Bitcoin Forum

When Satoshi Nakamoto first proposed Bitcoin, the first public criticism it received was around its scalability potential. Fast forward to 2021, and according to many supporters and doubters, scalability is still Bitcoin's biggest problem.

However, with the rise of institutional interest and technology, a solution to the above-mentioned problems was proposed, called the Lightning Network.
The Lightning Network solves the scalability of Bitcoin as a secure off-chain settlement. Why not fix Bitcoin directly?

You mean fixing on-chain scalability? Increasing the size of the blocks was also proposed before by Roger and CSW group but it was rejected. Instead, Segwit was implemented to help improve network scalability and reducing fees.

I'm not a developer (not even close) but I understand that improving scalability of a blockchain without compromising its security and decentralization will be difficult.

not that simple. Bitcoin is not just a payment network, nor is it about creating a fast payment channel.

You mean in the first layer?

The whole scalability problem has been discussed a million times in this forum. If you increase the block size, you'll make people pay less in fees, but hard to retain the decentralization. It turns out that the lightning network is, indeed, the greatest and most practical solution. Instead of fulling all those computers' hard drive with unnecessary transactions, you're just broadcasting the final balance.

Advantages:

• Better privacy. A blockchain analyzer can't track down your routed transactions.
• Instant confirmation. (no need to wait for transaction inclusion into a block)
• Nearly zero fees.

Segwit is in effect a block size increase in a manner that ensures older clients are still functional.
Block size is a tradeoff between security and scalability, with the security factor decreasing as time goes by due to the far more efficient network. It is incorrect to say that we will be far worse off in terms of security and decentralization given a block size increase.

If you want Bitcoin to scale, you need a block size increase in conjunction with a 2nd layer payment network. You have to initiate the channels, in LN with an on-chain transaction and an on-chain transaction to close the channel as well. You cannot accommodate for those without having to increase the block size or make transactions more efficient.

The problem with solely increasing block size alone is that it is not a panacea for the scalability problem. You cannot increase the block size to compete with the next best payment processor. There is a limit till block size becomes excessively large and it won't be feasible to do so then. ECDSA signatures has to occupy that much space in a transaction while data compression is possible, I doubt it would be able to truncate the data to that extent.

The Lightning Network FAQ (https://bitcointalk.org/index.php?topic=5158920.0) - I think the best place to go and discuss Lightning Network pros and cons. In simple words LN is just a second layer solution with limitations. Its impossible to force everyone to use it. Its adoption grows slowly but it does not depend on devs.

If we talking about first layers solutions ... there is no (and most likely will never be) a solution that will scale BTC to the VISA performance without losing decentralization.

It depends on what you mean by "fix". There is no magical solution that can solve everything and still keep the principles of bitcoin intact. For example one fix is to easily change how blocks work and centralize bitcoin similar to something like VISA and handle an enormous number of transactions but nobody would want that.
We can improve the capacity, compress transactions so that they take up less space and even increase the block size with a hard fork but none of them will ever "fix" anything, they will just improve the scaling.

I thought the first public criticism was the "anonymity" which of course later on people understood to be pseudo anonymous only,,, and all those Silk Road people who got caught finally understood this truly well:)

But anyway scalability is not Bitcoin's biggest problem but privacy still is (which is why the big important progress was taproot).

Segwit directly fixed Bitcoin and LN also,,, I do not see the point of asking?:)

SegWit didn't really fix Bitcoin, it's still struggling to cope with the large amounts of transactions years later and this means even the SW upgrade wasn't enough to fix its scalability problems. Bitcoin definitely still has some issues either a proper solution hasn't been found yet for or BTC supporters are way too strict about upgrades to accept the idea that a change could be more beneficial for its future.

I don't know the technical stuff but I think there's some problem in the LN that many users don't find good. Also, you needn't worry about this things, LN is already here, let's just wait for people to accept it like how we are waiting for a global adoption, this kind of thing takes time.

its been explained a million times that if you coerce people to lock funds up for 3 months and not make any transaction onchain... they no longer need to actively have a fullnode because they no longer care about what happens onchain because the lock is doing its job

people using LN are not carrying their desktop pc to starbucks to monitor the blockchain. they are using phone apps. meaning again. not having a full node active

thus LN causes less decentralisation as in the end the only fullnodes left become the custodial services and 'factory' services of LN

disadvatages
LN's 'gossip' reveals more info then you realise. every new commitment updates the status of the channels. which the network get to hear.

• you CAN piece together the payments by seeing the updates update
• payments are instant handshaked. but not confirmed. its not guaranteed until its on the blockchain
• because of onchain fee's unless your routes have high capacity. they charge a noticable amount. and the more hops away from the destination the more you pay
• payment succes rate is not 100% or guaranteed. its ok for niche small things like bubblegum but even something for pizza amounts can fail. presently 50% of the network has only upto $200 liquidity. but some routes already have most of that 'spent'

i got nothing against niche networks or services that offer things for niche use. but LN is not a solution
LN is not even a feature dedicated just to bitcoin

a proper bitcoin solution. involves evolving BITCOIN not other networks to coerce people away from bitcoin

in short
the solution to scaling bitcoin is not guiding people to use bitcoin less by converting them into other network/coin/token users

as that just 'solution to scaling american patriots= migrate patriots out of america so that there is more room in america.. without building any more houses'
and no. getting patriots to love mexico is not a american patriot scaling solution

Just as mentioned above, as far as I can remember, most criticism is about the difficult onboarding process, the "less decentralized" structure, and the lack of support so it is not a viable solution. Well, as you mentioned, we solve most of them with time and more individual adoption, especially opening new channels etc. This is just the nature of decentralized tech, implementation happens quite slowly most of the time, especially if everyone does not agree on it.

Any fix  usually brings its problems and increasing the block size and compressing transactions come with their own drawbacks that currently are not worth it. There might come a time where we need* to do both of those things that right now there is no urgent need. I think currently the developers are probably looking at other ways to improve the issues of Bitcoin and will take the solution with the least drawbacks.

If you compare Bitcoin with VISA or any other fiat card processor Bitcoin will always be slower but that does not mean its a bad thing. The reason why it is slower is because Bitcoin is a lot more secure because the miners process the transaction and check it so that it is valid. Once it is confirmed there is no reversing that transaction but in fiat card processors you can chargeback which is a major drawback in my opinion.

the question assumes that there is something to fix - and i think the blockchain trilemma is not solved (even though some projects claim that, they haven't provided anything tangible - correct me if i am wrong). as long as we assume that you can't have scaling, security and decentralization in the base layer, there is nothing to fix

in short. this guy is bitten the altnet apple and saying that bitcoin is broke beyond repair so give up trying
(facepalm)

there is no technical reason to not have let onchain scale periodically from years ago.. it has all been political to stop scaling onchain.
its a human problem not an IT problem

humans that want to promote other networks as the go-to place for users

segwit allows blocks to bloat in data size but has not offered a transaction count increase
we are still bottlenecking at about 2500tx a blockmax.. ~1500average.
https://api.blockchain.info/charts/preview/n-transactions-per-block.png?timespan=all&h=405&w=720

segwit/altnets are not BITCOIN SCALING solutions.
they are off-ramping utility to avoid the need to scale bitcoin

segwits actual purpose is a gateway tx format to allow people to use other networks. thus removing people from using bitcoin.

a solution to scale america is not to evacuate americans

scaling america is not where its made to be more expensive to live in america thus ending up in a timeshare situation where people can only afford to use america 1 day a year

in short. making america a tourist country and removing it as a citizen homeland. is not a solution to making bitcoin the best homeland for citizens

you are twisting the facts.
scaling is not about number of transactions per block but about the capacity of the blocks and segwit did increase that capacity which is also a block size increase.

one of the main reasons why the chart you keep posting looks like this is that a lot of big businesses that used to spam the blockchain with transactions paying 1 person started merging their payments together and pay multiple at a time.
obviously now the same block that used to contain 100 transactions from an exchange paying 100 users now contains 1 transaction paying 100 users. this increases the transaction size but decreases the total tx per block.

If you were to directly relate capacity to actual transaction count, then it isn't accurate.

As you said, Segwit allows blocks to be bigger. Let's compare, if we were to have a full SW block full of 1-to-1 P2WPKH TXes and a full legacy block full of 1-to-1 P2PKH TXes, which of them would have a larger transaction count? Of course, both adhering to their own rules.

What makes you think that people will shut down their existing full nodes (think the ones that are active on Bitnodes right now) to run an LN channel? If anything, it's going to be the new users who only run LN channels, not OG's who were already running full nodes before mass LN channel creation by other users.

i am an OG in 2012-2015 i was fullnode 24-7. but then as the scaling debates heated up and the merchants accepting btc direct started decreasing.. i started to realise i was not doing many payments a day/week.
now i just run a full node now and again..

only the custodial services and merchants would remain full noders 24/7/365.

again custodians and SERVICES that centralise liquidity and have customers. would be the full nodes
but USERs that just want to spend their value will lock up their funds. and then play around on litewallet phone apps.. why.. because carrying around a desktop for the full node is heavy. the locks mean no need to monitor the blockchain every minute. and not spending funds on chain mean no need to watch the blockchain for new income all the time. so people will see no point in downloading something they are not using hourly/daily.

so here is the question reversed onto you
newbie average joe just getting into crypto why would they go full node? if they are being told the way forward is microchannel altnets

think about it. most exchanges will offer channel opening facility with balance instead of withdrawing to a mainnet. to then lock to then open a channel...
so most new users will just do that for convenience and most exchanges would sway users into that convenient way.

so ask yourself who would choose to start a full node when all the utopian altnetters are pushing hard telling people to not use bitcoins main net

reducing the mainnet daily utility means people wont use or full node bitcoin daily. its simple logic


oh and i just done a quick search on bitnodes -
your request to run the scenario out of bitnodes list of nodes..
soo i did
seen the number of nodes.. and they are listed by most recently seen
clicked the US and seen the 37 pages of listings. i went to the middle page 18

and would you guess it. half the US nodes have only been online for 6 days
https://bitnodes.io/nodes/?page=18&q=United%20States.. not weeks or months. just 6 days

heck. i checked page 37.. the longest any of its nodes were connected is 2 weeks
https://bitnodes.io/nodes/?page=37&q=United%20States

i can spot a few issues. which is why maybe best not for you to use bitnodes as a scenario(their OG age is 2weeks, thus not favouring the scenario in your favour from the start)

To reverse the question back onto you why did you decide to run a node when you were a newbie? There is not many incentives to run a node other than to contribute to the security of the network and people still do it. While I do think it would probably be moved over to exchanges offering channels like you say but I think there will still be an appeal of users of Bitcoin doing it too just because they would be doing it themselves and not a third party.

back then there were no lite wallets. it was either store funds in an exchange (stupid idea) or use something like blockchain.info (back then they had bugs) or for best privkey storage and security. be a full node
there were no ledger devices, no phone apps

so the main option was to be a full node.

but now people dont need to be. most just use phone apps and ledger devices.

Lets say you are new and you just got into Bitcoin with all the additional options available would you choose one of those over running a node yourself? I feel like you are saying people would choose the easiest option but I would prefer to run my own node and I am sure that you would too. Its not like you have made the change and are now using something else.

actually i do use my own home-made lite wallet aswell.. its just a transaction creator and pusher to the network.

point is.
think common sense, logic and practical real life
if someone is new to bitcoin. well lets use paypal..
if paypal offered their own lite free app. or a desktop software that required days to download data. and wasnt great at just letting you just make a transaction from the first 10 minutes.. would you prefer the lengthy way.

yes being a full node has some security. but practically average joe(non nerds) wont care about the technical bits. they just want to get on and spend

Any changes in the functionality of bitcoin are now very difficult to implement in practice, even if the need for such changes is obvious. Bitcoin does not have its own cohesive team, as, for example, in ethereum. It is very difficult for his disparate groups to come to a consensus. This makes it very difficult to update. There have been many attempts to increase the scalability of bitcoin. However, this has not led to anything yet.