Topic: New video: Why the blocksize limit keeps Bitcoin free and decentralized - page 9. (Read 15218 times)

The important point of this is recognizing there is a set of engineering tradeoffs here.

Too big and everyone can transact but the transactions are worthless because no one can validate— basically that gives us what we have with the dollar.

Too small and everyone can validate but the validation is worthless because no one can transact— this is what you have when you try to use real physical gold online or similar.

The definition of too big / too small is a subtle trade-off that depends on a lot of things like the current capability of technology.  Retep added to my thinking on this by pointing out that anonymization technology lags the already slow bandwidth scaling we see in the broader thinking, and the ability to potentially anonymize all Bitcoin activity is protective against certain failure scenarios.

My general preference is to error towards being more decentralized. There are three reasons for this:

(1) We can build a multitude of systems of different kinds— decentralized and centralized ones— on top of a strongly decenteralized system but we can't really build something more decentralized on top of something which is less decentralized.  The core of Bitcoin sets the maximum amount of decentralization possible in our ecosystem.

(2) Decentralization is what makes what we're doing unique and valuable compared to the alternatives. If decentralization is not very important to you... you'd likely already be much happier with the USD and paypal.

(3) Regardless of the block size we need to have robust alternatives for transacting in BTC in order to improve privacy, instant confirmation, lower costs for low value transactions, permit very tiny femtopayments, and to (optionally!) better support reversible transactions. ... and once we do the global blockchain throughput rate is less of an issue: Instead of a limit of how many transactions can be done it becomes a factor that controls how costly the alternatives are allowed to be at worst, and a factor in how often people need to depend on external (usually less secure) systems.

...and also because I think it's easier to fix if you've gone too small and need to increase it, vs gone too large and shut out the general public from the validation process and handed it over to large entities.

All that said, I do cringe just a little at the over-simplification of the video...  and worry a bit that in a couple years it will be clear that 2mb or 10mb or whatever is totally safe relative to all concerns— perhaps even mobile devices with tor could be full nodes with 10mb blocks on the internet of 2023, and by then there may be plenty of transaction volume to keep fees high enough to support security—  and maybe some people will be dogmatically promoting a 1MB limit because they walked away from the video thinking that 1MB is a magic number rather than today's conservative trade-off.  200,000 - 500,000 transactions per day is a good start, indeed, but I'd certainly like to see Bitcoin doing more in the future.  ... But I suppose the community can work on educating people about that them with concrete demonstrations.  Thing like bg002h's suggestion of a maxed out testnet would be interesting in establishing exactly what the scaling limits of current technology are.

A testnet mega workout would be helpful.   I'm running a testnet node on consumer level (but decent) hardware on a decent (but home based) internet connection.  Perhaps we could all offer our computers to the devs to run a stress test on testnet?  We could try block sizes of 1-100 mb and see how it goes.

i think developing off-chain transaction technology is very important to bitcoin in the long run. however, until that is done, increasing the block size limit is still the only way to move forward. current consumer hardware can handle a lot more than just 1mb.
so encouraging users to support a 1mb limit is imho the wrong way. if we should go beyond 5, 10 or 20mb in the next few years is up to discussion. but staying at 1mb is just not an option. it will massively hamper short-term growth and thats too high a price to pay just to have every c64 be able to run a full node.

Peter, that is a fantastic video. I especially like the emphasis on off-chain transactions.

I would however add one thing at the end...

"And by the way, Litecoin (or other alt-coins like Novacoin) can ALSO be cryptocurrencies with smaller fixed limit blocks, allowing Bitcoin to raise the limit and the free market to appreciate which works best."

"Bitcoin is off the chain!"

Had to say it.

I though that too until I thought more deeply about how important privacy is.


Yes and no.

Off-chain is how the majority of transactions are probably performed on Bitcoin today: all the exchanges are off-chain for internal activity, The Silk Road and every site like it is totally off-chain, and then there's stuff like the recent Russian payment processor now supporting Bitcoin denominated accounts, again, off-chain.

However, the technology to do anything other than simply trust the payment processors is all stuff on paper right now. Some of the tech, like processors signing to prove they actually own the Bitcoins they say they do, is dead obvious that it'll work. The other extreme is stuff like fidelity bonded banks where we don't really know yet. Then you have in-between stuff like trusted hardware that has been used very successfully outside of Bitcoin, think smartcards, but whether that'll actually be seen on Bitcoin is an open question.

Of course, from the FinCEN guidance we've seen they're very against off-chain transactions and will consider it highly regulated. That's a tough hurdle for stuff like BitPay, although for anything underground they don't care one bit.

Really nice site!

The video is really well done. I'm not sure where the tipping point is for the block size to push the little guy out of running a node, but surely it's a lot more than 1MB.

I love the idea of off chain transactions. Is it anything more than an idea at this point though?

Reminds me of those movies where they start out with all this proven science .. Then suddenly go off on a batshit crazy tangent

Ah yes it was called what the bleep do we know

Video: http://www.youtube.com/watch?v=cZp7UGgBR0I

Website: http://keepbitcoinfree.org/

Pretty simple right now, but this is the beginning. For those of you at the 2013 conference, I'll be giving a presentation about off-chain transactions on Saturday as part of the tech stream.