Will you keep block size at 1MB if that makes bitcoin value rise?

[franky1]

In reality, road infrastructure is covered by the tax you turned into government which is around 50% of the gas price at where I live, so it is a very high cost without any ROI, but people still value that to be worthy. Everyone knows that driving a car is an expensive thing, and it often delays due to traffic jam, but they still drive a car due to the flexibility and freedom it brings. Government can set a low price for public transportation, since they have economy of scale similar to a clearing based solution

So I think a mixture of both public and private transportation is also healthy in bitcoin ecosystem: People who want low fee will seek centralized service hub and those who want to do transaction by themselves will have to pay a high fee

ok continuing your analogy by sticking to a 1 lane road(1mb block) roadworkers(miners) paid privately via fuel tax at $1000 a minute, which road users dont even think about or notice.


imagine the road can only cope with 400 people a minute who want to pass through.. in 2009-2013 everyone could drive a car with literally no toll fee and without realising the municipal road workers were paid via tax via fuel. which people dont care about as its a background thing they cannot choose.. or personally change..(blockrewards)

now instead of these road workers making more lanes to help the community. they put a toll on the road. charging cars(bitcoincore tx) 4cents and bus passengers(offchain) 1cent.
the community grows to 1million but still only 400 people a minute can use the road. so some decide to only make 1 journey a week instead of 4, to reduce road bottlenecks and some choose to go by bus(offchain). but even when using a bus, that bus does appear on the road and contains a list of people settled in their seats. so even offchain passengers eventually can also cause bottlenecks too.. if it turned out that more than 400 buses with settled passengers use the road per minute

so the community is demanding a new lane. but the road workers instead raise the toll fee, hiding their greed and saying that naturists who do not like change wont accept a new lane.
and that paying more is the solution..

so now we have 400 buses with settled passengers. and 400 cars.. it wont matter how high the toll is its not going to help the community. its going to make people just not use that road. people will either be priced out of using both car or bus.. or they just wont use that road(bitcoin) ever again as its now cheaper and faster by helicopter(Visa)

But increasing a toll will not impact the housing price of a city, as far as I can see

If it is so easy to add a new lane, then why are we seeing higher and higher toll and even the ban of using car under certain day?

you are right higher fee's does not make bitcoin more valuable.
allowing more lanes means that fee's totals at the end of the day, can double.. not due to raising the fee.. but by letting twice as much pass through, thus collecting more. and if people can pay just 1cent and have 2lanes, 4 lanes, 8 lanes where 800, 1600, 3200 people can pass through a minute, then thats 1-4million people happily moving eachday.. instead of just 500,000 a day.

that way road workers get more income while servicing the community so it helps the community and workers greed

The infrastructure are difficult to upgrade, it can not follow the growth speed of car users

the infrastructure is not difficult.. its just a few lines of code (few trucks of tarmac)..
the problem is not the technology, its the emotions of the community to fight over usability of the road. or the fear the extra lane will negatively affect their life (theres more tarmac filling up their green fields (theres more data on their hard drives))

The road is always a cost that you must pay to use, it is just not that visible. The best way is to work at home (no physical move of the person, equal to clearing based solutions to do transaction: no real move of the bitcoin) thus the transaction cost do not impact you

at the moment road workers get $10,000 for 10 minutes work via fuel tax.. this is more than enough, but road workers are greedy, coming up with bad excuses to charge people while doing no extra work, slowly ignoring the communities concerns or desires for expansion and its all about the road workers earning a free pension onntop of their salary..

tolls are NOT NEEDED as a supplementary income for atleast 15 years. and should not be used and abused now as a way to not help the community and to hold the community to ransom

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[jonald_fyookball]

Geez how thick are you? Price is tanking because hearn just revealed bitcoin isnt scaling.  Unbelievable.

I don't see any direct relationship between price and Hearn, it is just time to make some consolidation after we had so strong run during past 2 months, the resistance at 450 is so strong that now whales need to wash the market for a while to shake out the weak hands

So the fifteen percent drop on the same day as hearns post was pure coincidence?

Almost anything's value was crashed around the world during Friday, stock market, oil, etc... this is just anticipation of more rate hike from FED, not because of Hearn  

The FED rate has more correlation to Bitcoin price than one of its core figures quitting and releasing an expose of Bitcoin's major issues? 

You are delusional.

Both of them have no direct relation to bitcoin price, otherwise Hearn will be able to short bitcoin and make a huge profit if his words can move the market

News moves financial markets.  Look at the forex market for example.  Why do you think there sometimes huge breakouts and trends after a major economic release?  Look at the NYSE, why do you think stocks gap up or down on earnings?

It is because the market as a whole (especially the largest institutions that trade huge volume) has either a bullish or bearing interpretation of the news.  The rest of the traders follow what the big institutions are doing (either buying or selling) because that's what traders generally have to do in order to make money. 

When Hearn released his resignation/op-ed/expose, there was enough trading volume that saw this as negative and that trading volume
was selling and shorting. 

Hearn is the developer of BitcoinXT, BitcoinJ, etc, and he also has a wide-scope perspective on Bitcion
that few people possess, and that is why he was able to pen such a revealing post.

However, Hearn cannot move the market whenever he wants.  You can't "quit" everyday, you can only quit once. 

[johnyj]

ok continuing your analogy by sticking to a 1 lane road(1mb block) roadworkers(miners) paid privately via fuel tax at $1000 $10 a minute, which road users dont even think about or notice.

imagine the road can only cope with 400 people a minute who want to pass through.. in 2009-2013 everyone could drive a car with literally no toll fee and without realising the municipal road workers were paid via tax via fuel. which people dont care about as its a background thing they cannot choose.. or personally change..(blockrewards)

Your numbers are off. The miners digging out gold has nothing to do with gold's transaction cost, I've seen this strange reasoning several times. Miners come here to dig out bitcoin before it is too late, facilitating transaction is their second priority (thus SPV mining), when majority of the bitcoin has been dig, they will leave, unless the fee will rise significantly to keep their incentive

now instead of these road workers making more lanes to help the community. they put a toll on the road. charging cars(bitcoincore tx) 4cents and bus passengers(offchain) 1cent.
the community grows to 1million but still only 400 people a minute can use the road. so some decide to only make 1 journey a week instead of 4, to reduce road bottlenecks and some choose to go by bus(offchain). but even when using a bus, that bus does appear on the road and contains a list of people settled in their seats. so even offchain passengers eventually can also cause bottlenecks too.. if it turned out that more than 400 buses with settled passengers use the road per minute

so the community is demanding a new lane. but the road workers instead raise the toll fee, hiding their greed and saying that naturists who do not like change wont accept a new lane. and that paying more is the solution..

The bus can take 50 person, but a clearing based solution can take from thousands to millions of users, it is several magnitudes difference. Even if a bus can take only 50 passengers and everyone take bus, then suddenly all the traffic of this city is reduced by over 90%, there will almost be no car on the road, thus the car traffic toll will be removed

You mentioned naturists, this is a good analogy. I guess the main thinking behind the smaller block is to make it more environment friendly. As we all know, all environmental friendly solutions unavoidably cost more, but that can be regarded as an investment, the value increase caused by environmental friendly solutions are deep and long term, can lasts for generations. How can you be sure after 100 years bitcoin can still be installed on average gaming computer with decent internet connection if the size of the blockchain grows exponentially like it does today?

In order to increase on-chain capacity, bitcoin must grow like a monster, become an extremely resource intensive computer program for each nodes, while other centralized payment system will take it easily with a couple of server upgrade to reach same level of performance. In this race bitcoin has no chance to win at all. Given there are already 0 transaction fee mobile payment solutions out there, why should people pay a fee to use bitcoin to do transaction? Only centralized bitcoin payment services can provide 0 fee & instant confirmation transactions, like a bus that can sit thousands of users

You can look at China for such an example: With over 1.4 billion people in this country, it can simulate the largest traffic demand that bitcoin will ever possibly to handle. Chinese government built lots of road, and made their city looks like spider web, but still heavy congestion. The only practical travel method is subway, or intercity high speed train, each train carrying over one thousand people. So that's how a large scale system should be designed to function

[Kprawn]

The lower miners fee advantage, will soon be eliminated by the implementation of many "Private ledgers" being introduced within this year and the years to come from the banks

and other financial institutions. In my opinion this has not been the case in any way, because most people used a third-party as a on ramp and a off ramp for fiat conversion and

they added their fee, making Bitcoin use more expensive, than what it was supposed to be. The whole idea with the original protocol was for people to pay more for priority

transactions, and when it reach a situation where a bottleneck occur, then the block size could be increased to alleviate that. We have not reached a bottleneck in my opinion.

[lumeire]

The lower miners fee advantage, will soon be eliminated by the implementation of many "Private ledgers" being introduced within this year and the years to come from the banks

and other financial institutions. In my opinion this has not been the case in any way, because most people used a third-party as a on ramp and a off ramp for fiat conversion and

they added their fee, making Bitcoin use more expensive, than what it was supposed to be. The whole idea with the original protocol was for people to pay more for priority

transactions, and when it reach a situation where a bottleneck occur, then the block size could be increased to alleviate that. We have not reached a bottleneck in my opinion.

Well they've predicted that the bottleneck situation is now more likely to come soon, that's why they want action. IMO it's much better if the network increases the block size. Huge fees would kill micro-transactions otherwise.

[Cuidler]

People who want low fee will seek centralized service hub and those who want to do transaction by themselves will have to pay a high fee

The reasons for Bitcoin to exist are centralized services with high fees (Paypal, Visa/MC, international Bank wires). There is no reason to use Bitcoin if you cannot use Bitcoin for P2P decentralized onchain transactions with competetive low fees, because there are already many centralized services to make regular transactions. Saying such Bitcoin centralized services will have lower fees than other centralized services is just wishfull thinking backed by just your words.

When you remove the possibility to use Bitcoin for direct onchain transactions with competetive low fees, you basically kill Bitcoin because there is little incentive to use Bitcoin anymore.

Sorry, but hoping people find value in something they dont use and is not physically unique like rare metals is just wishfull thinking to get rich at bigger fool expense.

[johnyj]

People who want low fee will seek centralized service hub and those who want to do transaction by themselves will have to pay a high fee

The reasons for Bitcoin to exist are centralized services with high fees (Paypal, Visa/MC, international Bank wires). There is no reason to use Bitcoin if you cannot use Bitcoin for P2P decentralized onchain transactions with competetive low fees, because there are already many centralized services to make regular transactions. Saying such Bitcoin centralized services will have lower fees than other centralized services is just wishfull thinking backed by just your words.

When you remove the possibility to use Bitcoin for direct onchain transactions with competetive low fees, you basically kill Bitcoin because there is little incentive to use Bitcoin anymore.

Sorry, but hoping people find value in something they dont use and is not physically unique like rare metals is just wishfull thinking to get rich at bigger fool expense.

At current stage all the arguments are wishful thinking, so only the reality will tell. My guess is that a rising fee will not repel new users, since the cost of exchange into and out of bitcoin, together with the exchange rate risk are magnitudes higher than bitcoin's fee today, but people still come to bitcoin. So the fee is the smallest cost today that users care, it should have several magnitudes room to rise before it really become a problem

For exmple, people today typically pay 2-10% exchange fee to buy bitcoin, depends on which exchange they use, and if the market is of high volatility, they could lose 15% of the purchasing power of their coin in one day like this Friday. Such a high cost already bypass Western Union, but still more and more people purchase bitcoin, why? Because they either have some specific usage that can only be satisfied by bitcoin (drug dealing, gambling), or are aiming for 2-100x increase in value (based on its historical performance) thus this little cost is nothing comparing to the potential gain they expect from bitcoin. So even a 10% high fee does not repel users today, how could a fee which is just one dollar could prevent them from using bitcoin?

Bitcoin's fee model is based on data traffic, not the value of transaction. Transacting 100 bitcoin cost exactly the same as transacting 0.01 bitcoin, this nature due to design makes it always benefiting large transactions, and it also makes it a waste of resource to handle micro transactions, both from blockchain's and user's perspective

[johnyj]

The lower miners fee advantage, will soon be eliminated by the implementation of many "Private ledgers" being introduced within this year and the years to come from the banks

and other financial institutions. In my opinion this has not been the case in any way, because most people used a third-party as a on ramp and a off ramp for fiat conversion and

they added their fee, making Bitcoin use more expensive, than what it was supposed to be. The whole idea with the original protocol was for people to pay more for priority

transactions, and when it reach a situation where a bottleneck occur, then the block size could be increased to alleviate that. We have not reached a bottleneck in my opinion.

Well they've predicted that the bottleneck situation is now more likely to come soon, that's why they want action. IMO it's much better if the network increases the block size. Huge fees would kill micro-transactions otherwise.

Yes, with today's technology the nodes can handle 2MB blocks, so it still can grow, and a successful hard fork will prove that the concensus can be reached, both are good points

But from design perspective, it is always healthy to not push the system to its limit, you should leave enough safety margin, never use more than 1/3 of the maximum capacity

Bitcoin miners have a fatal weakness: They can not build their own internet. The whole bitcoin game must be played on internet, so the capacity of bitcoin network are ultimately limited by the internet infrastructure, and in turn that is controlled by the government. So if the day has come and world governments all openly support bitcoin, then you can scale to whatever level on blockchain because then government will specifically build high speed internet to facilitate bitcoin traffic. But it is not the case today, so better stay well within the capacity of the mainstream network speed

[johnyj]

This thread has been distracted a lit into the more practical questions, back to the topic, what I'm interested is, is there any prof that a rising fee will make more people quit using bitcoin?

I think as long as the fee is less than 1% of the transaction, no one cares, since they have been growing up in an environment of such similar fee, and I do feel that some people don't even care about 5% fee because that is a norm when they traveling abroad and have to use cash locally. It is more like a psychological thing, has nothing to do with profit, they just don't care because that fee becomes part of their spending, and they are there to spend those money

[cellard]

Bitcoin has value precisely because thanks sto the small blocks, it allows for a decentralized network, so people cna run one node on theri bedrooms. The day you cant run a node on their bedrooms, Bitcoin will become a centralized monster, and I will dump all my coins. Thats why conservative block size is a fundamental requirement for the well being of Bitcoin's network.

[LiteCoinGuy]

"those things that have cheaper and cheaper running cost, like car, tv, pc, mobile phone etc... they all goes down in value over time"

you cant compare apples and oranges.

[jubalix]

[1] well...no...see money is different to most goods, even if this is wrong

[2] the cost of something can be split from the use cost of something, in terms of money this becomes a little more complex as there is seigniorage, market value and friction cost, both the former and latter are discounted to the...inter.

Eg tools may be really cheap but be very expensive when they are not up to standard so break or stop you doing the job at hand.

Being the reserve currency, USD means its much cheaper to do transactions in USD due to liquidity and so less costs to do business os as a medium of exchange the USD becomes much more valuable.

The more transaction you can stuff into a block, the more valuable it becomes by stint of

[1] sharing the cost over many actors, while accommodating their specific circumstances of recording/facilitating that transaction
[2] creating the ledger state for more actors per block that allows said actors to arrange their decisions around the certainty of the blockchain

Also the block will not get cheaper, but more expensive as more people can be fitted in.

A better product often costs more to buy upfront and saves on maintenance and use.

to a point...and this point is perhaps the real question, not if we need but how much we need. Satoshi, in 2009, 7 years ago was happy with 33MB or so. I see no reason to at least go to 10~20 MB now

[johnyj]

If you study the case from the view of money supply theory, there is MV=PQ formula
M: money supply
V: velocity of money, e.g. how fast the money circulates
P: price level
Q: economy output

If the transaction cost is higher, people will do less transactions, thus reduced the velocity of money V. As a result P or Q would have to go down. P goes down means the price of everything is cheaper, thus money rises in value. Q goes down means the economy output goes down, thus there is less products and services available for trading. At this early stage, Q is still expanding, so it is very likely that P have to go down. means higher bitcoin value

This is reasonable, since you can imagine, when people reduced their transaction frequency due to higher fee, it means more and more coins will be stored instead of spend, resulting in reduced amount of coin supply in market, as a result the value of bitcoin will go up

Of course this is just a theory, the current deadlock situation is because everyone have different theories, no real world examples, we need more evidence

It is difficult to find a real world example because we seldom have something with limited supply in this world, thus almost everything we see basically goes down in value long term wise

Land maybe is the only thing that can compare with bitcoin due to its limited supply. As I can see, the transaction cost of land do not have direct relationship with its value, but land are not used as a payment medium, so even land does not quite fit as a real world example

[Matias]

This is very interesting.  I have no economical education,  but I have been wondering,  whether people hoarding bitcoins makes its value artificially high. Even when people have bitcoins they want to pay with fiat, because they think bitcoins price will rise. To my understanding,  most bitcoins stay idle on people's wallets.  I.e. velocity of bitcoins is low.

If velocity would increase,  on the other side of the equation prices should go up, i.e. bitcoins value would drop?

Thoughts?

[Cconvert2G36]

Speculations: Because BitCoin is first and best coin. Community rises minimum fee to $1. This makes more users want to use BitCoin, and pay more to use it. Becomes wealthy elite Coins and we anoint eachother fine and strange oils, while fondling private witness keys, decentralized nodes means they don't catch our channel.