Bitcoin: Settlement Layer or Payment Network?

[KoinKartel]

Because the more complex the protocol is the more risks it carries.

By adding all sorts of junk to it is not a good way when it comes to money.

It must be simple and stable, thats all it needs to be succesful.

If you want complexity then use ethereum or other stuff.

That's like saying the internet should only be used for email, and smart phones should only be used to make phone calls.

The problem here is that you are using an expired frame of thought. A frame of thought that has been made redundant due to the invention of Bitcoin and the Blockchain.

Bitcoin is not 'just' money. Bitcoin has record-keeping ability due to the Blockchain. Bitcoin allows users to initiate programmable contracts. Multi-signature transactions are also possible.

Bitcoin is a piece of software that employs human beings to secure it's network (miners) and then pays these human beings via block rewards - which makes bitcoin the first real world implementation of a decentralised autonomous corporation.

Put simply, bitcoin cannot just be put into the box of being "either" a payment network or a settlement layer because it does MULTITUDES more than just those two things.

It has the power to do things that have not even been defined yet

So I think room has to be given to allow bitcoin to continue to mature, instead of looking for small boxes within which to confine it's potential

[Kprawn]

I cannot see why we cannot do both? You could have the Core protocol serving as the settlement layer and a side chain doing the Payment network. We already have off-chain service providers doing a

good job at handling the payment side. { Or a combinations of them } We should look at this from more sides and have a three dimensional  view on this topic .... Bitcoin are adaptable with Side chains

to handle several functions.  ... SegWit will address some of the capacity issues and the rest will fall in place after that. 

[Carlton Banks]

I cannot see why we cannot do both? You could have the Core protocol serving as the settlement layer and a side chain doing the Payment network.
We already have off-chain service providers doing a good job at handling the payment side.

This.

[RealBitcoin]

That's like saying the internet should only be used for email, and smart phones should only be used to make phone calls.

No its not, bitcoin has only 1 function, money.

The internet is not 1 entity but many servers communicating with eachother.

Imagine if the internet were 1 blockchain, it would take up all earth's resources to store it.

Some estimates show that the internet is well beyond many million exabytes (10¹⁸ byte) the size.

If bitcoin were all stuff with many features, the blockchain size would be astronomically big, and would be impossible to store it.

The problem here is that you are using an expired frame of thought. A frame of thought that has been made redundant due to the invention of Bitcoin and the Blockchain.

Think that over again.

So I think room has to be given to allow bitcoin to continue to mature, instead of looking for small boxes within which to confine it's potential

There is no room, no feasable room, unless you want people to store mini datacenters in their houses to carry the weight of blockchain.

[RealBitcoin]

I cannot see why we cannot do both? You could have the Core protocol serving as the settlement layer and a side chain doing the Payment network. We already have off-chain service providers doing a

good job at handling the payment side. { Or a combinations of them } We should look at this from more sides and have a three dimensional  view on this topic .... Bitcoin are adaptable with Side chains

to handle several functions.  ... SegWit will address some of the capacity issues and the rest will fall in place after that. 

Exactly, that is what I`m talking about exactly.

The CORE protocol is the settlement layer.

And the offchain entities built on it serve the unique purposes.

It's purpose orientedness or how you call it. But the core protocol is settlement layer, that is crucial.

[RealBitcoin]

There was a similar thread recently:P2P Cash or Settlement Layer?. The first question that should be asked is what is achievable (which was also my first input on the other thread). If you really want to put some effort in your thread it might be good to provide some sort of list of features that are inherent to a settlement layer and those that are inherent to a payment network (then mark those that Bitcoin has). What you did was good, but it could be improved. It is just a suggestion though.

if someone sells 10million dollars worth of bitcoin the market will nose dive very hard, this should give you a clue as to how far off we are of being a Settlement Layer.

Basically, your definition of a settlement layer is something that has a very stable market price?

I dont think a blockchain based decentralized cryptocurrency can be a payment network.

Why? Because first it would require fast blocks. Ok you can say that DASH and LTC fits this purpose, but i think they will have big issues in the future.

Fast block interval is extremely dangerous if a lag occurs in 1 sector, it could drag down the entire network.

So a real cryptocurrency must stay conservative in all aspects.


You want payment network? Sure you can have it.  Every coins can store some amount of arbitrary data in a transaction.

Use that space to build a payment network on that. Or build another altcoin that aggregates transactions and sends them in group.

Lightning network, payment channels, you name it.

But the core protocol, must stay conservative!

[BadGhost]

Bitcoin, our beloved cryptocurrency now stands between a forked road and it has to take 1 route, that will define it, and once the route is chosen it cannot turn back. It's now time to decide what bitcoin is, and where it is heading, therefore 2 paths are in front of us: Settlement Layer or Payment Network.

Now obviously my opinion is (and its a strong opinion) that Bitcoin is a Settlement Layer and it's not suited to be a Payment Network.



Here are the reasons why Bitcoin is Settlement Layer:

✓ Bitcoin is a deflationary currency, perfectly suited for longer storage, not instant payments.

✓ Bitcoin has a slow transaction speed, 10 minute is too slow for average transactions, therefore not good for quick shopping.

✓ Most coins are already in cold storage or in black holes, and more will be, it has a low money velocity, therefore few big transactions happen (most transactions are dust faucet payments which can easily be done offchain anyway).

✓ Bitcoin is nr.1. cryptocurrency which means it has instinsic value in the crypto world.

✓ Bitcoin is effectively a commodity, a commodity money, a digital version of gold.

✓ Bitcoin is well trusted and respected therefore any other technology can be easily built upon it.

✓ Bitcoin transaction cost will rise eventually, phasing out small payments, and it will be used only for larger payments, and could become a professional or institutional platform for finance, not an internet joke money.

✓ Bitcoin is nr.1. and the original one, so there can be any derivatives of it linked to it, in a transparent way, that could serve as a quickpayment, like offchain transactions, offchain channels, Lightning Network, payment consolidators,etc..

✓ Making bitcoin a settlement layer is the only way to gain trust of rich people and advancing bitcoin forward to the next level being recognized as a professional platform and a serious thing amongst reputable people.

✓ Bitcoin could be a safe haven against financial collapse, capital control and could store trillions of $ in the future, making it's price stable, while a "quickpay" currency would be very volatile because we know the faster the money velocity the higher the volatility of price. So the trust , the deflationary aspect and the slow money velocity is the perfect combination for a digital commodity and settlement layer system.

✓ Given bitcoin's size, and the money risked in it, we should be extra careful with any sudden changes, so the financially responsible and conservative path is the best way to go, therefore a small block size is recommended.


Yes, so this is Bitcoin, and therefore the Core roadmap is the best suited for it. If you want a payment network coin, then try Litecoin or Doge, but Bitcoin is not well suited for it.

"If you give up financial security for temporary comfort, then you deserve neither." --Me

Ad. 1 You are wrong as bitcoin is hardly currency not being acknowledged by law as a legal tender. You are wrong again, because all that bitcoin is, is because its wide acceptance therefore bitcoin is meant to be spent.

Ad. 2 The transaction once broadcasted is irreversible there is like 99.9% chance that it wont be double spent by the user so the confirmation is not necessarily needed right away, yet I agree that 1 minute transaction would be great.

Ad. 3 most fiat money are sitting somewhere as well, thats irrelevant statement.

Ad. 4 yes bitcoins are the widest accepted it has no intrinsic value thought.

Ad. 5 No. Bitcoin is not like gold at all it was said many times. Bitcoin has no intrinsic value such as gold have. According to the law of many countries bitcoin is not a commodity neither commodity money neither commodity based money. Bitcoin does not even meet the economic theory regarding money. The volatility is said to be in disregard with the function of treasure.

Ad. 6 Bitcoin is well trusted by the bitcoin community, which is like 1 million people at its best. Rather 20 000 who really cares and like 500 that actually do something.

Ad. 7 yes, but only if the development will follow this path. Bitcoin might crash to few dollars literally every now and then and then it will be irrelevant.

ad. 8 I dont understand it and dont want to.

Ad. 9 How many "rich" people have you met? Most of them wont invest money to something that does not have a legal boundaries. It has to be first legally defined to be widely accepted.

ad. 10 quickpay currency? Like an altcoin? Do you realize that all of those altcoins in there are just bitcoins with different name that are focused on something that bitcoin could do but the developers havent decided yet to realize it? There is no need for altcoins. How do you know its safe against financial collapse? The fact the bitcoin is not a subject to inflation does not make it 100% best. Inflation makes you to spent your money.

overall: Bitcoin was created as a digital cash. That is it thats how it should be used. Period.

[RealBitcoin]

Ad. 1 You are wrong as bitcoin is hardly currency not being acknowledged by law as a legal tender. You are wrong again, because all that bitcoin is, is because its wide acceptance therefore bitcoin is meant to be spent.

Like politicians actually have a clue how bitcoin works, they are just robot bureocrats that do their agenda.

Bitcoin is whatever the code is written into it, and how the network functions, and not how bureocrats define it.

Ad. 2 The transaction once broadcasted is irreversible there is like 99.9% chance that it wont be double spent by the user so the confirmation is not necessarily needed right away, yet I agree that 1 minute transaction would be great.

For fuck sake,seriously you guys stop with your wild dreams and focus on the facts.

I dont care what you wish or what you fantasize, but if the 1 minute confirm time is risky from the network standpoint, then it should not be implemented.

Ad. 3 most fiat money are sitting somewhere as well, thats irrelevant statement.

No, most fiat money is actually being actively traded in forex markets or the repo markets.

Bitcoin has hardly anything in common with fiat.

Ad. 4 yes bitcoins are the widest accepted it has no intrinsic value thought.

First inventions always have intrinsic value

Ad. 5 No. Bitcoin is not like gold at all it was said many times. Bitcoin has no intrinsic value such as gold have. According to the law of many countries bitcoin is not a commodity neither commodity money neither commodity based money. Bitcoin does not even meet the economic theory regarding money. The volatility is said to be in disregard with the function of treasure.

Of course it has, and the volatility argument is nonsense, wait few more years and volatility will calm down

Ad. 6 Bitcoin is well trusted by the bitcoin community, which is like 1 million people at its best. Rather 20 000 who really cares and like 500 that actually do something.

More like 10 million now, and many thousand people work on it to make it better, its just that everyone contributes where he can.

Ad. 7 yes, but only if the development will follow this path. Bitcoin might crash to few dollars literally every now and then and then it will be irrelevant.

That is very unlikely, or even impossible since I suspect most coins are already lost or dormant, so i dont think bitcoin faces the risk of systematic crash.

Ad. 9 How many "rich" people have you met? Most of them wont invest money to something that does not have a legal boundaries. It has to be first legally defined to be widely accepted.

Ok wait, the time argument is redundant, wait a few more years and things will be more clear.

ad. 10 quickpay currency? Like an altcoin? Do you realize that all of those altcoins in there are just bitcoins with different name that are focused on something that bitcoin could do but the developers havent decided yet to realize it? There is no need for altcoins. How do you know its safe against financial collapse? The fact the bitcoin is not a subject to inflation does not make it 100% best. Inflation makes you to spent your money.

Nope, bitcoin inflation is hardly noticeable, and altcoins are not an extension of bitcoin.

Yes bitcoin and LTC are somewhat correlated, but i think LTC will lose its value sooner or later ,and bitcoin will centralize all wealth in it.

overall: Bitcoin was created as a digital cash. That is it thats how it should be used. Period.

Well, if its not feasable, then it's not. Cash is a debt instrument, bitcoin is an asset.

[Lauda]

I dont think a blockchain based decentralized cryptocurrency can be a payment network. Lightning network, payment channels, you name it.

I could argue that Bitcoin can and is a payment network when transactions of lower value are concerned. Transactions are almost instant and I don't see the need to wait for a confirmation or two when paying for a cup of coffee (as an example; other small purchases apply too). However, when it comes to big value then one has to wait. If people use the Lightning Network in the future (where transactions are also almost instant) they will have their 'payment network'.

But the core protocol, must stay conservative!

I agree, however there will be some room to increase the block size limit (to some number that seems both safe and conservative at the time).

[RealBitcoin]

I could argue that Bitcoin can and is a payment network when transactions of lower value are concerned. Transactions are almost instant and I don't see the need to wait for a confirmation or two when paying for a cup of coffee (as an example; other small purchases apply too). However, when it comes to big value then one has to wait. If people use the Lightning Network in the future (where transactions are also almost instant) they will have their 'payment network'.

Well the segwit will fix the malleability and the 0 confirm transactions will be harder to double spend isnt that true?

I saw a video report about people who were complaining about bitcoin transaction speed. If we can just make double-spend very very hard, then it will be instant with 0 confirm.

And for larger sums >0.5BTC people will just wait 10 min.

But the core protocol, must stay conservative!

I agree, however there will be some room to increase the block size limit (to some number that seems both safe and conservative at the time).

Conservative doesnt mean we hate change.

It only means that we are more cautious and risk assessors and not cowboy gamblers , wreckless people that ignore risks.

[Lauda]

Well the segwit will fix the malleability and the 0 confirm transactions will be harder to double spend isnt that true?

I think that BIP62 (IIRC) was supposed to deal with malleability, but Segwit does it in a better way. Transaction IDs will no longer cover signatures (IIRC). Transaction malleability however, is not a double spend! For example: You have two TX's, the original and the second TX which only has a different ID. The attacker can not change the details (send X amount to Y for example). A double spend would mean spending the same coins twice.
I don't think that either are a big problem. I also agree with what was said in regards to being conservative.
A better explanation might be needed, but I'm currently on a mobile device.

[franky1]

Well the segwit will fix the malleability and the 0 confirm transactions will be harder to double spend isnt that true?

blockstream invented segwit to fix malleability.. but then invented RBF to break the trust of zero confirms again.

much like making a fence to stop the neighbours cat getting in the garden, but then making a hole in the fence to fit a cat flap..
yea people are saying that people can spot a RBF and choose to not trust it. but thats like putting a security cam on the cat flap and scarring the cat away only after it comes in..

are we to expect starbucks to say "sorry sir you cant have the coffee because you used RBF, so go sit in the corner and cancel the transaction and try again".
much like if starbucks declined people paying by bank notes because it looks too crisp and has a chance of being a counterfeit.

starbucks would want a fast system that doesnt require hassle or customer complaints because of them not accepting a transaction for x/y/z reasons.

starbucks loves NFC debit cards because they dont have to bother checking bank notes, rummaging around the cashtray for change and counting it out.
same reason starbucks wont use bitcoin if malleability and RBF exist.

in short due to RBF you still cant trust zero confirms even after segwit. unless you have time to monitor what you are receiving, which negates the point of wanting to receive instant trustable transactions.

bitcoin in 2016 is in no way shape or form the same promises of 2009-2013

[Carlton Banks]

Franky, make sense man. RBF doesn't alter trust in zero-conf at all. (Neither did malleability, but, pffffffff) You can't just cancel transactions before they confirm, it doesn't work like that.


You seem to specialise in presenting totally bizarre scenarios that don't/won't exist in Bitcoin, but resemble the features of the new tech you're purporting to describe just enough to muddy the waters. Strange how you get subtle details wrong so consistently, with such consistent outcomes. i.e. always attacking Bitcoin. But, hey you're Bitcoin's best mate!

[Carlton Banks]

let me see if I can predict Franky's oh so unpredictable reply: he loves Bitcoin so much that 2MB. As well as 2MB. Franky?

[franky1]

Franky, make sense man. RBF doesn't alter trust in zero-conf at all. (Neither did malleability, but, pffffffff) You can't just cancel transactions before they confirm, it doesn't work like that.


You seem to specialise in presenting totally bizarre scenarios that don't/won't exist in Bitcoin, but resemble the features of the new tech you're purporting to describe just enough to muddy the waters. Strange how you get subtle details wrong so consistently, with such consistent outcomes. i.e. always attacking Bitcoin. But, hey you're Bitcoin's best mate!

lol goodluck receiving transactions before their confirmed.
im guessing you have no clue why people would want to use RBF or malleability to mess with transactions

[Carlton Banks]

Franky and his transactions that confirm in the past instead of the future lol. Is that your contention, that RBF requires the transactions to time-travel in order to confirm?

[franky1]

Franky and his transactions that confirm in the past instead of the future lol. Is that your contention, that RBF requires the transactions to time-travel in order to confirm?

you must be drunk or insane.. malleability and RBF mess with transactions so that people should not trust accepting zero confirmed..

you do realise that zero confirmed means not in a block.
meaning where a retailer would (stupidly) think they will receive funds before its had the 10 minutes+ to even get in a block because they cannot be bothered to wait. and (stupidly) think that just seeing it broadcast on the network is enough proof of payment

there is no time travel about it.

if star bucks wants to hand over the coffee as soon as the tx is broadcast, but before its confirmed in a block, they shouldnt, because although malleability will be fixed RBF will still be a risk to blindly accept zero confirms.

i really start to wonder if you have even bought any bitcoin ever. because your understanding of the basics seems very limited.

bitcoin can be both a settlement layer (confirmed) and payment layer (zero-confirmed). but only if they sort out not just malleability but the risks that RBF can be abused to make the recipient not get paid what they were intended

[Carlton Banks]

Franky and his transactions that confirm in the past instead of the future lol. Is that your contention, that RBF requires the transactions to time-travel in order to confirm?

you must be drunk or insane.. malleability and RBF mess with transactions so that people should not trust accepting zero confirmed..

You said "good luck receiving transactions before their (sic) confirmed".

The trouble is with your inability to express a coherent thought. We can't get through what should be a basic sentence with you before the eccentric prose gets in the way. Stop painting yourself as some kind of "communicator", you need some base abilities for that sort of role

[Bitware]

Bitcoin is...

• a settlement layer
• a payment network
• an investment
• money
• currency
• personal property

[franky1]

You said "good luck receiving transactions before their (sic) confirmed".

yep. maybe time you actually spend some bitcoin for once and realise that the transactions get relayed around the network, meaning people receive them, BEFORE the mining pools decide which ones to add to a block.

that 10+minute limbo.. is called zero-confirmations. where you see the transaction but its not in a block, not confirmed.
im guessing the basics are too over your head.

by the way i said transactions.. not settled coins..
 
maybe its time you ask your best friend lauda to explain bitcoin to you in his favourite language of Java , because c++ and english eludes you

anyway back on topic.
bitcoin while malleability and RBF are a thing is only trusted as a settlement layer. there are no guarantee's as a payment layer