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The fact that bitcoins can be transferred is the only reason they have value at all. You have to be able to exchange them for something else or they're worthles

The fact that bitcoins can be transferred is the only reason they have value at all. You have to be able to exchange them for something else or they're worthless. The question then is whether 7 tx/sec really is sufficient to support broad global adoption, even if it's just for savings. Dollars and physical gold have no such limits. Other blockchains are vastly expanding scalability, as well as eliminating the energy usage. Another issue is whether Bitcoin can maintain its monetary policy for the long term. Here's a paper from Princeton saying that if miner rewards are dominated by transaction fees rather than block rewards, the chain destabilizes, suffering frequent long rollbacks. https://www.cs.princeton.edu/~arvindn/publications/mining_CCS.pdf https://www.cs.princeton.edu/~arvindn/publications/mining_CC... If they're right, some future generation of bitcoiners will have to choose between keeping the issuance schedule, and having a blockchain that functions reliably. There's no way for us to know which they will pick. Personally, I think the right choice is a functioning chain. That last percent or two of inflation isn't a problem for maintaining value, because economies grow at the same rate. So does the supply of gold in the economy.

slickrick216 6y ago
“ The question then is whether 7 tx/sec really is sufficient to support broad global adoption, even if it's just for savings. Dollars and physical gold have no such limits.” Yes they do, it takes even longer to move physical dollars or gold around and depending on where and who you are sending them too it might be impossible. Sure in some mainstream cases you can send the digital derivative of gold and dollars to someone but those aren’t the actual asset just a representation issued by a centralized entity or a collection of them. Visas payment network isn’t moving dollars it’s moving digital dollars. Same with gold etfs. Let’s see them try to seize bitcoin and stop transfers it’s much harder
- DennisP 6y ago
  Their latency is high but they are massively parallel. There's no practical limit on global throughput. To get low latency on dollars/gold you have to go with centralized digital representations, but Bitcoin has to do the same to get more than 7 tx/sec. I might still be a fan if that were the only option, but with other blockchains eliminating this restriction I have a hard time seeing the long-term value proposition of Bitcoin specifically.
  - slickrick216 6y ago
    Yeah I agree, not a bitcoin maximalist. Things like wrapped bitcoin and renbtc open up new pathways for it to be successful though due in large part to its network effect and the underlying economics. It changed the whole off chain transaction narrative to just another chain transaction. L2 things like arbitrum make this even more compelling.
  - tromp 6y ago
    Others don't so much eliminate this restriction as they shift the problem to creating so much transaction history that it becomes impractical to run a node that fully verifies said history. In other words, they're significantly less decentralized.
    - thomasrognon 6y ago
      Which is a bigger driver of decentralization? Running a node or adoption? I would think a universally adopted blockchain in the multi-TB would turn out more decentralized than a narrowly adopted multi-GB blockchain. # of potential business/research/government nodes >> hobby nodes.
    - DennisP 6y ago
      That could be a serious issue if you're just relying on your nodes having beefy hardware. It's a lesser issue if you can support a large number validating nodes using cheap hardware, they are frequently and randomly assigned to verify different portions of the history, and they always act as secure light clients of the other portions. In fact, it might even compare favorably to the handful of major mining operations that mostly run Bitcoin, on expensive ASICs.
    - dane-pgp 6y ago
      Out of interest, what would you say is a reasonable minimum amount of disk space for a user to have to devote to their bitcoin node, such that the number of nodes does not cause significant extra centralisation (over and above the centralisation of mining pools and development teams)?
trident1000 6y ago
Theres a few issues here. One is that Bitcoin is largely a settling layer where batched transactions occur. Its not 1 transaction per tx even right now. Layer 2 networks of all kinds are handling the vast majority of traffic of bitcoin. More bitcoin moves on the ethereum blockchain than the bitcoin blockchain. And then we get cash app, paypal, the crypto exchanges, etc. Even hardware wallets like Ledger could batch transactions potentially in the future. So bitcoin frequent transactions largely run through top layer systems until its time to settle on the main chain which is infrequent/a small fraction of the total top volume. Also 95% of people who use bitcoin dont even have a hardware wallet, they just use the exchanges...for better or worse. Then you get into things like the lighting network. As for the Princeton study...Ill have to look at it but I'm skeptical they consider things like more batched transaction volume per tx in the future which could be harnessed to also have a more concentrated fee structure providing stability to the chain. Also changes can be made through consensus if needed...like segwit.
jhoechtl 6y ago
> Other blockchains are vastly expanding scalability, as well as eliminating the energy usage. The energy usage combined with proof of work is the backing. If you break that for Bitcoin als is left is trust. The energy used and consumed is like the USD tied to gold (which it is no longer since quite some time)
- Retric 6y ago
  You can do proof of work based on random memory access for example rather than pure computation. The monetary cost ends up being identical, but it’s much better for the environment.
  - TheDong 6y ago
    I haven't heard of this sort of proof of work before. Do you have a reference to it? If you're referring to memory-hard hashing algorithms, I believe those are just resilient to ASICs/GPUs, but still require significant CPU energy. I'm not convinced those would be better for the environment, so if you're referring to those, do you also have an explanation for why they'd draw relatively less power?
    - Retric 6y ago
      Memory-hard hashing algorithms are basically the same idea. They use less power simply because people are going to spend the same total amount of money in terms of compute hardware + energy, however RAM consumes less energy per per dollar spent on it than ASICs/CPU’s etc. 3W per 8GB of DDR4 is a reasonable baseline. https://www.crucial.com/support/articles-faq-memory/how-much-power-does-memory-use https://www.crucial.com/support/articles-faq-memory/how-much...
  - gruez 6y ago
    >but it’s much better for the environment. Why? If OPEX is reduced (lower electricity costs), it's logical to assume that it will be replaced with CAPEX, given how competitive mining operations are. If that's the case, that will mean electricity being used to power ASICs being replaced with chemicals required to fab semiconductors (along with electricity for those fabs). It might be better in terms of GHG emissions, it would be a wash for overall environmental impact.

slickrick216 6y ago

“ The question then is whether 7 tx/sec really is sufficient to support broad global adoption, even if it's just for savings. Dollars and physical gold have no such limits.” Yes they do, it takes even longer to move physical dollars or gold around and depending on where and who you are sending them too it might be impossible. Sure in some mainstream cases you can send the digital derivative of gold and dollars to someone but those aren’t the actual asset just a representation issued by a centralized entity or a collection of them. Visas payment network isn’t moving dollars it’s moving digital dollars. Same with gold etfs. Let’s see them try to seize bitcoin and stop transfers it’s much harder

DennisP 6y ago
Their latency is high but they are massively parallel. There's no practical limit on global throughput. To get low latency on dollars/gold you have to go with centralized digital representations, but Bitcoin has to do the same to get more than 7 tx/sec. I might still be a fan if that were the only option, but with other blockchains eliminating this restriction I have a hard time seeing the long-term value proposition of Bitcoin specifically.
- slickrick216 6y ago
  Yeah I agree, not a bitcoin maximalist. Things like wrapped bitcoin and renbtc open up new pathways for it to be successful though due in large part to its network effect and the underlying economics. It changed the whole off chain transaction narrative to just another chain transaction. L2 things like arbitrum make this even more compelling.
- tromp 6y ago
  Others don't so much eliminate this restriction as they shift the problem to creating so much transaction history that it becomes impractical to run a node that fully verifies said history. In other words, they're significantly less decentralized.
  - thomasrognon 6y ago
    Which is a bigger driver of decentralization? Running a node or adoption? I would think a universally adopted blockchain in the multi-TB would turn out more decentralized than a narrowly adopted multi-GB blockchain. # of potential business/research/government nodes >> hobby nodes.
  - DennisP 6y ago
    That could be a serious issue if you're just relying on your nodes having beefy hardware. It's a lesser issue if you can support a large number validating nodes using cheap hardware, they are frequently and randomly assigned to verify different portions of the history, and they always act as secure light clients of the other portions. In fact, it might even compare favorably to the handful of major mining operations that mostly run Bitcoin, on expensive ASICs.
  - dane-pgp 6y ago
    Out of interest, what would you say is a reasonable minimum amount of disk space for a user to have to devote to their bitcoin node, such that the number of nodes does not cause significant extra centralisation (over and above the centralisation of mining pools and development teams)?

trident1000 6y ago

Theres a few issues here. One is that Bitcoin is largely a settling layer where batched transactions occur. Its not 1 transaction per tx even right now. Layer 2 networks of all kinds are handling the vast majority of traffic of bitcoin. More bitcoin moves on the ethereum blockchain than the bitcoin blockchain. And then we get cash app, paypal, the crypto exchanges, etc. Even hardware wallets like Ledger could batch transactions potentially in the future. So bitcoin frequent transactions largely run through top layer systems until its time to settle on the main chain which is infrequent/a small fraction of the total top volume. Also 95% of people who use bitcoin dont even have a hardware wallet, they just use the exchanges...for better or worse. Then you get into things like the lighting network. As for the Princeton study...Ill have to look at it but I'm skeptical they consider things like more batched transaction volume per tx in the future which could be harnessed to also have a more concentrated fee structure providing stability to the chain. Also changes can be made through consensus if needed...like segwit.

jhoechtl 6y ago

> Other blockchains are vastly expanding scalability, as well as eliminating the energy usage. The energy usage combined with proof of work is the backing. If you break that for Bitcoin als is left is trust. The energy used and consumed is like the USD tied to gold (which it is no longer since quite some time)

Retric 6y ago
You can do proof of work based on random memory access for example rather than pure computation. The monetary cost ends up being identical, but it’s much better for the environment.
- TheDong 6y ago
  I haven't heard of this sort of proof of work before. Do you have a reference to it? If you're referring to memory-hard hashing algorithms, I believe those are just resilient to ASICs/GPUs, but still require significant CPU energy. I'm not convinced those would be better for the environment, so if you're referring to those, do you also have an explanation for why they'd draw relatively less power?
  - Retric 6y ago
    Memory-hard hashing algorithms are basically the same idea. They use less power simply because people are going to spend the same total amount of money in terms of compute hardware + energy, however RAM consumes less energy per per dollar spent on it than ASICs/CPU’s etc. 3W per 8GB of DDR4 is a reasonable baseline. https://www.crucial.com/support/articles-faq-memory/how-much-power-does-memory-use https://www.crucial.com/support/articles-faq-memory/how-much...
- gruez 6y ago
  >but it’s much better for the environment. Why? If OPEX is reduced (lower electricity costs), it's logical to assume that it will be replaced with CAPEX, given how competitive mining operations are. If that's the case, that will mean electricity being used to power ASICs being replaced with chemicals required to fab semiconductors (along with electricity for those fabs). It might be better in terms of GHG emissions, it would be a wash for overall environmental impact.