the blocksize debate

[skang]

The way bitcoin works is that there are people running 'nodes' which is a copy of all the transactions that have happened in entire bitcoin history, also relaying them to other nodes and there are people running 'miners' which do some energy consuming work to get the right to write to the ledger maintain by nodes for which they produce new bitcoins. So whenever you do a bitcoin transaction, the fact that your address actually holds the right to so many bitcoins is verified by going through that ledger held by the nodes.

Say your address is A which holds some bitcoins. The fact that A holds those coins can be verified by checking all the transactions that led to A holding those coins right back to the transaction block where they were generated. And this verification alone is the guarantee to the value of your bitcoins.

The algorithm looks all fine, but in reality, practical considerations kick in. There is a practical limit to how much data we can transfer among ourselves imposed by the bandwidth and space limitations of our current state of technology.

When bitcoin started there was no limit to the block sizes that miners could produce. But many services produced huge number of tiny transactions and that kinda swamped the network. But there was an another, much bigger, issue than this.

In the mining race, where miners are all racing to find the next block, the one who finds it first wins, and then everyone around the world give up and start racing for the next block. But how does everyone know that someone worked a successful block? The winner announces it to everybody. The one who successfully solved the block sends it over to the network for everyone to see for themselves that the winner indeed did the work required and hence they come to know they should give up the race for this block and start working on the next.

But what happens if the block solved was of a huge size?

It has two effects. Due to the practical limits, a big block takes a lot of time of propagate in the network. During this time maybe another miner also successfully solves the block only to realize after a while that he isn't the first one. The second effect, and a very important effect, is that the winner gets a headstart. He starts working on the next block while the rest of the world is still working on the previous one while waiting to download the successful solution. As mining has now gone big, the effect of this headstart is huge and increases with more mining power a miner or a pool of miners have.

The bitcoin protocol is anti-fragile. By that it means that whenever any factor of the system tries to rise, there is some other inbuilt factor that kicks in to keep it in check.

When a miner starts getting headstarts and thus economically more successful, the other miners would go at a loss since they are spending energy and would eventually close shop. This further makes the headstarter more powerful and so on until they start own the majority of mining power and that means they can do various kinds of attacks on the system, spending their own money twice easily, is one of them. And that would mean the death of bitcoin goose.

So huge block sizes are clearly a big problem. But what if we keep the block sizes small?

It would mean that each block, limited in its size, can only accommodate a limited number of transactions. This again has its own effects.

A limited number of transaction going through would mean that either a transaction would have to wait a long time for its turn to be included or that it would have to pay high fees to get preference over others. This means scalabilty problems because only a number of people would be able to use bitcoin. This clearly goes against the vision of a worldwide currency that we all have.

***

This is bitcoin blocksize debate & the community is divided into two.

There are 5 people in the world who have the commit rights to the original software program called 'Bitcoin core'. But since it is open-source anyone can copy the software and start their own version. The bitcoin core developers want to keep the block sizes small but other renowned people in the bitcoin community, namely Mike and Gavin, want to increase it to 8 mb from the current 1 mb and so on over the years. As expected, the big miners also want this increase since that would eliminate the small miners giving them more power. They have started another copy of bitcoin with this change called 'Bitcoin XT'.

The American majority is backing Bitcoin XT because they want to see widespread adoption but I am not aware how do they plan to contain the miners becoming powerful over time. The core developers want to keep it working correctly even if it means its usefulness to a smaller population. Hence bitcoin is forking.

***

What does this mean for the users?

As explained earlier the value of bitcoin is guaranteed by its verifiability in the ledger. But with the fork there will be two versions of the ledger. This means that anyone excepting bitcoin will have to decide which ledger they prefer - the one used by bitcoin core or the one by Bitcoin XT.

I don't know how this would play out and can only see confusion in the future. Effectively this means there is now a bitcoin core coin, earlier called bitcoin, and a Bitcoin XT coin also earlier known as bitcoin. The major forum moderators are siding with bitcoin core and have begun treating BitcoinXT as an altcoin. The english speaking majority it seems will move to Bitcoin XT and will treat Bitcoin core as an altcoin.

[1714822691]

1714822691

[1714822691]

1714822691

[1714822691]

1714822691

[1714822691]

1714822691

[buysellbitcoin]

Great write up and its really to the point. This should be in a blog post and should be posted to Reddit

People must understand at any time when blockchain forks one altcoin is born. The only issue is deciding which one is altcoin.

Bitcoin protocol says the valid fork which has longest work ( measured in terms of difficulty ) at any point of time is correct one. People give this argument and say Bitcoin has already answered it. IMHO this is theory. Practically its much more difficult and can have devastating ( fatal, IMHO ) effect on both chains.

All coins and transactions and balances before fork are safe and will be honored by both chains. The issue is new transactions and mining rewards after fork.

When I think more about this problem in philosophical manner, I always end up with answer to question "Why we need governments"

The whole movie is interesting if you think Bitcoin as experiment but its scary as hell if you think bitcoin as payment network or investment (I  dont have guts to brainstorm the currency part )

Regards

[upal]

Very good explanation Skang. It will immensely help newcomers to get the inside picture of block size controversy.

To solve the blocksize problem, I wrote a proposal - http://upalc.com/maxblocksize.php. This is now being discussed among devs. If any of you have any input to provide, feel free to share.

[skang]

When I think more about this problem in philosophical manner, I always end up with answer to question "Why we need governments"

How, Sir?

To solve the blocksize problem, I wrote a proposal - http://upalc.com/maxblocksize.php. This is now being discussed among devs. If any of you have any input to provide, feel free to share.

Upal, the suggestion you make is to make the blocksize dynamic. This is same as keeping a large block size. For eg, if the block size was 50 mb, it does not mean that each block is 50mb even if it is not filling up. 50 mb is the 'upper limit'. So all the blocks, after calculation & decision as suggested by you, would be equal to the size of transactions in queue, a.k.a mempool.

I think you are concentrating on the wrong part of the problem. People are not saying that blocks sometimes are not full. Everybody agrees that that in future the blocks would get full as the transaction rises. So as per your algorithm it will simply keep rising to meet the demand. This is same as having no blocksize limit.

Anyways, dynamic blocksize has been proposed and discussed many times and there are many variations of dynamic block-size limits here : http://bitcoin-development.narkive.com/cr8x2evb/bitcoin-development-various-block-size-proposals

[CounterEntropy]

To solve the blocksize problem, I wrote a proposal - http://upalc.com/maxblocksize.php. This is now being discussed among devs. If any of you have any input to provide, feel free to share.

Upal, the suggestion you make is to make the blocksize dynamic. This is same as keeping a large block size. For eg, if the block size was 50 mb, it does not mean that each block is 50mb even if it is not filling up. 50 mb is the 'upper limit'.

The suggestion is not at all same as keeping a fixed large block size. This is a demand driven approach, which might take down the max cap as well. For a fixed 50 MB max cap, one miner can clean the mempool while others will be forced to mine empty blocks and thereby losing economically. For this proposal, this wont happen as block size max cap will come down in next difficulty.

So all the blocks, after calculation & decision as suggested by you, would be equal to the size of transactions in queue, a.k.a mempool.

I dont understand, why you are saying this ? He has suggested the max cap to be dynamic, not block size. A miner can always mine empty blocks if he wishes so.

I think you are concentrating on the wrong part of the problem. People are not saying that blocks sometimes are not full. Everybody agrees that that in future the blocks would get full as the transaction rises. So as per your algorithm it will simply keep rising to meet the demand. This is same as having no blocksize limit.

Nopes. It seems you did not get the problem. Almost everyone agrees that blocksize need to be increased if blocks are full. The contradiction is in the process of scaling. Both core devs Jeff Garzik & Pieter Wuille, who are opposed to XT, have suggested BIPs (100 & 103) to increase block size max cap. Gmaxwell, Peter Todd and Luke Dash Jr have questioned many times in Reddit that how fast the blocks will be full. But, if they are full, no one opposes block size max cap increase. As per XT's algorithm, block size will keep rising in a periodic manner without accounting for the real demand. In this proposed algorithm, block size may increase as well as decrease. You are assuming transactions will only rise, which may or may not happen in reality. We need an algo that is adaptive to the reality, not assumption. It is no way similar to having no block size max cap.

Anyways, dynamic blocksize has been proposed and discussed many times and there are many variations of dynamic block-size limits here : http://bitcoin-development.narkive.com/cr8x2evb/bitcoin-development-various-block-size-proposals

Yes, dynamic block size max cap has been proposed before and I think, the proposal we are discussing now, has also listed many of those other solutions. But, none of them has accounted for the previous block size to increase and decrease max cap. This is an unique proposal and I hope it gets its due merit.

[skang]

To solve the blocksize problem, I wrote a proposal - http://upalc.com/maxblocksize.php. This is now being discussed among devs. If any of you have any input to provide, feel free to share.

Upal, the suggestion you make is to make the blocksize dynamic. This is same as keeping a large block size. For eg, if the block size was 50 mb, it does not mean that each block is 50mb even if it is not filling up. 50 mb is the 'upper limit'.

The suggestion is not at all same as keeping a fixed large block size. This is a demand driven approach, which might take down the max cap as well. For a fixed 50 MB max cap, one miner can clean the mempool while others will be forced to mine empty blocks and thereby losing economically. For this proposal, this wont happen as block size max cap will come down in next difficulty.

Yes this is not the same when we reach that large limit but for cases smaller than that it is the same. Anyways, I corrected myself in the thought process down the post where I write "This is same as having no blocksize limit" by which I meant "lets have no limits and lets simply keep the blocksize whatever the current demand is."

So all the blocks, after calculation & decision as suggested by you, would be equal to the size of transactions in queue, a.k.a mempool.

I dont understand, why you are saying this ? He has suggested the max cap to be dynamic, not block size. A miner can always mine empty blocks if he wishes so.

Yes, the max cap. Of course we are talking about the max cap in all of this discussion because miners can mine empty blocks anyways. Stop nitpicking!

I think you are concentrating on the wrong part of the problem. People are not saying that blocks sometimes are not full. Everybody agrees that that in future the blocks would get full as the transaction rises. So as per your algorithm it will simply keep rising to meet the demand. This is same as having no blocksize limit.

Nopes. It seems you did not get the problem. Almost everyone agrees that blocksize need to be increased if blocks are full. The contradiction is in the process of scaling. Both core devs Jeff Garzik & Pieter Wuille, who are opposed to XT, have suggested BIPs (100 & 103) to increase block size max cap. Gmaxwell, Peter Todd and Luke Dash Jr have questioned many times in Reddit that how fast the blocks will be full. But, if they are full, no one opposes block size max cap increase. As per XT's algorithm, block size will keep rising in a periodic manner without accounting for the real demand. In this proposed algorithm, block size may increase as well as decrease. You are assuming transactions will only rise, which may or may not happen in reality. We need an algo that is adaptive to the reality, not assumption. It is no way similar to having no block size max cap.

"But, if they are full, no one opposes block size max cap increase." Nope. Read my OP for the reason why big blocks are a problem.

Anyways, dynamic blocksize has been proposed and discussed many times and there are many variations of dynamic block-size limits here : http://bitcoin-development.narkive.com/cr8x2evb/bitcoin-development-various-block-size-proposals

Yes, dynamic block size max cap has been proposed before and I think, the proposal we are discussing now, has also listed many of those other solutions. But, none of them has accounted for the previous block size to increase and decrease max cap. This is an unique proposal and I hope it gets its due merit.

Many of them have accounted for the previous block size to increase and decrease max cap. The list I mentioned are the advanced changes, after the discussions have happened on this proposal.
I hope it gets its due merit too, but googling 'dynamic bitcoin blocksize' will tell you why it already has.

[chronicsky]

Very good post, thanks for such a good Explanation

Though i understand debate has been going about the increase in Blocksize, but i don't think it will effect the price in long run , at last - we all want bitcoin to go up.

[tech_solutions]

Very Good and Interesting Post

which explains the details about what is Blocksize and how it works , after reading this message i came to know about the whole dept of bitcoin mining and its process

It really helps new commers to the Bitcoin world about what is bitcoin and how it works,

thanks   

[Jag crypto]

I don't know how this would play out and can only see confusion in the future. Effectively this means there is now a bitcoin core coin, earlier called bitcoin, and a Bitcoin XT coin also earlier known as bitcoin. The major forum moderators are siding with bitcoin core and have begun treating BitcoinXT as an altcoin. The english speaking majority it seems will move to Bitcoin XT and will treat Bitcoin core as an altcoin.

Does the exchange have possibility of having both bitcoin core and XT?

[skang]

I don't know how this would play out and can only see confusion in the future. Effectively this means there is now a bitcoin core coin, earlier called bitcoin, and a Bitcoin XT coin also earlier known as bitcoin. The major forum moderators are siding with bitcoin core and have begun treating BitcoinXT as an altcoin. The english speaking majority it seems will move to Bitcoin XT and will treat Bitcoin core as an altcoin.

Does the exchange have possibility of having both bitcoin core and XT?

If this happens then old coins can be spent twice; once to merchants accepting core & then again to XT merchants.

[dashingriddler]

I don't know how this would play out and can only see confusion in the future. Effectively this means there is now a bitcoin core coin, earlier called bitcoin, and a Bitcoin XT coin also earlier known as bitcoin. The major forum moderators are siding with bitcoin core and have begun treating BitcoinXT as an altcoin. The english speaking majority it seems will move to Bitcoin XT and will treat Bitcoin core as an altcoin.

Does the exchange have possibility of having both bitcoin core and XT?

If this happens then old coins can be spent twice; once to merchants accepting core & then again to XT merchants.

Else the receiver should wait till he gets 6 confirmations from both versions of bitcoin.

[skang]

I don't know how this would play out and can only see confusion in the future. Effectively this means there is now a bitcoin core coin, earlier called bitcoin, and a Bitcoin XT coin also earlier known as bitcoin. The major forum moderators are siding with bitcoin core and have begun treating BitcoinXT as an altcoin. The english speaking majority it seems will move to Bitcoin XT and will treat Bitcoin core as an altcoin.

Does the exchange have possibility of having both bitcoin core and XT?

If this happens then old coins can be spent twice; once to merchants accepting core & then again to XT merchants.

Else the receiver should wait till he gets 6 confirmations from both versions of bitcoin.

Both versions wont be mining each other's coins and individually disentanglement of coins is a problem.

[dashingriddler]

I don't know how this would play out and can only see confusion in the future. Effectively this means there is now a bitcoin core coin, earlier called bitcoin, and a Bitcoin XT coin also earlier known as bitcoin. The major forum moderators are siding with bitcoin core and have begun treating BitcoinXT as an altcoin. The english speaking majority it seems will move to Bitcoin XT and will treat Bitcoin core as an altcoin.

Does the exchange have possibility of having both bitcoin core and XT?

If this happens then old coins can be spent twice; once to merchants accepting core & then again to XT merchants.

Else the receiver should wait till he gets 6 confirmations from both versions of bitcoin.

Both versions wont be mining each other's coins and individually disentanglement of coins is a problem.

Correct but the broadcasted transaction would get included in both chains unless i have the wrong understanding.

[aakashsangwan]

Very nice post regarding the problem Bitcoin facing in Blocksize, through your post i have understanded the concept of minning and how the bitcoin is working.

I don't know how this would play out and can only see confusion in the future. Effectively this means there is now a bitcoin core coin, earlier called bitcoin, and a Bitcoin XT coin also earlier known as bitcoin. The major forum moderators are siding with bitcoin core and have begun treating BitcoinXT as an altcoin. The english speaking majority it seems will move to Bitcoin XT and will treat Bitcoin core as an altcoin.

Does the exchange have possibility of having both bitcoin core and XT?

If this happens then old coins can be spent twice; once to merchants accepting core & then again to XT merchants.

Else the receiver should wait till he gets 6 confirmations from both versions of bitcoin.

Both versions wont be mining each other's coins and individually disentanglement of coins is a problem.

Correct but the broadcasted transaction would get included in both chains unless i have the wrong understanding.

If that happens that both transaction are verified from seperated exchanges then what you said will become that if i have 1 bitcoins i can use it in 2 exchanges and enjoy other bitcoin amount freely, if that happens then in near future it will be a very big scam.

[dashingriddler]

Very nice post regarding the problem Bitcoin facing in Blocksize, through your post i have understanded the concept of minning and how the bitcoin is working.

I don't know how this would play out and can only see confusion in the future. Effectively this means there is now a bitcoin core coin, earlier called bitcoin, and a Bitcoin XT coin also earlier known as bitcoin. The major forum moderators are siding with bitcoin core and have begun treating BitcoinXT as an altcoin. The english speaking majority it seems will move to Bitcoin XT and will treat Bitcoin core as an altcoin.

Does the exchange have possibility of having both bitcoin core and XT?

If this happens then old coins can be spent twice; once to merchants accepting core & then again to XT merchants.

Else the receiver should wait till he gets 6 confirmations from both versions of bitcoin.

Both versions wont be mining each other's coins and individually disentanglement of coins is a problem.

Correct but the broadcasted transaction would get included in both chains unless i have the wrong understanding.

If that happens that both transaction are verified from seperated exchanges then what you said will become that if i have 1 bitcoins i can use it in 2 exchanges and enjoy other bitcoin amount freely, if that happens then in near future it will be a very big scam.

The exchanges should credit your wallet only after it sees confirmations on both chains. Not just one chain.

[dashingriddler]

Umm, yeah now the issue would be with the newly generated coins after those two chains fork. They can only get confirmed on the same chain but never on the other.

[ohoooo]

Correct but the broadcasted transaction would get included in both chains unless i have the wrong understanding.

After split one chain does not care about the transactions on other. Each will only consider its own transactions.

The exchanges should credit your wallet only after it sees confirmations on both chains. Not just one chain.

Lol seriously  

It does not work this way. You need to pick a chain

[bloods-n-cryptos]

Correct but the broadcasted transaction would get included in both chains unless i have the wrong understanding.

After split one chain does not care about the transactions on other. Each will only consider its own transactions.

The exchanges should credit your wallet only after it sees confirmations on both chains. Not just one chain.

Lol seriously  

It does not work this way. You need to pick a chain

Exactly.  After a fork, all new transactions are on a new block chain like a new altcoin.  Transactions prior to the fork could be on both chains though.

[skang]

The BitcoinXT activation date was yesterday but the fork could not gather support (0 BIP101 blocks in last 1000 blocks, reaching a peak of 8 out of last 1000 in August).

For the near future here is the Scalability Road Map that bitcoin will be following : https://lists.linuxfoundation.org/pipermail/bitcoin-dev/2015-December/011865.html

[pandher]

Maybe Bitcoin should look at Monero which has dynamic block size, but for that to work the hard limit has to be changed to a tail emission which will never happen

[legendster]

A solution could be as simple as a 'ping' message. I don't have a programming mind and I wont pretend to understand how the internal wiring or Bitcoin works in technical terms but the issue here is basically this "the block size is too big, by the time rest of the world uploads/downloads this mined block information someone else would get headstart"

Can't we simply send a proof of work 'ping' to the rest of the world. This 'ping' would carry an irrefutable proof that a block has been mined and ID's the block?? So the rest of the world can stop mining that block and move on. Theoretically this 'ping' message could be few bytes.

Couldn't this be done? Or is it way more complicated?

[skang]

A solution could be as simple as a 'ping' message. I don't have a programming mind and I wont pretend to understand how the internal wiring or Bitcoin works in technical terms but the issue here is basically this "the block size is too big, by the time rest of the world uploads/downloads this mined block information someone else would get headstart"

Can't we simply send a proof of work 'ping' to the rest of the world. This 'ping' would carry an irrefutable proof that a block has been mined and ID's the block?? So the rest of the world can stop mining that block and move on. Theoretically this 'ping' message could be few bytes.

Couldn't this be done? Or is it way more complicated?

What you describe is called SPV mining. It means that miners skip the verification of the block and the transactions within, and immediately start mining a new block referencing the just-solved block header.
There could be many types of issues due to SPV mining:
- Since miners receiving only 'ping' & not complete data, they don't know what is in the last block, they have to mine without any transactions (except for the coinbase transaction), to be sure that they don't mine a block with
transactions that conflict with transactions in the previous block. This means they are not helping the bitcoin network at all!
- There were other issues like July 2015 fork which you can read about here : https://en.bitcoin.it/w/index.php?title=July_2015_chain_forks