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1  Bitcoin / Development & Technical Discussion / Block Size Scalability Issues on: August 26, 2018, 07:02:48 PM
     Letís talk a little bit about the Bitcoin scaling issues. We will look at some projections for the future using estimates based on todays numbers. I realize that some of the numbers change quite a bit so it makes it a little difficult to calculate perfectly, but we can get some good generalizations. If I am missing something or if my logic is wrong or my math is wrong, please kindly help me understand, as this is meant for information purposes only and meant to provoke meaningful thought. Especially for Bitcoin core, who can not agree on how to scale, so, so far nothing has been implemented as far as block size is concerned. There is a lot of info to share So letís beginÖ
    
     At current prices of $6,600 and with a block reward of 1800 coins a day (12.5 X 6 X 24) the current rewards paid out to the miners each day is $11,880,000. At some point in the future, around 2120 I think, the last bitcoin will be mined and the miners will have to live off of transaction fees alone. If that were to happen today, at todays rates, we would need to pay out the miners the roughly $11,880,000 with transaction fees alone. Something has to give. Either there will be less miners due to loss of profitability, or much higher network fees. At todays rate of $.572 average transaction fee (source https://bitinfocharts.com/comparison/bitcoin-transactionfees.html#3m ) we would need 20,769,230 transactions a day to pay the miners with the fees generated. We are currently just shy of 200,000 transactions a day. (source https://www.blockchain.com/en/charts) This means that we would need 103.8 times as many transactions a day to reach the 20,769,230 to make up the difference needed to sustain the miners. This comes out to 240.38 transactions per second! If you are familiar with the current block size limits you already know that the Bitcoin network can handle between 3.3-7 transactions per second. (source https://en.wikipedia.org/wiki/Bitcoin_scalability_problem) So, this means that the MINIMUM block size would need to be 35mb, not 1mb, not 2mb, not 8mb, but 35mb. No one is talking about a block size that large. No one. Again back to Bitcoin core. The block size is supposed to be scalable but they refuse to even double the size from current levels.
    
     These numbers listed above are conservative and if the price of Bitcoin goes up as high as some are speculating, they only get much worse. At a $50,000 Bitcoin price, and after the next Block reward halving (900 coins a day,) the amount of transactions would need to be 910.5 per second in order to pay the miners for their work if the block reward was gone. If we wanted to be at a point to where the network was growing at a rate that could keep up with miner payouts based on fees each time a block reward halving happens, then the network will need to grow to 910.5 transactions a second just to make up for the $45,000,000 lost in the block reward halving as well. So far we are not even close to that kind of adoption. Again, the network is currently capable of 3.3-7 transactions per second. Fast forward to 2120 when the last Bitcoin is mined and the numbers will have to be huge. What I am getting at is that in the end, if miners are going to live off of transactions fees alone, the current block size is only a tiny fraction of what will be required.  In the $50,000 Bitcoin price example shown above the block size would need to be 275.92 times as large to accommodate that many transactions. Bitcoin core will not even double the block size to 2 mb which would allow the Bitcoin network to reach a measly 6.6-14 transactions per second. What are they thinking? Some of the core members want to make no changes to Bitcoin and that means it will never see mainstream adoption. How could it? The numbers are simply impossible.

     One final thought: When the Bitcoin price rises mining becomes more profitable and the Hash rate will rise as more miners plug in to compete for the rewards. As prices fall, mining becomes less profitable and people will unplug their miners causing the hash rate to fall. Itís not the other way around. Just because the hash rate goes up it does NOT mean that the price of Bitcoin will also go up in order to support all the miners. It is possible to lose money mining Bitcoin.

This has been a brief summary of my thoughts The more we crunch these types of numbers the more obvious it becomes that the current situation on the Bitcoin network is a recipe for failure. The block size must be changed. We Better start asking the core guys really nice if they would like to go ahead and save the network, or are we doomed to live by their indecision forever? What are the motives to stay the same?      
    
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