For bitcoin prices to stabilize, large-scale economies need to develop with more businesses and users. In order for large-scale economies to grow, businesses and users will seek price stability.
Uncertainty has no effect on the main benefits of Bitcoin as a payment system for transferring money from A to B. It is easy for businesses to convert bitcoin payments into their currencies instantly, so they benefit from Bitcoin without having to experience price fluctuations. Bitcoin offers many useful and unique features, so many users choose to use Bitcoin. With such solutions and incentives, it is very possible that Bitcoin will mature and grow to reach a stage where the uncertainty / volatility of its value has been greatly reduced.
Topic: Block Size Scalability Issues (Read 587 times)
Yea, I dont think that would be fine. People can connect to what ever they want until they have options to connect. When they dont have they would have to connect to these centralized points/
But people CAN choose.
They CAN connect to whoever they want. That's the point.
Hubs are being built if people want to build them. And also.. note that Hubs are still decentralized. There is a difference between decentralized and distributed.
While the LN probably won't be completely distributed, it WILL be and currently IS decentralized.
Agreed, its not a solution but better then 1Mb block. Minor update to 2Mb or 4Mb would have solved lot of pressure when backlogs were high.
SegWit introduced the block weight.
With 100% segwit transactions, there is room for 4x more transactions inside a block than pre-segwit.
Currently, blocks are about 2,4 MB big (incl. witness data).
You won't get able any answer if you show pessimism/negative views towards Bitcoin on r/bitcoin. You better ask this forum or
Actually I did get an answer but not a proper one. Dont know if it was an admin but whoever it was said he will get back to me and never did. Then again its not a customer service but thats ok.
Still to point out, How does it matter if I was showing negative view?
Is current structure so weak that it wont stand any criticism?
It's hard to avoid
This thread Basics of the Lightning Network - explanation and wallets should give you more information.
I know, that's my concern. I dont have anything better to offer but I can point out what I see as an upcoming problem.
It's not really a solution. They postpone the problem.
Increasing a variable (blocksize) can never be a scaling solution.
A lot of new problems appear with a bigger blocksize which shouldn't be ignored.
What kind of problem are you referring to. I would like to read something on it.
That would be fine too. This wouldn't cause a problem at all.
Those hubs don't have any influence or 'power'. If you don't want to connect to them (e.g. because big hubs or fees), don't do it.
People can choose who they connect to.
Yea, I dont think that would be fine. People can connect to what ever they want until they have options to connect. When they dont have they would have to connect to these centralized points/
It's not really a solution. They postpone the problem.
Increasing a variable (blocksize) can never be a scaling solution.
A lot of new problems appear with a bigger blocksize which shouldn't be ignored.
Agreed, its not a solution but better then 1Mb block. Minor update to 2Mb or 4Mb would have solved lot of pressure when backlogs were high.
It's hard to avoid centralized centered LN nodes since merchants or nodes with high liquidity/balance naturally would have high connected channel since people would open new channel (merchant) if there aren't any available path/route and there's fewer available path/route (merchants & nodes with high liquidity/balance) if you intend to use LN for bigger payment.
The Lightning Network was designed to handle mostly micro-payments. The maximum amount of bitcoins you can send right now (in a single transaction) is about 0.041 BTC. The issue you mentioned can be solved by introducing multi-path payments which are being developed. It's still a bit unsafe to open a few big channels since there is no proper backup feature in many wallets. I would wait for eltoo with that. Lightning Network still needs some time for development but given the fact that there are so many nodes, there shouldn't be any problems with its adoption.
As I understand(Please correct if I am wrong) inorder for me to send BTC from A to B, I need to open the channel. So as a user I would have to do the same thing again If I have to send BTC from A to C (Unless B already has an open channel with C).
You have to open a channel, yes. But you don't have to open the channel directly with B. You can open a channel with anyone (X) as long as there is a route from X to B.
I think in long run we will see centralized points which have multiple open channel that users would connect to.
That would be fine too. This wouldn't cause a problem at all.
Those hubs don't have any influence or 'power'. If you don't want to connect to them (e.g. because big hubs or fees), don't do it.
People can choose who they connect to.
I know people dont like it but BCH atleast has a solution or even variable/flexible blocksize would solve in much better case.
It's not really a solution. They postpone the problem.
Increasing a variable (blocksize) can never be a scaling solution.
A lot of new problems appear with a bigger blocksize which shouldn't be ignored.
Good that I found this thread. I have been asking this question on r/bitcoin with no real answer. How is that LN will not cause centralization.
As I understand(Please correct if I am wrong) inorder for me to send BTC from A to B, I need to open the channel. So as a user I would have to do the same thing again If I have to send BTC from A to C (Unless B already has an open channel with C).
I think in long run we will see centralized points which have multiple open channel that users would connect to.
I know people dont like it but BCH atleast has a solution or even variable/flexible blocksize would solve in much better case.
As I understand(Please correct if I am wrong) inorder for me to send BTC from A to B, I need to open the channel. So as a user I would have to do the same thing again If I have to send BTC from A to C (Unless B already has an open channel with C).
I think in long run we will see centralized points which have multiple open channel that users would connect to.
I know people dont like it but BCH atleast has a solution or even variable/flexible blocksize would solve in much better case.
I don't think that the block size is much of a problem for scalability. Many new coins are looking to implement a dynamic block size in the future upgrades, and several ICOs are offering coins with dynamically scaled blockchains. Personally, I believe that the scaling solution will come from an off-chain solution via offline payment channels, so we can even stay at the same block size we're at now without much detriment.
They are obviously not going to have 1 or 2 channels, but 1000's. The point is, the Lightning Network is not taking away miners fees for them, if they are also hosting Lightning Network nodes. It is a complete change for some of them, but it will supplement income if the Block reward falls away.
Keep in mind that the Lightning Network makes new type of payments cost-effective. We would never see so many micro-payments on-chain. Miners in fact benefit from this by confirming transactions which open and close channels. Lightning Network implementations are going to get better and better. Autopilot is not perfect and it can't take care of channel balancing which is important long-term. It should change in the next few years.
Also, miners might start to supplement their income by hosting LN Nodes and getting fees from forwarding people's tx's. If they stop mining, then the Lightning Network will stop functioning and they will not get any fees from both the LN and the miners fees from their Bitcoin mining.
So in my opinion the Lightning Network actually supplement their income or it might just balance it out, when the Block reward decline.
So in my opinion the Lightning Network actually supplement their income or it might just balance it out, when the Block reward decline.
I don't think if setting up Lightning Nodes will be profitable for them. Lightning Network earnings are quite small and might not be worth the hassle of balancing thousands of channels. If some miners decided to stop mining due to low profitability then the difficulty would drop resulting in higher profit for those who continued to mine. None second-layer solution will replace on-chain transactions. Miners will continue to earn from on-chain fees. What is more profitable for an average miner? Small blocks and spikes in transaction fees or big blocks and small fees?
They are obviously not going to have 1 or 2 channels, but 1000's. The point is, the Lightning Network is not taking away miners fees for them, if they are also hosting Lightning Network nodes. It is a complete change for some of them, but it will supplement income if the Block reward falls away.
Millions of small tx's can also be profitable, even if it is still "small" now. The bigger picture is a business plan change from mining "Only" Bitcoin with ASIC's to a combination, where the miners also host Lightning Network nodes.
Also, miners might start to supplement their income by hosting LN Nodes and getting fees from forwarding people's tx's.
The good thing about the LN is that anyone can open a big amount of channels to get payed to route a payment.
You don't need specialized hardware and electricity costs far below the average to compete and earn money.
You just have to provide a funded channel to route the payment. So anyone (including miner) can participate the same way.
Lightning Network earnings are quite small and might not be worth the hassle of balancing thousands of channels.
They are small (or non-existent) at the moment.
But once LN is 'released' and truly tested and fully developed, the fees will increase when the user base and transaction made there increases.
These tx fees will still be way lower than the fees from on-chain tx's, but balancing thousands of channels should definitely make it worth it (at a stage where the LN is fully functional and used).
Also, miners might start to supplement their income by hosting LN Nodes and getting fees from forwarding people's tx's. If they stop mining, then the Lightning Network will stop functioning and they will not get any fees from both the LN and the miners fees from their Bitcoin mining.
So in my opinion the Lightning Network actually supplement their income or it might just balance it out, when the Block reward decline.
So in my opinion the Lightning Network actually supplement their income or it might just balance it out, when the Block reward decline.
I don't think if setting up Lightning Nodes will be profitable for them. Lightning Network earnings are quite small and might not be worth the hassle of balancing thousands of channels. If some miners decided to stop mining due to low profitability then the difficulty would drop resulting in higher profit for those who continued to mine. None second-layer solution will replace on-chain transactions. Miners will continue to earn from on-chain fees. What is more profitable for an average miner? Small blocks and spikes in transaction fees or big blocks and small fees?
We need massive amounts of settlement tx's on-chain, when people open & close channels on the Lightning Network and the price of a bitcoin must grow exponentially for miners to be profitable. 
With a big user base who is transacting daily on the LN, there will be enough on-chain transactions.
And if not, the fees for the on-chain transactions will be low enough for users to be attracted by on-chain tx's again.
I believe this will find an equilibrium.
The price does only have to grow exponentially if the miner do want to keep increasing the hashrate.
If mining gets unprofitable, the miner with the highest costs and lowest capital will stop mining and vice versa. This should also find an equilibrium.
I don't know why but people often forget that on-chain transactions will continue happening every 10 minutes, without LN.
These that can afford on-chain transactions and see a point in doing them (most likely for bigger transactions that require it to be on-chain) will always find a good opportunity cost to use it and thus keep paying miners.
As usage goes up fees goes up, miners happy, hashrate goes up, users happy due safer blockchain. It's a nice snowball effect.
We all would like to be able to transact instant, cheaply on-chain without no sequences but apparently physics don't work that way, for now either pay the fee or use LN.
Also, miners might start to supplement their income by hosting LN Nodes and getting fees from forwarding people's tx's. If they stop mining, then the Lightning Network will stop functioning and they will not get any fees from both the LN and the miners fees from their Bitcoin mining.
So in my opinion the Lightning Network actually supplement their income or it might just balance it out, when the Block reward decline.
We need massive amounts of settlement tx's on-chain, when people open & close channels on the Lightning Network and the price of a bitcoin must grow exponentially for miners to be profitable.
With a big user base who is transacting daily on the LN, there will be enough on-chain transactions.
And if not, the fees for the on-chain transactions will be low enough for users to be attracted by on-chain tx's again.
I believe this will find an equilibrium.
The price does only have to grow exponentially if the miner do want to keep increasing the hashrate.
If mining gets unprofitable, the miner with the highest costs and lowest capital will stop mining and vice versa. This should also find an equilibrium.
I don't know why but people often forget that on-chain transactions will continue happening every 10 minutes, without LN.
These that can afford on-chain transactions and see a point in doing them (most likely for bigger transactions that require it to be on-chain) will always find a good opportunity cost to use it and thus keep paying miners.
As usage goes up fees goes up, miners happy, hashrate goes up, users happy due safer blockchain. It's a nice snowball effect.
We all would like to be able to transact instant, cheaply on-chain without no sequences but apparently physics don't work that way, for now either pay the fee or use LN.
...
Unfortunately it's impossible with current PoW algorithm/consensus method since people who have most efficient ASIC with cheapest electricity always win and in PoW, the winner takes all.
...
Unfortunately it's impossible with current PoW algorithm/consensus method since people who have most efficient ASIC with cheapest electricity always win and in PoW, the winner takes all.
...
This may be true in theory, but in practice most miners are part of a mining
pool. Therefore they participate in the block reward every time that someone
from their pool "gets lucky" and manages to claim the block reward.
In the long-run this smoothes out the mining income and enables mining
on a more industrial scale. Of course there is still the possibility of mining
less than your expected share for a long time, but still taking part in a mining
pool reduces the variance inherent to a system that was designed as a
winner takes all system.
I wonder how Bitcoin would have turned out if we had never seen the emergence
of mining pools. The hashrate would probably be lower, because higher variance
would have made long-term planning and therefore industrial mining much more
difficult.
We need massive amounts of settlement tx's on-chain, when people open & close channels on the Lightning Network and the price of a bitcoin must grow exponentially for miners to be profitable.
With a big user base who is transacting daily on the LN, there will be enough on-chain transactions.
And if not, the fees for the on-chain transactions will be low enough for users to be attracted by on-chain tx's again.
I believe this will find an equilibrium.
The price does only have to grow exponentially if the miner do want to keep increasing the hashrate.
If mining gets unprofitable, the miner with the highest costs and lowest capital will stop mining and vice versa. This should also find an equilibrium.
Ok, but did the Lightning Network not throw a fox into the chicken coop? Satoshi's idea was for the Block reward to decrease over time and for the tx's to increase, so that the miners rewards would eventually replace the Block reward? Now we are implementing a 2cnd layer solution that would effectively reduce micro payments from the Bitcoin Blockchain and this reduces the tx volume.
We are hoping the Lightning Network will solve the scaling limitations and that it will increase adoption, but what happens if this does not happen? We need to look to a future where the miners rewards needs to replace the Block rewards.
We are hoping the Lightning Network will solve the scaling limitations and that it will increase adoption, but what happens if this does not happen? We need to look to a future where the miners rewards needs to replace the Block rewards.
You are only partly right about the block rewards (and that means you are party wrong too).
Even yesterday, at a jump in price, people reacted heavily and the number of transactions grew a lot, also the tx fees started to rise. Since we aim to get to bigger numbers than VISA can handle, there's a good chance that average tx fees will be higher than the basic 1 sta/byte. You need patience though.
Then there's something else you've missed. The price of Bitcoin. If today the reward only from tx fees in a block is maybe 0.2 BTC, with high enough price of Bitcoin even this amount would do.
Bitcoin mining doesn't have to be for everyone(*), only the most efficient ones will keep up.
(*) If Bitcoin mining would have been for everybody, big changes would have been needed, see Monero.
This makes it even more risky, because we need two things to happen for this experiment to succeed. We need massive amounts of settlement tx's on-chain, when people open & close channels on the Lightning Network and the price of a bitcoin must grow exponentially for miners to be profitable.
Fortunately for us, Bitcoin was developed to cover most of these challenges. If one thing goes down, another thing goes up and visa versa.
{Difficulty adjustment is one example} ... All the 2nd layer technology stuff like the lightning Network is only going to reduce fees drastically. ...
The Lightning Network makes Bitcoin micro-payments cost-effective. No one would pay a few cents or dollars for sending a few satoshis. Keep in mind that these transactions are nearly instant - it's something that won't be achieved on-chain. I guess that we won't bring zero confirmation transactions back.
Furthermore, increased adoption of Lightning Network will result in more on-chain transactions even if most transactions are off-chain because of the need to open and close channels. For example, if 10% of the world uses LN and opens/closes a channel once per year, that alone will generate 44 TPS, requiring (very roughly) 6 MB per block.
That's true. However, there are still many solutions which can increase the number of transactions per block (Schnorr signatures, MAST) without having to increase the block weight. Have you heard of channel factories? I have explained them here.
... All the 2nd layer technology stuff like the lightning Network is only going to reduce fees drastically. ...
LN is not a perfect substitute for on-chain, so not all transactions will be done through LN.
Furthermore, increased adoption of Lightning Network will result in more on-chain transactions even if most transactions are off-chain because of the need to open and close channels. For example, if 10% of the world uses LN and opens/closes a channel once per year, that alone will generate 44 TPS, requiring (very roughly) 6 MB per block.
... Which means we will need even more transactions to pay as the block reward diminishes. ...
Again, the need for fees is determined entirely by the need for security (against a 51% attack). It is possible that the block reward will be more than enough to provide sufficient security even without a subsidy, but there is a real danger that it won't.
The issue is that security is not a major component in the price of a transaction. The primary factor is the size/weight, which is not related to its need for security. There needs to be a way to tie security to price. Some ways to increase the price of security might be to somehow make more valuable transactions bigger so that they cost more, or perhaps to include the value of transactions in determining the "longest" chain.
Thanks everyone for contributing your thoughts in a respectful manner. It is a lot of information and I wasn't really sure where to start. I will look into the segwit block increase and do more research there.
However, people are pointing out issues about you can't use current rates for the fees. All the 2nd layer technology stuff like the lightening Network is only going to reduce fees drastically. Which means we will need even more transactions to pay as the block reward diminishes. It only validates what I am saying. If transaction fees drop to .02-.05 it will take many more to make the same amount of money for the miners than the current .57 transaction fee. 4mb block will not even be close.
These issues are still down the road a bit, but look what happened in December when the price shot up. Fees went through the roof, mempool back up grew, and business started dropping Bitcoin payments going into the new year. It is still early, but major adoption with the current setup would be fun to watch.
However, people are pointing out issues about you can't use current rates for the fees. All the 2nd layer technology stuff like the lightening Network is only going to reduce fees drastically. Which means we will need even more transactions to pay as the block reward diminishes. It only validates what I am saying. If transaction fees drop to .02-.05 it will take many more to make the same amount of money for the miners than the current .57 transaction fee. 4mb block will not even be close.
These issues are still down the road a bit, but look what happened in December when the price shot up. Fees went through the roof, mempool back up grew, and business started dropping Bitcoin payments going into the new year. It is still early, but major adoption with the current setup would be fun to watch.
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