Topic: New video: Why the blocksize limit keeps Bitcoin free and decentralized - page 6. (Read 15201 times)

jdillon, tbvconf and others: Thank you!

FWIW As it stands at I've gotten about $5750 worth of donations for the video, including the initial $3000 committed prior to making it, so I'm only about $1250 away from breaking even. I knew going into the project that I was taking a big risk, but in the end it's all worked out.

Again, thank you!

Someday people are going to look at 1 MB like they do a 1 KB. Keeping it at that arbitrary size doesn't help anybody. I'm sure there is a decent algorithm that will allow for an increasing sized block without it ruining bitcoin's decentralization.

Furthermore, I still don't understand why full nodes don't receive some compensation? Why only miners?

the central premise is true, 1MB is the just about the limit for mining bitcoin under TOR.
not sure why we need to have minners run under TOR tho... its not like mining bitcoin is illegal

in any case their idea of a central processor is good for another reason, it would solve the need to wait for 6 confirmations problem.

these seem like technical limitations that should be overcome given time and moores law, eg a120 GB a month internet account is not that much these days...and the speed is pretty good...many times faster than it used to be

there may be some innovations in the software that help as well

I am unconvinced about the central premise

their theory is that mining will require too much bandwidth if the block size is too high.

pretty soon you'll need a direct connection to the backbone to be able to download the blockchain fast enough, to be able mine. ( or somthing like that? )

this is make it impossible to be an anonymous miner in the network, very few people will be able to be miners, b4 you know it only a handful of miners have control over the network.


their idea is in the right direction, it would be cool if these payment processors could be built in such a way that they do not require trust.

some kind of automated bitcoin payment processing system that is open source and secure.
 not sure if possible... If not you'll need to trust your coins to a central entity to do these off chain TX

i guess, your already doing that when you send BTC to a website like https://www.havelockinvestments.com/ and buy and sell their bitcoin stocks....

music very repetitive gets annoying

hang on why does it become un profitable for miners when say the block size is doubled?

Also as BTC goes up by more usage, then fees become a smaller as a fraction of the BTC and so stay the same in buying power for power and hardware.

what am I missing here?

idk if i like the idea of having to store bitcoin in centralized payment processors aka bitcoin BANK

I just got around to having a peek at the web site now that it has some content.  Cool!

I implore you to 's/stenography/steganography/g' on both the site and in IRC

  http://en.wikipedia.org/wiki/Steganography

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I might clarify that my interest in Bitcoin and my interest in this aspect of Bitcoin is NOT really a reflection of my dis-satisfaction with our mainstream economic systems today.  Unlike many here, I think these are actually working surprisingly well.  My concerns are very much focused on what the landscape looks like tomorrow (figuratively speaking.)  And it is highly political to me.

Distributed crypto-currencies have a very real potential to be disruptive to mainsteam economic systems, and these systems are of extreme value politically.  We're not playing tiddly-winks here.  To be dismissive of the potential for a very significant backlash is unbelievably naive to me.  I would be completely amazed if 'the powers that be' rolled over and played dead as distributed crypto-currency technologies advance unless they have simply no other realistic alternative.  In other word, I expect every chink in the armor to be mercilessly explored.

Whether it's expected to be short-term profitable to enforce the soft limit, or try to break it depends on the fraction of total mining power enforcing the limit, the extra fees earned by breaking it, and the amount of external subsidies and which side these subsidies favor.  But the long-term interests of miners are also very important, and they clearly favor miners on the side of enforcing the soft limit in order to protect against bloat and to prevent any race to the bottom in fees, both of which lower future profitability.

So if the soft limit is set too low, then miners will have a strong short-term incentive to "break the cartel" in order to earn some extra money, and if it's too high, their longer-term interests will kick in in order to raise future profitability.  A balance would almost certainly be struck between these competing interests.

I don't think such consensus will be reached. Any rational miner would want to extend previous block, even if bigger than soft limit, because clients already accepted it and by mining it he gets less probability of being orphaned. And rouge miner could event put some bribe in his block to further encourage to mine on it.

I think you're misunderstanding the difference between the current hard limit, and the proposed soft limit.  A hard limit is where every node, mining or not, rejects a block for being oversized.  A soft limit is where miners converge on an appropriate limit amongst themselves, and non-mining nodes are fine with it being broken.  A soft limit is relatively easily changed, only requiring a large fraction of miners be on board, but a hard limit requires the entire network to switch in unison.  Much more difficult.

Gold has about the same usefulness to people as does lead.  Yet it has a vastly higher value.  Why?  Because people have confidence in it.  It is distinctly NOT because it is good for transactions and it is very rarely used for doing so these days.

And Bitcoin is actually kind of a crappy transactional currency IMO.  It's got a lot of latency, some real questions about scalability, and some enormous privacy issues.  I'm almost certain that we'll be seeing solutions which eclipse Bitcoin in term of ability to support exchange functions for low-value transactions.  If that is the niche which Bitcoin targets I have very limited confidence that it will ultimately be competitive in that role.

We either drop max size and then such block is valid or don't drop it so every miner refuses to accept such blocks. Can't have both.

Miners can prevent these kinds of attacks with soft limits, i.e. collectively refusing to build upon blocks that are "too large".

Bitcoin can't really drop block size limit. If it does you can easily dos blockchain by mining extremely large block with lots of small bogus transactions. How about 1 GB block or more? If miner succeeds network must transfer it and keep his work in blockchain forever. Minimum fees won't really work because miner will collect all fees from his block anyway.

But would it be worth it for the rest of the world? Again, just my opinion, but I think losing the ability to make a global transaction, that every other node in the world accepts, with transaction fees of 1 cent, would be more costly in terms of loss of Bitcoin's appeal to the average person than losing the ability to run a full node on an average PC.


I agree that block rewards are important, but there can be other ways of ensuring there are a lot of transaction fees other than having a 1 MB block size limit.


Fair enough. I personally am willing to see Bitcoin lose some of its ad-hocness in exchange for being able to use it any where in the world, which I think becomes much less likely if transactions are limited to 7 per second.




To explain why I think relying on third party payment processors is what would end up making the BTC-economy look like the modern banking system, and why I think it would be very un-adhoc-like if these third party payment processors were to handle global-scale transaction volume, I'll explain how I imagine it will work:

You have a merchant who wants to accept BTC payments. He can't accept them through the Bitcoin network, because transaction fees are $20, so he needs a payment processor. This isn't a removed payment processor like BitPay that simply receives BTC payments from customers and converts it to fiat for the merchant the same day.

The payment processor would need to accept BTC-credit from a customer, and then hold it in an account on behalf of the merchant or sell it to a party that would be willing to buy that BTC-credit, and deposit fiat in the merchant's bank account.

Accepting BTC-credit is not a simple thing. It means having to be able to trust the BTC-bank that the customer has BTC-credit with. The payment processor won't just trust any fly-by-night BTC-bank, since it hasn't proven itself trustworthy.

More likely, there will be a network of trusted BTC-banks, that have trust-based relationships with each other, and use a centralized clearing house, like modern banks do, to settle their debts at the end of each day with on-chain transactions.

Parties who can't join this centralized clearing house, because of their size, or regulations, or any number of reasons that people are currently locked out of the modern banking system, are effectively locked out of the BTC-economy.

Merchants can't accept their credit, because the payment processor they use doesn't accept the credit of any BTC-bank that doesn't participate in the same payment clearing network as them.

The competitive advantage of the parties that have large user bases, or are members of networks with a large number of members, would be too great for outside competitors to overcome, leading to a very centralized and static BTC-economy. It would be just like Visa/Mastercard, or the bank payment systems, like CHIPS.

Regarding the current banking system being a "fully automated p2p solution", this is not true at all. The current banking system is based on contractual relationships that require trust and regulatory access. A fully automated p2p solution has no contracts and every thing is done through protocol.

If a node in a p2p network goes down, no one loses their money, because it's a distributed p2p network where there are thousands of other nodes that store the same information. They communicate through the internet, and form a global network. Setting up a node is only a technical process, with no trust-based relationships required. As long as you have the bandwidth and hard drive space, you are equal in standing to every other node.


True enough. We should not assume Nakamoto was omniscient, and we should be able to change plans that he put in place.

I'm bringing this up though because we're talking about the vision for Bitcoin, since you said removing the 1 MB block size would go against your vision for Bitcoin. I think if we're going to have to decide between which vision to accept, those who want to keep the original vision start out with a stronger say than those who want to change it. Making what was planned to be a temporary block size limit into a permanent one should only be accepted if there is a strong consensus for it, not the other way around.


Very good point.

Not like gold. Bitcoin doesn't have value other than being good transaction system while gold does.
Moreover bitcoin security is directly proportional to miners revenue and revenue is proportional to transaction volume (after subsidy ends) so you cannot store to much value in it in relation to transaction volume.