60% of hashrate including 2 major exchanges agree to raise block size to 8MB

[Carlton Banks]

“The pool operators could actually make such a change themselves without proposing that the core developers do such a thing. Instead, we would like to express our views and concerns to the core developers, and let the community form a discussion rather than rudely cast a divergence. We are happy to see the consensus on the final improvement plan. After all, a 'forked' community is not what we are chasing after.”

It is great that these 5 mining pools are doing the right thing and trying to develop a consensus with developers but it is disturbing to realize 5 companies can completely decide Bitcoin's fate. We seriously need to work on decentralizing mining and hash power globally.

TierNolan's helical chains idea was a good proposal to achieve more equal opportunity mining.

[BitUsher]

TierNolan's helical chains idea was a good proposal to achieve more equal opportunity mining.

Thank You. Very interesting. Seems like something that can be rolled out in a sidechain for testing.
This could increase P2P pools use, but this is only part of my concern as my concern also deals with centralization of ASIC manufacturing(mainly in china), and centralization or hardware. 21s' IoT miners or bitfurys' lightbulb miners could solve this but it is unclear if they will force mining to be conducted on their own pools or not.  

[DumbFruit]

The human body contains a haphazard network of arteries and veins, from the large at the inner thighs and neck for instance, to the small capillaries that reach out delicately all the way to the tips of fingers and toes, getting as small as a handful of micrometers.
If the blood swells, the condition is called Macrocytosis. The network is effectively shorter, unable to reach the tiny capillaries. This leads to systemic damage as a whole; fatigue, tingling, dementia, and brain damage.

This is the way it is with any distributed system. As the difficulty to participate becomes more onerous the network atrophies.

As I've said before, the mechanism of centralization concerning larger blocks, is significantly different from the centralization we see when we are simply overloaded with transactions.

As blocks get bigger we guarantee a weaker decentralized system, ceteris paribus. Hosting a node simply becomes more onerous.

On the other hand, what are we looking at when blocks are totally filled? The Bitcoin network itself isn't damaged. It's not any more difficult to run a node. There aren't less transaction. There isn't less people with direct access to the blockchain (Though the sorts of people change). So what do we mean when we say that Bitcoin will centralize if there are more transactions being done than Bitcoin can handle? All it means is that a higher *proportion* of transactions are done off the chain as opposed to on it.

In the meantime, what drove the value of Bitcoin? What's driving the increase of transactions? In no small part it is the strength of the decentralized Bitcoin infrastructure... Which is directly damaged by an increase in block sizes.

So in the desire of absorbing more nutrients in the bloodstream, the doctor prescribes vodka to induce macrocytosis? Not only is that damaging to the person, it doesn't even help accomplish the objective, as even if we assume larger blood cells can absorb more nutrients, they wouldn't be able to reach where they need to go. (Stretching this metaphor pretty hilariously.)

There seems to be a large amount of people that believe that every Bitcoin transaction should be done between Bitcoin nodes, sure this is desirable, but is this even practical?
Suppose that Bitcoin were doing thousands of transactions per second, competing toe-to-toe with credit card companies like Visa. The only nodes that could afford to do this would be indistinguishable from the competition, except that they have added overhead of Proof of Work, and the costs of pseudo-decentralized infrastructure. To the end users this would mean slow, expensive, insecure transactions, that are irreversible.

Keep in mind that even right now, Coinbase offers offchain transactions, at any size, near immediately, and for free. It is physically impossible for a PoW cryptocurrency to compete with that.

The only conclusion I can come to is that large volume transactions should not be done on Bitcoin proper, and that the only achievable objective with today's technology is to engineer a method of graceful failure. We need a way to easily maneuver between highly decentralized, secure, low volume, slow, expensive transactions, to centralized, relatively insecure, high volume, fast, cheap transactions.

I don't see how bigger blocks, or even an algorithm for increasing block sizes, helps us reach that objective. Despite the overwhelming desire for bigger blocks.

[tspacepilot]

@DumbFruit,

I think I understand the metaphor you're using and your analysis of the costs of increased transactions to the network as a whole vs the costs to the user of a network which is very expensive to send transactions on.  However, I think you're being a little bit extreme and that it's quite possible that a lot of the problems could be eliminated by taking a middle way.  Why shouldn't block size increase a little bit?  Pruning technology should eliminate a lot of the costs to the network which are parallel to your blood swelling analogy.  If we can prune blocks and set a dynamic limit on block sizes such that a target confirmation time on a well-formed tranasaction with a "standard" fee is acheived on average, wouldn't this fit with the way we do things w.r.t. difficulty?  Other aspects of the network have these dynamic controls, it seems to me that block-size could do this as well and we'd be on the way to worrying about something else.

[DumbFruit]

@DumbFruit,

I think I understand the metaphor you're using and your analysis of the costs of increased transactions to the network as a whole vs the costs to the user of a network which is very expensive to send transactions on.  However, I think you're being a little bit extreme and that it's quite possible that a lot of the problems could be eliminated by taking a middle way.  Why shouldn't block size increase a little bit?  Pruning technology should eliminate a lot of the costs to the network which are parallel to your blood swelling analogy.  If we can prune blocks and set a dynamic limit on block sizes such that a target confirmation time on a well-formed tranasaction with a "standard" fee is acheived on average, wouldn't this fit with the way we do things w.r.t. difficulty?  Other aspects of the network have these dynamic controls, it seems to me that block-size could do this as well and we'd be on the way to worrying about something else.

Sure, it's a bit extreme. It's not like increasing the block size from 1MB to 2MB will usher in Armageddon. As others have pointed out many times, the progress of economies and technology could make it so a blockchain of a larger size in the future would be less burdensome on the network than the current blockchain today.

That's all well and good, the issue that I would like to stress is that in all scenarios a centralized agency will always be better equipped to handle large amounts of transactions quickly and cheaply. Bitcoin will never be able to out-compete them on that field.

So how does Bitcoin, and PoW cryptocurrency in general, compete?

1.) Fungible
2.) Anonymous
3.) Free Entry
4.) Trustless
5.) Irreversible
6.) Robust

Not

1.) Cheap
2.) Fast
3.) Arbitration

So I feel comfortable saying that there is always going to be centralized and uncentralized transactions. Rather than focusing on  trying to be a jack of all trades it would be better to focus on how a cryptocurrency can allow users to maneuver between these opposed feature sets. From that perspective I look at the 1MB block limit of Bitcoin and I say to myself, "Maybe smaller blocks might compete better in this space?"

TLDR:
Bigger isn't automatically better. Do bigger blocks really make Bitcoin more competitive?

[tspacepilot]

@DumbFruit,

I think I understand the metaphor you're using and your analysis of the costs of increased transactions to the network as a whole vs the costs to the user of a network which is very expensive to send transactions on.  However, I think you're being a little bit extreme and that it's quite possible that a lot of the problems could be eliminated by taking a middle way.  Why shouldn't block size increase a little bit?  Pruning technology should eliminate a lot of the costs to the network which are parallel to your blood swelling analogy.  If we can prune blocks and set a dynamic limit on block sizes such that a target confirmation time on a well-formed tranasaction with a "standard" fee is acheived on average, wouldn't this fit with the way we do things w.r.t. difficulty?  Other aspects of the network have these dynamic controls, it seems to me that block-size could do this as well and we'd be on the way to worrying about something else.

Sure, it's a bit extreme. It's not like increasing the block size from 1MB to 2MB will usher in Armageddon. As others have pointed out many times, the progress of economies and technology could make it so a blockchain of a larger size in the future would be less burdensome on the network than the current blockchain today.

That's all well and good, the issue that I would like to stress is that in all scenarios a centralized agency will always be better equipped to handle large amounts of transactions quickly and cheaply. Bitcoin will never be able to out-compete them on that field.

But like all things, these qualities are gradient.  If bitcoin isn't able to handle some volume of transactions for some amount of quickness and cheapness then it's going to be useless for any purpose.  I think you're corrrect to take the mentality of "don't try to be all things to all people" or "focus on your strengths", etc; but again, if we focus on our strengths to the point of ignoring our weaknesses altogether then that's not really a winning strategy either.

One thing I saw from the "stress test" was that it's far to easy for a joker to backlog the network quite a bit.  Now, as you say, increasing the block size from 1MB to 2MB certainly wouldn't risk armageddon.  But I'd go further and say that if such a small change increases the price of perpetrating armageddon (ie, a stress-test scenario) by 100%, that may be a real gain in robustness for all bitcoin users.  What I'm trying to suggest is that it seems to me that the coinwallet people were able to pull off what they pulled off far too cheaply.  I think making that kind of manourver more expensive could be a real asset to the network.

[solex]

One thing I saw from the "stress test" was that it's far to easy for a joker to backlog the network quite a bit.  Now, as you say, increasing the block size from 1MB to 2MB certainly wouldn't risk armageddon.  But I'd go further and say that if such a small change increases the price of perpetrating armageddon (ie, a stress-test scenario) by 100%, that may be a real gain in robustness for all bitcoin users.  What I'm trying to suggest is that it seems to me that the coinwallet people were able to pull off what they pulled off far too cheaply.  I think making that kind of manourver more expensive could be a real asset to the network.

Exactly. From a starting point of an average block size over one week (ABS) at 400KB they created a lot of impact. Consider that ABS will unlikely ever exceed 80% of 1MB because miners will often create small or empty blocks (even if thousands of legitimate fee-paying tx are backing up). So, it does not take a math guru to see that when the ABS is 70% then a bunch of redditards could spam the network 4x more effectively than today for the same effort. When the ABS is 80% of 1MB then any disturbance, whether 1Sochi, 1Enjoy, Dice site bots, Greek collapse news, could ramp volumes making Bitcoin a joke for thousands of users and the world's press. We are sleep-walking into a nightmare.

And the fastest way to get a dog-leg-down move in the chart of full node counts? Execute a fast hard-fork in a few weeks under emergency conditions.
Just brilliant! /sarc

[DumbFruit]

I understand that it's good for blocks to be as big as we can get away with, without significantly harming the decentralized Bitcoin network. I'm not convinced, though, that 1MB is too small or that some number greater than that is objectively better.
There is evidence that it's too big as it is; We aren't seeing enough transaction fees to cover network costs as inflation diminishes, and the blockchain is fairly awkward to handle.

Our current mining infrastructure is rewarded 12.5 BTC per block in inflation and about 0.1 BTC per block in fees. That would mean that if inflation stopped tomorrow, mining  would have to be cut more than a hundred fold. In this sort of environment, is it appropriate to be talking about methods that would reduce fees? It's particularly obscene to insist that the block size should be large enough to accommodate all desired transactions, as this implicitly means near zero  transaction fees as well.

The blockchain right now is about 36GB in size. This takes many hours to download even on a solid connection in the western world. For this reason, most users don't run a fully verifying Bitcoin node, and the network is the worse for it. While this is annoying, it's still tolerable for the average PC. How many people are going to bother running a node when they need to buy a dedicated hard drive for it, or a more expensive internet connection? Also, increasing block sizes carries an exponential cost to the network that also needs to be covered by fees.

So when people are asking for an increase in block size, they are asking for lower transaction fees, while imposing a larger cost on the network, and making it more onerous to run a node, in an environment where fees are too low and the quantity of nodes has diminished.

We'd be in a much better position to argue about increasing block sizes if fees more closely matched or surpassed inflation, and if a Bitcoin node were trivial to run. With time, both of these things may be true. Prudence would suggest waiting until that time.

[tspacepilot]

Our current mining infrastructure is rewarded 12.5 BTC per block in inflation and about 0.1 BTC per block in fees. That would mean that if inflation stopped tomorrow, mining  would have to be cut more than a hundred fold. In this sort of environment, is it appropriate to be talking about methods that would reduce fees? It's particularly obscene to insist that the block size should be large enough to accommodate all desired transactions, as this implicitly means near zero  transaction fees as well.

But if inflation stopped tomorrow then the value of that 0.1BTC per block would surely skyrocket.  Or maybe I'm missing something.  I'm not suggesting that the block size should be large enough to accomodate all transactions, but what about a block size which accomodates transactions with at least a certain fee rate in at least a certain time (on average).

The blockchain right now is about 36GB in size. This takes many hours to download even on a solid connection in the western world. For this reason, most users don't run a fully verifying Bitcoin node, and the network is the worse for it. While this is annoying, it's still tolerable for the average PC. How many people are going to bother running a node when they need to buy a dedicated hard drive for it, or a more expensive internet connection? Also, increasing block sizes carries an exponential cost to the network that also needs to be covered by fees.

  But this is why we want pruning, right?  Won't a lot of the storage issues be dealt with in the next release with pruning?  Or, again, maybe I'm misunderstanding (it happens too often, ha!).

[DumbFruit]

But if inflation stopped tomorrow then the value of that 0.1BTC per block would surely skyrocket.  Or maybe I'm missing something.  I'm not suggesting that the block size should be large enough to accomodate all transactions, but what about a block size which accomodates transactions with at least a certain fee rate in at least a certain time (on average).

Sure it's possible that the price of BTC could go up by 125x and end up funding the network at equivalent rates, but increasing block sizes would mean fees would have to increase even higher. That's quite a gamble, and not one that's easy to recover from if the assumptions are incorrect.
I'm not saying that you want blocks to accommodate  all transactions, but that's certainly what some people have been suggesting, or suggesting wild exponential increases.

But this is why we want pruning, right?  Won't a lot of the storage issues be dealt with in the next release with pruning?  Or, again, maybe I'm misunderstanding (it happens too often, ha!).

Yes, there's going to be changes that will improve the current situation, for sure. Does that mean we take those gains and then turn around and put the blockchain into the same situation all over again? Maybe it does, but this could be better reasoned about once where in a comfortable position to make these kinds of decisions.


As an aside I'm reading a discussion on the mailing list and I'm finding quite a bit of discussion about the same sort of stuff I'm mentioning here. It would be worth checking out if your interested;
http://sourceforge.net/p/bitcoin/mailman/bitcoin-development/thread/554A91BE.6060105%40bluematt.me/#msg34090292

[Acidyo]

This could deff get interesting to say the least. I see this getting pretty ugly.