Topic: Funding of network security with infinite block sizes - page 5. (Read 24569 times)

"So you say that Porsche you have for sale is worth $40k, I say it's worth two bucks.  Why don't we meet in the middle and call it $20k, that's fair right?"

People can't come along with a radically different vision for what bitcoin should be, and expect everyone else to meet them in the middle.

I think it's pretty clear who would win this battle if it came down to a fork.  The one with cheap payments.

Ok, maybe not crystal clear down to the exact numbers but qualitatively it is correct. This can proved easily by considering the upper bound, take the total installed 'potential nodes' on the planet with more than max_block_size*144*365 available storage space and there is your total available number of nodes. Make some assumptions about how many of those available nodes will actually run bitcoin and you get your maximum practical network size, measured in number of full nodes.

Increasing the block size limits the number of nodes unless there is added sufficient incentive for new nodes to bring online the new storage/relaying capacity. Whether that is a good or bad thing is a separate issue.

I agree.

This is not at all clear.

Increased storage requirements caused by increased transaction demand may reduce the number of home users willing to run full nodes but at the same time this growth can only happen if the number of people using bitcoins is increasing. Perhaps the fraction of home users willing to run a full node is decreasing by a certain percentage, but it's not at all obvious this percentage will be larger than the percentage increase of the user base as a whole.

In addition, if the  transaction rate is growing because of increased adoption bitcoin will be spreading into entirely different sectors than just home users; there will be more bitcoin-based businesses. It's not a given that the decrease in the number of home users running full nodes will exceed the growth in the number of businesses running full nodes.

It would be silly to assume that the composition of users during the extreme early adopter phase will be in any way representative of the composition of users in the future as Bitcoin moves higher up on the adoption curve.

I don't think storage is a big problem, even storing the full blockchain with 10MB figures. Memory has kept a good pace at becoming cheaper, more so than higher bandwidth options. Even with today's costs you could handle the 10MB figures for about $65 per year in storage costs, which will only get cheaper.


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Okay, here's some numbers so we are all on same page and not throwing around "vagaries"

The maximum size of the blockchain growth at present 1 MB block limit is 52.5 GByte per year.
At an increased block limit of 5 MByte => 262.8 GByte per year.
Similarly for 10Mbyte, max. growth => 525.6 GByte per year.

When someone says "they want to increase the block limit so that the network can grow", they can mean only one thing, they want the number of transactions on the network to grow since clearly the number of new people willing to run a full node with increased storage decreases (above some limit) as the size of the blockchain increases. So just to be clear here, they do not mean they want the network to grow but that they want the usage of the network to grow, which is not the same thing.

So as long as everybody is clear that increasing the size of the blocks is limiting the number of full nodes then that is okay, but what you are using as the metric for the "size" of the network is important here.

Is the size of the network the number of nodes or the number of transactions? What is the stated goal here, maximizing transactions or maximizing network nodes?

Well, one thing seems clear to me by now. No amount of continued arguments will change entrenched views here. So, on to the next question. What do we actually do?

In negotiations where parties are far apart and demonstrably unwilling to move the only solution AFAIK is one where nobody gets what they want entirely, but instead uses something all can live with.

In my opinion that would be a change that appears most "safe". That seems like raising the limit by some safe appearing amount and seeing how things go. I estimate that would be raising the limit to something like 5-10MB.

i am well aware of that. as i said it limits the best case scenario. but if we really do hit 5mb in say summer or fall 2014 that also means bitcoin is twenty times as big as it is now. imho, at that point its likely too big to fail - pun intended.
so i would like to intentionally sacrifice the best case to avoid the worst case. short term at least.

I think you might even have succumbed to this with your 5 MB recommendation.

With no further increases in the adoption rate, average block size will reach 1 MB by the end of 2013 and 10 MB by the end of 2014. An increase to 5 MB only buys a few months, and if something happens between now and then to increase the rate of Bitcoin adoption all bets are off.

i agree with mike that staying with the 1mb limit is far more radical - and unreasonable - than increasing block sizes. however, i think there is little need to find a final solution at this point. a conservative increase of the max block size - for example to 5mb - is a very simple and predictable short term solution. 5mb would work on computers and bandwidth a lot of people already have so you dont even have to argue with moores law or anything to show that you wont run into trouble.
and when the exponential growth hits that new limit hard and fast and there are still lots and lots of full nodes around, the 1mb-extremists will be very very quite and it will be much easier to get a consent on something more final  

there might be more elegant solutions, but pushing for anything that might even remotely look like it wont run on an already existing, affordable consumer computer is a very hard sell. at least for now.

ps: mike, i think you have trouble grasping how alien exponential growth is for pretty much everyone. it eludes the natural human capability to make good estimates and seems overwhelming and scary. psychologically, predictability is extremly important right now and thats one of the main reasons i advocate for a fixed increase in block size for the time being. i think its worth limiting the best case scenario for short term bitcoin growth for that.

I don't agree with the idea that keeping the 1mb limit is conservative. It's actually a highly radical position. The original vision for Bitcoin was that it supports everyone who wants to use it, that's why the very first discussion of it ever was about scalability and Satoshi answered back with calculations based on VISA traffic levels. The only reason the limit is there at all was to avoid anyone mining huge blocks "before the community was ready for it", in his words, so it was only meant to be temporary.

Peter, your usual response to this is that Satoshi made mistakes, etc, that he was wrong and that you know better than him. Which may or may not be true. However, regardless of whether he was wrong or right, that is how the project was envisioned and trying to fundamentally change it now is a controversial position - every bit as radical as wanting to change the inflation formula.

It's actually me that's the conservative one, because I advocate "staying the course".

I fully agree with this.


Peter, I've struggled to try to understand you concerns but I still find your arguments convoluted and hard to follow. You want it to be possible to run a Bitcoin node on average hardware, but you don't want the people with average hardware to be able to use the network. How can that work? It's obvious that a blockchain recording all transactions is bound to be resource-intensive, but as far as I can see that's the very nature of a proof-of-work blockchain. Satoshi's idea was that such a resource-intensive system could be viable in the 21st century and he always presented Bitcoin as an accessible payment system, not as some sort of infrastructure for large financial services. And that idea is also what practically all of Bitcoin enthusiasts have been promoting during the last three years. I think I'm not the only one who's been telling his friends about how easy it is to get a Bitcoin wallet, and make payments to anyone around the world, and how this system could eventually be used to pay for a restaurant bill or to buy a book online. This is probably the idea that first attracted most of us to Bitcoin. If you think that such a thing is not possible and that Bitcoin can only survive as a low-volume network where payments are outrageosly expensive, well then that's like saying that you don't really believe in the original Bitcoin idea. You could be right, who knows, but keeping the block size limit is what effectively kills the Bitcoin dream, either by turning it into a specialist service used by a minority or, more likely, condemning it to irrelevance and oblivion. We need to find a compromise, and I think the sensible thing would be to agree to a higher block size limit. Those, like myself, who would remove the limit altogether will find a much higher limit more reasonable whereas those who are adamant that the limit is necessary could accept a value like 50 MB, and avoid crippling the system during the next few years.

Great post Mike! You should create a topic with it in the OP, as it deserves more than to be buried here in the 7th page of this topic.



Hum, are you sure about that? I'd like to know what happened to the market price of gold in US during the ban of the 30s...
If Bitcoin is aggressively banned everywhere, then I'd agree with you. But if it's still allowed in a significant number of places, I don't think so.

We already have off-chain transactions, for instance Mt. Gox, and AurumXchange's code systems. Similarly web wallets allow for transfers from one user to another directly; MPOE reports that quite large amounts of BTC are exchanged between users every day. The Silk Road is another example of off-chain transactions - deposits go into a big shared wallet and transfers within the system are totally off-chain. In that case there are significant privacy advantages, not to mention how it makes implementing escrow easy.

There isn't going to be a single service that does this, that's my whole point: if you achieve scalability by just raising the blocksize, you wind up with all your trust is in a tiny number of validating nodes and mining pools. If you achieve scalability through off-chain transactions, you will have many choices and options. I'm sure the users of the Silk Road have very different ideas about who they can trust than users of BitPay...


Off-chain transactions aren't something that will be implemented in one big go. Like I said above, the markets can naturally adjust bit by bit gradually moving uses of Bitcoin from on-chain to off-chain as the fees gradually increase. At worst growth in the least important, lowest value, parts of the Bitcoin economy is slowed while off-chain tx solutions catch up.

On the other hand, if the blocksize is raised and it leads to centralization, Bitcoin as a decentralized currency will be destroyed forever.

It might not be sexy and exciting, but like it or not leaving the 1MB limit in place for the foreseeable future is the sane, sober and conservative approach. Exactly what I want from the developers of the brand-new and still poorly understood technology underpinning Bitcoin's $1.5billion market cap. For that matter, I personally have a good chunk of my wealth tied up in Bitcoins and want them to be valuable in the long run.

You know, I work in engineering at a company filled with ex-aerospace guys, guys who are careful and try not to get people killed by things they don't understand. They all find my work on Bitcoin interesting, and a big part of that is because of how crazy high-stakes it is. If anything Bitcoin is kinda like being given alien technology that happens to be able to make a plane that never has to land, and unfortunately doesn't even even seem to be able to land. It's brilliant at moving passengers around, although the current plane can only fit 1000 of them. It's also the only one we have so if you want to change anything you have to do a bit of wing walking and be careful not to get any body parts near the props. Oh, and not to mention, it's currently raining cats and dogs, well, actually mostly dead puppies...

Now, under those circumstances do you think I'd go up to my boss and say "Gee, I dunno, how about I climb out that access hatch at the back and add some sheet metal until the plane is long enough to shove 200,000 passengers in there?" Fuck no. For one thing this plane of ours damn near fell out of the sky a month ago, and it only took 700 passengers to make that happen. We also don't really understand why it flies at all; we've all got our own theories and some of the theories are probably even right, but we've never flown this plane in serious turbulence, let alone been attacked by those monocled guys in airships off in the distance. Heck, we got worried enough when one of them sent us a nasty telegram the other day about how shabby our records were or something.

No, instead I'd be told to work on some prototypes and write some papers and see if maybe I could make some small nimble plane that could fly along-side our hulking monolith. Preferably a plane that can land for maintenance.

Oh goodie, more Google conspiracy theories. Actually I never had to ask for approval to use 20% time on Bitcoin. That's the whole point of the policy - as long as there's some justifiable connection to the business, you can do more or less whatever you want with it and managers can't tell you not to unless it's clearly abusive. That's how we ensure it's usable for radical (i.e. unexpected) innovation.

But even if I was being paid to work on Bitcoin full time by Google, the idea that I'd want Bitcoin to grow and scale up as part of some diabolical corporate master plan is stupid. Occam's Razor, people! The simplest explanation for why I have worked so hard on Bitcoin scalability is that I want it to succeed, according to the original vision laid down by Satoshi. Which did not include arbitrary and pointless limits on its traffic levels.

The idea that Bitcoin can be a store of value with a 1mb block size limit seems like nonsense to me. That's reversing cause and effect. Bitcoin gained value because it was useful, it didn't gain use because it had value - that can't be the case because it started out with a value of zero. So if Bitcoin is deliberately crippled so most people can't use it, it will also cease to have much (if any) value. You can't have one without the other. The best way to ensure Bitcoin is a solid store of value is to ensure it's widely accepted and used on an every day basis.

If Bitcoin was banned in a country then I think it's obvious its value would be close to zero. This is one of the most widely held misconceptions about Bitcoin, that it's somehow immune to state action. A currency is a classic example of network effects, the more people that use it, the more useful it becomes but it goes without saying that you have to actually know other people are using it to be able to use it yourself. If there was immediate and swift punishment of anyone who advertised acceptance of coins or interacted with an exchange, you would find it very hard to trade and coins would be useless/valueless in that jurisdiction.

The reason I'm getting tired of these debates is that I've come to agree with Gavin - there's an agenda at work and the arguments are a result of people working backwards from the conclusion they want to try and find rationales to support it.

Every single serious point made has been dealt with by now. Let's recap:

• Scalability leads to "centralization". It's impossible to engage in meaningful debate with people like Peter on this because they refuse to get concrete and talk specific numbers for what they'd deem acceptable. But we now know that with simple optimisations that have been prototyped or implemented today, Bitcoin nodes can handle far more traffic than the worlds largest card networks on one single computer, what's more, a computer so ordinary that our very own gmaxwell has several of them in his house. This is amazing - all kinds of individuals can, on their own, afford to run full nodes without any kind of business subsidisation at all, including bandwidth. And it'll be even cheaper tomorrow.
• Mining can't be anonymous if blocks are large. Firstly, as I already pointed out, if mining is illegal in one place then it'll just migrate to other parts of the world, and if it's illegal everywhere then it's game over and Bitcoin is valueless anyway, so at that point nobody cares anymore. But secondly, this argument is again impossible to really grapple with because it's based on an unsupported axiom: that onion networks can't scale. Nobody has shown this. Nobody has even attempted to show this. Once again, it's an argument reached by working backwards from a desired conclusion.
• Mining is a public good and without artificial scarcity it won't get funded. This is a good argument but I've shown how alternative funding can be arranged via assurance contracts, with a concrete proposal and examples in the real world of public goods that get funded this way. It'll be years before we get to try this out (unless the value of Bitcoin falls a lot), but so far I haven't seen any serious rebuttals to this argument. The only ones that exist are of the form, "we don't have absolute certainty this will work, so let's not try". But it's not a good point because we have no certainty the proposed alternatives will work either, so they aren't better than what I've proposed.

Are there any others? The amount of time spent addressing all these arguments has been astronomical and at some point, it's got to be enough. If you want to continue to argue for artificial scaling limits, you need to get concrete and provide real numbers and real calculations supporting that position. Otherwise you're just peddling vague fears, uncertainties and doubts.

Maybe we are seeing parts of why the world does not already use just one currency universally.

Right now I have my *coin holdings in full form, the actual blockchains, on my own machine.

I can spend them to anyone who has a machine no more powerful than my own, by having them run the daemon of the particular variety of coin they wish me to spend to them, and providing therm myself, directly with the entire blockchain that validates the entire thing all the way back to The Block of Genesis.

I might be very very wealthy when whichever coin or coins become vast mass-market enterprise mined by massive enterprises on the scale of Google, but will I really feel that my private keys to coins on big brother's chain are really as god and useful as the keys I have now to chains held in private hands in private homes throughout many nations? Even now already if I want to buy, say, two hundred and fifty bitcoins worth of perfectly legal goods, such as maybe some computer gear to run some nodes on, can I even now using these small, hidden in private homes everywhere, chains actually do that, or is big brotyer already reaching for it, maybe holding over bitcoinstore or bitcoinshop's heads already a bunch of threats that they must track who I am and maybe not even tell me that my information is being given to big brother and so on?

How much worse is it going to be when I have to submit my private keys for approval to some megacorp that is the only entity with access to the blockchain not because only a big entity can afford the transaction fees to get onto the blockchain but because only a big entity can actually mine the thing thus only the big entity can choose which private keys are even permitted onto the blockchain or to be used to move values on the blockchain, and to where they are allowed to move how much value, and how many permits are needed and how many copies of apostilled passports and so on?

Maybe if there isw a dichotomy between smal and secret store and private transfer out of big brother's view, and mass market full subject to big brother control megablockchain, we should just go ahead and admit litecoin already has bitcoin beat for sheer amount of transactions and sheer speed of confirmation and focus on the unlimited blocks ideas for litecoin and the keeping one's money out of big brother's hands for bitcoin?

Pls if both are too big for some uses, what the heck we still have namecoin and ixcoin and devcoin and i0coin coiledcoin all merged mine able alongside bitcoin so any one or more of those might happen to still be small enough for some time to come that even as more and more of te bloat more and more it still might be a year or two before we need to ad a bunch more chaisn to the merge to ensure small people, private people, still have bitcoin-type technology scaled suitably to their needs?

Problem here though that I have already seen is that despite all the verbiage about independence from big brother bitcoiners actually have massive tendency to deliberately not help keep the smaller less of a target for big brother so far due to smaller market cap chains strong in hashing power...

-MarkM-

I was unable to find a single point you made in your post wasn't either specious or failed to address what you were replying to, so unless you've got something more substantial than that it's probably not worth anyone's time.

Miners obtain revenue from the block reward and fees. Non-mining nodes benefit indirectly: by owning a long-term bitcoin holding. No one can complain if they are left behind when they freeload. If a non-mining node wants to stay fully connected then they should be prepared to spend a tiny amount of their holding on computer hardware to achieve it.

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1.2 BTC to store a Bitcoin blockchain which has 690 days of 20MB blocks in it!

Not much of an obligation.

The solution that allows for the most number of connected nodes must be the preferred one.

Whether those nodes are mining or not seems immaterial at this point as mining is already a highly specialised endeavour. There are already 'pooled' blockchain storage solutions like electrum available.

It seems to me that the blockchain storage that your average commodity desktop/laptop PC can tolerate for the foreseeable future must be the over-riding determiner of maximum block size so that the most number of transaction transmitting, relaying nodes can realistically remain connected to the network.

Accepting this as true, for which you present a strong case in your thread on trusted banks, then this is indeed a complementary service which may well attract a significant user base in the future. It may even succeed in handling 90% of the transaction volume which would otherwise hit the main blockchain. Is that your optimistic scenario?

However, and correct me if I am wrong, but such a trusted banking service does not exist yet. Not even in a prototype form, let alone one that can rapidly substitute for blockchain transactions. Acceptance of new services like this will take some time, at least a few years, surely. The people on this forum are ahead of the masses on bitcoin usage, yet they universally appreciate that their holding is stored on thousands of nodes worldwide. How many of us would quickly and permanently move our bitcoin holding to one single service instead of having it stored directly on the main chain?

You use the word "trust", but it takes time to earn it. It has taken Bitcoin four years to earn the trust that is fueling its success today.
I argue that there is not enough time left for that level of trust to be earned by complementary services before the 1MB arbitrary constant becomes as effective as any ddos attack in the history of bitcoin.

Please consider this chart and let us know, in your considered opinion, whether trusted banks will be fully ready, with a proven track record, before its blue line reaches 345,600.

https://blockchain.info/charts/n-transactions?showDataPoints=false&show_header=true&daysAverageString=7×pan=&scale=1&address=