Topic: How a floating blocksize limit inevitably leads towards centralization - page 17. (Read 71590 times)

s/the blockchain/the primary blockchain/

Also, I am pretty convinced we can double the max block size every eighteen months fairly safely, or if not that much then maybe increase it 50% every year, so I am really more on the lets do absolutely minimal increases to ensure normal consumer machines upgraded every five years or so can keep up side than the lets never increase even when the machines we pick up at the furniture bank for free see the entire blockchain as trivially small and 7G networks flood the city making internet free pretty much everywhere that isn't a total middle of nowhere wilderness/backwoods side.

-MarkM-

MarkM, the problem I have is that not increasing the max blocksize will eventually force 99% of transactions off the blockchain. So only millionaires buying Ferraris and pirate funding his gox account get onto the blockchain. In order to keep Mr. Slowpoke miner's node running most of the rest of us are forced off the blockchain. Madness

It is not, at extremis, about a little bit of profit margin more or less... It is about total PWNing of everyone not in the top however many percent you have to be in to get the limit raised to where you are just fine thanks and all the moaners and crybabies who were, afterall, just cutting into your top percenter obscenely vast income, people who you can employ far better as menial codemonkeys or sysadmins or branch-managers or whatever than by letting them run around encroaching into your top-percenter domains of rulership, are PWNed.

It is a slippery slope, and there might not even be any mechanism to prevent the already existing pre-bitcoin establishment's 1%-ers from remaking the entire resistance movement against them that bitcoin once might have been into just another back forty of their empire.

So far our primary stength has been the world's most difficult proof of work, in the hands of we the people, a power hopefully sufficient to enable we the people to finally, after all these centuries escape the whole paradigm of 1%-ers versus the 99%.

Now some of us seem to suspect we are starting to see the arguments of the 1% insidiously arising ready to corrupt and undermine the entire experiment, turning it into just another too big to fail, too big to hide from Big Brother therefore too vulnerable to being seized by Big Brother tool of, ultimately, good old Big Brother himself, in poison.

-MarkM-

If I'm understanding this right, a miner with a slower internet connection can be put at a disadvantage by a guy with a better connection who blasts out large blocks.  So let's say Mr. Slowpoke is put at a 20% disadvantage due to his connection.  Would that really end up putting him out of business?  There are so many other factors that he might be able to use to compensate for his connection speed disadvantage such as cheaper electricity, cheaper labor, lower profit margin, lower borrowing costs, etc.  Businesses fight on many fronts, so would a competitive disadvantage in just one really matter that much?

Let's get him on the phone and see what he says.

Notice the if and the emphasis on need...

Cross post to one of the three threads going about this

care to create a constructive response on that?

Nice job polluting a wonderful thread with great technical insights with your Jennifer Lawrence spam.

In this order:

1. Most blocks are at or near the 250 kilobyte soft limit.
2. The memory pool of transactions grows due to insufficient space in blocks.
3. Users notice trend of transactions taking longer to confirm, or not confirming at all.
4. Fees increase as users pay more to improve confirmation times.
5. Miners (or mining pools) modify code to select transactions with the highest fees per kilobyte to fit into blocks. They remote the 250 kilobyte soft limit. Some miners disallow free transactions entirely.
6. Transactions clear much more quickly now, but fees decrease.
7. Blocks increase in size until they are at or near the one megabyte hard limit.
8. Fees start increasing. Free transactions rarely confirm at all now.
9. Small transactions are eliminated since they are not economically feasible. SatoshiDice increases betting minimums along with fees. The volume of SatoshiDice transactions decrease.
10. Users at the margins of transaction profitability with respect to fees are pushed off the network.
11. Many people, most non-technical, clamor for the block size limit to be lifted.
12. Fees reach an equilibrium where they remain stable.
13. Spurred by the profitability of Bitcoin transactions, alternate chains appear to capture the users that Bitcoin lost.
14. Pleased with their profitability, miners refuse to accept any hard fork to block size.

Just leave it alone, bitcoin as it is now favors a steady state economy, in contrast to the problematic inflationary system of world banks.

RE: particular ideas if "we" decide the blocksize has to be increased:

I think the first step is to come to rough consensus that, at some point, we WILL need a hardfork to increase the block size limit.

If we can come to rough consensus on that, then we can figure out the safest way to accomplish that.

I don't think we'll get consensus; retep and others will argue "we need to run into the hard limit to FORCE alternatives to be created first."

I keep saying we should see what happens as we run into the soft blocksize limits.  To people on both sides of this debate:  what do you predict will happen?

If what you predict will happen doesn't actually happen, will that make you re-evaluate your position?

(I haven't spent enough time thinking about this problem to answer those questions, but that is how I'm going to think about it).

They already are.  Bitcoin is not intended to, nor is it likely to, replace national currencies.  It's going to be a long time coming before Bitcoins displace paper cash in small daily transactions.  That said, it's not unreasonable to assume, should the central banking model not be able to adjust to the reality of Bitcoin (and presumedly not be able to destroy it), that new paper cash currencies that claim a reserve backing of bitcoins that displace national fiat currencies.  So yes, in many cases simple paper cash would function as an "alt-chain" just fine; although I'd predict that should a bitcoin backed banknote ever come into existance, it's more likely to be a plastic token with a digtial artifact imbedded into it, probably using many of the very advanced security features that casino tokens use today.  And just like the gold in a vault never actually moves under a (auditable) gold standard, the bitcoins that presume to back those banknotes would rarely, if ever, need to move across the blockchain.  The important part to all this is that, in the end, any peer forever has the ability to move transactions across the blockchain.  That is the part that makes it 'decentralized', not the number of network nodes (although that is an important minimum) or the common size of a mining operation.  The important part is that there are no 'super-nodes' with special abilities to ignore or exclude other nodes from the network.  If the block-max-size issue ever started to trend toward nodes that were so much larger than the entry level node as to functionally have the ability/incentive to ignore the small nodes, and have that actually work, then I'd be concerned.  I do not claim to know what is the best method for increasing the blocksize limit, but I do not believe that increasing it to 10mb, 20mb or even 50mb as a hard limit would be a dramatic burden on most full nodes.  Perhaps a combo solution; a higher than currently reasonable hard limit combined with an adjustment algo for a soft limitation.  For example, the hard limit could be set to something like 250Mb, and an algo that can adjust the soft limitations within that hard limit withn a range based upon, perhaps, the average number of blocks delayed that a minimum fee transaction experiences during the prior two week period. 

Although I havn't a clue how that could be actually implimented.

There's one possibility that I'm surprised no one has mentioned. That the rise and performance of Bitcoin as a store of value (forget about fast payments) creates competitive pressure on fiat currencies to stop inflating and remove capital controls. Wishful thinking? Or could fiat currencies become the "alt chains" needed to fill in the gaps?

Wow nice idea johnyj, I like it! Well done!

Of course whether it will play out that way remains to be seen, but really nice story, especially if it does play out.

-MarkM-

Another possible scenario:

After block size limit reached, transaction slowed and there is a stronger motivation for a hard fork, so it happened. After the hard fork, the hashing power will divide, some miner will stay on the original chain, some others will hash on the new chain

And then transaction volume is divided, the original chain will suddenly get much less transaction, so it becomes good again, then people will slowly move back to the original chain, since it has much longer history and credibility (And most important - higher exchange rate), and this will slowly bring up the problem on that chain again, then some people could not tolerate the slow transaction will move to new chain

So it basically will create a self-balanced original chain, there is just enough transactions happened on the original chain to keep it working well and all the long term investors will stay there. All the people want fast transaction will move to new chain and tolerate the lower price per coin

Unless the block generation on the original chain can be stopped totally, the inertia of the original chain is so big that no matter what benefit new fork bring, it won't stop it from becoming more popular. Even mtgox move to the new chain, there will be other exchange for original chain and the price of original bitcoin stay strong

In the normal development of a fast transaction system, the transaction system itself is seperated from the value it transfer, but in bitcoin's case, it is much more complicated, the system itself will affect the value of bitcoin and it's successfulness will depend on other factors than pure technology

Can we go with specialisation rather than centralisation?

By keeping the primary chain as small and efficient as possible, focussing on its being 24/7 live-verifiable by as many people as care to verify it as it happens, maybe we can keep mining accessible.

Meanwhile by creating many many many secondary chains, maybe we can also keep the verifying of any one secondary chain, maybe even the primary chain plus one secondary chain, accessible?

Large mining outfits could merge absolutely every regional, niche, and special-purpose chain, smaller outfits could pick and choose which chains to merge, depending on what economic sectors, industries, scales, neighbourhoods or whatever they happen to be interested in verifying at any particular moment.

But hey, we already have lots of blockchains, so if one of them wants to go ahead and use terabyte blocks why not? We all should have plenty of advance notice and plenty of time to trade our holdings on that chain for holdings on other chains, right?

We already see though that folk who favour the "primary" chain which all the merged chains are designed to depend on to provide the world's most difficult proof of work, have quite some tendency to refuse to even consider merged-mining.

Thus maybe we need to abandon merged mining as too impractical in the face of the prejudice of the entrenched / vested-interest "establishment" and urge them to go ahead and make blocks large enough that we can migrate all our altcoins to coloured-coin format, putting them directly on the world's largest blocks blockchain due to the "establishment" wanting to monopolise not only mining difficulty but also blockchain-size?

Or maybe terracoin and litecoin and bbqcoin have it right, that the "establishment" is too prejudiced to merge with; maybe terracoin and litecoin can be the new "primary" chains, one for SHA256 the other for Scrypt, and grassroots power to the people mining afficonados should eschew the "establishment coin" and seek to build merged mining setups that can beat its hashing power? Afterall, ensuring "the people" have more hashing power than "big business", "the military-industrial complex", "the world banking cartels" - in short, "the establishment" is a well established tradition in the cryptocoin world already...

Maybe we need to know what exactly all the various chains have in store in the way of immutable or arbitrarily vast / uncapped block sizes so we can start planning how much of our portfolios to place with how "eatablishment" and how "grassroots" a collection of blackchain projects?

-MarkM-

It wont be like our current system, but more like the classical gold standard where your gold(Bitcoins) are redeemable on demand. But since Bitcoins are slower/more expensive to transact with, people would over time stop using it at all and all future services may require interfacing with the service layer built atop of Bitcoin eventually leading to the demonitisation of Bitcoin just as it happened with Gold.

Although there are a few key differences between Gold and Bitcoin which may not lead to such a scenario
-Bitcoins are instantly assayable by anyone with an internet connection or an upto date blockchain.
-With declining usage, cost of Bitcoins TX will fall to compensate, possibly resulting a balanced equilibrium where only low cost TX are sent via the service layer.

But i think you do have a valid concern.

Ultimately it comes down to 2 forms of centralisation,
1) Centralised mining pools which have the hardware and infrastructure to run a full node process all payments at a low fee  (Large Block Size)
2) Centralised Payment processors(or possibly alt chains) built atop of Bitcoin to offer cheap/free transactions for micro-payment(as a complimentary service to their existing e-wallet/exchange service) in order to keep high levels of decentralisation (Small Block Size)