the blockchain. Their's is one solution to the problem and others are needed as well, the lightning network being another, which is a competitor. Competing off chain solutions to the scaling issue is exactly what we need providing that the main chain is kept secure. Once the extra off-chain capacity comes online fees will reduce again.

curiousgal 10y ago

>I've received two temporary bans myself for mentioning ethereum in a comment You should've seen r/Bitcoin following the DAO debacle, nothing posted/discussed but that.

toomim 10y ago

> Yes, there is a concentration of mining power in China, owed to their low costs of electricity. It's actually due more to the low costs of building a datacenter. The electricity prices in WA state, for example, are lower.

joe_the_user 10y ago
I don't know a huge amount about bitcoin but I know that China has a large number of wealthy individuals wanting to move capital out of the country in various ways. Turning influence or Renminbi into power, turning that power into bitcoins and then into dollars/Western currency would look like a good deal to a significant number of people regardless of the exact rate.
- placeybordeaux 10y ago
  I have assumed that this is the basic story. Bitcoin has provided a way to move funds out of China, and has provided a place to store value that can't be easily seized by law enforcement.