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The bigger problem with Bitcoin today is that it can't be used for regular transactions. Due to the 1MB blocksize cap (that people having being trying and fail

by lhl 10y ago

The bigger problem with Bitcoin today is that it can't be used for regular transactions. Due to the 1MB blocksize cap (that people having being trying and failing to fix for 2 years), Bitcoin has been limited to ~3tps, has permanent backlogs in the mempool in the thousands (and climbing to tens of thousands during busy times) and tx fees have risen to 10-20 cents (or more) for regular transactions, making it useless for day-to-day payments. ETH has pushed up to 100tps in prod, but realistically, higher transaction rates will need to wait for Casper (sharded PoS). Monero has a flexcap blocksize, although I don't know if it's ever been stress-tested in practice. I think that whatever alt gets a good light wallet that supports seamless transactions (contactless/touchid) for mobile devices might get some serious traction...

runeks 10y ago
If by "regular" transactions you mean consumer-to-merchant transactions, then this is solved by off-chain clearing, much like VISA solves it for our current monetary system whose lowest level transfer protocol (SWIFT) is also too slow/expensive for consumer transactions. With Bitcoin, consumers can connect to clearing intermediaries via payment channels, allowing them to be in full control of their funds while having them ready for instant transfer. If merchants are willing to accept a week of credit risk -- which, I would argue, VISA proves that they are -- then thousands of off-chain transactions can be cleared into a single Bitcoin transaction, making the performance of the underlying blockchain less important.
- lhl 10y ago
  Payment channels, besides being alpha/never used in production, are also dependent on a transaction malleability fix. Since SegWit was rolled into this soft-fork disaster, I'm pretty confident in saying it will never reach 95% and activate (there are almost as much BU/BCl support as BCo/SW support at this point), so a non-starter honestly. I'm not against PCs in principle, I just don't understand why the block size wasn't increased and then a fully tested version of LN being rolled out afterwards - instead we've 2 years where the blocksize cap has been looming, a year where Bitcoin functionality has actually been crippled (Bitcoin is the only "successful" technology I know of where it's getting more expensive and performing worse as time has been going on), and of course there's been a combination community and developer civil war/purge (and subsequent deadlock) that could have easily been avoided. This whole mess has been extremely counterproductive. Note, even in Poon and Dryja's original paper, they outline that LN still requires bigger blocks: "If we presume that a decentralized payment network exists and one person will make 3 blockchain transactions per year on average, Bitcoin will be able to support over 35 million users with 1MB blocks in ideal circumstances (assuming 2000 transactions per MB). This is quite limited, and an increase of the block size may be necessary to support everyone in the world using Bitcoin." It's worth pointing out that Bitcoin currently has just under 52K unconfirmed transactions in the backlog (this will take hours if not days to clear) and that PCs still have risks/failure modes from that as well (failure of breach remedy transactions can actually break down the counterparty trust system from my understanding, making rollbacks and even double spends possible).
  - runeks 10y ago
    CHECKLOCKTIMEVERIFY/BIP65 fixes payment channels without fixing transaction ID malleability, so non-malleability is only a requirement for payment channels to work when we want to free received channel value while keeping the same channel ready for new payments. Technically, this could be solved by the client sending funds to two different outputs, and switching to output #2 while the settling transaction redeeming output #1 is being confirmed, and vice versa. It's a horrible hack, I know, but it works right now. Of course, the client app should take care of all of this, making it transparent to the user. I agree with Poon and Dryja that 1MB won't be enough forever, but payment channels is a bit like fiber, the capacity is basically unlimited. If you keep a payment channel open for a week, and then close it, it's completely irrelevant whether you made a single payment or 1 trillion payments over that channel, since nothing touches the Blockchain. In other words: if we are able to clear efficiently enough, it's also technically possible to get by with the 1MB limit, simply because payment channels have unlimited capacity, as they don't touch the Blockchain. > I'm not against PCs in principle, I just don't understand why the block size wasn't increased and then a fully tested version of LN being rolled out afterwards [..] Because a fully tested version of the Lightning Network doesn't exist. When it does, this plan will make sense, but that's not yet. Personally, I'm focusing my attention on something that I know is possible right now: consumer-to-merchant transactions using digital promissory notes issued in exchange for payment channel payments. It's not the most elegant solution, but unlike all other proposed solutions it actually can work right now. Much like is the case with Bitcoin, by the way. When Bitcoin was released, cryptographers/mathematicians weren't really pleased with it because of its "inelegance". But, in the end, it works better than anything else and it works right now.

by lhl 10y ago

runeks 10y ago

If by "regular" transactions you mean consumer-to-merchant transactions, then this is solved by off-chain clearing, much like VISA solves it for our current monetary system whose lowest level transfer protocol (SWIFT) is also too slow/expensive for consumer transactions. With Bitcoin, consumers can connect to clearing intermediaries via payment channels, allowing them to be in full control of their funds while having them ready for instant transfer. If merchants are willing to accept a week of credit risk -- which, I would argue, VISA proves that they are -- then thousands of off-chain transactions can be cleared into a single Bitcoin transaction, making the performance of the underlying blockchain less important.

lhl 10y ago
Payment channels, besides being alpha/never used in production, are also dependent on a transaction malleability fix. Since SegWit was rolled into this soft-fork disaster, I'm pretty confident in saying it will never reach 95% and activate (there are almost as much BU/BCl support as BCo/SW support at this point), so a non-starter honestly. I'm not against PCs in principle, I just don't understand why the block size wasn't increased and then a fully tested version of LN being rolled out afterwards - instead we've 2 years where the blocksize cap has been looming, a year where Bitcoin functionality has actually been crippled (Bitcoin is the only "successful" technology I know of where it's getting more expensive and performing worse as time has been going on), and of course there's been a combination community and developer civil war/purge (and subsequent deadlock) that could have easily been avoided. This whole mess has been extremely counterproductive. Note, even in Poon and Dryja's original paper, they outline that LN still requires bigger blocks: "If we presume that a decentralized payment network exists and one person will make 3 blockchain transactions per year on average, Bitcoin will be able to support over 35 million users with 1MB blocks in ideal circumstances (assuming 2000 transactions per MB). This is quite limited, and an increase of the block size may be necessary to support everyone in the world using Bitcoin." It's worth pointing out that Bitcoin currently has just under 52K unconfirmed transactions in the backlog (this will take hours if not days to clear) and that PCs still have risks/failure modes from that as well (failure of breach remedy transactions can actually break down the counterparty trust system from my understanding, making rollbacks and even double spends possible).
- runeks 10y ago
  CHECKLOCKTIMEVERIFY/BIP65 fixes payment channels without fixing transaction ID malleability, so non-malleability is only a requirement for payment channels to work when we want to free received channel value while keeping the same channel ready for new payments. Technically, this could be solved by the client sending funds to two different outputs, and switching to output #2 while the settling transaction redeeming output #1 is being confirmed, and vice versa. It's a horrible hack, I know, but it works right now. Of course, the client app should take care of all of this, making it transparent to the user. I agree with Poon and Dryja that 1MB won't be enough forever, but payment channels is a bit like fiber, the capacity is basically unlimited. If you keep a payment channel open for a week, and then close it, it's completely irrelevant whether you made a single payment or 1 trillion payments over that channel, since nothing touches the Blockchain. In other words: if we are able to clear efficiently enough, it's also technically possible to get by with the 1MB limit, simply because payment channels have unlimited capacity, as they don't touch the Blockchain. > I'm not against PCs in principle, I just don't understand why the block size wasn't increased and then a fully tested version of LN being rolled out afterwards [..] Because a fully tested version of the Lightning Network doesn't exist. When it does, this plan will make sense, but that's not yet. Personally, I'm focusing my attention on something that I know is possible right now: consumer-to-merchant transactions using digital promissory notes issued in exchange for payment channel payments. It's not the most elegant solution, but unlike all other proposed solutions it actually can work right now. Much like is the case with Bitcoin, by the way. When Bitcoin was released, cryptographers/mathematicians weren't really pleased with it because of its "inelegance". But, in the end, it works better than anything else and it works right now.