Topic: New video: Why the blocksize limit keeps Bitcoin free and decentralized - page 5. (Read 15201 times)

I believe there would be a mechanism that promotes centralization, because there is a mechanism in traditional payment markets that promotes centralization, and traditional payment processors handle fiat-credit, which has almost exactly the same properties as BTC-credit.

You haven't explained why this mechanism, which we see in fiat payment processing, wouldn't be seen in BTC-credit payment processing, even though they both use the same type of trust-based credit relationships.


There is very little to attack if there's a 1 MB block size limit. BTC won't be a major player. It'll be centralized banks that handle credit redeemable in BTC that dominate the BTC economy, if indeed BTC becomes widely accepted, which I don't believe it will if transaction fees need to reach $20 to handle global scale traffic.

I'll grant that in the unlikely event that bitcoin succeeded under a 1 MB block cap, and this kind of economy came to be, at least the currency wouldn't be inflated by governments, but everything else will be like the modern financial system, as far as I can see.


That's exactly how I see it.

Bitcoin is not free, it's about $129 /BTC at the moment. The block size limit won't keep it free but it will surely keep it from rising much above $400, since as we hit the 7tps limit with actual useful (non-SD) transactions the limit will cap the adoption at that level.

Bitcoin is not THAT useful as a technology. Never was, never will be. If we artificially cap the transactions to some level (as opposed to letting the market decide) it will certainly make bitcoin even less useful.

And as I say, with all due respect, you seem to also.  I reject (fairly vociferously) that there would be a mechanism to promote significant centralization while you assume it would be the case.  I am certain that we won't see the kind of regulatory capture and verndor strong-arming that has put VISA and MC where they are.

Now, it may well be the case that people choose, en-mass, to use one payment processor for the other services they offer (authentication, convenient wallet access, whatever.)  That's lamentable, but it would remain a free choice since any number of alternatives would exist.

I actually think that a very likely outcome would be that people would choose a payment processor who was affiliated with causes they believe in for one reason or another.  Jesuscoin.org, greenpeacecoin.org, nracoin.org, etc.  (The latter will be for sale someday, BTW )

I'll be using some combination of native Bitcoin, some off-chain processor who respects privacy, one who is jurisdictional secure, and probably several who are associated with causes I believe in.  I expect to have a simple UI to effortlessly and inexpensively transfer value between the various off-chain solutions I use.


Soon.  As soon as we can find it in our hearts to stop stawman-ing one another.


Going full circle, the 1MB (or reasonable) limit is simply to keep the kernel of the distributed crypto-currency ecosystem widely distributed and having a realistic chance of survival under the most significant and coordinated of attacks.

I cannot say that I don't care about the 'spending money' second-tier organs (or 'off-chain processors') but they are in my mind very secondary and very dispensable relative to the actual value core.  They need to compete and offer more options to end-users which I see as a good thing and a much more safe outlet for the urge that everyone feels to have things grow and improve.

You haven't explained why the tendency for a few dominant networks to arise, which we see in Visa/MC, would not exist with payment processors handling BTC-credit. BTC-credit is not BTC. BTC's decentralization doesn't make credit held by centralized BTC-banks less centralized. The handling of credit happens through traditional off-the-chain channels, where BTC's decentralization has no benefit.

Again with all due respect, it seems like the 'offchain' crew is making assumptions that are not supported by any real substance. The safer assumption, in my opinion, is that centralized parties handling BTC-credit will act like banks that handle other types of credit now, and will be vulnerable to the same type of pressure.


A 1 MB block size limit is not a solution to that. Whatever the risks are of having high-bandwidth requirements for nodes, they are nothing compared to the risks that would face unregulated high throughput payment processors.


Good luck. If you succeed, then you would have no reason to be concerned about a lifting of the 1 MB cap, as off-chain solutions that are as provably secure as the Bitcoin network would be the preferred payment mechanism of users, and most activity will take place off the chain.

Um...  These attack blocks would be received on non-anonymous connections, as this behavior is indistinguishable from a non-mining node's.  Only sending has to be done via an anonymous connection, and as you mentioned earlier, this can be done quite efficiently (I thought transactions were more like 500 bytes, giving a 15x boost to scalability, but whatever.  Actually, as Mike Hearn mentioned somewhere on the forum before, only the first few bytes of transaction hashes actually need to be sent, so this boost can actually be quite a lot larger.).

Unless you mean the anonymous miner's non-anonymized bandwidth is likely smaller than a non-anonymous miner's, since the latter can use an efficient data center.  In which case, how much extra on-demand bandwidth beyond the usual steady transaction flow are you estimating is necessary to thwart these attack blocks?  Is this amount of bandwidth really only available to people who are willing to give up physical control of their machines?  Don't you think that any extra cost due to lowered economic efficiency might be externally funded by parties interested in preventing censorship?

Actually it seems pretty clear already how this can be done.  Some of us have been thinking ahead  Here's a good summary of it by gmaxwell: https://bitcointalksearch.org/topic/m.1596626  Follow the thread/links back for more details.

One further improvement on this proposal is for nodes to partially verify blocks in order to make the block auditing more decentralized.

this is what I thought as well
...

need is the mother of invention

The miner on bandwidth limited anonymous connections will always receive an incoming block slower than someone located in a non-anonymous datacenter.

I'm not following why Tor is an issue at all in this proposed attack, since they're receiving all incoming data without Tor, at the same speed as non-Tor miners.  I'm really sorry if I'm just being thick here.

I certainly don't assume they would.  But mining pools are a dime a dozen, and it's not really a big deal if a jurisdiction turns unfriendly and takes one or two out, as miners can seamlessly migrate to another pool in a friendly jurisdiction.  Engineering for the scenario that all jurisdictions across the planet have become unfriendly toward Bitcoin is kind of silly IMHO.

Natural monopolies are...well...natural in some environment.  Namely one's where the barrier to entry is high.  They are also artificially created when possible.  Visa/MC are probably a little bit of both.

I conjecture that efforts based on a freely accessible Bitcoin network will have a very low barrier to entry and can arrange an endless array of unique incentives so I very much doubt that they would fall victim to the natural monopoly effect.

We may have to agree to dis-agree on this, but it is pretty clear to me that we are both handwaving to some extent.


OK, even if Bitcoin growth happened to stop at a point when a few thousand entities could still operate it...

As I've mentioned on previous threads, there is much more value in having a broad footprint in the network and using it to harvest business intelligence information than there would be in collecting penny-ante fees.  So, entities who have a realistic ability to tap into this source of value will be able to subsidize the services they offer.  This will drive out competition and create a vicious circle of centralization. 

For an example of this, consider how e-mail has evolved over the past 10 years ago.  Relatedly, look at how much more centralized the e-mail solutions most of us use have become.  You think that this happens just because some CEO felt like giving something back to the community?  Think again.


I'm looking forward to his work along these lines.

That's only true if Tor miners are the majority. If they are the minority, and >50% of hashing power has fast connections, doing so puts that Tor miner at a big disadvantage, and is good for the miners with the fast connection by reducing competition. Keep in mind that it's likely that large well-connected miners will offer SPV node connection services in return for you not giving the competition a chance at mining those transactions and collecting the fees: https://bitcointalksearch.org/topic/how-you-will-pay-for-bitcoin-network-access-services-in-the-future-197169

I can't see why it matters if an evil miner fills his blocks with transactions that he hasn't relayed.  It doesn't put the Tor miner at any relative disadvantage, as he's still safe receiving the block data without Tor, correct?  Am I missing something here, retep?

My video was made by stonecanoe - give them a shout.


You know, if you are happy with just assuming pools and nodes in general migrate to friendly jurisdictions you do have a lot of options. But Liberty Reserve just showed how seemingly friendly jurisdictions don't always stay friendly.

Any form of encrypted data transmission, including Tor, has problems in jurisdictions like China which simply throttle encrypted data. The cost to banning encrypted data entirely is just too much, let alone when you include stuff like steganography, (thanks tvbcof) P2P radio links and other exotics. A small blocksize, and off-chain transactions, gives you options.

After all, I've seen people argue that with tx hashes we could easily have a blocksize 5-10x bigger and still mine over anonymous data connections efficiently. That argument is based on taking the average tx size, (160 to 320 bytes) and just passing around tx hashes (32 bytes) instead when you create a block. (this assumes mempools are fairly well synchronized, a problematic assumption, let alone under attack) Well, that's great, but it just gives you 5x-10x better scaling. That doesn't buy you much exponential growth, let alone abusive uses of Bitcoin for things like timestamping that we just can't stop.

What do you do next if 10MB isn't enough? I firmly believe I don't really know what the future of Bitcoin is. I know I don't have a magic crystal ball, but I do believe in having options: http://www.youtube.com/watch?v=2Z902nIOvL0

A lot of arguments could be made about the causes of centralization, so I'll try to give a more specific example: Visa/Mastercard dominate credit card payments, and would dominate even with no regulations. Networks like this have a network effect. Whoever controls the network then becomes the central power in payment processing.

Merchants have to use their services if they hope to have access to the majority of consumers, and consumers prefer to use their network over those of smaller competitors, even if the smaller competitors offer significant advantages, because whatever those advantages are, they can't make up for the disadvantage of having a smaller network.

It's a snowball effect that's going to lead to a few large networks dominating. Unlike the bitcoin network, a BTC-bank network will require some combination of regulatory approval, trust-building, and fees to the party controlling the network for a participant to join.

This makes it very likely in my opinion to become something similar to the modern payments system, notwithstanding the absence of central bank control over the base currency.


You are basically making my argument for me here.  That is why it is critically important to me that the system remains lite enough such that the barrier to entry is minimal AND that the communication protocol is conduce to reliable function even under coordinated attack by network carriers.  Or at least the kernel of the system (i.e., Bitcoin) because if that remains functional, auxiliary systems can be re-born overnight if they are somehow killed off.