coindesk's centralization scaling conference:
Liked that!
[ From Qntra/Trilema: ]
Bitcoin's value proposition lies in its fixed inflation. No number of dollars meeting the market can increase the supply schedule. Trilema clearly explains:
There's pretty much literally nothing those extra dollars nobody wants can do to increase the Bitcoin supply. It's very, very inelastic, and consequently the only stability point is when equilibrium is reached. Two billion dollars divided by 600`000 Bitcoins comes to three thousand dollars and change per Bitcoin.
Actually inflation *can* be introduced into bitcoin in a number of ways, at nearly zero cost. The supply cap or 21 million BTC is not "guaranteed by math"; it is decided by humans who choose which software to run. Paraphrasing the old proverb, "no protocol change is prohibited if the right 20 business men decide to implement it".
Then there are also altcoins, both original and forks of bitcoin. Litecoin already has faster confirmation times and better antispam protection than bitcoin (thanks to a measure that Charlie Lee implemented in Litecoin, but the Core devs rejected for Bitcoin). Viacoin aims to be a replacement of bitcoin; it is noteworthy, among dozens of other altcoins, because at least two Core developers (Peter Todd and BTC Drak) work for it.
So it is not unconceivable that some other coin will conquer Bitcoin's user base -- and value.
Even if the supply cap of Bitcoin *were* guaranteed to never change, that would not guarantee fabulous prices: scarcity does not imply value. There is a finite number of tickets for last month's Penssilvania State Lottery, that can decrease but never increase. With modern micro-analytic techniques, forgery of such tickets would be impossible in practice. Yet those tickets are now worth the price of dirty paper scraps.
Bitcoin is faced with hitting another inelastic limit in its maximum transaction volume.
It is not inelastic at all. The number of regular bitcoin users is probably less than 100'000. It is possible that the network will not be able to serve 1000 times as many users in 10 years time. However, it can certainly serve 10 times as many, even today.
There is a dozen people who think that they own the system, and want to impose an artifical 1 MB lmit on the block size. Such a limit would prevent the traffic from growing to more than 0.750 MB/block, a level expected to be reached in 2016. But there is no justification at all for why the block size limit should be 1 MB, rather than 0.100 MB or 10 MB. Even those guys are now admitting, grudgingly, that the size limit should be raised "now" to 2 MB/block. The major businesses support BIP101 (with 8 MB blocks now), while the miners support BIP100 (that gives them dynamic control of the block size).
So, there goes the "inelastic limit in its maximum transaction volume".
That group has claimed that letting the traffic grow beyond the current 0.750 MB/block limit would have a number of harmful effects, such as fewer full nodes, increased miner concentration, increased orphan rates, etc. But those claims are just FUD.
Miners are too concentrated today and will tend to be more concentrated. The reasons are economies of scale and of location, that are independent of traffic levels or block sizes.
The block size has more than doubled over the past 15 months, and yet the average orphan rate has remained totally flat, at ~1.5 orphaned blocks per day.
The number of full nodes will continue to decrease, no matter what. Not just because of the increased traffic, but mainly because shutting down a node saves saves money for the node operator, while starting a new one costs increasingly more in bandwidth and time -- even if traffic were to remain constant. (The blockcchain now grows at 100 MB every day, and will soon grow at 150 MB/day even if the 1 MB limit is not raised.)
(And then there are those small-blockians kiling hundred of full nodes because they dared to express support for XT... )
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