Bitcoin Forum

I watched Gavin's presentation from the San Jose conference (http://www.youtube.com/watch?v=JfF5mJDgZWc) and I learned that it is actually being planed to increase the MAX_BLOCK_SIZE withing new next 10 or 20 months.

Please don't do it.

As I have read it many times before, and I completely agree with it: Bitcoin is not designed for micro-transactions.

The network does not scale, we have a worldwide economic crisis and the Moore's law does not seem to be any longer applicable; our internet connections got stuck at what a DLS's copper can do, and the CPU's also don't seem to be getting the speed as much, as they were 10 years ago.

As an average bitcoin user, but also a developer who understand all the pros and cons behind increasing MAX_BLOCK_SIZE, I beg you: don't do it! Instead, do the other thing that Gavin mentioned in his presentation; implement a proper fee discovery mechanism into the client, so anyone would be able to decide how much fee he needs to pay to have his tx mined withing the next N hours...

Please let the fee market to work. The fees behind the transaction is a great feature invented by Satoshi - don't break it, but get advantage of it instead. They will take the load off the net and the net needs it.

Increasing MAX_BLOCK_SIZE to a larger but reasonable limit will still allow a fee economy and most users will still be able to run a full node.  Personally I believe block size needs to be limited, it just doesn't need to be limited at 1MB.  Raising it to some larger limit (5MB, 10MB, 20MB) would provide "breathing space" and time to develop a more comprehensive strategy for scaling bitcoin.

I think there are lots of differing views on MAX_BLOCK_SIZE and some try to make it binary choice.  These are just the views I have seen expressed:
a) "1MB now, 1MB tomorrow, 1MB forever"
b) Don't raise the limit "now" (where now can be anywhere from this year to next couple years)
c) Raise the limit but don't remove it                                                                                     
d) Remove the cap and hope the "free market" (which Bitcoin mining isn't) adapts without destroying this $1B experiment.
e) Implement some algorithm for raising the blocksize deterministically overtime.

In theory I prefer e over c but it should be discussed, analyzed, peer reviewed, and tested over an extended period of time, thus in the short term I prefer c.  I would also point out that despite the blocksize being 1MB most blocks (even with unconfirmed tx) are much smaller which means major miners are taking a cautious aproach to raising the actual block size they create.


As for low bandwidth residential users what I think really needs to happen is for the "wallet" and "node" functions of bitcoind to be separated*.  This would allow someone to run a full node on a VPS and their local wallet would communicate securely with their node.  The link between nodes won't get any lighter but the link between the user's wallet and their own full node will.  There are also alternatives like electrum, future SPV clients, eWallets, etc but I think the ability for a user to run a full node in the "cloud" and then connect securely to it would be powerful especially as the demands for a full node continue to rise. 


* Yes devs I have looked at the code and refactoring it will be a nightmare but it is something which needs to be done IMHO for a lot of reasons.  I would gladly contribute towards a bounty if someone with extensive knowledge is interested.

Fighting over so few transactions per second as are possible right now is in my opinion too limiting. I would agree to not having 1 TB as MAX_BLOCK_SIZE, but 10-100 MB should be still possible.

A 56k modem can still keep up with ~30 MB blocks. ::)

its not about microtransactions. In a year or two, 1mb wont be enough even for normal commerce with transactions only >10$.


btw the plan is to actually let the market decide the block size, not allow unlimited blocks.

This isn't about microtransactions.  It's about a currency system that is supposed to be global, but can only handle 6 tx/sec.  That's just not enough, even if we somehow limit all transactions to 250B and >10 BTC.

There's no question that blocksize should be limited.  The question is whether 1 MB was the correct answer.  I think the answer is a resounding "no."  Bitcoin can't do what it was supposed to do at 1MB.  All other properties of the system can be maintained with a higher blocksize limit, but Bitcoin can't grow with the current one.

Well said.  To put it into context PayPal is about 50tps.  I think a short term goal of Bitcoin eclipsing PayPal in transaction volume would be a pretty impressive milestone and that would require an average block size of ~10MB and given the transaction volume distribution by hour of the day (hmm maybe interesting to chart that out) that might require a max block size of ~20MB.

Anyone here seem to agree that sooner or later we will get to that point when we will have to say 'enough is enough'.

So why not to just keep this point at the 1MB, as Satoshi originally designed?

If you don't increase MAX_BLOCK_SIZE people will naturally start using BTC payment processors, which will take the load off the net, and which has to eventually happen anyway.

Is Gavin talk available on video?  I saw it at the conference but it might help in the discussion if the OP could link to the talk.

So, propaganda fails.

Again.

worse still, hitting the block size limit early, particularly before the clients start handling fees and pending transactions in a more graceful manner, might severly slow down bitcoin adoption. gavin thinks there is still around 12 month before we hit 1mb blocks. i think thats a very conservative estimation of bitcoin growth. imho, it might well happen within 3-6 months.


plus, current average computers and network connections can easily work with, say, 10mb blocks. there is no real risk or assumptions about future computer capabilities involved. a moderate increase in block size is a safe bet and it doesnt make any judgements about the necessity or viablity of some parallel or overlay technology to limit the number of on-chain transactions and blockchain size long-term.



dont make a practical discussion ideological. 1mb is much lower than necessary and might hurt bitcoin severly in the short term.

http://www.youtube.com/watch?v=JfF5mJDgZWc

Agreed however there is a debate on if 1MB is "enough".  Most people would say it isn't and that likely means "enough" will be moved to a higher number at some point in the future and in some manner.  It would be smarter to focus on the how & when given that an increase eventually is an almost certainty.


Bitcoin was never designed with a 1MB limit initially.  You can check it doesn't exist in the early versions of the source code.  That was added later as a safety limit to prevent an early attacker from massively bloating the blockchain and thus killing off the project.  Imagine if in 2010 there was no block limit you had to download a 5TB blockchain just to start using this experimental currency with very little actual value or use.  Most people wouldn't and the "ecosystem" might have died in the crib.  1MB limited the size of the blockchain to no more than 52GB per year.  High and luckily early volume was much lower but it provided an upper bound while Bitcoin was young.  When the average block has 2 to 8 transactions it doesn't make sense for a single bad actor to add GB worth of transactions to hinder future users.  Bitcoin is far more developed now so it likely is time in the near future to take the training wheels off.


Sure.  However the debate becomes at what point and how much goes off blockchain.  In a perfect world I would say MAX_BLOCK_SIZE should be large enough to allow anyone to run a full node with "reasonable" resources.   Reasonably to be loosely defined as the resources (storage, computational and bandwidth) available to the dedicated user willing to pay for being a peer in a global network (in other words not everyone will be a full node but most "could" be a full node).  Yeah that is a very gray term but it is more important to look at what the MAX_BLOCK_SIZE does conceptually to the idea of centralization:

Lets look at two extremes futures where Bitcoin is massively adopted (say 100x current usage in terms of users, merchants, tx volume both on & off blockchain, etc):
average block size = 1MB.  max annual on blockchain tx volume = ~3.6 million transactions.  tx fees relatively high.  overwhelming majority of tx occur off blockchain.  the blockchain becomes sort of an open interbank settlement system *
average block size = 5GB.  max annual on blockchain tx volume = ~18 billion transactions.  tx fees relatively low.  most non-micro tx remain on blockchain.  the blockchain in theory can be used by anyone however the cost of a full node exclude most**

* At 1MB average block, while the cost of running a full node is relatively trivial the cost of transactions would exclude all but the largest bulk transactions.  Remember as subsidy declines the tx fees pay for the cost of securing the network.  So either Bitcoin is popular and thus fees are high (because only ~3.6 million tx can occur annually) or Bitcoin is unpopular and thus becomes less and less secure as the subsidy declines.

* at 5GB just about anyone running a full node can directly interact with the blockchain with low transaction cost however the resources for a full node would be on the order of:
- 262TB per year in storage requirements
- 500 mbps connectivity (bidirectional) this likely can be reduced up to 80% by optimal tx and blockheader sharing but it would still be high
- memory pool of ~2 blocks worth of tx would be ~26 million transaction thus RAM requirements (to avoid painfully slow disk lookups in validation) would be say something like 32GB.
- The UXTO is likely very large as the number of independent direct users of the blockchain are high.  It is hard to estimate but we can expect the UXTO to be large and efficient validation requires at lest a significant portion to be in high speed memory.

Both extremes result in centralization.
The low limit results in a centralization of transactions.  It becomes too limited and expensive to transaction on blockchain so most occur off blockchain.
The high limit results in a centralization of nodes. The extreme cost of running a node means there will be less of them.

The "optimal" blocksize would be one that perfectly balances the centralization of transactions against the centralization of nodes.   Now 1MB obviously isn't that perfect limit and whatever the limit is raised to likely isn't either but it certainly moving in the right direct.  In other words a 10MB limit is closer to optimal than 1MB is.

Recalling the 5430 dust limit controversy, can the 1MB limit be customized by each miner to suit their needs?

The "not designed for microtransactions" argument is irrelevant in this context, unless you consider $7.50 worth of bitcoins to be a microtransaction. As was stated earlier in the thread, a 1MB limit won't even allow for affordable MACRO transactions if we keep it where it is.

Current hardware could easily support 5-10-20 MB block sizes and we aren't even at a point where we need blocks that large. Stop making something out of nothing, folks.

In addition, a full-time dev has been 100% crowdfunded for the next 3-6 months to develop a lite node that is fully validating and requires 0 trust of any central server. This would make hardware issues moot for "average joe users" who don't want to rely on an online wallet if the full blockchain is too much for their 2008 box.

There is really no issue here aside from folks not doing their research and freaking out about problems that have already been solved.

That would essentially be an unlimited blocksize.  It is possible and I don't want to say it shouldn't be done but I would point out that the reality is mining is heavily centralized.  If the x largest pools (where x is >51% of hashing power) decide to use a 100MB block it doesn't really matter what you think as virtually all miners will accept their blocks or risk (due to >51% control) falling permanently off the longest chain.  

To avoid a continual set of hard forks any limit imposed on blocks created by other miners would need to be soft limit.  As an example the node would not consider the chain with blocks greater than its limit longer until it is some x (also decided by node) ahead of the longest "compliant" chain.  This would result in soft forks that overtime would be resolved and in theory could work.  In reality I personally believe it will add a lot of complexity with no real benefit.  Game theory says that it would be optimal for the largest players (say top 3 or 4 mining pools) to agree on a certain size to avoid orphans between each other.  Those major pools attract hashing power by keeping their revenue high and that means orphans low.  Agreeing on a set block size would ensure the pools aren't competing against each other.  Other pools even if not in the official agreement will have little choice but to follow that as blocks larger than the agreement won't be extended by the largest pools and have a mathematical certainty of always being orphaned eventually.    The settings of every other node will be meaningless as the limit is soft and they will adopt the larger blocks once x block ahead (which will always happen eventually).

Thanks @DeathAndTaxes
You have some good point here, that I had not considered.
Still, I don't quite understand the argument why 10MB is "better" than 1MB.
Better for who? And can to prove it? ;)

Someone asked me whether $7.50 is a micro-transaction..
Well: if it's lower than the remaining 2000+ txs that went into a block - then yes.
Obviously whether something was a micro or not, is a relative term.
If you are aiming into Bitcoin becoming the new global currency, then even $1000 would be a micro-transaction.

circular logic alarm!

bitcoins is not for microtransactions
-> the 1mb limit will stop microtransactions
-> everything that doesnt fit into 1mb is a microtransaction
-> bitcoins is not for microtransactions

I just mentioned that I read it all the time: "bitcoin is not for microtransactions" - and I agree with it.
But it was not my entry point - rather a by the way argument.

My point was: if it doesn't scale further, just get advantage of it's fine design that has a built in mechanisms to solve it.
Though, at the other hand, I understand the politics and the need to balance between the resource consumption vs. making the system available for anyone, in order for it to become successful.
So yeah, why not 10MB :)

This is the real problem.

There's no reason to be concerned about blocks getting too big in the absence of a protocol limit unless you're also worried about some entity gaining majority control of the network, and in the case of an entity gaining majority control they can interfere with the network in other ways with or without a protocol-specified maximum block size.

I think the number of non-mining full nodes is going to drastically increase as more businesses begin to adopt Bitcoin. especially as we see the node implementation become heterogeneous with the emergence of Bits of Proof and btcd. The obvious solution if you're worried about mining pool misbehavior is to give all full nodes tools for specifying the maximum block sizes they will relay. If a large pool tries to make an excessively large block it won't do them any good if the rest of the network refuses to relay it and the other miners refuse to build from it.

This puppy ain't gonna fly with a 7 Transactions per second limit, even if it was only reserved for large transactions.

So at it has been show here, if we just make the block size unlimited, and let the miners decide, it will only encourage the mining arm race - the only thing that the chain may be afraid of.
At the very moment when a set of nodes decide that they wont accept block with a valid difficulty, just because it is too big for "their standards" - that's the moment of the disaster.
So we won't just stick to the traditional 1MB? That's the best way, IMHO.

You could think of P2P client systems, to the bitcoin network that would take care of small transactions and even make them faster, also using some sort of blockchains, though sort of compressing them in the actual chain, for a fee.
Hell, if you think about it, you can even involve mining there, as long as it gets cheaper than the bitcoin chain fees.
Just leave the 1MB block limit and you will see it bloomig (good for everyone), while the actual bitcoin network will be able to breath out.

Besides, IMO it's also too dangerous to change anything in this protocol. :)

There is no 7 tps limit, even with 1MB blocksize.

Off-chain transactions offer unlimited tps.

For reference, when talking about "off-chain transactions" are we talking about Rapidly-adjust (micro)payments (https://en.bitcoin.it/wiki/Contracts#Example_7:_Rapidly-adjusted_.28micro.29payments_to_a_pre-determined_party)?  I would guess so, but just making sure.

Sure, off-chain transactions can replace a lot of the bulk of the blockchain, but there will still clearly be more than 7 tps between previously-unrelated parties if Bitcoin is going to scale to the levels it needs to.  Not to mention, that the RA(M)P referenced above does require two transactions per pair of parties, and needs to be renewed at some regular interval. 

I think this is the most useful direction to take the discussion.

Being able to send 0.00982 BTC to the coke machine is a cool trick, but really should be seen as the sort of stuff that doesn't belong in the global network.

Micro-payment channels and their distant cousin probabilistic coinbase txout payments (https://bitcointalk.org/index.php?topic=201920.0) are useful, but they are really just a particularly efficient form of on-chain transaction.

Off-chain really refers to systems where the transaction never has to see the blockchain at all, ranging from really simple stuff like Easywallet account-to-account transfers (and SilkRoad for that matter) to advanced solutions like fidelity-bonded payment systems and trusted computing hardware where the trust in any third party is minimal.

Speaking of scale, we know that at some level Bitcoin just can't be decentralized and still have every transaction on the blockchain - you just have to read the wiki page on Scalability to see how VISA-level volumes require a system that's hardly decentralized, let alone resistant to government control. We've already had to ban sub-cent microtransactions from P2P network in the 0.8.2 client due to scaling concerns - I'd rather see Bitcoin develop into a system where we don't have to make ugly decisions like that again.

Off-chain transactions aren't Bitcoin.

Here's an interesting thing I just conjured up:  From a doc 'UnitedStatesComp.pdf'


To save one the math, I get about 5 tps.

Seems to me truly a no-brainer to consider various forms of off-chain transactions vs. trying to shove everything onto the blockchain.  Even with 'ultra-prune'.  The only real question is when.  A median of $25k and average of $3.5M is pretty alarming...though we are talking about $380T here...  It cannot be said that I am not a 'USD user' by virtue of the fact that I've never performed a Fedwire transaction.  The same would stand for Bitcoin.

If the 'source of truth' for values is stored on 1,000,000 power-users computers distributed around the world (and processed by the same) vs. in some computer system owned by the federal reserve (or BIS or whatever) that is a pretty revolutionary thing.  If the same basic solution consists of Google and Facebook, or even a few thousand DWolla-sized entities, that is a much less compelling to me.

Ultimately, I think the appropriate factor to weigh most heavily in a decision about data rate is what, exactly, is required to protect against which particular threats.  Various economic factors will certainly play important roles in this equation, but I truly believe that they should be secondary.  This because resistance to attack will ultimately define the value of the solution in my opinion.

+1048576

It just feels stupid that you send some one a coin and he send you a coin back and you need two transactions broadcasted just for nothing happened in reality

The book keeping method is a common practice in accounting, it reduce the real transaction in financial system. If you have lots of bitcoin nodes that transfer bitcoins between each other, the real amount of transaction on the blockchain will be very small and the nodes just need to broadcast the net incoming or outgoing transactions

BTW, I think today most of the transactions are just pools paying miners, that can be dramatically reduced by reduce the pay out frequency  :)

Not true at all.  You may send a digitally signed message to anyone, by any means of digital transmission.  Any number of economic incentives may exist to maintain exclusivity.

Reason being... oh wait there is none.

Jeff, this is the development & technical subforum. Can you provide an examples of the types of off-chain transactions you are talking about which "are bitcoin"? I know about rapidly-adjust payments, which does solve a certain specific type of micropayment problem in a compact way. However what general solution exists? How do you handle 10k tps between unique party pairs, within the bitcoin protocol and with a 1mb block size limit?

I know about, say, Fellow-Traveler's proposal to "lock" bitcoins for use on an Open-Transactions server in a trust-free way. You can then scale the centralized Open-Transactions server with beefy hardware to handle whatever load you need. But I wouldn't call that bitcoin.

its not just about 56k modems. its also about people being able to mine through tor. you could not mine 30mb blocks throug tor.

Any solution which requires a trusted authority isn't Bitcoin. Any means of transacting in which payments may be blocked, censored, or reversed with less effort than what is required to orphan a block isn't Bitcoin.

Saying that we should use off-chain transactions is a bait-and-switch scam. It means convincing people to adopt Bitcoin by offering them a trustless, decentralized, censorship-resistant payment method and then turning around and telling them they can't actually have any of those things. They'll have to route all their transactions through regulated gatekeepers and thereby negate absolutely every advantage Bitcoin offers.

Virtually every bitcoin user already uses third parties, and trusts them to some extent.  Doing so is a trade, cost for risk.  In the future, I expect it to be even more complicated.  Imagine a credit card denominated in bitcoin.  With that, you'd be paying for them to assume transaction risk for you, while right now the model is mostly the opposite with you getting a discount for assuming the risk that the third party may bail with your bitcoins.

Every bitcoin transaction has a cost associated with it, and we don't have a very good idea at all what that cost really is.  The mad scientist in me thinks that we should wait until the 1 MB limit is met and sustained for a while before we raise it.  That way we'd get some real world experience with how the system (including the people!) react.  Hopefully, that would lead to a better understanding of the forces that will eventually drive the equilibrium.

I couldn't agree more.

Bitcoin by design is meant to be decentralized, p2p e-cash solution for as much people as technologically possible^{satoshi paper (http://bitcoin.org/bitcoin.pdf)}. As DeathAndTaxes noted (https://bitcointalk.org/index.php?topic=221111.msg2330047#msg2330047), keeping 1MB is not good for decentralization, let alone accessibility.  IMHO peter's video (http://keepbitcoinfree.org/) claiming that increasing size from 1 to 10MB will lead to centralization and allow microtx's, is misleading.

Bitcoin is not meant to be for early adopters (like me) who are now shitting in their pants, worrying about any change. Change that can make it potentially more difficult to e.g. hide the traffic. Though there is a potential market for something like torcoin (paracoin (https://sites.google.com/a/tcilgl.com/paracoin/home)), it's not what >90% bitcoin users (miners) would want to have; at least under present circumstances.

All in all, I believe that blocksize should be adjusted such that if it is < 100MB, tx fee should be <=$1.

Thanks - first time I'm seeing this video, its nice.

You cannot argue with one thing from it; by increasing the blocks size, just to keep up with the growing number of txs, you will eventually end up with a system where a bitcoin node can by run only by rich people and only in data centers.
Set the limit to 10+MB and its almost certain that 5 years from now nobody will be able to run a bitcoin node at his home PC, through a DLS connection, not to mention via Tor.

thats not true. 10mb can likely be sustained virtually forever. both bandwidth and storage space grow fast enough to handle this.

I agree that decentralization is a priority. Though I think at least up to 100MB (if avg tx fee> $.1) we are perfectly safe in that matter, if we abandon Tor.

at the rate transactions are picking up, it is only a matter of time before a full node needs to run on a small cluster of machines, e.g. a db machine, a tx verification machine, etc. imo, increasing the block size limit is a must.

unless countermeasures are taken, e.g. jgarzik suggestion of off-chain payments, the blockchain will continue to bloat, driving up tx fees. if the devs or miners choose to not raise the block size limit, users will complain and campaign for increasing the limit.

I would be very hesitant to abandon tor, and you should be too.

A lot of people are concerned that miners will soon find themselves in legal trouble.  I suspect their concerns are excessive, but what if they are right?  Right now, we can run the entire system over tor, which essentially makes it unkillable.  Until we are sure that we no longer need to be concerned about such things, or until a more efficient way to be unkilable comes along, we should not be making any changes which make truly anonymous operation harder.

I believe bitcoin may change the world. We can't be perfectly safe to achieve this.
Off-chain processors are even more likely to fall into trouble.
Unkillable - yes, but in case of "bitcoin war" it will be suitable only for drugs and criminal activities. So essentially it will lose >90% value anyway.

On the other hand, if it gains people acceptance,  not only will it be inconvenient for gov's to shut it down, but also it may gain much value.
We will never be sure, and people acceptance would be pretty much efficient.

Right now trusting third parties is an optional choice that a user can make. In a scenario in which the demand for transactions exceeds the protocol-specified limit they won't have a choice - the only way average people will be able to use Bitcoin at all is to let a third party hold their coins for them. At this point Bitcoin is dead because it's become just another Dwolla or PayPal.

Imagine an accelerating car driving into a brick wall. One day the number of users and transactions will be increasing exponentially and then suddenly the growing user base will be rationed to a fixed number of daily transactions. It won't matter how much the users are willing to pay in transaction fees or how much the miners are willing to provide a higher transaction rate - the network will be limited to a constant number of transactions. It's madness to blindly assume that Bitcoin will continue to be useful and in adoption after its use case is fundamentally reversed.

Right now the demand for transactions is below MAX_BLOCK_SIZE, so effectively we have no limit. What we're looking at right now is how users and miners behave with "infinite" block sizes. Users are willing to pay fees, and the fee revenue grows proportionally with the transaction rate. We don't have to speculate about this because the real data is available. Allowing Bitcoin growth to suddenly hit an artificial limit really is playing mad scientist with what will be at that point a multi-billion dollar economy. Incidentally that kind of central planning is exactly what many people are adopting Bitcoin to getaway from and you're ready to pull the rug out from under them right when they least expect it.

With a 1 MB block size limit, Bitcoin will not be usable for normal transactions as a global currency. It would only allow 7 txs per second, meaning only huge value transactions (e.g. >$5,000) would be economical.


Moore's law is continuing, with the number of transistors on integrated circuits increasing exponentially. Internet connections have gotten much faster since 10 years ago too.


Satoshi originally designed Bitcoin with the vision that full nodes would eventually handle blocks that are hundreds of MBs in size and be run by specialists:

http://www.mail-archive.com/cryptography@metzdowd.com/msg09964.html


Originally there was no 1 MB limit in the Bitcoin code. The 1 MB limit was a temporary measure put in place until a better way to control bloat could be found. It was never intended to be permanent.


People will have to use BTC-banks, not payment processors. We're not talking about Bitpay simply converting your BTC to dollars for some merchant. We're talking about having to store your BTC at an e-wallet, and send BTC-credit, backed by that e-wallet, whenever you want to transfer 'BTC'. This would be a credit based economy that would have a tendency toward centralization.

There's a long discussion on the block size limit here that I recommend you read to see counter-arguments to keeping blocks limited to 1 MB:

https://bitcointalk.org/index.php?topic=208200.0


Only if you define "decentralized" as home PCs being able to run full nodes, which is not the way Nakamoto defined it. Having people reliant on handling BTC-promissory-notes backed by centralized BTC-banks is giving up on BTC-decentralization altogether, as well as the original mission for Bitcoin of being a "digital cash".


You have handled cash, which makes you a 'USD user'. Also, while you haven't use Fedwire, you have used banks regulated by the federal government and a payment network that relies on a centralized clearing house run by the Federal Reserve: the ACH. Unless we have a similar government-regulated and insured BTC-banking system, and a centralized BTC clearing house, BTC-credit held at various banks won't be equivalent to BTC.

Really?  Then where live must be far behind the rest of the world, since the internet speed does not seem to have improved here over the last couple of years. Thus no reason to assume that it will improve much in the next couple of years...

As for the CPU usage, I think 7 tx/sec seems to be a tolerable maximum, since it adds up to about 15 elliptic curve verify ops, per second.
If you have a CPU with 2 cores, and about 2 GHz clock - it can stand it in a background.
But if you make it 150 EC ops/s, leaving the came CPU, you are just killing all these poor people's home PCs - and that's not even counting the bandwidth, nor the memory requirements.

So yeah, if you want to make a bitcoin node available only for the rich - then increasing the block size is probably the best way to go ;)
But if your goal is to just handle more transactions per second, you should rather try to push the inevitable centralization into more democratic directions - ones that don't give advantages to the rich. Meaning: many centralized payment processors who settle their balances with each other through the bitcoin blockchain - this seems to be a natural and democratic way to go forward, IMHO.

Not really.  CPU is not much of a bottleneck.  RAM requirements may eventually require machines with above average memory but even they are modest through 70tps or so.   Storage is dirt cheap and getting cheaper all the time so it is less of a concern for existing nodes.  Now bootstrapping a 400GB blockchain for new nodes will require some optimization but it isn't impossible.  Bandwidth is the key limiter.  Residential connections only have so much throughput and while improved (optimal) tx and block relay procedures can reduce that average nodes bandwidth requirements by 75% or more pretty soon one is going to hit the limit of what a residential connection can handle.  Assumming sufficient disk space and bandwidth I wouldn't see the need for clusters of machines until tps reaches well into the hundreds of thousands per second (which is likely never).

see: https://en.bitcoin.it/wiki/Scalability#CPU
Making bitcoin full node available for rich enough to sustain 100MB is enough in terms of decentralization. And there is no advantage to the rich apart from the fact, that normal users need to use servers for tx handling - still much safer than using offchain processors. So this is democratic direction.

"4000 tps is easily achievable" - of course... wiki always knows the truth ;)
And then one can only wonder why a 250KB block needs over one second to get verified by my i5 CPU, occupying 100% of it, while doing it..

I think you are not aware of what kind of world we are living in.
If only rich and powerful can run a bitcoin node - then it will become very easy for a government to shut it down. Especially after you disable support for Tor.

Min requirements for full node at 100MB is ~1mb dsl connection, perhaps 10x more for miners, and 1hdd/year.  You don't need to be especially rich to meet this.

You're setting up a false choice by presenting a scenario in which only the rich and powerful being able to run a Bitcoin node, and then you propose a solution (limited block size) which results in only the rich and powerful being able to transact on the blockchain and call this a solution.

Then there's the making up facts in order to support your position.

That Satoshi originally designed a 1 MB limit is wholly false, and this has been pointed out to you, and you have yet to acknowledge it. The odds that you're arguing in good faith is low at this point.

People who are genuinely interested in solving the problem of full node resource usage, instead of just using it as a red herring to further some ulterior motive, can contribute bitcoins and/or code towards actually fixing the problem (http://utxo.tumblr.com/).

I don't like the way you're talking to me, but out of the respect for other people reading this thread, I'm not going to reply on your void accusations.
But you are wrong - all the way.

FWIW piotr_n UTXO indexes don't help scalability with regards to bandwidth because you still have to receive every transaction on the P2P network to mine profitably or validate properly.

Although if we're going to go off accusing people of ulterior motives, anyone want to figure out what, if any, services/companies justusranvier runs? It's interesting how amincd runs btctip (https://bitcointalk.org/index.php?topic=208200.msg2330607#msg2330607) for instance.

All you have to do is ask. I'm working on an educational project to introduce Bitcoin to non-computer geeks. It hasn't launched yet though.

The difference between a mistake and a lie is that people correct factual mistakes when they are pointed out. Continuing to say that the 1 MB block limit was part of Bitcoin's original design is a lie.

I only start to publicly speculate about ulterior motives when someone is deliberately spreading falsehoods.

It's not a lie, man.
1 MB block limit - it's there and has been there for years, whether you like it or not.
Was it Satoshi himself who added it - who cares? Who is Satoshi, anyway?
The only thing that matters is that some people don't want it to grow bigger, and they have an actual valid reasons. Very important reasons.
And you accusing me of "making up facts" - it's just silly :)

For the record, Tor was not really on my mind for this.  I've never convinced myself that Tor is a sufficiently reliable framework in 'war time' environments.

Paracoin is mostly envisioned as a platform upon which to reasonably experiment with constructs which would push core infrastructure to the network's edge...and beyond if need be.  These might include rewards proportional to desired diversity in terms of geo and political situation, transaction messaging protocol, peer count, and such.

My latest thoughts have to do with 'two-pass' mining where the 'tip-blocks' are secured with suite of diverse and non-predictable algorithms while the trailing blocks are locked with high difficulty sha256.  Hopefully this could reward both those running FPGA (hopefully at home) while anyone with an investment in current ASIC and what-not could continue to participate and secure the solution.

But anyway, I would strongly prefer that Bitcoin proper remain the 'gold standard' as a source of truth in distributed crypto-curency land.  'paracoin' and things like it are only a fall-back should Bitcoin go the way of PayPal due to excessive commercialization and associated capture.  It probably understates things to sat '>90%'.  It's probably closer to '>99%'.

  Edit:  More clear about 'edge'.

Obviously you care, or at least you think the people you are trying to convince care, because you relied on as the basis of your appeal to authority.


So it's important when it supports your point, but then we shouldn't worry about it if it turns out to be false?

I've said many times before that Satoshi was a man, not a god.

Bitcoin, as originally released, had a 32MiB blocksize limit and it was implemented in a way that makes me wonder if Satoshi didn't realize what an issue the blocksize limit would be. He later changed that limit to 1MB, and did so relatively secretly.

In any case what matters is how we can make Bitcoin scale now while remaining decentralized and censorship resistant, not what Satoshi thought Bitcoin should be four years ago.

Exactly.
So my idea is: leave the limit as is, and let the fee market to work. This will naturally create incentives for payment processors to appear and compete with each other. Just like mining pools do ATM. It even makes a lot of sense that the mining pools would become payment processors.

I agree with this. It would be nice if this sentiment would come out more often so that nobody would think bring up what Satoshi's original intentions may or may not have been in these conversations is a valid point.

You have brought up the bigger issue though of what people think decentralized actually is, or how important it is. For instance as jdillon pointed out recently in a pull request (https://github.com/pmlaw/The-Bitcoin-Foundation-Legal-Repo/pull/4) the Bitcoin Foundation doesn't include the promotional and protection of decentralization in its bylaws. I'm not sure jdillon had the right approach in that pull-request, but the responses of various foundation board members are interesting, especially with regards to anonymity and privacy. There certainly is a segment of the Bitcoin community that doesn't see decentralization as particularly important, and would happily sacrifice it in favor of extremely low cost payments of any size. (remember how the conference had the tagline "Bitcoin - The future of payments")

OK, so now I see some bitcoin war having a chance to pop up in a near future. People vs corporations?
It's not good, and I surely hope to stand on the right side.
Though, I don't think it's likely for me to move to the enemy camp, unless they just force me. But I will surely try to fight, FWIW, because I want to have a bitcoin node in my home 10 years from now. I mean, without a need to have also an A/C to cool it :)

What I find most frustrating about these debates is that people who profess concern about centralization in the form of resources needed to run a node propose as a solution centralization in the form of restricted transaction rates and blockchain gatekeepers and nobody seems to care or notice the discrepancy.

Etotheipi proposed, and maaku is implementing, a solution to allow people who don't have the resources needed to store a huge blockchain to still be first class network citizens. If people really are concerned about resource usage why aren't they involved in this project? If there are problems in the proposal, are they offering possible solutions or at least actively assisting with the search?

When someone puts forward something as a problem, and then shows absolutely no interest in possible solutions to the problem, then it's reasonable to assume that they don't actually want to solve the problem and it's being brought up as an excuse to further some unstated agenda.

I'll just post this again from retep's ridiculous video thread, since I don't see enough people arguing the point about Moore's law.  Moore's law means that even with no blocksize limit, we will be able to store the blockchain on PCs forever.

The blockchain is not currently increasing in size linearly in a straight line, as you can see here:
http://blockchain.info/charts/blocks-size?timespan=all&showDataPoints=false&daysAverageString=1&show_header=true&scale=0&address=

It is increasing exponentially because we are in the adoption stage where more users are added.  Once bitcoin reaches its potential market size, or once it hits a blocksize limit, the blockchain size will increase linearly.  We will never see sustained exponential growth in the number of monetary transactions that humans need to conduct.

Bitcoin merchant adoption and transaction fees have grown 1000% over last year, which is an extremely high rate that temporarily outpaces hard drive capacity growth, but this cannot be sustained very long.  Hard drive space and internet speed show no signs of slowing their exponential growth rates, so they will always outpace the bitcoin blockchain in the long run.  Exponential growth will always win out over linear growth.  People will be able to store the blockchain on their personal computers forever.  Removing the blocksize limit doesn't change that.

There was a recent article in Bitcoin Magazine that analysed the blockchain size, but most of their articles are not available online.  The article looked at some worst case scenarios, and even using really conservative estimates, 20 years from now people will easily be able to store the whole blockchain on their phone and download the whole thing in a few hours.

Hard drive capacity over time:
http://www.effortlessis.com/Hard_drive_capacity_over_time.png
World internet bandwith over time:
http://3.bp.blogspot.com/-ZaDXjJGTBrI/TwG3zAN3NhI/AAAAAAAABcw/Cy_I3tdTHPU/s1600/Untitled.png

World internet bandwidth is smashing the pace of Moore's law.  Tor bandwidth also follows Moore's law.

1980:  300 baud
1990: 14.4k
2000: 384k dsl
2010: 20mb cable
2013: 1000mb fiber

Storage capacity is also likely to have radical breakthroughs that smash the pace of Moore's law.

It's actually quite interesting topic to consider.
Splitting the coinbase into forks, where one stays at the limit, while the other one goes unlimited in size, or there are more branches, with different limits...

I think technically that could be done quite easily. Almost naturally - you just let a fork go and see how the market acts upon it.
BTC would split into BTC1 and BTC2 and from that moment each of them would have a different exchange rate. At the beginning, probably both below the last common price, but later - obviously either of them is still better than any other concurrency..
Maybe that could actually work :)

Eventually it will dawn on the business types that only a handful of entities are capable of consuming the whole pie, and that if Bitcoin proper can remain a rock solid core there will be many many slices of pie which will be plenty big enough to keep them busy.  At least those who's primary interest is economic.

Admittedly it is bit presumptuous for me to play business guy however.  It is probably true that one can be severely dis-advantaged by jurisdictional differences in a marketplace which is truly global.

Bitcoin can always be forked into a block size limited version if we find censorship is becoming a problem with larger blocks. Artificially limiting the block size now is creating a problem to solve a non-problem.

Wishful thinking.

If censorship was a problem, that would be because hashing power was under the control of authorities, who would simply use that hashing power to 51% attack the censorship resistant Bitcoin. Changing the PoW algorithm doesn't help either, as new coins haven't been able to survive 51% attacks by people having fun, let alone focused attacks, for a long time.

We've got one shot at getting a decentralized PoW-based consensus system implemented. Don't screw it up.

Sounds like a word of a wise man :)

If a >50% attack is a problem, it won't matter what the block size is, unless you're suggesting a mechanism by which larger blocks leads to authorities getting hold of hashing power..?

I think he means we should stay together and join our power to protect the net :)

He doesn't mean that and in any case, a parallel chain could use merged-mining.

well it's sort of rude to talk about what he means while he's reading it, so can answer himself.
but I started - I know, sorry :)

Larger blocks lead to it being increasingly difficult to mine anonymously, thus making it easier to authorities to control those mining.

I put the possibility of world governments coming together to force bitcoin mining nodes to direct their hashing power to attack a parallel blockchain as pretty close to zero and way down on the list of things to worry about.

I expect at this time bandwidth is the major bottle neck.  At least in the US I think we can expect someone wishing to run a full node to have at least 1Mbps of bandwidth.

All transactions will be first broadcast then transmitted again in a block.  There is also overhead for the inventory notify messages.  I will guess that protocol overhead, inventory and addresses take up about as much bandwidth as transactions so needed inbound bandwidth is about 3x what is needed to just transmit the blocks.  Slow connections would naturally limit outbound traffic as nodes would fetch inventory from other hosts that advertise that inventory sooner.  That said it might be worth improving the client to take into account connection speed between nodes.

1Mbps of bandwidth is 75MB per 10 minutes.  I would expect someone would want bandwidth for other things so lets assume 30MB available.  This means someone with 1Mbps of bandwidth should be able to handle up to about 10MB blocks.

Given this I wouldn't expect raising the limit to 10MB would have a significant centralizing effect but significantly higher would.  This doesn't account for tor.

Bitcoin does have the potential to grow significantly faster than network and computer speed increases so transaction growth to a point where block size would become prohibitive is a real future possibility.  I expect we have a little time before this becomes an a significant issue but its clearly best to have a solution prepared before its absolutely necessary.

Could we get decent statistics on the bandwidth of internet connections through the world and basically set the block size to ensure something like 95% of the fixed internet connections would be able to run a full node?  Lots of fudge factors in this calculation but its still less arbitrary than 1MB.

As soon as the block limit is hit it will raise transaction fees and there will be a significant need to justify the limit.  The more objective and reasonable the way that limit is set the better.

I, at the other hand, think that this is the most important thing that we should actually worry about :)

I2P is better suited to high bandwidth hidden services than Tor, and a I2P transport protocol is already under development.

Also mining anonymously is only essential to the survival of the currency if every government in the world simultaneously banned Bitcoin. As long as this is not the case it's possible for mining as an industry (not necessarily the individual miners) to route around oppressive legal environments.

It does, however, greatly alleviate the network, storage, and processing requirements for non-mining full nodes, allowing for modest devices (a 3G phone, for example) to operate with some assurance of security. This discussion isn't just about miners.

Absolutely, and I'm glad to hear you are working on it. But essentially it lets us scale down, not up.

sometimes I get these feelings like all the people know what they are talking about, except me.

Well, not quite. It lets the argument about scaling up be about mining only. UTXO indices + bloom filters (already implemented) means that miners are the only ones who need to attach themselves to the firehose of transactions on a scaled-up p2p network, or the terrabytes of historical blockchain data. If we scale up to the limits of a beefy desktop PC with a RAID array and >1Mbps network connection, we wouldn't be pushing anyone out from actually using the network.

Except from the ones who don't know what RAID array and >1Mbps network connection is. :)

It just has to run on any PC than can play youtube - then I'm fine with it.
If a PC plays youtube, but cannot keep up with the chain - then the chain is broken.

In fairness, one does not really need to know what such things are to use them.

A much bigger concern in my mind is that one may need, say, 1Mbps of bandwidth which is free of disruption by commercial network carriers.  These players have little ability to act autonomously of government security policies even if they had a desire to do so.

I think it hopeful in the extreme to assume that any political leadership is going to stand idle by while the power inherent in controlling a currency system is eroded.  If distributed crypto-currencies never reaches the stage where it is a eats into existing monetary solutions and supplants some of their function then yes, we are probably safe from such attacks.  It is far from clear to me that such solutions will not achieve such a capability.

It is not acceptable for mining to be something only a select and non-anonymous few can participate in. You might as well argue the conventional banking system is perfectly acceptable because using it is cheap and easy, who cares about the fact that full participation is highly limited.

That ship has long since sailed, for reasons that have nothing to do with the block size limit.

Ultimately its users who will decide what is unacceptable.
The difference is bitcoin users would still own their money. But with high fees, their full participation would indeed be highly limited.
It has everything to do, as block size will ultimately determine miners ability to stay anonymous and users ability to process normal txs via blockchain. One needs to find a compromise.

Increase the block size! We need more centralization so we can handle the oncoming billionsPMMMFFFHHHMMPFF!! Sorry why is anyone concerned about this again? There cant be that much demand for gambling and drugs. I mean people certainly arent using them for legitimate things like postage.

If mining is brought under control, you'll likely find your coins tainted/tarnished unless you pay the taxes and other fees which are required by the various powers that be.

These are likely to exceed by a wide margin what you would be paying on a free Bitcoin network, not to mention an off-chain framework built around on top of a free Bitcoin network.

As already said, a 56k modem can handle 30 MB blocks... ::)

^lol, it depends on your definition of handling (http://en.wikipedia.org/wiki/Handle), take a pick

And you said it again.  Simply saying it twice does not, in and of itself, make it a particularly meaningful statement.

Well, then various powers would compete. Even if they would make some international agreement, I don't believe people would allow their gov's to set high tx taxes, much higher than the free network. Furthermore seeing how the world tackles tax heavens problem, I wouldn't worry about it that much.

Off-chain framework is also vulnerable to control unless it's hidden under tor. But then again it would not be accessible. If it won't be accessible, not many people will use it -> sum of tx fees will be low -> low hashrate -> vulnerable to gov 51% attack with the help of the likes of TMSC. 51% threat is a big one now and can only be deterred by fast growth.

The beauty of off-chain solutions are that they have almost infinite flexibility to adapt to attacks.  Like a starfish, if you cut him to pieces each piece grows a new starfish.  In off-chain solution land, though, this would happen probably literally overnight in a lot of cases.  But it requires an enduring base upon which to ride.  That is, hopefully, a free Bitcoin network.

I found the rest of your note to fantastical to really comment on.  Sorry.

Speaking of fantastical, there's nothing I've seen more fantastical than your claim that turn-key engines will be created that will allow anyone to create a secure BTC-accepting site at low cost:


And retep's claim that if block sizes are large, governments would identify all miners in the world and force them to use their hashing power to attack a parallel block size limited blockchain:


The fact remains that with existing technology, my site, btctip.com, and others like it which have low volume would not be possible with $20 transaction fees. Bitcoin's low transaction fees are what make most of what Bitcoin is used for possible.

Claiming that as of yet non-existent technologies will be created that will solve all of these problems created by $20 transaction fees is fantastical.

we run a few tor exit nodes at our colo and either (A) our colo provider or (B) the USG have substantially down-regulated our tor exit node bandwidth in the past couple month. we are capable of pushing up to ~1 Gbps of tor traffic but can only push ~20 Mbps at the moment.

i would expect to see a lot more manipulation of tor exit nodes in the future.

This discussion is obviously going to go on and on, so a request that would make it a bit clearer and more meaningful:

When we talk about who will and won't be able to mine under what circumstances, can we be clear on whether we're talking about being able to do it at all or whether we're talking about being able to do it _competitively_, and thus at a profit rather than a loss? They're both potentially important in different contexts, but the latter is what drives who controls 51%+ of the network.

What the world desperately needs is a better store of value. We need a way of combating the inflationary policies of central banks worldwide.
Although gold has historically served this role, with the advent of the paper market, gold's true value has been obscured and manipulated by bankers. Bitcoin provides us with a new tamper-resistant way of saving our purchasing power over time.
Any increase in the blocksize will marginally decentralize and weaken this store of value property.
Personally, I'm all for storing my retirement savings "on the chain" and doing small, low-risk, day to day purchases "off the chain".

I'd love to hear what guys like Tuur D., Andreas A., Voorhees, and Surda think about the blocksize limit. I believe that ultimately this is more of an economic issue than a technical one.

Let's assume the transaction fees go up to $20 and Wordpress, Mega, Silkroad and all BitPay's clients sod off to LiteCoin or some other coin without this restriction, as they obviously would, so you were no longer able to actually buy anything with your Bitcoins.

Do you think the value of your Bitcoins would go up or down?

I'm thinking it would go down, and more than marginally.

There would be an exchange rate between BTC and LTC. Because of BTC's properties combined with a commitment to a limited blocksize I would guess that it would maintain its purchasing power much like its analog equivalent, gold.

That's a very - ahem - optimistic take.

It would be interesting to hear what those various people you mention think about it, but for example Falkvinge's piece on the target value of Bitcoin is specifically premised on being used as a payment system:
http://falkvinge.net/2013/03/06/the-target-value-for-bitcoin-is-not-some-50-or-100-it-is-100000-to-1000000/

I don't.  LTC (or some alternative) also would serve as a store of value.  So if given the choice between:

a) store of value with high transaction costs, low liquidity, and difficulty directly spending
vs
b) store of value with low transaction costs, high liquidity, and ease directly spending.

which is likely to be more popular?  Given the friction between crypto-currencies is very low (compared to crypto to fiat) I would expect a massive decline in the value of a relative to b.

TL/DR Bitcoin's value as a store of wealth is linked to its utility as a wealth transfer mechanism.  If the later if limited so if the former and the price will reflect it.

So announce the PoW algorithm switch/reimplementation of the block size limit well in advance, giving ASIC manufacturers enough time to get their chips widely distributed.  New alt-coins haven't been able to survive 51% attacks because they've been worthless, and therefore don't command a significant enough mining force.  It can be assumed that this Bitcoin fork would not be worthless. and would thus command a significant mining force.

I'm curious though, suppose all of the reasonable hypothetical difficulties with reimplementing a block size limit could be addressed, would you then switch sides in this argument?

BTW one of the mysterious things about people wanting to optimize Bitcoin for ease of running a mining node, at the risk of losing in the marketplace to another currency optimized for cheap payments, is that some other coins, notably LiteCoin, are actually already much better optimized for what _they_ are worried about than Bitcoin is.

The big issue here is the proof-of-work, which is far more important to the economics of mining than the block size. If you want a radically distributed network rather than one dominated by a bunch of big pools or companies, you need the economics of mining to be a good fit for a cottage industry, rather than a capital-intensive commodity business with large economies of scale.

This isn't an easy thing to design, but one of the main features would be that you'd be able to mine competitively on hardware that you already own, using spare CPU cycles, rather than needing to buy a lot of fast-depreciating specialized hardware, which you then need to install and operate highly efficiently to get a good return on your capital. This is something LiteCoin's proof-of-work is actually designed to do, and Bitcoin's isn't. It's not clear whether their current approach will work in the long-term, but in Bitcoin's case, as someone said upthread, the ship has long since sailed.

d'aniel: Of course.


Litecoin uses scrypt in a way that can be implemented on FPGAs and ASICs in a cost-effective manner. It's harder to do than the Bitcoin PoW, but that's actually a decentralization disaster because if one player ever does make a ASIC for litecoin mining it'll be much easier for them to get 100% of the market. Bitcoin's SHA256 PoW is really easy to implement on an ASIC, so we've already seen 4 different ASICS implementing it.

Exactly. It is wishful thinking that Bitcoin can be parked in a state of suspended animation with "just the right amount" of market-share until the blockchain becomes a replacement for Fedwire (http://en.wikipedia.org/wiki/Fedwire), and off-chain solutions of the "just the right type" for all non-bank users mushroom around it.

Market forces mean it will either soar and succeed or crash and burn. There is no safe middle-ground.

Excellent.  I think it's important for the small blocks crowd to enumerate these hypothetical difficulties then, so they can be addressed.  Were you convinced by my response to the one you already brought up?

I can only speak for myself, and I don't think that it should be a big factor in this decision, but...

I will definitely be liquidating a fair fraction of my BTC holdings if I don't feel that the solution is on a trajectory to withstand very significant growth and very significant attacks.  It is in fact something I've been actively planning but a serious discussion about block size and off-chain frameworks has given me new hope.

Now, it is fair to say that I'm an unusual thinker in my system analysis.  I was buying with both hands in late 2011 based on analysis and intuition, and with a few exceptions it seemed like many/most of the people on bitcointalk.org were kind of on death watch.

In the future, we may need a lot of ASICMiner style USB miners which can run all day at high hashrate, yet doesn't cost you anything noticeable in electricity, yes it will not give me a steady income of mining revenue, but should be a worthwhile investment to secure the network if the power cost can be driven to low enough that you can just plug it into your laptop and stop caring.

Heck no. How on earth do you think you are going to manage to come up with enough funds to outspend potential government level attackers with a brand new ASIC and hashing algorithm, and on top of that, have people trust you that the effort is real?

I hypothesis that the competitive parties in mining will be 'the masses' who, like you say, don't use enough power on an individual level to consider, and large entities with a big enough footprint to harvest high value business intelligence.  The latter can subsidize their power costs.

New as Bitcoin is, we've already seen that power costs can influence mining effort, so it is not a wild theory at this point.  I do suspect that small mining operations will vanish unless they can monetize the data they can obtain and sell it up-stream to entities who can use it.  Servicing SPV clients or offering stratum server services may be one way to do this.

I strongly agree that 'ASICMiner style USB' devices in the hands of ordinary market participants are a powerful and positive thing.  I do have some qualms about buying sha256 ASIC gear myself or inducing others to do so however.  It may not happen this year like Kaminsky tried to claim (or ever), but it could be that a different and possibly varying proof of work algorithm is in the interest of a 'free' Bitcoin.

Relatedly, I've been musing about whether it might be possible to favor work done by demonstrably 'network edge' participants.  These players have the 'strength of numbers' which make the concept of voting based on choosing software work.  I hope that smarter persons than myself have been pondering that as well.

The government level attacker would have to match that spent by the new miners, which is roughly proportional to the expected value of their block rewards, which is roughly proportional to the demand there is for the censorship-preserving fork.  Are you doubting this demand?  The effort can be trusted to be as real as the ASICs produced by chip makers, which would be being produced well in advance of the fork, and purely as a for-profit enterprise based on expected demand for the fork.

If demand for the censorship resistant fork is high, but the government level attacker is still willing to outspend the miners, well then the problem is completely orthogonal to the issue of block sizes.

And just to be clear, all of this matters only after 1) all governments across the world have successfully colluded to eradicate all non-hidden, censorship-resisting mining pools everywhere, and 2) mining pools aren't able to find any technical means to hide the location(s) of their machines, despite the funding available from parties (good and bad) with financial interest in resisting censorship.

Not to mention there are other, non-technical, ways to deanonymize miners: "Just register with us, the government, to collect your mining subsidy."

I think it's more likely that the community would let a fork go, rather than trying to beat governments on hashing power, resources, or (lack of) anonymity in order to run a node, or a miner...

People can adopt easily and they can easily switch to another branch, if they find an actual need to do so.
In fact, knowing life, I wish they didn't, but they probably will.
But I don't think it will be the end of the world.
If we managed to gather so much power to build this net, we can as well manage to move this money into the right branch, after a potential fork.
When the chain splits, the hashing power must also split - so the risk of a 50+% attack gets actually lower for you, because you get to choose to go with a branch that you personally consider less vulnerable.

Can you use/fork altcoins (maybe a temporary blockchain?) to handle microtransactions with minimal impact on the blockchain?  Is this completely insane?

It sounds like any solution for microtransactions AND not bloating block size requires some degree of centralization.  Like, microtransactions to company A require that all people who want to microtransct with A use a pooled, shared BTC account.  then it batches together transactions for many people, keeping the data of who gets what off the blockchain.

but it would be one-way, only many people to one company.  one company to many people (ASIC miner shares for example(?)) seems to be a pain in the ass

The risk of a 51% attack on a lower hashrate network is mitigated by the fact that the transactions on said network are significantly less valueable.


i.e. the Y $ invested to pull off a 51% attack on the main network produces X $ expected value from a double-spending attack, X/Y is the same for the alternate chain.  Of course calculated in BTC for these purposes

it just seems like altcoins (especially with faster blocks, and for transactions where the value is low that you don't really give a damn about the [hopefully] small chance for a 51%/double spend attack ) would be a good solution for micro-transactions.

this is precisely why i own some litecoins  ;D

yeah, move several BTC (or more!) into LTC/etc altcoin on an exchange.  takes one transaction in the block.  You now can do microtransactions on your altcoin block with no influence on BTC.  when you're done, move LTC/etc altcoin back to BTC on an exchange.  again, one transaction in the block.

And going from virtual currency <-> virtual currency i'm pretty sure was explicitly listed as not subject to regulation.

(which is funny, because it could easily serve as a coin mixer, which i think they tried to call illegal.)

Dubious as it may be FinCEN believes their oversight authority covers the exchanges of virtual currency for other virtual currencies.

I don't see how having one currency for 'store of value' and one for 'medium of exchange' is 1) possible to centrally plan, and 2) helps to do anything except dilute mining power and liquidity of both.  Bitcoin is a valuable medium of exchange because it commands significant mining power, it commands significant mining power because the block reward is valuable, and the block reward is valuable because it's a good store of value.  (Yes, 'significant' and 'good' are relative terms.)  And even if the currency functions could be separated this way, how would the 'medium of exchange' currency have avoided the very censorship problem it was designed to solve in the first place for the 'store of value' currency?  It's pretty difficult to move back and forth between the two if either one is censored.

There's no particular need to have different exchange rates for different chains. What we're talking about is just sharding - it's a common way of growing systems that run into some natural scaling limitation. Without doing anything particularly clever:

When you got to a particular size you'd split the existing outputs into two shards, which would split in turn when they got too big. So some of your coins would be on Shard 1 and some would be on Shard 2. Your client would have to be able to connect to all the shards you had coins on. Most people would use SPV or whatever, but if they wanted to they could run full nodes for some, all or none of the shards.

For most purposes this would look identical to the end user to what they see at the moment. Just as your client currently looks at the amount of money you want to spend and figures out the appropriate collection of spendable outputs, it would gather together enough outputs on the same shard to make your payment.

The hitch is that if you didn't have enough coins on a single shard to make your payment, you'd have to make two different transactions, one on each shard. The client could display this as it would a single transaction, except that you might have something like "65% 3 confirmations, 35% 1 confirmation". In theory there could be cases where the 35% didn't confirm at all. The vendor would need a bit of extra logic to watch for their payment coming through in multiple transactions.

If you needed the whole payment to go through in one transaction - maybe it's a fancy escrow contract or something that needs to be atomic - you'd have to exchange coins on one shard with someone for coins on another shard.

There's no particular reason why people should ascribe different values to different shards - they're all Bitcoins (or whatever alt-coin), they can all be paid to and from the same addresses, and they all look the same in the client. But if you were worried that people might end up valuing different shards differently for some strange reason, you could head the problem off by making a method to move coins across shards. It wouldn't have to be fast or cheap - you'd just need to be able to reassure people that every shard was worth the same, and if anyone got the idea that they were worth different amounts the difference could be arbitraged away.

hopefully open transactions will solve all these problems much more elegantly.

If that's the end game, then I can't help but feel uneasy about having a dozen or so people collectively (via the proposed voting pool) having ultimate control over most of the bitcoins.  Systems that rely on trust tend not to be very decentralized (for cognitive reasons?).

blind signatures should protect from this. as an analogy, the banks wont be moving your money around directly but rather moving around a locked box full of money that you have given them that only you know the combination to. This way the money that you give to the bank will only be valuable to you and can never be used by the bank.

It's not the best analogy, a Chaumian token is more similar a a banknote.

That's correct.  The bitcoin-denominated tokens issued on OT servers are promises issued by the aforementioned voting pool to redeem for real bitcoins at par.  OT deals with the issue of trust by spreading it out across multiple parties via a multisignature transaction on the blockchain.  What makes me uneasy is there are technical, logistical, and cognitive limits on the total number of parties able to participate in the voting pool, and so the issue of trust ultimately still remains.

Edit: Furthermore, once trust enters the equation, anonymity usually leaves, since most people aren't willing to trust their money to strangers.  Thus, we likely haven't actually attained censorship resistance.

The solution is the Bitcoin blockchain.

All of these off blockchain ideas are all trying to solve the problem that Bitcoin solves, without using the amount of resources that a solution requires. It's never going to work out that way. If somebody does find a way to solve the decentralized transaction ordering problem in a way that's better than Bitcoin that technology isn't going to be an add-on to Bitcoin - it's going to be a new currency that replaces Bitcoin.

All of this effort around designing alternatives to the blockchain would be more effectively employed making the blockchain work. It's not going to be any easier to scale an off chain transaction processing system to huge rates and keep the same level of security and censorship resistance than it would be to scale the blockchain to the same level.

You're preaching to the choir :)

Quoted... because it deserves to be said again. Thank you, justusranvier.

The tradeoff will be worth it for certain scenarios--currently you already submit much of your personal data to exchange operators, with OT it's possible to provide a level of anonymity that even if government agents manage to obtain the transaction records, they can turn up hardly anything worthwhile.

If Bitcoin becomes popular, then people will not mind paying eqv. $100 in fees for buying a house.  When a house is 0.01 BTC.

7tpc is enough.  Let Bitcoin be the high-powered-money.  Not play money that you use at the corner store.

We can create any number of merge-mined chains for any number of other transactions.  These chains can be optimized for the particular purpose that they fulfill.  They can even be dominated in BTC (with clever escrow-bitcoin-look-up).


I for one would love to only have 7tpc. This would mean that it would be easy for everyone to audit the high powered money.  (we would know what the bankers are doing with our cash).  In-fact in 10 years, my mobile phone may be able to audit the entire chain. (with some dedicated cypto hardware).


On another note, merge-mined chains that fulfill other purposes will make the main Bitcoin chain more secure. So it is a win-win.

+1 Very well explained.


Bitcoin is supposed to be a "digital cash". If people are willing to pay a $100 transaction fee to make a transfer, they can just use a wire transfer.

Fully agree. So the way forward seems to lie in two separate but significant Bitcoin enhancement projects:

1. Lightweight nodes with a pruned blockchain consisting of unspent transaction outputs (utxo) as described by etotheipi, which maaku is working to prototype. This benefits all non-mining nodes.

2. Block header propagation, perhaps requiring a pool of verification nodes. This benefits miners, reducing the need for mining pools and large block propagation.  A major technical problem exists in how this model of block-sharing copes with reorganizations. Is this solvable??

If these were implemented in a future release then Bitcoin would be well on the path for large-scale capacity while still retaining significant decentralization and low-bandwidth nodes.


If 99% of the transactions I want to do are priced away from the blockchain by high fees, then I certainly will be switching off my node rather than leaving it running to support fat-cat banksters who are monopolizing the blockchain.

If it truly is win-win then you don't need an artificial limit of 7 transactions per second included in the Bitcoin protocol.

If those merge mined chains, and the off-chain transaction systems such as the ones you develop, really are valuable on their own merits then users will happily adopt them no matter how many transactions per second the Bitcoin network is capable of processing.

Open Transactions is valuable on its own merits, right? It's not that the only way you'll ever get a significant user base is if Bitcoin is artificially limited to a cripplingly low transaction rate, is it?

It does the 'fat cat banksters' a lot more good to see your transactions than it will you to see theirs.  If they have their way, you'll definitely have most of your activity in the block chain, and there will be a fair amount of information logged about how it got there.  So, don't worry, be happy.

Ya, ya, I know.  'Tor'.  Yawn.

I think that you miss the point, if you are having small transactions, they SHOULD NOT be audited by everyone in the world (or at least those who use Bitcoin).  The time-importance of small transactions is much lower than of high-powered-money transactions.

For-example, I could make a merge-mined chain that works like Bitcoin, where the value of any coins older 6 weeks is halved. (and forgotten once they get smaller than the smaller unit).  New miners would sell these coins, and people could trade over medium time periods.  (purchasing and selling this temporary currency for bitcoin).  However this is just one option that I made up then.  There is a multitude of possible merge-mined coins that could be developed.

However the key point, is that the whole world should not care about my transaction of going to the corner store and buying a coke.  Only transactions that are significant for everyone should be audited by everyone.  7tps seems like a good rate.


Open Transactions works completely differently to Bitcoin, they are in-fact extremely complementary.  They solve different problems.  Bitcoin solves the 'low-trust, everyone audits, value transfer.'  Open Transaction solves the problem 'anything that is related to something in the world should be able to be traded'.

I suggest that if it was 700tps running a full node would be prohibitively expensive, and commonly, only fat-cat banksters would run them.

Not if the lightweight nodes and block header propagation software changes are done.
These are difficult changes, for sure. But if achievable, then all the off-chain, blockchain as backbone solutions become optional. They can succeed on their own merits, not because Bitcoin is crippled to 7tps.

Of course anyone can invent any type of coin they want. The question is why would users chose to transact in self destructing money when they could use Bitcoin instead. The answer to this question only makes sense if Bitcoin is artificially restricted so that those users don't have a choice in the matter.

And you're going to do your best to make make sure Bitcoin stays in that pigeonhole so that it doesn't also solve the problem that makes your pet project valuable.

Running 700tps would be prohibitively expensive for anonymous node only (my last post (https://bitcointalk.org/index.php?topic=221111.msg2340751#msg2340751)).

Oh my, this is so much of Bullshit.

http://stickerheads.com/images/BULLSHITMETER34343.jpg

You actually mean that the current Bitcoin client is not designed for microtransactions.

But future clients may require multiple computers or a cluster to run a single client (like BitsOfProof supernode).

It is entirely possible to write a client which will be able to process 100.000 transactions/second with today's technology and internet connections, so why the stupid "BTC is not designed for micro.... blah blah" talking ?

WTF is wrong with you people. Obviously, Bitcoin IS DESIGNED FOR MICROTRANSACTIONS. There is NOTHING in the Bitcoin protocol design that would not allow microtransactions.

default fee, MAX_BLOCK_SIZE. But it is not designed to be 1MB forever. Still I don't see any reason to make microtx as secure as macrotx. It is not worth to store them in the blockchain.

These are just variables. Variables can be changed.

But the CORE Bitcoin protocol allows ANY number of transactions per second. The only REAL limitation is the speed of the internet connection and TFLOPS of processing power.

So why the hell people keep shouting "Bitcoin is not designed for microtransactions" ? This is just a big piece of Über-Bullshit.

So do you claim that block reward can also be changed? Is it also just a variable?

And the speed of anonymous internet connection, in case someone want to make bitcoin fully anonymous. And the cost of it.

Because it's nonsense to store sub dollar tx in thousands of full nodes around the globe and propagate between them. The cost of bandwidth and storage is simply to large to make it economically feasible.  

I think everyone who is shouting today that we should just increase blocks size, or even allow micro transactions, should commit himself to run a full bitcoin node continuously, for the next 10 years, paying all the costs of it by himself.

Maybe then he would have understood :)

You can keep only the UTXO set rather than the full blockchain.

Also, I may turn off my miner for profitability reasons, but it doesn't imply that I would not turn it back on at my own loss just to protect my freedom, if it is in real danger.

Yes, but it is not the storage that we are concerned of.

It's the bandwidth and the computing power - keeping only the UTXO does not change much here.

There is a difference.
Change of block reward would create a HARD FORK of Bitcoin. It is the most "sacred" variable of Bitcoin, it cannot be changed without hard forking and disagreement in the community.
Changing block size OR default fee will not create a hard fork.


And what is stopping you from using a LITE client over an anonymous connection ? Why the hell do you need a FULL client over TOR for ?
Also, there is a network which can handle such traffic - I2P.


We have (or we will have) tree pruning for that. Not everything has to be stored.
And hard drives capacities & internet connections speeds will be improving over the years.

Yes, I actually plan to do that.
Few terabytes is not a problem and i think that we will have working tree pruning in the next 5 years.

??? . This whole discussion would be meaningless if it wouldn't.

For mining, and I2P is not ready yet.

Out of interest what's your goal here? Do you just want to be able to mine anonymously, or do you want to be able to mine anonymously long-term at a profit?

Ok sorry - it actually will - my mistake.
I actually meant it does not change the "core principles of Bitcoin" like block reward.


Why exactly is it "not ready yet" ? Last time i checked, they even encouraged usage of P2P over I2P.

And in a maximum of few years time, mining over TOR will be impossible anyway. 6 transactions per second is simply NOT enough for any serious buisness, so the max block size will be increased anyway. The question is not if, but when and how big will it be.

People who run a non-mining Bitcoin node are (usually) not out of pocket. Consider that many have a long-term Bitcoin holding, and how well that holding has done in the last year. Isn't it reasonable for owners of full nodes to spend a few bitcoins on upgrades and hardware? If the value of bitcoin continues like it has then anyone with a small holding will be able to afford vast amounts of disk space and bandwidth well before 10 years are up.


Bandwidth is really the only important limitation. That's why the block header change is also proposed. Also, computing power (average CPU speed) is already well above what is required.

But it does change the "core principles of Bitcoin" like decentralization of mining nodes.

The USB miner can solve the computing power problem, if people really care a bit about their freedom, they will run the miners when they hardly cost them anything(it's only 2.5W atm), albeit generating negligible revenues, it's up to them.

Bandwidth....well, I suspect it will be dat big a problem, true not everyone will have access to enough bandwidth, but a significant percentage will be, the ISPs could cause some troubles though.

Then it is worth checking.

Bandwidth ?  Like 150 Mbit down / 10Mbit up you can already get in most developed countries ?

Computing power ? Like Beowulf cluster you can build at home ? Like Core-I7 ? Dedicated FPGA's ? Extremely powerful Graphics cards ?

I don't see ANY PROBLEM AT ALL here.

Obviously, soon not everybody will be able to run a full node. It will be a job for geeks, academies, non-profit fundations and companies. And that is completely normal.

I, for one will obviously run a full node.


Mining is a job for geeks/nerds/hobbyists/companies/institutions and not for average John Smith. Sorry for that.

You don't - I do.
Lets just stop here, then.


Yeah, you wish, non-profit my ass :)
You should have put governments and corporations at the top of this list.

No - it is not normal.
It would be a huge threat to the network, and thus to the currency itself.

People who really care about their freedom is always a minority, whenever, wherever.

We can't force them to care about it, we are already fortunate enough to have a chance to change something.

Yes - let's just assume you have no arguments and that you are wrong.
And then we can stop.



And what is the threat, exactly ?

Bitcoin full nodes are currently run full time mostly by hobbyists/geeks anyway. So what is the difference ?

No, my friend, I'm not going to admit that I am wrong, since I'm right, but feel free to keep talking to yourself, if that makes you feel superior :)

Why did you even post this discussion if you intend to ignore anyone has a different opinion on the issue?

Let's look at the facts:

• Satoshi Nakamoto did not want the 1 MB block limit to be in place forever. When he created it, it was intended to be a temporary measure.
• Nakamoto stated even before he released the software that specialists would eventually need to run nodes when resource requirements increased. He had no intention of seeing Bitcoin throttled and turned into a "high powered money" transfer network
• Bitcoin's original mission was to be a digital cash. $30 transaction fees would make that impossible
• Bitcoin was never designed to be able to be run through node Tor forever

You can't force Bitcoin into something it wasn't planned to be. Bitcoin needs to scale and allow digital cash transactions for people all over the world, not be turned into an experiment on combining expensive p2p transactions with digital banks.

I'm not talking to myself. I am talking because that increases the probability of reversing effects of your stupid propaganda.

Why? Isn't it obvious? To ask the devs to not increase the MAX_BLOCK_SIZE.
I definitely did not post this discussion to keep repeating myself, over and over again, on the 9th page already.
I'm not the kind of an empty talker person, as your friend here :)

You could have just PMed them if you wanted to ignore any counter-arguments.

He could have asked Gavin in person at the conference!


Piotr - did you even bother to try to talk to Gavin about what you think is a huge threat to Bitcoin?

Yeah, like you could have PMed me with this message. Why didn't you? :)

Your friend did not bring any arguments that would not have been addressed on the previous pages of this topic.
Though he repeated them with a significant dose of arrogance, so he just doesn't deserve my answer.

Do you think that Gavin doesn't read this forum?
Plus, if the number will change, it surely won't be by Gavin's decision only, so taking about it with him only would be just stupid and counterproductive.

At the other hand: what's your problem with me opening this topic? Why are you so upset?

I'm not upset, just now satisfied that you have not brought any new arguments to the table to further what was discussed in the many prior threads on this subject.

And will be discussed repeatedly, more and more often in the future, as the block size gets to its limit, so better prepare to be even more unsatisfied. :)

Unless the decision is made only among developers and it happens somehow secretly, but surely I hope not...

Please stop calling me "friend". I am not your friend.

Bitcoin's main innovation is not that you hold your own dollars.


I can imagine all sorts of things.  What I'd prefer is to have some data so that I can spend less time imagining.

The brick wall thing seems like a particularly silly analogy.  People are already competing for block space with fees.  Why are people doing that when block space is effectively infinite?  Why are miners encouraging that when the fees are so meaningless in comparison to the subsidy?  It seems like the car hit a wall of jello a couple of miles before hitting the brick wall.

Where you see a brick wall, I see a ramp.  The way ahead gets steeper when we hit the block size cap, but nothing stops or explodes.  If the demand for transactions stays steady or increases, then on-chain transactions will get more expensive, which makes off-chain transactions cheaper by comparison.  What I want to know is, how much cheaper?  How well will people innovate?  Are people willing to pay enough in fees to keep mining going as the subsidy declines?  What is the actual marginal cost of including a transaction?  How will that change over time?

There are a lot of question marks between where we are and where we want to be.  It seems imprudent to assume that they will all be resolved to our liking.

The brick wall is analogy is accurate because It's the difference between being able to send transactions and not being able to send transactions. Right now all the users who want to send Bitcoins can do so because the total demand is lower than the protocol limit.

Once the blocks fill up we'll get to a situation that changes.  If more than 5000 people want to send a transaction in the same 10 minute interval they won't all be allowed to do so, no matter how much they are all willing to pay in fees. The ability to use Bitcoin will be rationed to a fixed number of entities.

It's complete economic and historical ignorance to assume the best way to answer any of those questions is with central planning in the form of transaction rationing.

Miners will mine if they can obtain a market price for their services that is acceptable to them. Users will initiate transactions if the price if sending transactions is acceptable to them. Not only is there no need to second guess price discovery by trying to calculate the marginal cost of handling a transactions and using that as the basis of a magic number in the protocol but also succeeding at such a strategy is probably impossible (http://en.wikipedia.org/wiki/Economic_calculation_problem).

1000 times this.

I know rationing from my personal experience living in a part of the USSR. Imagine standing in line for 6 hours with your mother just to get meat for Christmas...
I would advise anybody who does not get what "rationing" means and what it leads to to try that. It should be an enlightening experience.

The less centralization & control, the better. Let the market decide.

I think we can easily agree on this.

The problem though, is that for me the market is a transactions fee market - expressed in BTC...
While for you it is obviously a hardware & bandwidth market - expressed in USD.

That is also compatibile with definition of freedom.
People are free to buy more powerful hardware and internet connections.

But freedom does not mean that everybody has to afford it. You are free to work hard & earn money to buy a more powerful computer and more bandwidth.

I don't care about your freedom, man, neither about your definition of it.
I am not a religious person and as you said yourself, you are not even my friend.

All I care about is for Bitcoin to succeed in a long term - you put USD requirements over running a node and you are giving the power back, to the very same people that Satoshi was trying to escape from with his great invention.

ok so the problem is everyone can not be expected to audit every transaction. So what we need to do is figure out how many transactions people would like to make and divide it by the total resources available for auditing transactions and in a perfect world each transaction would have that many resources dedicated towards auditing it.

so we It seems like what we need is a way for people to add useful security to the network while auditing only a portion of all transactions. This could be done by introducing a new bitcoin clone every time transaction fees became supra-optimally expensive, but this would cause inflation and heterogeneity in the money supply.

so then the ultimate question is how do we allow people to help to secure the network with out needing to download every transaction while avoiding solutions that introduce inflation and heterogeneity into the money supply.

tell me if i have this right!

yes, I think you have it right.
and once again I'd like to recall what kjj had mentioned before; that we have an option to just wait and see what happens after the block reached its limit. and then we should only act upon it, if we find it still necessary.
I don't think it will be necessary though, since the tx fees in the main chain will intensify the bitcoin support infrastructure to quickly built itself up, not only allowing cheap transactions, but also making them faster and more reliable than they are today.
I'm willing to bet on it, if you want :)

Making the 1 MB block size limit permanent to push transaction fees to $30 would put Bitcoin in the hands of banks.

Satoshi believed running a node would eventually require a lot of bandwidth and hard disk space, and would only be done by specialists. Running a high-bandwidth node is a lot easier than running a trusted bank and is less centralized. A node doesn't need to know your private key. A bank does.

I disagree.
IMO, making the 100 MB block size limit - this would put Bitcoin in the hands of banks.

Did he tell you that during a dinner? :)
It doesn't matter what he believed 4 years ago.
The only thing that matters now, is: what should we do to keep this experiment successful?
And I'm saying: the right thing to do is do not touch MAX_BLOCK_SIZE

In fact, I would not touch the protocol at all - ever again.
I understand that there are many talented developers who would like to use their talents to improve the bitcoin protocol, but I surely hope that they can channel their skills into developing block-chain client apps, so the chain itself could just stay as it has been invented and tested for the last 2-4 years. Whether it was Satoshi himself, of whoever else that set the A variable to the X value, N years ago - it shouldn't matter, the bitcoin core should just stick to it.

It is the chain's client apps that should be changing/developing, from now on, and there is a lot of room for such.
Just freeze the code and let it go - you will see.

A node isn't a bank. Having to store your Bitcoins at an e-wallet, and use the e-wallet to perform internal transactions, would put your Bitcoins in the hands of a bank.


He wrote that in the mailing list. I posted the link for you, but didn't even take the time to read it.


It matters because that's the agreement, and you can't change the agreement without a consensus.


Nodes don't control your private keys, a bank does. I don't want Bitcoin to be controlled by banks. Making the 1 MB block limit permanent and pushing transaction fees to $30 would result in banks controlling it.

as soon as it becomes a problem entrepreneurs and innovators will go nuts trying to figure out the best way to solve it and they will succeed.

And even if you are a developer who wants to develop bitcoin further.
Wouldn't you just enjoy it more, knowing that from now on, you are only developing a client app, and not the core? So whatever you screw up is not going to affect the chain, nor the economy..
I think it's much more pleasant to develop a code without such a burden.
So once again: please do not touch the core! Otherwise, if you break it, your grandchildren might never forgive you :)

you could establish a relationship of trust with your chaum bank with out either party revealing its identity by creating a risk fund utilizing multisignature transactions on the bitoin blockchain. The idea is both parties risk bitcoins in a transaction on the blockchain that requires both parties to sign off on the transaction at some point in the future otherwise both parties coins will be destroyed. If you and i are trusting each other with a $5 transaction and we have both risked 20 dollars and neither party knows who the other party is it becomes in neither parties interest to behave dishonestly.

the only big draw back is you have to have some resources to invest before you are capable of participating in the system, but of course that's even the case with money in general now isn't it. Oh also super wealthy trolls who get off to the idea of destroying money that is worth more to other people than themselves. I dont think this would be epidemic though.

The plan has already been set for Bitcoin. Almost everyone who invested in Bitcoin did so with the assumption that the block limit would be raised because that was the understanding when the 1 MB block limit was first created, and what almost everyone assumed would happen until recently. It would be a betrayal if the Bitcoin community changed the plan for no good reason.

some of us just hate the idea of central planning ><

with the scripting language that bitcoin has, you can think of all kind of decentralized P2P payment systems that would utilize the thin chain to do thousands of sub-transactions in one go, without even requiring more time to mine it out.
end even more, if you add those that we have not though of yet... :)
leave the incentive there, and they will bloom, and you will be no less of a creator in this process.
anyone can change a value of a constant - but it's not an invention, so most likely it just wont improve anything, though has a potential to make things worse.

The block size will be raised, that is the overwhelming consensus among the people who are actually writing code and using Bitcoin for products and services that it needs to happen.

And there is a tiny minority of people who will loudly proclaim that isn't true and that the core developer are going to destroy Bitcoin if the block size is raised.

If you want to be helpful, please organize a list of objections to raising the block size limit and responses to those objections.

I believe the last objection raised was that a higher block size limit would make it impossible to mine anonymously, but I think that has been debunked with the notion of "read the firehose of transactions non-anonymously, then broadcast just new block header + coinbase + listof(truncated transaction hashes) anonymously."

I'll soon be writing up a plan for how we can safely raise the block size limit.


RE: central planning:

No central planning is why I would like to eliminate the hard, upper blocksize limit entirely, and let the network decide "how big is too big."

RE: "the plan"  :   The plan from the beginning was to support huge blocks.  The 1MB hard limit was always a temporary denial-of-service prevention measure.

Gavin, with all the respect, but you just said: the limit will be raised.

So the problem is not anymore, whether you guys (whoever you are) will decide to raise the limit - the problem is now: what will happen next?

I personally find it offensive, and a bit awkward, that developers of this project could make some decision with an argument like: "we are the people who are actually writing code and using Bitcoin for products and services, so it needs to happen"
Seriously?

You know that all the mining pools have actual incentive in keeping it at 1MB - don't you?
At least the current mining pools - after you increase the limit the balance might change.
So first of all, I don't think a developers voice counts more than a non-developers voice. Or a merchant's..
And second, even if it did, there are bigger powers out there that you need to convince - how are you planing to do that, when obviously there already are people who are convincing them otherwise?
So once again with a respect, I admire your self confidence, but just cannot wait to see it happen. I will surely follow the flow, though I hope that the wold of bitcoin is not going to like a system where developers along with corporations setup the protocol, without even asking anyone else.

So than the end-game has to be miners who build their own infrastructure connecting them to each other? This would work pretty well i think if it was an option.

But what if it isnt an option. dont we have to assume that governments will be hostile? if they are than we will have to rely on miners relaying over the internet. If this is the case and demand for transactions outweighs the supply of transaction space even for miners who happen to live in the part of the world that has THE fastest internet than we should expect that almost every miner in the world would clump up in the same area, or the same couple of areas.

anyway i might not have any idea what im talking about. :P economics is more of my interest than computer science.

OK, whatever.


What ? We are talking about RELIGION now ?

http://cdn.memegenerator.net/instances/250x250/37162448.jpg


Do you actually understand that PEOPLE, not only banks will be able to run full nodes in their basements even if block size is 50MB, right ? So what the hell are you talking about ?

As for mining, it is already unfeasible to mine if you are not a specialist with resources anyway and the situation will only get worse - no matter if block limit is 1MB or 100MB.

Yeah, I got that part.
5 years from now you will have cluster of i7 something machines, with very performing A/C and everything, just to be so cool.
But I'd rather prefer to be able to verify this fine chain on my laptop :)

EDIT: And about the religion, when you said "freedom", it sounded like a religion, thus my answer.

Some people consider the possibility of governments being hostile to Bitcoin as conspiracy theories on par with the moon landing being fake.  Other people, I suppose, feel that the best strategy to avoid hostility is to comply with any demands that corp/gov may make and architect the solution such that it is capable of doing so.  Frankly, I see the Bitcoin Foundation as being fairly strongly in the latter camp and I think it is a mistake for the strength of the Bitcoin solution.

---

On the topic of infrastructure scaling, it is noteworthy that to be reliable it is necessary to run well in excess of average capacity.  This to account for diurnal and seasonal spikes.  5/1 is an oft used industry guide line and I found it necessary in my work, except that since I had no control over the demand side, I at times realize a spike in the first few seconds of the hour which vastly exceeded even the 5x margin.  This because of end-user automation which was not properly designed.

Off-chain solutions can give users the ability to reliably and safely perform financial operations which are locked to the Bitcoin 'source of truth' when it is practically and economically feasible to do so.  Actively embracing them would be, from a system design point of view, a wise thing to do.  It would act as a much needed buffer for the native protocol and go a long ways toward allowing it to be widely distributed.  At least if wide distribution is actually seen as a positive thing.

I'm not sure why you think that there is some sort of free market for bitcoin transactions.  I have a lot of confidence that someday there will be such a thing, but for the next couple of decades (and possibly for the rest of my life) there is not and will not be.

Right now, every single transaction (with a couple of exceptions caused mostly by programming errors) is mined as a charity.  There is also some indirect benefit to the miners, in that the network actually working makes their holdings more valuable, but there is nothing even slightly resembling a balance between cost and reward.

To recap, we have no idea what it costs to process a transaction.  Even without the block size limit, there is a limit to how many transactions can be processed by the network in a given time.  There is a much smaller limit to how many can be processed economically.  And there is a vastly smaller limit to the number that could be processed economically without the subsidy.  We have no idea where these limits are, and they are all moving targets.

If we were starting at 100% adoption, Moore's law would let computing power keep ahead of the game, and probably even pull out far ahead.  But we aren't at the top of the adoption curve, we are at the bottom.  In the short run, the vertical slope looming is going to kick all of our asses.  There will be a period when the system won't be able to keep up with demand for reasons other than an artificial block size limit.  God help us all if we've evicted all of the small miners (less than, say, 100 million readily available capital) from the network before that happens.

I'm really not sure why I bothered to write this reply.  Your want the network (people other than you, at least mostly) to have to provide a scarce resource in unlimited quantity, while you accuse me of advocating central planning for pointing out that the market that you need doesn't actually exist.

exactly. you cannot really say what is a cost of a transaction until you let the fee system to work and set it at some level.
then you can try to optimize it, with the block size and current house technology.
but not before.
it's just crazy - mad scientist is less crazy than it :)

You win the Orwellian of the day award for having successfully used every term you included in that rant as if it meant the opposite of its meaning.

What I want is for the network to be allowed to provide a service at a quantity and price that they and their customers find acceptable. You want to ration the amount of transaction processing miners are allowed to provide to their customers.

The fact that we don't know how much it costs to process a transaction is expected and irrelevant.  Miners won't continue to mine if the benefit the receive does not exceed the costs involved, and users will not send transactions if the cost of doing so exceeds the benefit they derive. That's that that matters. If you don't believe this process works in the real world then you should really contemplate how it's possible for the providers of the products and services you consume every day to figure out the correct amount to produce and the correct price to offer it at.

Which "bigger powers" and which "people" ?

Is there some secret cabal out there I don't know about?

If you mean "Peter Todd has convinced some big mining pool operators not to increase the size of the blocks they create" -- then great!  That's the free market at work, big mining pools should be free to create blocks that are as large or as small as they like, and to accept or reject other's blocks for whatever reason they like.

Bitcoin is really getting old, when some political decisions have to be made

This + 1000.  It would be wonderful if developers raised the hard cap and miners at least initially didn't make larger blocks.  The cap should only be a security mechanism.  I disagree that no cap is necessary but the cap should be high enough that the economic decisions of rational miners are setting a "defacto" cap lower than the hard security limit cap.

Ya know what?  I think you've check-mated us decentralized folks.  A big block can eat a little block, and the SPV's are pawns who have no choice but to upgrade.

I'll have to think about it a bit more, but I think the you and your employer are going to win this one.  So, carry on and make me rich.  My BTC will flow, but they will be to had only dearly.

Try taking your meds first before thinking. You might at least generate something coherent.

So you are OK with like 70% of the haspower going to a fork that did not accept your change?
I mean, you do not seem to be concerned about it at all. Like you just assumed "whatever I decide, will be the right choice".
People may just not agree with you. Especially people who run mining pools and basically only their vote counts.
But not disagree with you because they are mean - maybe, like me, they disagree with you from good reasons.
Do you even have any proofs that increasing this number is necessary?

No, absolutely not. The process for a hard fork looks like:

+ Get rough consensus that the change is necessary.
+ Write the code.
+ Get it reviewed and thoroughly tested.
+ Release software that will support it when X% of hashing power agrees

... where X is a super-majority (like 75% or more).  If 70% of hashing power disagrees, then it doesn't happen. Miners will express support by producing block.version=3 blocks (just like they are now producing block.version=2 blocks that MUST include the chain height in the coinbase transaction).

It is possible the X% threshold will never happen if 1MB is plenty big enough. It is possible it will only happen when transaction fees start going up and pressure increases on pools to make their blocks bigger (or maybe merchants tired of paying high fees figure out they'll save money by mining or operating pools themselves, will get X% of hashing power, and will increase the block size).

Again, I spent a lot of time at the conference talking with people about the block size issue, and there is definitely consensus that 1MB just won't be big enough eventually. That has nothing to do with microtransactions, normal growth in "macrotransactions" will bump up against the limit in a year or three.

My, how clever and original you are!

I'm try very hard to avoid the tech section in order keep in order to keep it marginally useful.  I'm out now.  I'll sell you some uBTC on the Google 'send money' thingy in a year or two.  So, see ya in hell.

sounds like a good idea, thanks for explaining.
I'm gonna vote NO, at least for the next 12 months.
however I do have some mining shares and I wish you did too :)

There is always rationing.  The question is how.

In a mature system with a market, I'd let the market figure it out.  That's what market are for, and that's what markets do.

But we don't have a mature system, and we don't have a market.  Not only do we not know what a transaction really costs, we don't have any way to find out.  You are arguing as if I didn't believe in markets.  I do, but I only believe in real markets.  I have absolutely zero faith in the ability of a market that does not and can not exist to provide useful information.

In the absence of useful information, it is prudent to be careful.  Since backpressure on the transaction volume does not reasonably exist yet, and whatever actions we take will have serious long term consequences for the entire world, we should not just remove the limit, nor create dynamic rules that are too easy.

When we do need to increase the limit, I would propose the following rules:  Block max size increases iff at the time of difficulty change, the sum of the size of the last 2016 blocks is > (1814 * block_max_size).  If size increase is indicated, block_max_size+=(block_max_size>>4).  I'll leave the implications as an exercise for the reader.  1814 and 4 are magic numbers, they could be changed, but I suggest they not be any smaller than specified.

Don't give up that quick. Gavin represents the United States-centric, FinCEN fearing above-ground side of Bitcoin; the world is a lot bigger and a lot more diverse than that. I suspect Peter Vanesse and his "we'll help regulators crush bad actors (http://www.cnbc.com/id/100774151)" antics are a much smaller part of Bitcoin than you might think.

Speaking of, reminds me of an email I got yesterday:


When I first heard from this guy he sincerely wanted to help out Bitcoin by moving his timestamping needs to my OpenTimestamps service to try to avoid UTXO bloat, and now he's pissed off enough to be adding to the problem as a political statement. Of course, that's a tormail address, and he's been using my service through Tor according to my logs; I suspect he doesn't share Peter Vanesse's thoughts on Bitcoin...

Having said that, nothing wrong with taking a break from the forums - easy to get yourself exhausted by it.


I will say though, Gavin's proposed 75% threshold is kinda funny - right now it would take just three or four pools to meet it.

I really gotta make my decentralizing mining project with pooled-solo mode happen: https://bitcointalk.org/index.php?topic=221164.0

Sage advice which I will take.

Before I go, I'll just like to say screw Gavin and the Bitcoin Foundation horse he rode in on...or at least rides into the future.  I'm sorry to not be more hopeful, but at this point I see Bitcoin to be not much more than a cash cow to be milked.  I'm counting on the army of mouth-breathing think-they-are-libertarians here to continue to help me line my nest with $USD and they have not let me down yet.

I do have confidence in the 'free market' and have confidence that it will eventually produce something the people of world actually need vis-a-vis distributed crypto-currencies.  What we definitely don't need is some corporate controlled one-world currency solution which is exactly where this thing is headed to be blunt about it.

I hope I'm wrong and you are right that there is still some hope for Bitcoin proper, but I'm not betting on it.  Were it not for Garzik and Maxwell I would have zero hope.  I will participate in what efforts I might be able to in terms of experimentation and such as they will likely produce useful data and code no matter what happens.

Bitcoin Megastore, are you aware of this project for a software solution which goes a good way towards alleviating node bandwidth loading?
https://bitcointalk.org/index.php?topic=204283.msg2135237#msg2135237

Right now I'm running a full node on a VPS because the traffic is a bit rough on the home connection. For people who are invested enough in Bitcoin and want to see it stay decentralized, this might present a reasonable compromise. I keep my wallet in an SPV client and sponsor this node to help keep the network strong.

People already do this for tor nodes and have been doing it for a while. I don't see much reason why people who have benefited financially from the bitcoin network and want to see it continue to succeed would be very averse to taking on this responsibility. It is not something everyone needs to do, should need to do, or even should do. It is one very practical way of adapting to the changing realities of bitcoin though.

Bitcoin is designed to be distributed peer to peer currency first and foremost.  Certainly more than any importance of "microtransactions"

If allowing microtransactions means that you need a T3 line and terabytes of harddrive space to run a node, then your microtransactions will have to go, because otherwise it simply consolidates power and destroys the entire point of the network, which becomes datacenter-to-datacenter-to-bank-to-government-to-datacenter

You can also see that satashi fully intended to be able to use everything over Tor, which again is impossible with bloated block sizes

Blocksize should scale such that the average peer with average internet (broadband, roughly speaking ~50-100kb/sec upload/many MB/sec download currently) and average computation and storage resources can always participate as a full node

Remember it's still very early in this game. Even taking the abnormally high hashing rate into account blocks are barely pushing 150kB average; don't forget that at the conference there were just a dozen vendors, mostly representing internal Bitcoin businesses or investors. For all we know we'll find out that this whole payments stuff never takes off the way people keep hoping, and where it does take off is certainly going to continue to be the "bad actors" Peter Vanesse says he wants to crush.

The Bitcoin Foundation is not Bitcoin. In terms of technology all they can do is pay people to write code; open-source projects can and do fork if they have too. At the same time from what I heard at the conference the legal and lobbying strategy of the Bitcoin Foundation looks to be very much in our interests: I had a really good discussion at the conference with the foundations' chief lawyer Patrick Murck and their strategy of lobbying to make virtual currency trades unregulated. It may or may not work, but it's not going to do us any harm.

It was quite funny at the speakers dinner at the conference how I wound up sitting next to Mike Hearn... and a bunch of finance and investor types. We, well, minus Mike, talked about where Bitcoin was headed and what it's role in the world will be. At that table, and indeed at the whole conference, the finance crowd seemed to really get how what makes Bitcoin special is decentralization and freedom from authority, and how Bitcoin's future lay as a reserve currency rather than an inefficient and inconvenient payments system. You don't remake the worlds financial system by focusing on penny bets and ad-impression scams first and foremost.

Of course, I doubt the high finance crowd spend much time on troll talk...   ;)

Bitcoin is designed to be a peer to peer digital cash. Read the Bitcoin white paper. Nakamoto wrote that BTC nodes would eventually use large amounts of bandwidth and be run by specialists, so that's what it was designed for.

$30 transaction fees, due to a 1 MB block limit, would make regular transactions impossible. It would convert Bitcoin into a high powered money that only BTC-banks could handle. I don't want a BTC-bank to hold my private keys and be the third party intermediary to my transactions. It's bad enough BTC has to rely on centralized exchanges. Forcing people to store their BTC at banks and process their transactions through them for straight BTC transactions would make the problem of centralization exponentially worse.

hey retrep could you take a look at post #191 and tell me if i understand this correctly.

While there are some elements of Bitcoin that may be used for microtransactions; I do not believe that it is rational to suggest that Bitcoin-itself is designed for microtransactions.
It comes down to maths.

The cost to check the inputs of a transaction is:
O log(total number of unspent outputs).

The cost of checking any one transaction is:
O (number of full nodes) * (cost of checking a transaction).

The cost of growing the network with a constant number of transactions per user is:
O (number of users) * (cost of the network checking the transaction)

For a constant ratio between users and, full nodes (so we can maintain the decentralization of the network). It can be shown that:
The cost of verifying the Bitcoin Network of any given network size (number of users), for a constant number of transactions and full verifying nodes per user is: QUADRATIC.

or

Cost of Verifying the Transactions of the Bitcoin network = O (network size in users)^2 * log(number of unspent outputs)
Where we assume: Constant number of transactions per user, and a constant ratio of users and full verifying nodes.

This is why I will re-iterate, that Bitcoin was NOT designed for large-scale microtransactions.


EDIT: fixed, from CUBIC to QUADRATIC. (thanks amiller).

Not only that, it's specifically designed to help with "small, casual transactions" too small to be handled by centralized payment processors who have to charge too much per transaction because they can't avoid doing dispute mediation. This is right there in the first paragraph of the white paper.

As opposed to removing the limit, letting malicious miners make massive blocks?  Privatizing profit, and distributing the pain?'

If you can't run it over Tor or similar you've just destroyed a much more important part of the philosophy. 

No, it's a little disingenuous to make such an argument:


It could very well be constant, if a hash table were used.


There is no protocol reason why more than 1 full node needs to be running. If there are N full nodes, it is because N-1 people decided it was a worthwhile investment of their time and resources to do so. Open-Transactions runs with a single validating node, the server. But audit information is (in theory) available so anyone can check that the server isn't lying. And if they were to do so for all transactions processed by the server, then it would incur the same overhead. Now typically in Open-Transactions one only verifies their own receipts, but the same could be said for SPV/SPV+ clients.


Which with your qualifications is essentially saying that the cost of full validation scales linearly with the number of transactions. No surprise there.

This conceptual argument I take issue with:


The very security model of Bitcoin requires there be multitude of full nodes, unless, if there was only one full-node, then non-bitcoin transactions could be possibly slipped in (unaware to SPV nodes).

For the current standard of decentralization to hold, we need a constant ratio of full nodes vs users.  Having only a few full nodes is a very much a higher-trust security model than what the Bitcoin Network currently provides.

People who advocate a high tpc, must necessarily, advocate a more centralized full-node processing network.  (Because of the QUADRATIC cost of maintaining the decentralization).

My point is that the same argument applies to Open-Transactions, or any other known distributed money system, except perhaps zero-knowledge proof systems which are still theoretical. In Open-Transactions you are given the information necessary to audit the server's actions. If you want to make an apples-to-apples comparison, you should be accounting for this computational cost incurred by users who do such validations.

Than would it be worth it, to take a portion of the transaction fees and distribute them to the owners of the full nodes. After all they are contributing just as much to the security of bitcoin.

This softens the effect of a mining monopoly that is currently highly centralized.

While Bitcoin was small, a low-importance transactions were fine, as the entire network size was small.  However as the network increases in size, so must the 'importance' of the transactions.  Otherwise it becomes disappointingly costly to maintain the network -> thus, creating great economic incentives to centralize the network.

If, for example, fees are LINEARLY related to Network-Size, then the cost of maintaining the network will be LINEAR * LOG (number of unspent outputs).  Or just LINERAR, if you have an unlimited amount of random access storage (eg. RAM).  This is a sustainable proposition. (The fees will pay for the cost of running a node).

The position argued, by some, is that the cost to make a transaction on the Bitcoin network should be CONSTANT.  This means that the cost to run a node on the network (while maintaining the same quality of decentralization); will be increasing faster than the amount of fees, per node.  -> Thus creating an economic situation, where either:  Nodes are subsidized, or the ratio or full nodes vs. uses goes down.

I, personalty, value a very decentralized and non subsidized processing network of Bitcoin full-nodes, more than the utility advantage of having low importance transactions.

The cost to make a transaction should be equilibrium point at the intersection of the supply curve and the demand curve.

I'm not sure who constitutes the mysterious "some" you're talking about. Do you have a link to a specific post?

There are intermediate solutions between a 1 MB block limit and letting a node create a block of any size.


You can either have digital cash, or you can have a Bitcoin that can be run fully through Tor. You can't have both. Given the philosophy of Bitcoin is to be a digital cash, and being able to run through Tor was not a design goal, raising the block limit, as Nakamoto intended and the devs have been planning for years, is the right decision.

I'm not concerned about censorship of nodes, because they can be run in any jurisdiction in the world. As long as there is some free jurisdiction in the world, the Bitcoin network will be up, and people can access the nodes through encrypted channels if need be.

The important point is that people be able to control their own private keys. If transaction fees go up to $30 due to a 1 MB block size limit, then people will have to trust BTC-banks with their private keys, and transactions will have to take place through these intermediaries. Bitcoin would no longer be a p2p cash.

This is not about microtransactions, at least not in the sense most people understand that word. With the current 1 MB limit per block, the number of transactions is capped at around 7 per second, which roughly translates into 200 million transactions per year. So, if there were 20 million users of Bitcoin in the whole world (a very conservative estimate of what Bitcoin can achieve), the average user would be able to carry out 10 transactions in a year. Say I wanted to get my salary from my employer and then pay my landlord in bitcoins, that would be 24 transactions in a year. With a 20-million user base, such "microtransactions" as paying a salary or a monthly rent would be off-limits to most people. Even if I was willing to pay a hefty fee to get more blockchain space than your average Joe Bloggs, my landlord would have trouble getting his bitcoins out of the chain and would end up saying "But why don't you just pay me in euros?".

The solution proposed by the "do not change MAX_BLOCK_SIZE" advocates, if I understand them correctly, is that I shouldn't use the blockchain for such mundane transactions. Transactions like paying a rent would be handled through off-chain processors that provide me with BTC tokens. But then I'd be using bitcoins as a mere denomination, like the IMF's SDR or the old European ECU. Certainly not what Bitcoin was designed for. And it's far from certain that Bitcoin could even survive in such a scenario. Why would ordinary people even run Bitcoin nodes if it becomes just an infrastructure for Google/Facebook/Baidu Credits? It would make as much sense as running a SWIFT or LCH.Clearnet node (if these systems worked as distributed networks).

I really wish this was better known, the amount of people shouting crap about how Satoshi intended for 1MB block size is sad. So many misinformed people here....

Satoshi did not intend the 1MB block size to be final at all and it was not even in the paper or in the original code. He envisioned a much larger dynamic block size.

So what?
Thinking about Tor and the current 1MB limit, still seems like a reasonable number to stop at.

So just stop, take a breath, look around and see how the market responded... and then try to improve it further, if needed.
By increasing the block size limit now, you are not improving anything - you are only making transactions cheaper for satoshidice, which is especially stupid when you consider the fact that the transactions are essentially free ATM. As kjj has nicely phrased it, currently the transactions are being added to the chain on a charity basis - why would anyone aim to make them even cheaper, at the cost of an exponential growth in the price of infrastructure required to run a node, or a miner?

IMO the 1MB limit is the best moment to stop this madness, let the fee market work, and just think about the best way to go from there.
If the best solution to the scaling problem the developers have is magnifying the scaling problem, then I am honestly disappointed. :)

Excellent post. People won't run nodes if they are priced away from the blockchain, and the worst-case scenario of centralization would occur: Bitcoin with just major companies running server-farm nodes.


once the blockchain-pruning solutions are up and running Tor will be usable for a long time, probably indefinitely.

Why you assume that it would need to be Google/Facebook/Baidu Credits?
Why do you think that a bitcoin backed payment processor cannot be built as just yet another lightweight P2P network, protected by a cryptography?

Why do you guys keep repeating that one would be forced to give all his private keys to a bank?

And what blockchain-pruning has to do with making mining available via Tor?

Relying on 3rd-party providers for using BTC makes the above very possible (p2p won't be used by bitcoin-banks as they will want control of their systems).



This is the 2nd software change needed, as well as blockchain pruning:


If this 2nd change works then Bitcoin will be massively scalable and can become the success everyone wants.

Why don't you want Bitcoin to have this chance to succeed?

You are right - if it works, then Tor mining should be easier, though the scaling issues of a home node still remain.

Anyway let's at least hope that they will prove the debunking thesis working, before touching the number.
Though after learning that decentralization is not considered as particularly important, I am not so certain about it... :)


Because for me Bitcoin has already succeeded and increasing the block size is playing with lethal forces that we don't even understand.
So it has succeeded, but if you act irrationally, you can easily screw it up.

We might be getting closer to agreement  :). I was thinking just now that the software changes for scalability might be well advanced even before 1MB blocks are common. That would be a nice outcome.

With regard to playing with lethal forces: because for most of Bitcoin's lifespan blocks have been way below the 1MB limit (and only recently approached the soft-limits), then it has operated with no effective block limit. Letting it hit the 1MB actually introduces a lethal force where it didn't really exist before.

So why the rush? Why not let the merchants and users ask for change when the need arises?

Someone asked me to reply....

So Gavin's idea for mining in an anonymous, free from coercion and central control way goes like this:

Step 1. Run a high-bandwidth, publicly visible Bitcoin node.

Step 2. Send the blocks you mine over Tor.


This came up at the conference at the developer round table - it was kinda funny talking to some Argentinians after about the plan. (at the conference Gavin's idea was Step 1 would involve a "censorship-proof satellite" - I think he's since figured out that space isn't known for decentralized grassroots efforts) Those Argentinians figured the discussion they'd wind up having with their local authorities would go roughly like this:

"Q: So tell us why are you running a full Bitcoin node exactly? You don't happen to be mining by any chance do you?"
"A: Um...."


In any case we need mining to be more decentralized, not just done at a few big pools. Anonymity and censorship aside requiring  high-bandwidth sure won't help the situation we're in right now where almost 50% of the network is controlled entirely by two pools.

This is not a problem, really.

Dedicated servers are so cheap these days you can easily set up a machine in a random country.

Check this out:
http://www.ovh.co.uk/dedicated_servers/

REALLY CHEAP.

Yeah - like the guy who once had Liberty Reserve (http://libertyreserve.com/).. :)

You have to understand where he's coming from. He and the Bitcoin Foundation are pushing Bitcoin as a system to do payments on the internet; the recent San Jose conference had the tagline "The future of payments" after all.

It's a lot harder to convince people that investing time and money into implementing Bitcoin for payments is a good idea with a 1MB limit on transactions. Removing the blocksize limit entirely and making it something that miners decide solves that problem from that perspective: regardless of what the demand from transactions are at least one entity will always be able to meet that demand at a cost approaching the cost of bandwidth and servers. That's why Gavin likes to talk a lot about "free market forces" and "competition" when it comes to mining, and has said before he's happy to see the smallest 20% or so of miners and full-node operators get forced out of business by rising costs every year.

From the perspective of someone who wants to accept Bitcoin payments on their online store letting the majority of miners decide what the blocksize is solves the uncertainty of how much transactions will cost. They connect directly to miners to send their transactions and don't care if Bitcoin is controlled by six people or six million. From the perspective of someone investing in Bitcoins because they want a decentralized store-of-value, AKA electronic gold... well they might see things differently.

Thank you Gavin for keeping common sense on this matter.

Little suggestion to the dev team: when dropping the block size limit, also consider implementing "replacement code" that would give block generators the ability to control the block limit themselves through soft-limits. Soft-limits could be useful not only on the size of the block, but on the amount of "unknown transactions" you see in a new block - spammer-miners would have to fill their blocks with transactions that are not on other generators' memory pools. In other words, don't forget to provide the tools for block generators to collectively control the block size.
You may bet that, as soon as there's no longer a hard limit on block sizes, some of these "Bitcoin should crippled and limited to a SWIFT2.0"-people will attempt to spam the network with gigantic blocks, if only to "prove their point".

I still don't see it how they are going to convince the miners to drop the 1MB limit.
Is there even a single mining pool that would not want to see 1MB limit at work, at least for awhile?
When they see it, when they see the size of the incentive the limit gives them, it will make them even more motivated to never unlock it.

Counting on the pool operators that they will just unconsciously start mining version 3 blocks, just because it will be a default setting in bitcoind version 0.8.4 onward...
One would need to think that these people are either stupid or ignorant, which I don't think they are.

It depends on how big you are. Right now transactions cost about $12 (http://blockchain.info/charts/cost-per-transaction) each in terms of the inflation subsidy, which also shows how the Bitcoin price is being held up by investors, not the utility of Bitcoin as a payment system. If you are a small mining pool you have every reason to keep that 1MB limit... but if you are a large mining pool, why not make huge blocks filled with almost free transactions and force your competition out of business?

Orphaned blocks are interesting too, because if a mining pool is trying to do that what makes sense for your competition is to produce blocks with no transactions in them at all to keep collecting the inflation subsidy. When you do that you don't need to know what transactions are on the network, nor do you need to validate blocks. Of course the people mining at your pool might leave, but only if the largest pool pays miners more in reality - they might not if the business isn't there.

It's a really strange set of incentives.

Incidentally I'm planning on making sure code that makes it easy for miners and mining pools to do exactly this is available, although I hope people use it in a different way: when you know a block has been generated, but haven't validated it fully, attempt to mine a zero-transaction block that would orphan that block. But the way incentives are, mining in the no-validation way is what's most profitable.

Well then we can only hope that none of the existing pools will choose the "force your competition out of business" model, and so if Bitcoin Foundation want to turn bitcoin's main chain into a paypal replacement, they will have to start from investing in a mining hardware, prior to building the data centers for running the nodes.

I wish you good luck with the change Gavin although, like piotr_n says, people are either stupid or ignorant.

You are the one who needs to focus on leading the development team according to the Bitcoin community, not the other way around. I would recommend having more than a rough consensus on this issue.

I actually said the opposite. You wish they were, but I doubt that they are... :)

Indeed.

More to the point, people who are putting time and money into Bitcoin payment systems should think really carefully about how little we know about what Bitcoin is going to look like in the future. I had an interview with the BTC Journal at the conference, which included this segment on where I thought Bitcoin would be in five years: http://www.youtube.com/watch?v=2Z902nIOvL0 In short, I don't know.

That uncertainty is the truth of the matter. We've already had to ban sub-cent microtransactions in Bitcoin - the 0.8.2 release now blocks them as "spam" - and we have no idea what the cost of transactions will be in the future. Given that uncertainty if the Bitcoin Foundation wants to promote Bitcoin as a payment system they really should be looking at technology that genuinely can scale rather than relying only on technology where scaling directly conflicts with decentralization.

100 000 000 times this :D :D

Mining should be stopped at all.
If we need "more" BTC a small algorithm is enough, setting for example

1 old BTC = 100 new BTC

But if you're convinced miners would not go above the 1Mb limit, why are you afraid of replacing a hard-coded constant by voluntary/decentralized/p2p/spontaneous-order limits?

When it's time to drop the limit, soft-limits configs should be available on bitcoind. The default first entry could be precisely 1Mb, just to keep as is. Block generators would have to manually change that configuration in order to start easily accepting larger blocks... otherwise they would refuse them until they're deeper.

As you say, they'd likely not change it so easily. They'd only change if they consider the potential extra-revenues from adding more transactions more valuable than the risk of being orphaned - and that's precisely demand pushing for more supply.

+1M :)

+n, n->∞

I actually was under the impression that we are libertarians here and we should push for any solution that decreases centralization.

No block size limit = free market decides the proper size
Block size limit = central planning

Central planning never works and is bad. Aren't 300+ million casualties of communism enough to prove that ?

You mean the 3 people controlling the pools that have the majority of hashing power control the blocksize.

Actually, no. Individual miners have freedom to choose a pool which suits their interests better or simply use the P2P pool.

OR start a new pool and convince enough people to use it.

Indeed you can, but you've moved away from the standard Bitcoin model where we hold miners hostage by saying if they do something we dislike, we'll ignore the blocks they mine. If we were having a discussion about what the inflation subsidy would be, no-one would ever suggest putting it to a miner vote; as Jeff Garzik said a few months ago the decision is very much like the inflation subsidy: http://garzikrants.blogspot.ca/2013/02/bitcoin-block-size-thoughts.html (he proposes a fixed blockchain growth rule, although that has many problems of it's own because you can't predict the future)

Well perhaps there could be a configuration settings in the normal(non-miners) clients for that too.

So then we could threaten miners that we won't accept/relay/confirm their blocks if they don't comply with our demands.

A display of FUD and economic ignorance in a single sentence.

Because I'd prefer this community to stay united, in order to protect the network, instead of starting a war on who has a bigger hashing board.

Besides, I cannot resist the feeling that there is some hidden agenda and it hasn't been necessarily planed to leave the default at 1MB, but rather to sneak the patch through, without doing too much noise around it, hoping that nobody would notice. Just a fact that the lead developer is getting paid by the very same people who have a vast interest in making bitcoin nodes unavailable for an average citizen of the world - it itself indicates at least a possible conflict of interest, though some people might just simply call it a corruption.
On top of that, nothing has been consulted with the community. Gavin jumps into the thread with an announcement "The block size will be raised" because "that is the overwhelming consensus among the people who are actually writing code and using Bitcoin for products and services that it needs to happen."
What the hell? :) Are we supposed to just believe that whoever he talked to in San Jose was a good statistical representation of the worldwide bitcoin community and so the bitcoin community surely wants him to lift the limit from the protocol, and they want him to do it ASAP?

The wording "using Bitcoin for products and services" is very specific. As Peter pointed out earlier the fact that transactions currency cost $12 each shows very clearly that the market does not think Bitcoin as a payment service is valuable now, but instead either thinks it will be in the future, and/or sees Bitcoin as valuable as a pure investment.

"Actually writing code" is misleading. The core developers other than Gavin have a consensus that while the blocksize may be raised in the future decentralization is important and raising the blocksize must be balanced against that concern. Unfortunately for the payment side of Bitcoin that consensus also is that off-chain transactions will be required for low-value payments and you can see that consensus in action by how the developers decided to block microtransactions from Bitcoin on the basis that they weren't valuable enough for the resources they use. The question is how low is too low? No-one knows what that answer will be because as long as payments happen on a decentralized consensus system the cost of a transaction depends on how popular Bitcoin becomes. Put another way, O(n^2) scaling is a bitch.

A more interesting question is to ask why doesn't the foundation ever talk about off-chain transactions? My guess is they know that FinCEN has them in a nasty bind now that they've made it clear that Bitcoin is ok provided you use it exactly the way they want you to: as an easily traceable blockchain-only payment method. Promoting alternatives would raise ugly issues around money laundering and so on. Right now if someone went off and implemented one of Peter's anonymous chaum-token using fidelity bonded banks it would most likely be used not as a payment system, but as a way to launder money.

Yet it would also provide an answer to the scalability issue, just not one the Foundation can back, and probably not a solution that the Foundation's publicly visible and mostly US-based members can use to accept payments anyway regardless of how well it works. That gets back to the issue of his repeated thunderous public statements of course. What do they do? They discourage anyone from working on alternatives. If they don't exist, people won't have any option but to raise the blocksize.

The worst scenario for the Foundation is if off-chain transactions are developed to the point where they are a secure and usable way of moving funds, yet the legal situation in the US doesn't change or gets worse. The rest of the world could easily choose to leave the blocksize as it is, gradually pricing companies who must follow strict anti-money-laundering laws out of Bitcoin entirely.

As for you Peter, and indeed anyone else who cares about Bitcoin's future, don't let yourself get distracted by forums. Your efforts to make the problems Bitcoin has as a payment system clear, like the replace-by-fee project and making mining more decentralized with pooled-solo mode, are good and you should keep them up. Writing code and non-forum PR is a far more valuable use of your time than chatting to angry internet trolls like ShadowOfHarbringer and Gavin.

edit: Speaking of, I agree with that anonymous timestamper. You should be encouraging UTXO timestamping and other abusive uses of Bitcoin that we know threaten Bitcoin in the future now, precisely to make the risk clear. With Bitcoin it's not unlike security disclosure, where not disclosing the security risks puts us in much greater harm in the future. Gregory Maxwell's concept of our "startup capital" has value, but at the same time we should get a sense now of how valuable people see abusive use when we know we have no way of stopping them in the future other than by making the use expensive. So yes, turn off your timestamping servers until someone is willing to pay you properly to run them.

edit #2: Note how I'm not saying that the foundation is trying to get Bitcoin under FinCEN/US government control, just that they are taking a perfect rational approach towards promoting the blockchain as the solution to all payments given the limitations public companies in the US face.

I'm doing well this month, so far I've been called an "Angry Internet Troll", a "coward", and a "nazi".

The funny thing is I don't even remember being angry in the last 72 hours...

Well, I guess that jdillon knows better what i feel then.

Obviously none of you is going to address jdillon's key argument, that is:
Bitcoin Foundation is doing (more or less consciously) everything to:
1) get bitcoin under control of the US government.
2) disturb anyone in solving the scaling issue by other means than increasing the block size

That is not the topic of the discussion, so i ignored it as offtopic.

Best comment I've seen here. :D :D :D

Yeah, keep trolling guys. I surely care :)

Ha, and I hear you called Peter either "The Devil's Advocate" or "The Antichrist" at the conference. (my source wasn't quite sure)

As I was saying, I think all this talk is a bit pointless and distracting from real work that could be done, so I'll do what I can to end this thread in the usual internet tradition.

Heil Hiter!

Block size soft limit is already a configurable parameter inside bitcoind.

Your "thick skin" should help you surpass the shock in no time. Meanwhile just address some points presented in this thread and don't feed other trolls, if it's not too much to ask.

Nobody is trolling here, seriously. We are just pointing out that your arguments are idiotic.

I think we must give him some time to consult the answers with the lawyers first :)

Without an explicit written permission, he seems to be only entitled to giving replies on whether he is a nazi, a troll, or a coward.. ;)

I'm not sure we're talking the same thing here.
What I call "soft limit" is not a personal limit on the blocks you'll generate or relay.
What I mean would be a set of value-pairs (X,Y), where X is a limit for block acceptance, and Y is the number of block deeps a third-party block violating X needs to be in the chain for you to accept to mine on top of it.
For example, let's say, for block size soft limit you set (1Mb, 1), (5Mb, 2) and (10Mb, 3). That means that if you receive a block larger than 1Mb, you refuse to build on top of it, unless it has already another block on top of it. For >5Mb, it needs to be 2 blocks deep. For 10Mb, 3 blocks deep and so on.
I also strongly suggest soft-limits on "percentage of unknown transactions (not in memory pool)", because that's how a spammer-miner would create gigantic blocks: by filling it with transactions that he does not intend to broadcast, as that would require paying lots of fees.

AFAIK none of these are implemented, right?

Every point presented on this subject has already being addressed. Multiple times.

Well, then please refer me to the post that addresses my last question: Does Gavin's salary paid by the Bitcoin Foundation create a conflict of interest?
Or another question: Does Bitcoin Foundation try to discourage development of off-chain transactions technologies, in favour of increasing the block size?

This is totally unrelated and a sort of ad hominem.

I'm also wary of this Vesseness guy. He seems the typical ""capitalist"" that won't hesitate to use the government to rule out his competitors. I'm not very found of the bitcoin foundation either, as you can guess.

That has nothing to do with the block size limit. This damn constant should never have been created in the first place.... the day I learned about it I knew it would be a problem...

Yes.  If you're feeling helpful, please create a wiki page or other document that organizes all of the pro/con arguments: economic and technical. And maybe another wiki page that organizes all of the various proposals for how to increase the block size.

I've been derailed the last week by a death in the family (http://higginsfuneralhome.com/obituary_view/2013-05-theodore-frederic-cooke/10065698), and still need to finish up some payment protocol work.

Again, these point have nothing to do with whether a central planning is necessary to avoid market cartelization on the bitcoin network, or whether we have any technical reason to keep this damn constant there (we don't).

Dropping the hard-coded block size limit is totally orthogonal to developing off-chain transaction technologies by the way. I'm for instance very optimistic about Open Transactions. But I still want to be able to transact on the blockchain daily. One thing doesn't rule out the other.

Please, don't be silly.
I'm sorry for your lose, but should I be bringing the deaths in my family as well? I've surely had some recently, but it's just not an argument for a bitcoin development board.

As for the wiki page, or pros/cons list - I've been there and I am now old enough to know that the only reason anyone would refer me to such a means, is if he wants to get rid of me.
So thanks, but I won't use it.

My sincere condolences to you and your family. I'd suggest avoiding places like this forum for a while, and instead watch out for yourself and your loved ones.

If you're going to ask that question it's also reasonable to demand that everybody who is opposed to raising the limit disclose whether or not they are developing or invested in competing cryptocurrencies or transaction processing systems.

That is also a conflict of interests.

Well, feel free to disclose your motives.
I've already stated it that I own some mining shares, so I have an obvious incentive to keep the limit on.
Though, which you probably won't believe, my main motivation comes from a sincere care about this fine project and its future, and not from the few extra percent benefits of my mining operations.

This thread is a complete rehash of months of debate. I can't wait until we can get past this issue. I truly hope that the efforts here http://utxo.tumblr.com/ are successful, because helping scalability means helping Bitcoin and this might the most important work in the history of the currency.

Now you are just being a rude son of a bitch (not a troll).

Step down with your tone or GTFO, motherfucker. I will not be having a discussion with such a bastard.

And I mean, seriously - no trolling.

http://blogs.kansas.com/weblog/files//putin.jpg

I would have been rude if I was lying to have someone really close to me died recently.
But since it really happened, and you feel sorry for Gavin, but not at all for me and my mom, then I can only tell you back: fuck you!
Still, the code does not care about who died and someone has to take the stake and develop it further in the right direction.

"Don't be silly" is simply not a proper way to reply to somebody whose a person in the family has recently died.

You must be a sick piece of bastard (or a psychopath) if you don't know that.

It is, if it was an answer to an argument/excuse on an arbitrary change of the bitcoin protocol.
I understand how broken you can be at such moments, but bringing it as an argument on whether we should increase a block size, or not... Please.

Hey, piotr_n, I have prepared something for you:


Don't be silly. She was a bitch anyway.


Raped ? Don't be silly, everybody knows she fucked everybody around. She liked it and she wanted it.


Don't be silly, I know your neighbour and he is a cool person ! I am sure that it was your dog that was mad.


Don't be silly, that car was crap anyway.

Do you like it ?

man i really don't care about your trolling.
really.
you might even write a poem for me, and trust me: I wont read it :)

The only things I've ever been interested in are ways to allow scalability since that bothered me about Bitcoin within seconds of understanding the basics of the network and the design of it's decentralization.

• 'http://bakcoin.org' I abandoned, but it was envisioned to support 'best-of-breed' exchange currencies and thus, hopefully, Bitcoin.
• 'http://bitcoin-legacy.org' is arguably Bitcoin.  (Oh, I need to make a slight correction there...done.)
• 'http://paracoin.org' is Bitcoin by design...until Bitcoin 'fails' at least.

I've never held any alternate crypto-currencies or had much interest in them since none that I know of focus on real scaling issues.  I have given BTC to friend and encouraged them to knock themselves out playing with alternates in the hopes that some good ideas and code spring from them, but generally it's not worth my time to play with them.

The idea of a 'debt based' system which can move 'debt' to where it is needed is a powerful one and very interesting.  But Ripple is is closed source and centralized from the get-go which is a non-starter for me.  It's a completely opposite beast than Bitcoin (in my mind), but that is fine and actually a good thing.

Open Transactions seems to rock, and is exactly the class of solution I see as being the best hope for Bitcoin in any capacity where it has a realistic chance of being worth a shit (where 'worth' is not meant to be taken as in monetary terms.)

  edit: url fix

You are an asshole. Gavin was offering a way for people who actually care about this issue to present the various arguments in a useful way AND giving a reason why he can't do it right now. It wasn't an excuse, it was Gavin being his usual pragmatic self.

---------------------

Gavin my thoughts are with you and your family.

Sorry for your loss Gavin. The most prudent course of action would be you leave development for a while and recover.




Point us in the right direction, don't be shy.


@ShadowOfHarbringer please control your tone too, is obvious piotr_n wants to keep this thread on topic like you do.

This has nothing to do with trolling.
I am making a pure ad hominem argument that you are a very impolite person and also an imbecile with stupid arguments so nobody should listen to anything you have to say.
Still on topic.


Sorry for that, I usually lose my control when somebody is an über-asshole.

He deserved it anyway.


By the way, my condolences.

Exactly like these 3 people?
So 3 people have been controlling the block size ever since the 1MB limit was introduced.  Now it all becomes clear!

I am an asshole, because Gavin, after being pointed out that his neutrality in the matter is at least questionable brought up an argument of his family member passing away, and I dared to call it silly?

Well, if such a behavior falls under a definition of being an asshole, then maybe I am one - whatever.
But it still doesn't change the fact, that in my opinion there is something seriously wrong with the development of this project.
While the community expects the dev team to solve the scalability problem, the lead developer just makes an announcement that he already made the decisions along with all the other important people from the community and they decided that instead of addressing the scalability issue, while there is still time, they are only going to make it worse, and they will do it as soon as possible. And before it happens, they are also going to lobby against implementing any alternative ways of addressing this issue... hell, they are going to pretend that it isn't even possible to solve it otherwise.

Thank you though for giving me the opportunity to present the various arguments, even though by your definition I obviously belong to the ones who don't care  :)

Wait a moment.

So what are the OTHER safe & reliable methods of "addressing scalability issue" without increasing the block size ?

What are the other propositions ? And I mean ones that do not require re-writing whole protocol from scratch, by the way.

If you are criticizing this way, you need to provide **an alternative**.

Obviously. Read through this topic carefully, instead of just barking around like a rabid chihuahua, and you will find at least a few good ideas.
But they won't get a chance to really develop and built the infrastructure, as long as the transactions are free. So forcing transactions to stay free is probably the best strategy to kill these so needed innovations; and I am old enough to suspect that it might not be a coincidence, but an agenda at work.

1. I don't really have time to go through the whole topic - sorry. So please tell me which of these propositions you think should replace the increase of block size.

2. Transactions are supposed to be free - that is the foundation of Bitcoin. That is how Satoshi envisioned it. He also said very clearly that the block size limit is a temporary measure to protect the network from DDoS.

The way i see things is that you want do a hard fork and completely change the basics of Bitcoin instead of doing the thing that is natural and already designed by Satoshi - increasing the block size. And i think that is one hell of a dumb idea.

Why create a new untested solution when we already have a solution ?

You're talking bullshit, man. Transaction fees are at the very core of the bitcoin protocol, so don't tell me that bitcoin was designed with free transactions in mind.
If you make the transactions free forever and this will centralized the infrastructure - how will it be different from what a paypal is today?
How are you going to prevent people running huge bitcoin nodes from getting arrested in Spain, or just killed without a trial in Pakistan, by US authorities or a different mafia?

You don't even understand what I am talking about and you apparently know shit about the protocol.

Obviously, transactions are CURRENTLY free only for "old" coins that haven't been moved in a long time and only until there is a block reward. When the block reward stops 100 years from now, transaction fees will be the only thing that keeps mining profitable - so there will be no free transactions anymore.


And how do you make transactions free forever with today's Bitcoin protocol ? That is impossible and that is NOT what i meant.


http://cdn.memegenerator.net/instances/250x250/37162448.jpg

Just how did you come to the conclusion that free transactions = centralized infrastructure ?


Arguments:
- Huge nodes can be run on I2P and perhaps TOR.
- Huge nodes can be run on Mesh networks (https://en.wikipedia.org/wiki/Mesh_networking).
- If Bitcoin becomes really mainstream, huge nodes will be run by companies/corporations, academies, governments

Are you assuming that Bitcoin will be a geek - only currency forever ? If that is so, then centralization will not be a problem, because there will not be any scalability problem.

Logically:
- If Bitcoin does not become mainstream => Scalability is not a problem anyway (little amount of transactions = low bandwidth/storage requirements)
- If Bitcoin becomes mainstream => scalability is not a problem, because governments, companies & academies will be running big nodes.

So your logic is fatally flawed.

Actually, one more argument:

- Huge, full Bitcoin nodes can be run on dedicated servers in different countries. The servers are now extremely cheap and will be getting cheaper every year.

He means almost free.

Regarding centralization: the advantage Bitcoin has is that the blockchain is open source. This significantly reduces the costs of running the transaction database, since there is no need to prevent unauthorized access, no need for backups, no need for 99.99% uptime, and readily available mirrored databases to restore from in case there is a server failure. What this means is that the cost of running a node will never be that high, no matter how many transactions are processed a second, and there will always be many nodes active.

In other words, if high bandwidth is the only requirement of running a full node, there won't be a shortage of full nodes.

So  what if one day the requirement becomes "you must have a government issued license to run a full node"?

You don't think that the governments would never do it to bitcoin, if they could, do you?

Then we will run nodes:
- On I2P, TOR
- On Mesh networks
- On dedicated servers in countries that don't care about U.S. law
- In rented apartments/basements with fast internet connections in different countries

Possibilities are endless.


Of course they would... if they could.
For now, they cannot even stop Bittorrent/P2P and you expect them to stop Bitcoin ? Please...

Only because running a bittorrent client does not require you do own a data center.
But whoever had to have a data-center and was found supporting a P2P sharing, has likely been shut down already or will be shut down in a near future.
Not to mention that they even go after the poor people, just to make punishing them as an example to others.

No reason to assume that the same thing would not happen to bitcoin, if we let it happen by centralizing the infrastructure.
And the reason is always the same: they want to steal your money, though to make it sound right, they call it either a tax or a copyright fee.

You really think every government in the world is going to require a license to run a Bitcoin node? There will always be many countries with no restrictions on it.

Whether every government - this I don't know.
But I am sure the one you have over your head, would be one of the firsts..

EDIT:
But I think essentially, yes.
Because every government wants to have control over what you do with your money.
Because money is power and they surely prefer to keep the power for themselves.

Unless every government does it, it won't stop Bitcoin. It won't even disrupt transactions. This makes it even less likely for any given government to consider this option.


I would bet you a lot of money that every government will not require a license to run a Bitcoin node. There are countries where that type of restriction would be opposed by too much of the public.

WTF. Stop right there.

You clearly know nothing about anything. Have you heard of pruning ? If not, please educate yourself and come back here.

https://en.bitcoin.it/wiki/Scalability
https://bitcointalk.org/index.php?topic=10663.0
https://bitcointalk.org/index.php?topic=88208.0

When pruning is implemented, the only thing you need to run full node is a fast internet connection which is ALREADY CHEAP in many countries and will be WAAAAAYY cheaper in a few years.

If govs are ever to attack bitcoin, they'll do it the way they're used to: banning their usage in commerce.
That's much more typical of governments, easier to enforce and more effective than trying to fight bitcoin on the technical realm.

Also, let's not forget that a single honest node can already spot fraud attempts like increasing the 21M BTC limit.

Oh, and let's not forget either that SPV has a high level of security too, even considering rogue full nodes. People speak as if SPV nodes would be completely vulnerable to rogue full nodes, but that's not the case. A rogue full node could potentially omit data to its SPV peers. But that risk can be considerably mitigated by just connecting to multiple full nodes: a single honest one in the bunch, and you'll receive your data.
A rogue full node cannot fake a transaction to a SPV node because he'd also need a fake Merkle root, what implies in a fake block header, what can only be obtained through real proof-of-work. If a node is willing to waste all that hashpower just to fake a transaction, why not do a Finney attack in the first place? That's more effective and works against other full nodes too.

He does know about pruning, because we were talking about it a few pages back, as well as mining optimization.


But, all this quickly and conveniently gets forgotten, then its 'data centres' all over again.

I know, but please note that it does not imply at all that the value of our bitcoins would go down then - I'd rather say that it would go up, like BTCUSD rate went up on MtGox, after they seized their Dwolla account. And like drugs got more expensive, after they had been banned.

Moreover, a theory that the commerce is very afraid of the possibility, pretty well suits to a theory that the commerce might just corrupt the devs, so they would help to make bitcoin protocol as the government requires; centralized and with a built in censorship mechanisms.

Exactly - maybe he knows about pruning, but he chooses to forget just to keep the discussion going.

That's what i hate about some people - they choose to IGNORE SOME ARGUMENTS so they can "win" the discussion (or at least they think so).

@ShadowOfHarbringer I say to you one more time, please control yourself.

We have an issue here and is quite obvious. Piotr_n is probably right thinking there is an agenda behind the actions of Gavin and his team, and I think the same thing, but let's not derail the topic here. I actually think the programmer team is doing this not to lose any control left over the network, like pushing changes with new updates, or vetting changes that aren't aligned with their view of the network.

Here is an example of a pull request that has the potential to limit the spam transactions, so MAX_BLOCK_SIZE limit won't be reached before a couple of years. This consists of passing the control of the Bitcoin network to it's users resulting to be a controversial change in the dev team. and obviously was closed without a serious reason by Gregory Maxwell. Btw Gregory, please abstain yourself from commenting, you've done enough.

Add user interface to set dust limit and filtered addresses - https://github.com/bitcoin/bitcoin/pull/2383

Then Gavin and team start taking it seriously and implement a fixed minimum transaction in the code - https://bitcointalk.org/index.php?topic=197414

According to Gavin himself writing code for Bitcoin, and submitting a pull request, should be quite easy - https://bitcointalk.org/index.php?topic=4571.0 , but reality is quite different.

I would recommend Gavin take small vacancy so he can recover his strength.

We are back to the essential/contentwise discussion already (I'm done insulting piotr_n), so i don't understand what are you talking about.

You simply ignored me after I pointed out how silly your theory is. Here's my challenge once again:


So do you want to bet me?

The only way Bitcoin can be censored is if every government in the world requires a license to run a Bitcoin node. If this is wrong, then everything you're arguing is wrong.

Glad to hear that, probably I missed your latest posts so I wasn't aware you guys have settled down.


Would you be so kind to comment on the solution I presented on MAX_BLOCK_SIZE issue?

Wery well, but first i need to find it...

EDIT:
I checked all of your posts in this topic and it is not there. Please point me in the right direction.

No. Because if I win, you won't be able to pay up anymore.

Plus, I don't bet on things which I am against, because this would create a conflict of interests inside me, and unlike some people, I do have problems with such.

We can put dollars in escrow, so I can pay you even if BTC goes to 0, which is very unlikely to happen even if all governments required node operators to be licensed.

Anyway, the idea that every government in the world would make laws against running a node without a license is preposterous. That really ends this debate. You're worrying about something that is barely any more likely than every government banning Tor exit nodes and encrypted traffic.

Sorry about that, it was my previous post.

https://bitcointalk.org/index.php?topic=221111.msg2377152#msg2377152

Please, for your own sake, stop proving to us how incompetent you are in predicting governments' intentions.

Obviously they wont call it "a law against running a node" - they will just shut down your node saying that it was being a part of a global money laundering syndicate, or whatever terrorism sponsoring related, and so if you are lucky, you will be able to leave the prison yet before you die.

They won't even need to change a single law in order to shut you down; their interpretation of what kind of evil you are doing running a node without exporting an API for their censorship app, will be just enough.

Every government in the world will not do that. As I said, you might as well be worrying about every government in the world making encrypted traffic and Tor exit nodes illegal.

Governments that want to censor Bitcoin will punish businesses that accept BTC, and those that exchange it. It's futile to censor BTC data, since it needs EVERY OTHER GOVERNMENT in the world to cooperate to be successful.

Quite correct.

Exactly as it is wit Bittorrent, creating an effective law against Bitcoin connections/nodes will require cooperation of EVERY GOVERNMENT IN THE DAMN WORLD (because internet is by its nature decentralized).

And that will never happen and has never, ever happened in history. So yes, amincd's argument is correct.
The only other thing that can be done technically is shutting down the Internet.

Actually "they" would like very much to shut down the Internet, as this video shows:
http://www.youtube.com/watch?v=Ct9xzXUQLuY

But "they" CAN'T. Too bad, I almost feel sorry for "them".

It's funny how people believe that it is not possible for all the governments to do it, though they have no question whatsoever whether their own government (the one that they elected) would do it, as soon as it gets a chance :)

Here is what you need to believe to oppose lifting the 1 MB block limit:

1) That there is a real possibility that all governments in the world will agree to censor BTC nodes, but that they would only stop at BTC nodes, and not all agree to also censor encrypted traffic. I put the possibility of this at less than 0.1 percent, and I don't think many people will put it at much higher.

2) That if 1) does come to be, there is a real possibility that the majority of governments in the world will also all create laws to force bitcoin miners to use their hashing hardware to attack a new fork of Bitcoin that is limited to 1 MB blocks. I put the possibility of this happening at less than 0.001 percent.

There has to be a reasonable chance that both 1) and 2) will happen for it to be the correct decision to cap block sizes at 1 MB right now and there is no way that's the case.

Yeah, that's what I was going to say. In the absurd event of Bitcoin being strongly banned everywhere, blocks would naturally become tiny since Bitcoin usage would become quite restrict anyway. Block sizes would be the least of our worries.

They're warning about a scenario where running a Bitcoin node requires a license in every country in the world, where this global government measure doesn't lead to blocks getting tiny, that governments, after taking this measure, aren't willing to take the next step and ban all encrypted traffic, and that the majority of governments make laws forcing miners to use their hashing hardware to attack any 1 MB block limited forked version of Bitcoin.

In this incredibly improbable coincidence of events, then having made the 1 MB block limit permanent now would have been the correct decision.

+1

Also, banning of ALL ENCRYPTED TRAFFIC by ALL GOVERNMENTS SIMULTANEOUSLY ?

I would say the probability of this is almost astronomically small, like < 0.0000001.

You can't get all governments to agree on probably any topic you want (choose one at random) and piotr_n would like us to believe that all of them will agree on such an important issue ?

https://lh4.googleusercontent.com/-3XyFOc6kzmI/T3CV0MlwBQE/AAAAAAAAAbo/1xbv5SMlCAo/s250-c-k-no/ProfilePhotos

To be fair, their premise is that encrypted traffic wouldn't be banned, so a 1 MB block limited Bitcoin network could operate encrypted, but that all countries in the world would require a license to run a Bitcoin node, so it would only be possible to run an uncensored Bitcoin node if blocks are small enough where they can be encrypted. In this scenario, only a 1 MB block limit could save Bitcoin.

Even then, we're just going to run Mesh networks, powered by the sun if need be.

The cat is out of the bag.

Not true in my case, but I am way out on the edge compared to most people.

Getting rid of encryption on the public internet won't fly.  It is far to critical for security.  What could fly, however, would be only allowing encryption which was 'certified' in some manner.  Namely, in a manner which would provide a back-door which would allow analysis and capture.

I hypothesize that this will go down by having ISP's and network carriers use devices which will be able to detect and block encrypted data which is found to not be 'compliant'.  Or encrypted data which was carrying a payload which is not authorized.  And do so in close enough to real-time so that it could not be argued to be a show-stopper from an economic perspective.  This could explain some of these observations:

http://www.dslreports.com/shownews/Obama-Set-to-Back-Fines-for-NonCompliant-Wiretapping-ISPs-124163

http://www.wired.com/wiredenterprise/2013/05/nsa-bluffdale/

https://www.eff.org/deeplinks/2010/09/government-seeks

If this is true, then yes, there still _may_ be jurisdictions where it is possible to operate and access a high data-rate crypto-currency, but it will be a somewhat dangerous cat and mouse game reserved for specialists to even actually use them much less to operate them.  Actually, the same applies to low data-rate systems as well, but it becomes more practical to operate them in a wider range of places.

If large countries who's leadership most fears their own populations decide to cooperated within their own jurisdictions and put pressure on their smaller vassal states to do the same, it could become for all intents and purposes, impossible to run a viable system at high data rates.  I could imagine such cooperation being of enough mutual interest that I certainly would not rule it out.

Out-of-band communications like 'mesh networks' are not completely without hope, but it is critical to realize that even unmolested they will be WAY less capable, performant, and reliable than anything like what we are used to today.  If they are attacked as subversive, which seems highly likely to me, they may not work at all.

I would not anticipate such a dystopia to be a permanent thing.  People will eventually get fed up and make some changes.  But it could easily persist through a period of economic chaos, and that is exactly when we'd be in the most need of a functional and independent currency solution.

Vote: https://bitcointalk.org/index.php?topic=226193.0 (https://bitcointalk.org/index.php?topic=226193.0)

I don't see the option for "a shitty wire replacement service that is expensive to use, impractical for commerce, non-ubiquitous, unwilling to make use of computing advancements, and soon to be replaced by competing technology developed by reasonable people".

And I don't see an option for "It will stay in the geeks' mode, because the core devs will betray Satoshi's ideas for a corporation's 40 silvers, while the people's (hashing) power will stand up to them, in order to protect the actual values behind their Bitcoins".

Though, even then, I barely ever participate in polls that have more than a Yes/No answer.

Stop misrepresenting Satoshi's ideas. I've read them. I knew what I was signing up for.

Bitcoin is intended to rival Visa and Paypal, not Western Union. Saying a lie over and over again does not make it true.

I want Bitcoin to be widely used. Actually used. I don't give a fuck about running a full node on my watch.

Since Satoshi is gone, everybody has a right to interpret his ideas in their own way.
For me, the biggest achievement of Bitcoin is that it managed to get the money out from a control of governments, using P2P decentralization along with the hashing.
Today when I read that the lead developer does not consider decentralization as particularly important and he even does not care about what the miners think of his ideas to change the protocol - for me, it's like betraying Satoshi's ideas.
Though I must honestly add that (unlike Gavin) I did not know the guy, so maybe indeed he wanted to invent a more secure way of doing a visa/paypal transactions... :)

No, bitcoin is not intended to rival Visa, and never will be.  Bitcoin has nothing to do with debt (thank goodness).

While it's an interesting topic, it doesn't change any point I made. From my understanding of how encrypted traffic is blocked, whether encrypted traffic is banned, or merely restricted to prevent BTC use, either way, such a global measure would make Bitcoin impossible regardless of what the block size limit is.

My point is that if the unlikely scenario of governments all deciding to require node operators to be licensed came to be, then there would be very little stopping them from taking it a step further and also banning/restricting encrypted traffic. Based on this assumption, I believe it's unlikely that there will ever be a reaction by every government in the world that would affect a large block version of Bitcoin, but not one with small blocks.



This is very very dishonest. I have posted quotes from Satoshi in which he states he wanted a high-bandwidth Bitcoin.

You're also once again not responding to my argument for why we have no reason to worry about Bitcoin centralization due to high-bandwidth requirements for running a node:

I'm sure 4 years ago I was also thinking that my internet speed would be going up, along with my CPU speed.
But it didn't, so if I was Saotoshi I would likely review that targets now.
And since he is not here anymore, your guessing of whether he'd be voting to increase the block size now, or not, is as good as mine.
And even if he would, his vote only counts as much as he can hash - that's the rules he designed, himself :)

You're making a lot of assumptions to claim Satoshi didn't want a high-bandwidth Bitcoin. This is very dishonest.


Did you just forget that you're the one who brought up what Satoshi wanted?

I disagree.
IMO it's very honest - it is as much honest, as you want to get from me.
One more level of my honesty up, and I would need to start swearing :)

I think everyone would agree with me. You're a troll. Mods can you please move this discussion somewhere else? This discussion has long ago stopped being a technical one. Piotr_n ignores technical arguments, lies, and repeats himself.

You want it technical? No problem.
Please tell, if you know, me how long one EC_verify operation takes on your PC?

I want you to explain how high-bandwidth requirements are going to result in it becoming impossible to run Bitcoin in every country in the world.

This is my post which you still haven't replied to:

So, you've pointed out that I derailed the thread into a non-technical discussion, therefore I am a troll, but now you are proposing to get us back to politics?
No thank you. I'm done with you.

It's the legal implication of the technical aspect of Bitcoin that this comes down to, since the topic is censorship, which is a legal response.

We need to increase MAX_BLOCK_SIZE, the only questions is When? and How Much?.

When: As soon as possible.
How Much: calculating...

Ok, in that sense it's not. I am talking about eventual transactional capacity, not a business model.

Simple question, even if you don't feel that an appeal to authority provides for a valid argument, I respect your work and would like your answer to this. Having worked on the core code, with the understanding and knowledge that you have, do you personally believe that the 1mb limit was intended to remain in place permanently? Regardless of what is decided as optimal now, what do you believe was the original intention?

these  are some pretty clear thesis.
now prove them, as a scientist should before developing a system to satisfy them.
I'd actually like to see at least one proof that increasing the block size is going to make the bitcoin world anyhow better, from what we have now.

Let me remind you of @kjj idea, which I find interesting:


Though I would consider adding some high hard limit too (100MB-1GB)

Based on the poll linked above, about half of the people on this forum who are not overtly hostile to Bitcoin have a criteria of success that would not be met if Bitcoin was too widely used.

That seems about right based on the responses in all these threads about MAX_BLOCK_SIZE. For many people it's not whether Bitcoin can or can't scale to be ubiquitous currency, it's that they don't want Bitcoin to become ubiquitous so they work backwards from that desire to make sure it doesn't happen.

Just looked at that poll, and the results seem very encouraging. Nearly 80% want/expect Bitcoin to be a global success, yet about half that number are realistic that one or more other crypto will have a major market-share. (IMHO, other crypto will stay but have a minor market share).
So the vast majority of Bitcoiners expect it to scale well. JR, I don't read much hidden agenda there...

one last time: it doesn't matter what participants of your poll think.
the only thing that should matter in making decisions on how to change the bitcoin protocol, or if it is needed at all, should be the hashing majority.
setting up some meeting on a desert in las Vegas, or wherever, where a bunch of guys who consider themselves the elite of bitcoin decide how to change the protocol, and maybe even (god, I hope not) how to push it through, without the people noticing - shame on you. that's all I have to say

Are both of these posts from you?

The hashing majority will have another choice. If they don't like the changes, they will not upgrade their clients to new version !
But right now it seems most of people, EXCLUDING YOU is supporting the change.


What the hell are you talking about ?
What have you been smoking ?
Where have you been the last 6 months ?

Yes, this issue has been discussed for AT LEAST 6 MONTHS. This is not "some decision done on the desert of LA", dumbass.

Please, stop wasting our time with this pointless discussion. All of your arguments have been proven to be wrong.

Schizophrenia tends to do that.

He probably thinks he is 2 different people simultaneously.

yes. I'm not a kind of person who would start a forum topic to not learn anything from it. though, I believe that for you it might be unusual :-)

This is the 3rd or 4th time he has done that in this thread.

Obvious troll is obvious. Clicking ignore button now.

Upon further reflection, I now feel that 1814 is too small of a number.  1915 would be better, possibly even higher.

In regards to all of the talk about banning encryption, I guess no one remembers the 90s any more.  The cypherpunks won that battle in the past.  The genie is out so far now that no one even remembers that there was a lamp before.

They did indeed, and the way they won it points to how we'll win this one. You build systems that everybody else uses and make them essential to the operation of the economy. Everybody depends on SSH and SSL, you can't censor dissidents without censoring everyone.

Metaphorically, you take the world's payment systems hostage, so that nobody can shoot Bitcoin without shooting something they care about.

Legitimate payments of taxpaying businesses, right there on the blockchain. Loads of them. Every corporation that owns a congressman should want to protect bitcoin. Every organization that mobilizes large numbers of voters should want to protect bitcoin. If someone suggests attacking the network to try to taint coins or cause some other kind of mischief, whether it's by creating regulations or setting up rival government-run nodes, they should get angry phone calls from every donor from Amazon to Walmart, and every charity from the NRA to the Salvation Army.

Bitcoin can do this, as long as we don't break the feature that makes it attractive to the great majority of people out there who will never be libertarians. And that feature is UNBELIEVABLY CHEAP ONLINE PAYMENTS.

I was involved with the internet in the mid 90's an following some of the cypherpunks work, but was not involved aside from piddling around with early versions of PGP and such.  I've been a politically aware US citizen since that time.

I can tell you that there have been notable shifts in popular opinion and expectations over this 20 year preriod.  There have been even more significant shifts on how the internet is used and viewed.

If you get complacent and think that what the cypherpunks achieved is sufficient to stand in stone forever more, you may very well be in for a rude awakening.  Certainly the Obama admin does not accept that military grade encryption is without a backdoor to assist  our fearless leaders in protecting us is the right path forward (see the EFF story I posted.)

As I mentioned, it is clear that we need SSL and probably SSH for business reasons.  That is NOT the same thing as needing these two to be capable of resisting 'authorized' analysis.  If you are going to stand up and say you don't trust the FBI, NSA, etc, your message is not going to resonate with either the legislative bodies or a healthy percentage of the population who is scared shitless by the 'Christmas bomber.'

Who's saying that? I'm certainly not.

What I'm saying is that we should learn from what has been effective so far: It's far easier to protect a technology from regulatory attack, including marginal or dissident uses of that technology, if it's embedded enough in common, lawful, everyday commercial activities to be hard to attack without incurring serious collateral damage.

It follows that if we want to protect Bitcoin from regulatory attack (most plausibly at the fiat exchange end, but also potentially more exotic things like trying to force 51% of miners to taint coins or government subsidizing mining nodes to do that itself) we should be optimizing for fast, massive, widespread commercial adoption. Which means cheap transactions, and lots of them.

There is a brilliant article at www.thegenesisblock.com (http://www.thegenesisblock.com/go-fork-yourself-life-after-a-bitcoin-hard-fork/) that starts with a quote from the conference.


I think the above quote wraps up pretty well some concerns that people have been trying to discuss in this topic (though only to meet a wall of silence).

So, what do the elite of bitcoin do seeing that the network's genius design is not going to let them put their dirty hands on the protocol?
They announce plan B: the proof-of-work function must change... and that is also not a discussion!
And why it must change?
Because it's just wrong that one dude (meaning some guy in China who they don't know) has more voting power than they do altogether, while they are supposed to be the bitcoin ruling elite... :D

Well, let me tell you something, mr Kaminsky.
The one dude at least has done something to build an infrastructure that protects this network from governments, while you were conspiring with a bunch eggheads on how to capture it for yourself using the very means that the network was designed to prevent. And the design is so fine, that it will surely prevent it, so keep dreaming...
Yesterday the one dude turned out to be much smarter than you and there is no reason to assume that he won't be smarter than you tomorrow, so even if you don't value his contribution into the security of the network, at least have a decency to show some respect towards people smarter than you.

You want to change the bitcoin's POW function, and you think that you can just do it, because you have an entitlement to pull patches and tag sources on the github, and the ownership of bitcoin.org domain?  ::)
Be my guest, man - I'll gladly see your disappointment when you smash onto the Satoshi's great wall. Although, I would rather advise you to just stop wasting your time, and if you are not interested in the real bitcoins, better go back to using US dollars already today - that will save you a lot of wasted efforts and further disappointments.

You don't actually know who Dan is, do you?

No, I don't.
Though when I put his name into Google a wiki article appears on top, so I guess he must be somehow important :)

That's debatable.  But he certainly isn't important here.

I nearly shot beer out my nose when you called him "elite of bitcoin".

Well, if you watch the video, he even said that he already discussed changing of the POW function with others, during a "great meeting", though he did not want to give their names.
So either he was lying, or he indeed did not want to disclose a conspiracy. Or maybe he was just fantasizing...

Either way it happened at the very same conference where Gaving was working out a consensus among the people who know better than anyone else why we must push to increase the block size.

Hehe. I'm willing to call "elite of bitcoin" anyone who considers himself as such.. :)
And he surely does, if you listen to him. And he even got an applause.

Then you rage against figments of your imagination.  You should stop doing that.  It is a very clear sign that your tinfoil hat is on too tight.

P.S.   Barring some catastrophic break in SHA, something that advances our knowledge of cryptography by a couple of decades overnight, there is no chance of a change in the POW system this year.  Anyone that tells you otherwise is a deluded attention whore (Hi Dan!), or doesn't really understand how bitcoin works.

Sorry I don't speak English that well - I have to guess what it means and hope that it wasn't too insulting :)

So you believe that there is an actual bitcoin elite, and I am deprecating their titles by giving it to any freak who thinks that he can just change the protocol without asking the miners?

In such case: can I get the list, please? Otherwise how am I supposed to know who I can call the elite of bitcoin, and who I cannot..


Yeah, I said that, only using different words. But it wont change not because nobody will try - it wont change because the network won't let it.
Surely some people will try - the only question is 'is it only Dan?'

My best hypothesis is that Dan said that for 'attention whore' reason, but also to light a fire under those who need to be thinking about this stuff.  And it has had that effect...or something has.

The primitive proof-of-work based on sha256 has had the effect of lending enough credibility to the system to allow it to get big enough to make some people some money.  But it's weaknesses are becoming apparent to a segment of the community.  Whether a more well thought out scheme to keep Bitcoin credible into the future can be transplanted in at this point will be an interesting thing to observe.

OTOH, there may be other reasons why it is not worth the bother.  That is to say, if there is no real hope of Bitcoin remaining de-centralized then who cares what the proof-of-work scheme happens to be?  If a battle between Titans decides who's property it becomes, I personally could not care less which one happens to win it.

IMHO, if the SHA gets broken (so when you can do the reverse function using limited resources), then we can as well assume that bitcoin got broken, because from that moment on, you will be able to replace any existing transaction inside the chain. So then, instead of changing the POW function, it would probably be just more efficient and more fair to start a new currency.

But if it only gets broken in a meaning that it will suddenly be i.e. 1e10 times easier to calc the hash - then it isn't really broken, but rather optimized.
New mining h/w will appear, smashing the old one, the difficulty will adjust, and you can as well continue with SHA...

And as far as I understand SHA, it is quite proven that the function cannot be reversed. From a popular science point of view, reversing SHA is much less possible than time travels :)

We are entering bitcoin 2.0

The next evolution of bitcoin will be moving away from its decentralized nature towards centralized nodes.

Firstly, as blockchain grows, mining will become more expensive because of increased bandwidth and storage requirements.

It will become more expensive to make decentralized bitcoin transactions because the supply/demand dynamic will change - there will be more transactions, with less miners to store them.

Therefore there will be a new market for 'off-chain' transactions. A centralized network of off-chain transactions will evolve for transactions such as, pay 0.003 BTC to buy a coke from a vending machine. People will prefer to use off-chain transactions because it will be cheaper than using the blockchain.

This will all be driven by a change in the transaction supply/demand dynamic and an increase in transaction fees.

I believe the bitcoin network will evolve to accommodate this.

As far as blocksize limit goes, I think it needs to be raised, clearly.

I'm sure as bitcoin grows and changes, the developers will have to modify the protocol more. The modifications will be chosen by the politics of bitcoin and the demands of the userbase.

In short, its my opinion that much evolution will happen naturally with bitcoin to accommodate a larger userbase.

This will all happen with a background of collapsing FIAT currencies and broader government recognition/adoption of bitcoin. Governments will eventually recognize it is in their interest to support bitcoin and they will not prevent its evolution. If they try to stop it, they will not succeed.

Sounds like a business plan.

But do you really think that you can predict what the network will decide to do? Or are you still one of those who belive that it won't be the network to decide?
Or maybe, abstracting from a religion of network: how much would you be willing to bet that what you think will happen, will actually happen?
Because I, for instance, I don't know. Though, I do know that the network does not seem to be having any incentive to increase MAX_BLOCK_SIZE. At least not now.
I'm glad to be silently assured by some people that it wont happen without asking miners for a conscious vote, but I still think that making sure that miners vote consciously should be the main target of a real bitcoin foundation. Instead of making fun of people, who are actually doing their job (http://keepbitcoinfree.org/), though in a kind of an underground. If the main principle of the project becomes an underground - where are we? :)

Look, let's be clear about this. Bitcoin did not come about in a vacuum. This technology was not invented on its own. It was invented with a background of collapsing fiat currencies, in an era where fiat currencies have failed.

Right now, technology is not there to allow the bitcoin system to be completely decentralized. Because a P2P system cannot scale to accommodate all the tiniest mBTC transactions at current VISA bandwidth.

So the market will innovate to get round this. I believe the system I've described is what will happen, of course it could go another way. But in any case all the people who are predicting bitcoin will die due to scaling issues, will be proved wrong.

Eventually at some point in the future, perhaps technology will evolve so that more transactions can be shared on the blockchain (ie. transaction costs will come down). However I have already posted about how bitcoin is not scalable (storage & bandwidth are not unlimited, Moore's law is not a law).

The key thing to realize here? The world will soon need a currency like bitcoin. Bitcoin was not invented in a vacuum. We are heading for a serious collapse in the dollar and all other fiat currencies. Global governments have been proved incapable of managing their currencies and money supply. The end is near.

If max block size isn't made larger then how will Bitcoin handle the flood of transactions  it may take to reach $1000 or $10,000 a coin? Changes have to be made and 10 months is a good timespan to expect to have to make them.

Let me quote the poster who originated this idea:



Microtransactions are a necessity. Without facilitating microtransactions Bitcoin cannot grow to it's full potential. $1000 a coin, $5000 a coin, $10,000 a coin, or more, are all possible only through large amounts of microtransactions.

Because math says you can't. If Bitcoin cannot do microtransactions it wont scale. If Bitcoin cannot do many tps it wont scale. Some guy here said 10MB, why not? Another said 10-100MB, I can agree with that as well but I think 10MB is more conservative. 1MB just doesn't make any sense.

So how are we supposed to buy stuff?  Sure you can somehow pool them into bulk transactions but I fail to understand your alternative.

I think that it is just the opposite.  If Bitcoin continues to lose nodes and become increasingly centralized as the capitalization required to run at these capacities increases, the value proposition as a robust solution which is able to withstand attack will be severely damaged.

OTOH, if Bitcoin remains highly decentralized and becomes the value base for second tier or 'off chain' providers, I have no trouble at all seeing stunningly high valuations.

Remember, it is perfectly possible to for second tier processors to both prove their reserve, and to lock it such that they need their customers need approval in order to use it.  This contrasts sharply with the murky and inflationary nature of our mainstream economic solutions of today.

 edit: grammatical fix

Use a VPN and now you can. Use a paid VPN.

Even the Internet has a backbone and couldn't be completely decentralized. I think even in the best case there will be supernodes. I don't have a problem with the idea if the supernodes can be spread out across many nations and it's international. No government will control it. But I don't think it's going to be a completely flat evenly distributed thing because that seems impossible.

The Internet is anything but decentralized and it is no trouble whatsoever for the authorities to shut down centralized services.  Nor is it required that there is a low threshold for collateral damage.  Witness Megauploads as an example.  In that case the service threatened mainly the dominant political player (the US) yet it was still possible to completely kill it and do so overnight.

It would also be fairly trivial, I believe, for a great deal of grief to be heaped upon those end-users attempting to use Bitcoin natively, and do so at the ISP and even the backbone level.  Do you really want to fire up a VPN to make a micro-transaction?  ...even if it remains completely trivial to use you favorite VPN which is far from certain and, I believe, even unlikely...

The internet will not go away absent a Mad-max scenario.  It is to critical.  But it would not be very hard to make it much less free.  Something like Bitcoin has the potential to threaten pretty much all central governments (who are pretty universally cronies of the modern economic systems which have developed) so I think that counting on jurisdiction hoping is a risky gamble.

A low data-rate solution operated by low capitalized independent specialists is possible under almost any realistic regime of increased network control.  And second-tier providers have a lot more flexibility to adapt to on-the-ground and evolving threats.  This is why I see such a structure as having a realistic possibility of enduring in most possible future scenario.  A solution where a set of highly capitalized entities operating Bitcoin natively is, to me, a very ginger solution which relies on the kindness of it's adversaries for survival.

 edit: characterize specialists, end-users, and spelling.

Retrospecting the thread, I'd like to bring in some numbers.
At the moment we have 6353442 unspent outputs with 11287864 BTC in them, from which 4799281 (75%) outputs are below 0.01 BTC, and they carry 1515 BTC (0.01%) of the money.
The average block size, for the last 24 h, has been 125.0 KB.

So it makes me wonder, again; why do we actually need to increase the 1MB block limit, within the next year or so?
What numbers do he have to support even worrying about it?

As for my measurement, if we do the dust filtering right, and allow the fee system to work out some fair tx fees, we wont need to touch MAX_BLOCK_SIZE at least for the next 3 years. And if there will be a war (which I hope not) the 1MB limit might easily survive for 10 more years...

Keep bitcoin node lightweight - please.

+1

Anyone that is still using a modem probably won't have a digital connection, so they won't get 56kbps, it's more like 3.5-4KB/s, 35kbps or so.

Not that it really matters, since even at 56kbps it wouldn't come close to keeping up.  At the "real" optimal speed you'd get, about 4KB/s, it'd take over 2 hours.

Well, I forgot that the block chain can be compressed... so if you were downloading with zmodem or something instead of the bitcoin client, it'd probably be a bit faster

Breaking away from POTS modems which are, unfortunately, probably not sufficient for anything but a solution designed to target them which Bitcoin never was...

Anyone who has much experience with system design at the network level will also understand that in order to have a smooth functioning system, one needs significantly in excess of a simplistic number resulting from a division operation and two gross numbers.

I've already described seasonal and diurnal traffic patterns which are certain to impact a currency system significantly. 

More generally, if one is running almost any system near capacity, it is an arduous and frusterating task to catch up after inevitable failures of one sort of another.  I've seen poorly spec'd systems and/or systems which have grown unexpectedly which are *never* able to catch up.  If one is lucky (or skilled) the system can perform in a degraded capacity while catching up, but this is not likely to be the case for Bitcoin due to it's design.

Mix in a determined attacker with significant resource who can deploy, at least, denial of service attacks (and likely much more), and we have a solution which is very subject to outage.  My opinion for a long time has been to deploy some 'marketing' resources to making it broadly understood to the end-user public that even in the event of a long duration outage, Bitcoin is not 'dead' and the value held is still as safe as an individual's ability to retain their secret keys as sole property.

In the case of Megaupload it was not a threat to the US government, it was a threat to certain US businesses that corrupted the US government to align it's national interest with their business interests. We voters did not vote to take down Megauploads to protect the business model of their competitor. You're right they were able to kill it and you're right Bitcoin will probably be attacked in some countries at some point.

But Bitcoin is not completely decentralized, nothing we know of can scale and be completely decentralized. The math isn't going to work. How can it work for Bitcoin? If we look at how Bitcoin is now it's not completely decentralized. We have mining pools and companies.

Just use Bitcoin to purchase VPN service. What do you mean by fire up a VPN to make a micro transaction? What does it matter if we did have to run a VPN? Microtransactions are a thing that cryptocurrencies can do better than any other.

Bitcoin does not threaten all central governments. The NSA is not threatened at all by it.
I do see your point that you cannot count on jurisdiction and that is a gamble but isn't that the gamble we take right now already? It seems we are already taking that sort of gamble and a 51% attack has not occurred.


The solution you see in your vision just does not seem possible to do and have it scale up to the levels Bitcoin has to scale up without changing Max Block Size. So unless Bitcoin is going to basically just settle for being unable to scale up it's going to have to make a concession. If it does not then Litecoin or some other coin probably will and will surpass Bitcoin because of it. Microtransactions are essential to the success of Bitcoin and cryptocurrencies in general.

How exactly would you do this and allow Bitcoin to both scale up and do microtransactions?

I have some possible solutions to prevent highly capitalized entities from operating Bitcoin natively but they all would require complex legal schemes to pull off such as cooperatives, syndicates, L3C's and benefit corps. It is possible in theory but in practice there is the concern that if done wrong it would become just another highly capitalized entity.

I'll answer some of your points, though I snipped them for brevity.

The Megauploads thing (among many others) demonstrate that state and corporate interests are already significantly merged.  For all intents and purposes it is fair to say that the NSA and various enforcement agencies will do the bidding of the large financial corporations if and when it is deemed to be in the interest of said corporations.

Bitcoin could survive, and possibly thrive, by being absorbed into the large financial and internet companies and in that way avoid attack.  I dis-favor that approach.

Bitcoin could also survive if it remains a tiny dot, and/or is useful to a sliver of those with political clout.  I distrust that even if this were the desired trajectory it would be within the power of the solution to modulate these factors.  If it is useful, and it is, demand could grow rapidly and in waves.

If Bitcoin attempts to remain de-centralized by forming low data-rate distributed core and a multitude of decoupled second tier solutions, I believe it would have a chance of surviving in something akin to it's present form even under significant attack.  So, to address your concern about my preferred strategy needing to scale, it is not the case.  You choose the data rate which gives a light enough footprint to achieve your distribution goals, then let second tier providers build on top of it.  With economic incentive I have high confidence in the market to produce robust solutions at a rapid rate.

I cannot envision a solution which you seem to be eluding to involving high-cap players and legal structures being what I would consider robust or desirable.  I strongly prefer that Bitcoin remain completely decoupled from any legal structures.  I have nothing against cooperating with state-level legal frameworks and I think that individual operators should usually do so, but I strongly feel that it should be optional and the core solution should avoid being hamstrung by such constructs.

If Bitcoin is to be a currency and not just hoarded then it must support microtransactions. That is the only way it can beat Paypal. Everything on the web can be monetized once microtransactions are implemented properly.

I believe everything which isn't monetized should be monetized because nothing is actually free. Thinking we can access websites for free and get free content forever is an illusion. Micropayments solve the problem because Bitcoins are valuable. Everything has some value which can be priced in Bitcoins and should be and that even includes stuff like our screen names and accounts on sites but it can also be our ability to access any link on a site. If you have to pay x Bitcoins to access certain links on the site this pays for the site and you'll certainly have enough satoshi to comfortably pay for it.

What a coincidence! I can't remember the last time I paid someone with plutonium yet that is valued at $10,990 per gram.
http://www.nbl.doe.gov/htm/lists/plutonium_certified_reference_materials_price_list.htm


No, they are not, unless you mean small transactions equivalent to fiat paper currency values..

Yes they are and I'll explain why. The problem with the web is content isn't monetized. All content must be monetized. All websites must be paid for somehow. If we use a website like suicidegirls for example, currently it does not accept Bitcoins. They expect us to pay a monthly fee of $5 which ends up on our bank statement to be scrutinized. They have to charge a fee because they have to pay their models somehow, so they charge a membership fee.

Micropayments change everything. First we'd have privacy, nothing would have to be on our bank statement. Websites would charge transaction fees and micro fees to fund their site. A nash equilibrium would be reached between end users and site owners allowing the site to make a profit while allowing end users access to content.

Microtransactions would allow end users to pay for their online activities but also allow end users to get paid for their online activities. These microtransactions are the major advantage that cryptocurrencies have over fiat currencies. The other major advantage is privacy. Why not leverage both these advantages to produce a fully monetized web experience which benefits end users by allowing end users to effectively pay for content with their revenue from mining or whatever they do to earn coins and allow content producers to get paid for producing content?

If you don't have a way for content producers to get paid then you dont have a way for masses of people to earn coins. Anyone can make a blog, get paid via micropayments, and earn coins just like exchanges can all charge fees and pay for their operation that way. Anyone can start a site or forum and earn coins, now you have people actually building stuff, working for coins, spending coins, all which are good for a currency but which will only be possible with microtransactions. These small transactions which are a fraction of a cent are enough to monetize the entire web.

It does not have to be equal to fiat money values either. Assume for a moment that every screen name, every account you make, every post you make, every feature you use, all is priced in some satoshi. What if you make money for every post you make but you pay for every feature you use? This would create an economy even on forums such as this. A few bucks worth of satoshi would unlock portions of the site reserved for people who pay for VIP access. A few bucks worth could be earned just by posting quality content on the site. If every url click could have a price attached to it, the entire web can be monetized easily with each click costing a fraction of a cent but over the course of a day those cents add up. Not only this but it would mean exclusive content for people who have the coins and people who don't have coins would have to buy them or not access certain portions of certain sites at all.

Luckybit, this is the same argument made by Shiresilver
https://bitcointalk.org/index.php?topic=150405.msg1602604#msg1602604
Please see the counter-arguments which follow in the thread.

tl;dr: Microtransactions cost the network more than they are worth.

But it is an outstanding opportunity for off-chain solutions.  A lot of Bitcoin holders already use potentially off-chain solution such as an on-line wallet for spending money.  I have and do even while I run one or more full clients.  A solution where I could use such a service to make micro-transactions would be a very interesting to me, and I am much more likely to actually perform such transactions if someone offered a well engineered system which made it safe and easy to do.

In fact, since I first studied Bitcoin in mid 2011 I've never personally felt comfortable using it for piddly little shit because I was bothered by the scaling issues since day one.  OTOH, the big draw for me has always been de-centralization, and it is clearly not a priority for a lot of people in the community.  In fact, it does not really seem to be a central concern for the Bitcoin Foundation to my shock and horror.

Paypal is a payment processor, not a currency. Bitcoin will beat Paypal if it beats the fiat currencies that Paypal operates on.

Payment processors appeared on the market because at some point in time there was a need to send fiat money quickly and cheaply. Sending bills and coins in envelopes was obviously not practical and the market developed a solution.

Let the same need to appear in Bitcoin, and the solutions will also develop themselves, allowing bitcoins to be sent cheaper and quicker, while still keeping it lightweight and decentralized.

And let me repeat it one more time: increasing MAX_BLOCK_SIZE is not a solution for anything!
Though, it has a good potential to create a disaster.

Please do not raise the max block size. It hurts projects I am working on.

+1

Explain.

IMO we need at least 5MB MAX_BLOCK_SIZE to handle a 500% increase in Bitcoin usage.

Vote for option 'E' and hope someone is smart enough to figure out what needs to be done for dynamic, deterministic block management.

Still, I believe that the period between 0 conf and 1 will hamper adoption in the physical world for immediate payments.  It would be nice for Bitcoin to be as pedestrian as technically possible.


Sergio had an idea worth debating.  More of an indirect approach.
https://bitcointalk.org/index.php?topic=147124.msg1561612#msg1561612

I don't know why you came out with 500%, but well.. let's go into it.

For the last 24h, the average block size has been ~88.6KB - this gives you a potential for 1000% growth, yet without touching MAX_BLOCK_SIZE.

In fact the potential is much, much bigger, because when you eliminate free transactions, by forcing the fee market to work, it will make all the small payments (0.01 BTC or less) unprofitable. And now such a tiny transactions seem to be taking a huge amount of the blocks. And who is paying for this? We are all paying for this - and if you increase the bock size, we will be paying for it even more.

Or you could just stop cramming bloat inside the damn blocks, and keep a separate useful chain of transactions, and the useless chain of blocks out of the TX chain.

You only need a diff 1 for TX chain. It is only the blocks which need the true diff as proof of work. How many useless and repeat transactions are included in a block, but simply ignored because an earlier duplicate exists in a previous block?

This whole system is setup bass-ackwards. Only miners should be concerned with the super-bloated chain. If the TXs are confirmed, then they are confirmed. They only have to be linked to a block, not crammed inside of it. Oh yea, they do for this crappy moronic setup. lol. The only setup where something like 0 is 2K, and 500000 is 2K, and we get "charged" for sending K, without being told what K is, or what the K-value is, prior to sending, or why a tx we are sending is 100K or only 2K. That is what happens when you let programmers try to use the real world... They fail.

Screw-it... Make max-block-size a full GB... it won't matter what it is, because you either download 10000 small ones, or 1 large one, it is still the same freaking volume of crappy data-packing and useless bloat.

Do you guys even know what g-zip is? Or, I don't know... byte-reduction by not sending bloated "human-readable" expanded values, where real values are just as functional.

Stop sending "0100101010010101001" and "sud3U" when you only need to send "FU"

Overkill where it isn't needed, and not enough refinement where it is, where it is already possible. Because you keep building off one mans poor crappy code. He stopped developing this crap because it was crap.

If it is a crap then why do you use it? :)
IMHO he stopped developing it when he realized that the network was already strong enough, to resist any possible corruption within the development team that he left the code to.


As for the rest of your post, your proposals of how to handle the problem are just stupid - no more comments.