Topic: A different approach to Bitcoin's scalability issues? - page 2. (Read 415 times)

Thanks for replying.
I agree that the difficulty isn't really a measure for transaction demand. However, and I might also be wrong about this one, I believe that a relation (not necessarily a linear one) might exist.
I went to check some data to see something more visual.
I checked these 2 tables:
https://ycharts.com/indicators/bitcoin_transactions_per_day
https://www.blockchain.com/charts/hash-rate

I have seen 2 significant things:
     1) It appears that there is no linear relation between the hashing rate and the transactions per day.
         One thing that I think should be taken into account, is that today we are already facing the scalability issue's consequences. Meaning that I think it's possible to say with just a little of confidence, that if
         transaction fees weren't as high - we would see much more transactions occurring. So basically saying that it might be possible that the data we are seeing today is "manipulated" by the problem itself.
      2) When major changes in trends occur, it is seen in both the hashing rate and the transaction 'demand'. You can look at the end of June 2021, end of April 2021, end of October 2020, end of May 2020,
          end of March 2020. Although not identical, the downwards trend is similar. It should be said that it's possible that there a 3rd factor I didn't take into account that is effecting both of these rates.

So to sum this one up - I don't believe that the relation between the two factors should be linear. It could be inverted, divided, and etc.

Regarding your insight of having to have matching calculations no matter time of place - regarding the who and where I agree, regarding the time factor, that's the whole case here.
Who and where - shouldn't matter, as long as the formula/algorithm is embedded in the network.
Time - that's what the calculation is all about. To give a specific (yet doesn't have to be accurate to the decimal point one) value that represents the relation between demand (transaction amount) and network power.
This value has to change throughout time, or nothing will ever change in the network (hence block size remains the same).
The algorithm might take multiple calculations made by many nodes, and average them to get the best all-around estimation. This way there wouldn't be a hard fork. This is only theoretically speaking. I am not sure that on the mathematical level this should be a good idea.

No, SegWit2x was a fixed size one time hard fork to increase the size once. You might be thinking of "bitcoin unlimited" which was basically giving all the power to miners to change the block size any time they wanted to any value they wanted as many times they wanted.

Thanks for replying. I totally agree and that's exactly what I was aiming in the 1st disadvantage I mentioned. This might happen, but, and I will say this very carefully since I am not qualified yet to create any kind of formulas, but I believe that an adjusting constant factor could be added into the calculation - to soften increases and decreases in block size. Firstly it would create a somewhat moderate increase, and even giving a limit for the max block size so it cannot go way higher than today's technology could handle efficiently (that of course throughout time could be adjusted again as times are changing).

I think the variable-blocksize method has already been proposed/attempted before. Possibly Segwit2x for example. Or maybe I'm just imagining about that one.

The thing is when the blocksize is based on a difficulty, there's a chance for the blocksize to rise exponentially in proportion to difficulty without ever going down. This would keep the size at e.g. 100MB for a 100x increase in difficulty.

Even if someday, disks do get that kind of capacity to store a blockchain with that large blocks (and not eat up space from everything else), network speeds and internet prices would still be a bottleneck to downloading such a chain.

We use weight now and the limit is 4 MB and the total depends on the transaction sizes. For example block 738,060 was 1.4 MB with 3000 transactions while 367,853 was 0.99 MB with 12239 transactions. But in general based on tx sizes that most people use specially the transactions consolidating many inputs or have many outputs the tx sizes are higher hence the average tx/sec is about 5.

BCH forked to create a new altcoin so that those behind it could make money whether through mining or pump and dumping or other ways such as scamming people by selling BCH to the newbies who wanted to buy bitcoin using the scam website known as bitcoin.com.

The adjustment takes place every 2016 blocks.

This is not the most correct assumption.
First of all the hashrate increase could be because someone made a much more efficient hardware to mine bitcoin (in simple terms a better ASIC). That doesn't have to mean more adoption.
Another reason could be that a very cheap source of electricity were found and more miners got on board in that place. For example the electricity price for home users is ridiculously low where I live ($0.002) but people generally don't know or care about bitcoin mining not to mention that the government regulation that forces any bitcoin miner to register and pay a higher electricity price (equal to export price which is about $0.05 I believe).
Imagine if that changed, and the ASIC production wasn't a bottleneck. The hashrate would shoot up to the moon.

On the other hand we saw how the price crash accompanied with China banning mining and more price crash could lead to hashrate dropping a lot.

In both of these 2 cases everything else about the network remains the same. It takes the same amount of time for nodes to download and verify each block. The number of nodes remain the same, etc. while hashrate jumps up or down.
So, as you can see hashrate is not a good characteristic to use in order to determine the block size.

Generally speaking any dynamic way of computing block size cap is a bad idea.

Bottom line is that we can never reach the desired scalability using block size ever simply because there is always a cap and the block could be filled whether with legitimate transactions or spam ones. But with a second layer that does't have the same limits, we can achieve a lot of scaling.

Fees have to be low for people to use LN otherwise it would make very little sense to even open a channel if you have to pay for example $100.

I don't think basing the block size cap on the total difficulty is a good idea because the difficulty is not a measure of a need for more (or less) block space.

Any computation that determines the maximum size of a block must have the same result no matter who calculates it or when they calculate it, and the inputs to the calculation must be indisputable. Otherwise, the chain will fork.

Eventually, mining will be completely dependent on transaction fees and the maximum size of a block affects the value of those fees. So, a proposal for varying the maximum size should include some analysis on the effect on fees in potential future scenarios.

It can be argued that a 1 MB fixed cap may not be optimal (or even sufficient), but until a clearly better method can be demonstrated, I think it is likely to remain.

A different approach to Bitcoin's scalability issues?

Opening
I have a question that I have recently thought about, and wanted to share and get feedback from people that probably have much more knowledge than I am regarding Bitcoin and blockchain.
This is a honest thought, that I compiled into these paragraphs, just trying to 'think outside the box' as they say.
I am not an expert of bitcoin or blockchain, so it is really probable that there's something that I am missing or miscalculating. It is also possible that this solution has already been suggested before me thinking about it.
Any feedback would be great. Thanks in advance.

Alignment
So this is just a moment to review the stuff I know and understand (or think I do) about Bitcoin's mechanism.
I am separating it from the below concept, so it would be clear what I base my stuff on. It is also possible that I misunderstood something that can change it all from the core.
So, some basics:
    1) Bitcoin can handle about 7 tx/sec at most, and that's also best case scenario. This is due to the 1MB block size limit.
    2) The BCH hard fork, happened because it was being claimed that making the block size bigger, would cause a more centralized network, that would be much harder for the regular people to participate in.
    3) The network adapts the difficulty of mining a block in relation to the hashing power of the system, every 2 weeks.

Basic concept
So, given that bitcoin uses a self-adapting mechanism that adjusts the block-mining-difficulty in relation to the network's hashing power, why not use a similar mechanism in order to make block size bigger?
Now more specifically:
What if the block size would adjust itself in a relation (which could be calculated differently than the block-mining-difficulty) to the network's hashing power as well?
This concept is based on one major assumption - in general (not in a specific date or short period of time), more hashing power means one of two things:
     1) More people are joining the network
     2) The same people/mining farms etc. got more power
Either one of these two options, suggests that the network (by the price of it's coin - aka bitcoin) is profitable enough for people to invest in mining power.
So, if the coin's value is high enough, it could imply that more people are adopting the network or the coin - resulting eventually to higher transactions rate.
With that being settled, it means that there could be a certain relation between the network's hashing power and it's transaction rate.
This relation does not have to be accurate to the decimals, but just enough to give a general trend. In the end, the difference between 10,000 tx/sec and 10,001 tx/sec is not that big of a deal.
I have to stop and say - I am not even close to be qualified to say anything practical about this relation in the numeric part of it. I'm trying to hand out a concept.
The calculation mechanism doesn't have to be applied to the network every two weeks.

So, to sum the basics of the concept up - A calculation/data-based mechanism would change the block size in relation to the network's total hashing power. This equals (given that everything mentioned above is legit) to saying that the block size will change depending on the coin's and network's adoption throughout the globe.

Advantages
This mechanism has some big advantages that I can see, also compared to the lightning network (which I might not understand well enough so correct me if I'm wrong):
      1) Not relating on another network - The mechanism is an integral part of the bitcoin network, and does not require a special and new custom-tailored network to be made.
          It should also be mentioned, that the dependency on another layer to process transactions, makes the whole ecosystem more vulnerable because now 2 networks has to work constantly perfect
          instead of just one.
      2) Fees - As the block size will increase in some accordance to mass adoption and transactions rate, it should somewhat average the fees and keep them at about the same level.
          This is in a huge difference from the lightning network, which must have increased fees in order to be economically justified.
      3) It works both upwards and downwards - Meaning, that also when fear or pessimism (or regulations) are causing people to abandon the network, leading to lower hashing rates - the network will adjust the
          block size back to smaller sizes - making it easier for everyone to mine blocks again.
      4) Another advantage that I see in relation to the Lightning network, is that in the lightning network, you must have an open channel across many people simultaneously in order to make some complicated
          transactions. Think about it - if you want to buy from a seller in the US, and you are living in the UK. You have basically 2 options of making this transaction happening on the lightning network:
               a) Open a direct single channel with that seller. This method is practically inefficient, because you have to open and close many channels with many sellers throughout your life that will cause a lot of fees.
               b) Use an already opened channel-links that can somehow connect you both. As I see this method working efficiently in small communities or groups, what are the odds that someone that you know/have a
                   channel with, has a channel w/ someone that has a channel w/ someone....(you can see where this is going) that will connect you with people from other countries? Statistically I believe it could be done,
                   but the real question is how much network fees will have to be paid for such a long route?
        
Disadvantages
       1) The frequency in which the mechanism updates the block size must be sophisticated enough in order to perform well also in extreme conditions, and not collapse the whole network.
           For example, if a major country, like China, forbids mining in it's territory and mining giants are escaping the country or shutting down - the network won't fall as hard and as long.
           *Although this might be an interesting obstacle in the way, I believe that a smart calculation and algorithm might solve this.
        2) Basing the mechanism on the hash rate could cause over/de-evaluation of the network's transaction rate, since it predicts a trend in the network and not actual transaction rate.
 

This is what I have come up with so far. What are your thoughts?