Topic: New video: Why the blocksize limit keeps Bitcoin free and decentralized - page 8. (Read 15201 times)

Just saying this doesn't make it true.  Can you actually answer any of my questions?

This regulation FUD is a complete canard, being pushed by investors with obvious agendas.  Quite frankly, I'm shocked that some of you are naive enough to fall for it.  Entangling Bitcoin with the existing financial system, and all the baggage that entails, would be the beginning of the end.

Perhaps Bitcoin can be shutdown within a country.  If so, it's their loss.  Perhaps Bitcoin could be completely destroyed by a motivated attacker that doesn't care about the costs.  This is widely recognized.  But regulated and micromanaged at such a level?  Give me a break.  They can't even keep banks from laundering billions in drug money.

What "healthy and active solution of off-chain activity"? All off-chain activity occurs on centralized third party payment processors that you have to trust your coins with.

People seem to be convincing themselves that there is some awesome off-chain solution that doesn't exist. The only secure decentralized off-the-chain solution I know of is payment channels between two parties using lock-time that allow for fee-free micropayments, but this is only useful in a small percentage of transactions, where you have an ongoing financial relationship with someone, and since it still requires the creation of one on-chain transaction to set up the secure payment channel, with $20 fees, it would be almost useless.

This leaves relying on third party payment processors. With $20 fees for on-chain transaction, it would be expensive to get your coins out once you have transferred them to a third party off-chain processor. It's not like it is now, where you can easily get your coins out once you've deposited them at some website.

To avoid high fees, the coins will have to stay within a network of payment processors that have trust-based relationship with each other. They might settle the debts they have with each other at the end of each business day with large on-chain transfers, much like modern banks that use CHIPS.

It would be MUCH EASIER for a government to attack a large payment processor than a high bandwidth/hash-rate node. A node is mobile: it simply needs to connect to the internet to be active. A payment processor needs to rebuild those trust-based relationships with other major payment processors to be useful, so once it's shut down, it would take BTC a long time to repair.

The shut-down would be especially damaging to BTC because it would cost the many account holders $20 each to get their coins out. It's more likely that payment processors will transform into banks, in which case BTC will be just another type of bank credit, that's expensive to transfer and is closed in by all types of bureaucratic walls.

A solution that leads to a limit of 7 peer-to-peer transactions per second and $20 transaction fees is not a good one.

The video is too extreme for my taste. Obviously, a 2MB or 4MB block size limit will not kill bitcoin. I still applaud the author for pointing out the problem!

The basic idea is extremely sound: the block size limit needs to always be kept relatively small and increased only when there is actual transaction demand (not SatoshiDice). Running a full network node should not be too expensive and should stay available to hobbyists. This would keep bitcoin free and open, which is what we all want!

Very nice video, and another point did not mentioned in the video, if you change the block size limit, you will split the blockchain into two fork and cause lots of confusion

I always prefer speed over functionality when it comes to software, the functionality can always be done at user level with many local adaptation, good for scalability, good for a robust infrastructure

Like I've said before, a healthy and active solution of off-chain activity would provide the necessary user numbers to give the protection you (supposedly) seek.  Any regulatory attacks are going to be a broad enough brushes to impact all such economic activity.  You seemed to have no answer for that.

I also said back in 2011 that a viable way to attack Bitcoin might actually be to either leave it alone or foster it's growth and let it burn itself out (or mutate away it's peer2peer nature) due to uncontrolled growth.  The relative lack of molestation and surprisingly positive media attention that allowed/facilitated growth over the last few years makes me wonder if that was not a course of action chosen.  The likes of Chuck Schumer have been interestingly mum since their initial burst of verbal diarrhea.

Again, I see a light and highly distributed core value system with a myriad of off-chain solutions of different postures as being a pretty hard whack-a-mole problem to attack on a sustained basis.  Which is why it appeals to me.


I don't see it as crippling in the least.  Nor do I see a lack of room to grow at our current settings.  On the other hand, the fantasies of a one-world currency that are everything to everyone are almost certain to end in tears as I see it.

Ding, ding, ding.  Hobbling Bitcoin transactions and mining over Tor is such a ridiculous solution that only those working for the "good guys" could suggest it with a straight face.

+1

Videos argument is irrelevant because ASICS and the ever growing size of the block-chain, indeed the very nature of PoW will inevitably centralize all mining regardless of block-size.  Fundamental nature of BTC implementation lead to centralization and simply demanding that nothing change will not prevent that, the rules of the protocol constitute an unstoppable force or 'invisible hand' so to speak.

Yes, it's technically feasible. The thought is that the attacker (presumably a large government, or group of governments) would make laws forcing miners in their jurisdiction to follow their rules, not Satoshi's. The idea is then that if miners are able to operate anonymously we'd have a defence, because they'd all just hide behind Tor and the government couldn't get them because it wouldn't know who they were.

The problems with the defence are:

1) It's not enough for the miners to be _able_ to duck behind Tor and hide under the radar rather than comply they also need to be _incentivized_ to go off the radar. There would still be a chance that they'd get found out. ("With an electricity bill like that you're either mining bitcoins or growing weed, let's search your house and find out which...") Better to comply rather than risk going to prison.

2) Small-scale anonymous miners still have to out-compete miners who are working out in the open, which they can't do any more because Bitcoin mining is too capital-intensive, regardless of what you do with the block size. (See my previous post.)

3) The attacker wouldn't have to use coercion. They could use bribery instead. Anonymity doesn't help with that, because thanks to Bitcoin, you can bribe people anonymously. Decentralization doesn't really help either; If anything it makes it worse, because smaller miners have less to lose if their actions reduce the value of Bitcoin compared to the amount they stand to gain.

4) If all that failed, the attacker could just set up the mining infrastructure themselves. It's expensive to set up, but you make up for it in mining revenue. They have access to cheaper capital than the private sector, so they could probably just out-compete the non-compliant miners and drive them out of business. If they weren't able to operate as efficiently they'd need a subsidy, but only enough to cover the difference between their inefficient operation and the efficient private-sector operations, plus a little bit extra to make sure they wiped out their competitors' profit margins.

All this makes me think that the chances of the Tor defence being both necessary and sufficient are pretty minimal. On the other side of the equation, throttling the network and forcing transaction costs up takes away one really effective defence Bitcoin has against hostile government activity, which is the ability to take the world's payment systems hostage so that the government can't shoot it without hitting something it cares about. This is done by getting loads of businesses and non-profits using Bitcoin, right on the block-chain, so that everybody depends on Bitcoin and will stop their donations to any politician who messes with it.

In fact, if you were a representative of a hostile government or somebody trying to protect the legacy banking system, I think the most effective move you could make right now would be to make a video trying to persuade the Bitcoin community to cripple their own currency by throttling it at 7 transactions per second...

I see.  So you think such a blacklist is technically feasible?  How often would it need to be updated, in order to be effective?  How could it be enforced, unless the authority in question controls 51% of the network?

And, in the other case, all it takes to evade such regulation is access to a single miner somewhere in a region that is friendly to Bitcoin.  We can pretty much assume that will always exist, in one form or another, for the few who need it.

That "small markup" has to cover delivery, support, returns and the cost and risk of holding stock, because sales won't be predictable, plus the distributor's profit margin. Someone paying wholesale prices has a huge competitive advantage over someone paying retail.


What proportion of people currently running ASICs do you think are running on somebody else's "free" electricity? Realistically, Bitcoin mining is now becoming capital-intensive, so the network isn't going to be mainly powered by people using it as a roundabout way to steal money from their parents.


There are some datacenter designs that trap the heat and use it for something useful - the classic one is colocating a datacenter and a swimming pool. In practice these have tended to have the same problem as doing this at home, namely that the logistics of putting everything in the right place and getting it running at the right time tend to outweigh the saving. This is particularly true if, like most of the places where humans live, your house is sometimes too hot instead of too cold, because you have to either idle your (expensive, fast-depreciating) hardware or eat the opposite cost of cooling, which will be much worse than a datacenter because your house was designed for living in, not getting rid of server heat.

Before we had GPU mining, then ASICs, this was sort-of feasible: You just need to run software on hardware that you already have, and since there's no capital cost it doesn't matter if you only run it some of the time. But once the hardware started becoming specialized and capital-intensive, as it inevitably did, mining was always going to move out of people's bedrooms and move towards getting done by professionals.

Edit to add:

Some people have made alt-coins that try to come up with proof-of-work schemes that are more resistant to capital-intensive, specialized hardware, and therefore resist the economic tendency to industrialization -> centralization (oligopolization?). IMHO if the OP's that worried about centralization he'd be better off working on one of those, and making clear from the start that _that_ will have a limited block size, probably smaller than 1MB. But it needs doing from the ground up, starting with the proof-of-work scheme - if it still uses proof-of-work.

Right now he's trying to stop people putting petrol in the car for fear of making it too heavy to fly, but his efforts are wrongly directed because there are much more serious problems in getting this particular car to fly, starting with the fact that it doesn't have any wings.

If the discrepancy was really that huge than surely some enterprising entrepreneur would capitalize on this opportunity by purchasing in bulk and redistributing individual units for a small mark up.


i think this is the opposite of the truth. many small scale miners have free electricity for mining as in land lords or parents dont notice a few extra watts.


This also is wrong i think. The heat given off by a single unit is an asset to many people in helping to heat their house, with 1000 units that same heat that used to be an asset becomes a huge liability. A single unit costs you nothing in storage if you happen to have a little free space in your room, storing 1000 units would be extremely costly.

I read the thread but didn't find an answer to the question, was it posted somewhere else e.g. dev mailing list?

I'm a bit puzzled why the people behind this video think that the _blocksize_ of all things is going to be the thing that pushes small miners out of business. Bitcoin mining is a simple, commodity business with serious economies of scale. Specifically:

* Buying 10,000 ASICs will cost you substantially less than 10,000x the price of buying 1 ASIC.
* A commercial customer buying a lot of electricity in volume will pay substantially less per kWh than a domestic customer buying a little bit.
* Setting up, monitoring and maintaining 10,000 identically-configured boxes will cost you orders of magnitude less than 10,000x the cost of setting up and running 1 box.

Bitcoin is designed to make mining a competitive market, so as more efficient miners show up, less efficient miners will constantly be finding that they can't operate at a profit and forced to close. The network connection for transmitting the blocks is a completely trivial factor compared to the raw economics involved in buying hardware and operating it to turn electricity into hash power more cheaply than anyone else.

Centralization of mining power may turn out to be a serious problem, but if it is, it's a fundamental problem with the Bitcoin design, not something that you can prevent by throttling the network to 7 transactions per second. The only way throttling the network might help would be if it kills Bitcoin's growth and makes mining so unprofitable that only hobbyists bother with it.

I hear you, and agree completely. There are different visions for Bitcoin, some people are happy with a niche off-grid currency/payments system, some (more?) people are keen to see Bitcoin achieve greater goals, a global system which makes existing fiat currencies and card companies all but obsolete. Leaving those visions aside however there is indeed a middle ground on the block size issue between no-change and infinite blocks. I have always considered an algorithmic increase keeping ahead of demand as the conservative option.


Anecdotal evidence like this is helpful, but surely we can do better. This is the nub of the argument about Peter's video. He makes no attempt whatsoever to provide a numerical measurement of decentralization before and after 1MB average block sizes occur. Perhaps nodes should be able to issue query responses which contain information about their transaction handling capacity.


In Peter's vision of the future those centralized solutions will all be Fidelity-bonded (Chaum-trusted) banks.
https://bitcointalksearch.org/topic/fidelity-bonded-banks-decentralized-auditable-private-off-chain-payments-146307

While I think the idea of them is very good, they must take market share of transactions on their own merits, not because Bitcoin is deliberately crippled.

At the same time, it's a video made in an environment where some people are saying that it would be totally fine to _completely_ uncap it or leave it up to some hash-power majority— some even going so far as arguing that people who urge caution have dishonest motivations.  It's outright toxic at times.
(I'd provide some citations— they're easy enough to find... but I think it might be a little unfair because in places where the debate has become heated some people have made arguments that I don't think they would have made outside of the heat of the argument, and I don't think they ought to be held personally accountable for them... the fact that the discussion goes acrimonious so easily is problematic, not the people)

I'm personally suffering some conflict over the "controversy" making needless drama and the fear that the video exaggerates some points while at the same time feeling thankfulness that someone has taken an extreme position that moves the middle and maybe makes thoughtful dialog _easier_  because careful discussion about the very real tradeoffs might suffer less from people blowing it off saying its a non-issue.  If you want to argue it's a non-issue, first you must duke it out with the one-meggers. In the mean time, people who want to think instead of fight are free to find the middle path.  I was also happy to see that the website linked from the video seemed to have a more even handed presentation.

I certainly think the nuance here is far more easily explained as a tension between two completely legitimate engineering objectives which we— as a community— have to carefully compromise over, rather than just some right vs wrong binary question of "is a bigger blocksize bad".

From one perspective— bitcoin as an unstoppable, unregulatable, absolutely trustworthy egold—  practically any block size is bad... smaller is pretty much always better. People are already using SPV wallets in large numbers because of the current cost of validating the chain, people are choosing centeralized pools over P2pool because of the cost of dealing with the chain. There is no doubt in my mind that this is already hurting the decentralization of the system to an unacceptable degree: Hacking or kidnapping just _two_ people (or hacking one and DOS attacking one or two others) is enough to do enormous chain rewrites right now. For untrusted high value transaction people should be waiting 10-20 confirmations now— or more: ASIC miner claims plans to have a signficant multiple of the whole network's hash rate in a few months: What if they already have it now?   Centralization creeps in easily, and it really undermines our security model... but at least being fully decenteralized is still _possible_, the centralization we see now is an artifact of the path of least resistance rather than a requirement at our scaling level.

And at the same time— from another perspective— Bitcoin as practical unit for common every days payment cheaply available to as many people as possible— practically any block size restriction is bad. It's also completely clear to me that transaction costs— even insubstantial ones— have already turned some people off from using Bitcoin. A tiny sub-bitcent fee is _infinitely_ worse than zero by some metrics. If we can first just accept that each of these views are valid conclusions from different objectives for the system... then after that we can have a polite discussion about where on the compromise spectrum the system will delivers the best value to the most people.

An interesting question that this begs is how do we measure the decentralization impact. Right now the best I have is basically a "gmaxwell-test"— what is my personal willingness to run a node given a certain set of requirements? Given that I'm an exceptional sample in many regards— including having hundreds of cores and tens of terabytes of storage— at home, if some scale level would dissuade me it's probably a problem.  Whatever qualities or flaws that criteria might have as an engineering objective, though, one way that it completely fails is that its not persuasive for other people. It doesn't form arguments that can act as a consensus mechanism, excepting insofar is that other people might apply their personal version of it and get the same results that I do.

retep, with your design, no more then 5 payment processors will have 80% share of all bitcoin transactions because this is how things work, you can take the clue practically from any other global market consolidation. So what is the point of having decentralized validation system if a user has to choose between 5 centralized solutions to make a transaction?

EDIT: just realized that some people may not understand the consequences. It will be super easy to regulate those payment processors and enforce arbitrary rules about what people can or can't do with their money.

gmaxwell, it is always a relief to read your level-headed analysis of a problem after a serious amount of arm-waving and hyperbole.

The video is completely dishonest from the point where data-centers is mentioned. It makes the false case that up to 1MB blocks allow for decentralization and anything larger needs PayPal-like server farms for each node. It may be that the network would hum along fine with 2MB or 5MB blocks right now. We just don't know.

If Peter Todd had run NASA's Apollo space program no astronauts would ever have landed on the moon because they would still be doing Earth orbit missions, tinkering with the technology.

What is desperately needed is software that scans the Bitcoin network and provides metrics of exactly how much decentralization exists (by what ever measurement is sensible, such as propagating node-hours up-time) and plot this against average block size. Blocks are now about 0.18 MB each, so there is still time to gather stats and project how much fall-off (if any) occurs at values above 1.

I think you're mistaking the kind of anonymity being talked about here.  Say some random authority wants to force miners to only mine transactions that the authority approves of and not mine any that match some kind of blacklist, and to not extend any chains that contain violations of these rules.  If successful this would substantially undermine the purpose and goals of Bitcoin.

If it is easy to mine with relatively high anonymity— if you can validate on a single high performance server with a commodity consumer grade broadband connection and announce over tor or some other anonymity network— it would be difficult to impose such a criteria: too many miners would disappear into the mists if you tried, and so there would be no reason to try. If, instead, running a _validating_ node (much less a miner) requires a rack of expensive equipment and a multi-gigabit network connection that is far less clearly the case.

If you're concerned about anonymity, then above all you want as many people using Bitcoin for as many transactions as possible.  The weak link in maintaining anonymity will always be the person you are sending Bitcoins to.  If you're the only person who sent him Bitcoins this week, or this month, or if you're the only person who uses Bitcoin in your neighborhood, then you're not remotely anonymous.