Bitcoin Blocksize Problem Video

[xavier]

The block size problem is just one of a number of problems that are coming bitcoins way. The biggest problem however is not block chain or any external government or regulation, as actually both the problems could be solved rather easily. It is the bitcoin foundation itself.

First of all, and this may seem like a rather extreme opinion, but I think that Gavin Andresen is a liability to bitcoin. If you read in the tehnical forum, you can see MANY complaints about him, his communication, the way he acts and deals with the community. You will notice a general dissatisfaction about Gavin Andresen that has been present for a while. Considering he is currently in full time employment effectively by bitcoin itself, and therefore really has no excuse, this is rather worrying. Is my opinion that his involvement as lead developer with the bitcoin project, effectively CEO of bitcoin, is going to cost investors a lot in the future. For this reason amongst others, I have sold many of my coins already for alternative currencies so I don't not have to worry about the things he and the rest of the bitcoin cartel have in store in the coming months.

All I can really add here, as i am not a member of the cartel and just look at things from the point of view of an outside investor: if you believe in the concept of crypto currencies that bitcoin has successfully communicated, but do not want to have to worry about the bitcoin foundation or 'satoshi', this mysterious guy who holds nearly 10% of the coins outstanding, and you do not want to continue to prop up the bank accounts of such individuals as Gavin Andresen and the bitcoin cartel, there is an alternative currency Litecoin that is actually technically better than bitcoin and avoids all of these problems.

The day the bitcoin foundation opened was the day that bitcoin died. I strongly advise anyone holding bitcoin to sell now and buy lite coin so they do not have to worry about this bunch of idiots. I also believe more people will be doing this in the coming months, as the incompetence of this bitcoin foundation makes itself clear, which makes this a pretty good time to be buying.

[grue]

First of all, and this may seem like a rather extreme opinion, but I think that Gavin Andresen is a liability to bitcoin. If you read in the tehnical forum, you can see MANY complaints about him, his communication, the way he acts and deals with the community. You will notice a general dissatisfaction about Gavin Andresen that has been present for a while. Considering he is currently in full time employment effectively by bitcoin itself, and therefore really has no excuse, this is rather worrying. Is my opinion that his involvement as lead developer with the bitcoin project, an equivalent to CEO, is going to cost investors a lot in the future. For this reason amongst others, I have sold many of my coins already for alternative currencies so I don't not have to worry about the things he and the rest of the bitcoin cartel have in store in the coming months and years.

All I can really add here, as i am not a member of the cartel and just look at things from the point of view of an outside investor: if you believe in the concept of crypto currencies that bitcoin has successfully communicated, but do not want to have to worry about the bitcoin foundation or 'satoshi', this mysterious guy who holds nearly 10% of the coins outstanding, and you do not want to continue to prop up the bank accounts of such individuals as Gavin Andresen and the bitcoin cartel[...]

Ad hominem

[jdillon]

The block size problem is just one of a number of problems that are coming bitcoins way. The biggest problem however is not block chain or any external government or regulation, as actually both the problems could be solved rather easily. It is the bitcoin foundation itself.

Don't be foolish. If Bitcoin is decentralized and democratic as it needs to be Gavin and the foundation pose little threat to Bitcoin regardless of their actions.

I disagree with Gavin on the blocksize issue and I think the foundation should be making off-chain transactions a priority. But Bitcoin needs people working full-time doing the grunt work of testing and feature development and Gavin *has* done a good job of that. Bitcoin also needs people working on legal issues and advocacy and again the foundation is beginning to provide that. That is exactly why I've donated to the foundation before and if they changed their priorities I would do so in the future.

The foundation does not control Bitcoin. They are a resource and YOU choose to run the software they help develop.

[amincd]

First of all, and this may seem like a rather extreme opinion, but I think that Gavin Andresen is a liability to bitcoin.

I think he is a huge asset. Complaints against him are inevitable, no matter how he conducts himself, given the size of the bitcoin community and the differing opinions among its members.

but do not want to have to worry about the bitcoin foundation or 'satoshi', this mysterious guy who holds nearly 10% of the coins outstanding, and you do not want to continue to prop up the bank accounts of such individuals as Gavin Andresen and the bitcoin cartel, there is an alternative currency Litecoin that is actually technically better than bitcoin and avoids all of these problems.

This not the place to pump your bitcoin copycat. It's clear what your motive is now.

I'd rather the most successful bitcoin-based cryptocurrency reward early adopters like Satoshi who actually developed the technology and supported it while it was still unproven, and not early adopters of copycat networks who want to profit off of all the work put into creating bitcoin technology, without rewarding those who put in that work.

You give all bitcoin-based cryptocurrency a bad name with your spammy sniping.

[cypherdoc]

this mysterious guy who holds nearly 10% of the coins outstanding

you have absolutely no evidence of this.

[cypherdoc]

given my recent experience with one of the other core devs over on github, i have to say that my support for Gavin as lead dev has been reinforced many times over.

i too would like to see Bitcoin become a reserve currency and a store of wealth but i don't necessarily see increasing the block size to be a mutually exclusive event.  certainly i plan on holding multiple copies of the blockchain as it increases in size.  as for it increasing the target on my forehead, i'll have to defer to the experts on that one.  but the increased velocity of Bitcoin as a currency certainly will increase it's value even if a merchant chooses to hold it only briefly.  the mere fact that those coins will be circulating at a much faster rate will increase demand for their use and consequently their value. 

seems to me Mike has a point that miners could always choose to put a cap on their block sizes if they want.  i say open up the limit and let it evolve.  more users also means more difficult to shut down.

[tvbcof]

My reaction:  stop spreading FUD.

Commercial broadband providers are monitoring and manipulating users traffic.  This is not some 'moon landing' consipricy theory.  It's happening now.

maybe you are talking about something else but ... ISP's have manipulated P2P traffic in the past but that was at levels way above what Bitcoin uses.  That was that whole Network Neutrality thing.  These days some ISP's still claim they need to do throttling because of all the bandwidth being used but the reality is it is a revenue generating thing because they want to push people into a metered service.  I actually testified at the class action court hearings for this issue because Comast blocked some of my ports and forced me to get a higher level of service because I run my own e-mail server.

So the issue is whether you have or don't have p2p communication, not the amount of p2p traffic when you are talking about Bitcoin.  The blocksize is not really an issue as far as ISP throttling p2p traffic is concerned.

The things which concern me most are deep packet inspection and targeted blocking.  These have been toyed with off and on in the US, and are under active use in other countries.  I have zero confidence that one 'cyber-attack' would not sway a majority of people to support whatever means are necessary to stop 'al-quida' or whoever the baddies are advertised to be.  Especially if the filtering left their porn and media theft habits available.  Nor do I believe that it would be technically unfeasible to filter with enough effectiveness to throw a wrench into the workings of many systems including Bitcoin.

If the infrastructure required to operate Bitcoin needs to be of commercial grade to be effective, I believe that the task of disrupting it would be even more simple.  Again, that would just require a law, and a law would just require an emergency.  Such an emergency does not even have to be a 'false flag' for those who are not prone to conspiracy theories.

You might argue that Bitcoin is global and can survive be packing up and moving to a 'free' country.  I say that very few countries are not going to feel some threat to their own financial infrastructure posed by a robust Bitcoin and it may be hard to find a welcome home.  The countries which are not set up to quash 'threats' such as Bitcoin and are not under pretty strong influence of a powerful external political body are rare...and I believe that you've find a dearth of datacenter and backbone fiber within their jurisdictions.

You might argue that people will switch en-mas to using cryptography and other forms of cloaking.  I will say that it will hasten the requirement for traffic which is not auditable by authorities to be blocked.

You might say that it will damage legitimate uses, industry, etc.  I will say you've got 90 days to re-compile or use the solution provided by a certified vendor.  Nobody is going to hunt down illegal crypto users...just flip a switch and start blocking traffic.  That is kind of a checkmate unless I want to make the argument that I don't trust the government, and that's going to be a loser in certain very possible environments.

You might argue that it has not happened yet and we won the strong crypto battle of two decades ago and SOPA recently so we're all good.  I will argue that it was a close call in both cases, the adversaries learned lessons for their next attacks and learned that it is possible to make some pretty good lemonade out of the lemons that we delivered in those to instances.  In short, "it ain't over yet."

Or you might just be a pimple-face Internet tough guy who will state the acronym 'tor' to solve any problem.  If so, you are likely to end up being an Internet tough guy with a dead internet connection.  Good luck using Bitcoin in that state.

---

Now I do believe that there will be plenty of technically inclined people will be able to move with relative freedom through almost any conceivable network environment.  How much 'guts' they will need is the main question.  My whole thing about the block size comes down the difficulties of moving through a hostile environment while trying to pack a big load of data.

It is important to note that I'm not talking about today's legal and cultural environment.  Obviously Bitcoin can scale hugely under the environment we enjoy today.  I'm looking down the road and asking 'then what' under certain changes which are, I am pretty certain, distinct possibilities.  If the Bitcoin Foundation is doing such forward threat analysis, they are doing a damn bad job of communicating it, and if they are not, they are negligent in my opinion.

---

It just hit me that it is the case that many animals when they wish to quit a fight will lay prostrate and 'expose their jugular'.  This is an indication to the winner that the loser no longer poses a threat.  In short, it is the ultimate demonstration of good will.  I wonder if the Bitcoin Foundation is, in an effort to demonstrate goodwill to the authorities, putting themselves (and us) into such a position (by laying defenseless against certain forms of attack.)  If so, I think this is a totally wrong strategy.  I think that Bitcoin should maintain a cordial relationship with the authorities and make good faith efforts to comply with reasonable requests, but should (and could) operate from a position of power.  Centralization and reliance on corporate controlled systems is a position of extreme weakness whereas full and credible p2p is an expression of extreme strength and possibly enough to actually win the war which seems likely to at some point be fought.

[edmundedgar]

One thing that video script is missing is a simulation of how high transaction fees would go if you had your way. Without that it's a bit meaningless, because people can't imagine which of the current uses of bitcoin will still work and which ones will have to disappear or move to something else, like a payment processor that they'd have to trust.

You're going to have to pay quite a bit just to beat out Satoshi Dice, because those guys are making out like bandits doing what they're doing, and sometimes they're taking seriously high-value bets.

What are we going to be paying in your world to get into the world highest-value 7 transactions? $1 per transaction? $10 per transaction? $100 per transaction?

[herzmeister]

money and politics

inseparable after all 

[tvbcof]

The things which concern me most are deep packet inspection and targeted blocking. 

Right, that is what I said.  it is whether you do or don't have a p2p connection.  This has nothing to do with increasing the block size.

And I'll say (again) that it is possible to 'have a p2p connection' in hostile environments which can pass small amounts of data, but will not live long or work well on large amounts.

Once Bitcoin make the jump to a bandwidth intensive solution it is unlikely to be able to go back, and that leaves it at significantly higher risk of a successful state directed attack.

[tvbcof]

The things which concern me most are deep packet inspection and targeted blocking. 

Right, that is what I said.  it is whether you do or don't have a p2p connection.  This has nothing to do with increasing the block size.

And I'll say (again) that it is possible to 'have a p2p connection' in hostile environments which can pass small amounts of data, but will not live long or work well on large amounts.

Once Bitcoin make the jump to a bandwidth intensive solution it is unlikely to be able to go back, and that leaves it at significantly higher risk of a successful state directed attack.

If you are claiming that the difference between the current block size and a new block size is somehow going to trigger all this stuff then I find that hard to believe and you have no data.  The issue has nothing to do with block size. 

I am only saying that attacks of this nature might be 'triggered' in that if Bitcoin is weak in this areas and can heavily damaged or killed.  If so, that could become the preferred attack channel as Bitcoin becomes increasingly threatening to existing power structures.

The flip-side is that if an attack using network analysis and filtering technology is unlikely to kill Bitcoin, or is likely to make it stronger, or is likely to cause excessive co-lateral damage, that will probably not be the attack vector of choice.

You seem to be saying that it is somehow invalid to consider problems which have not yet occurred.  That strategy is unlikely to result in a robust system.  This is not specific to Bitcoin but applies to almost any endeavor.

[jmw74]

I do not understand the "anonymity" objection to raising the block size.

"Trust a 3rd party" is a perfectly valid solution for doing low-value transactions, but it's not a solution for keeping anonymity?

I think retep's objection is the short-sighted one.  In the long-term, hardware capacity will vastly outstrip transaction growth.  In roughly a decade, storing and forwarding every transaction in the world will be trivial.  In 1995, it seemed impossible to stream and store 1000's of high-def movies.  Now it is done on cheap commodity hardware.

There is no reason whatsoever to keep the block size under 1mb.  There may be a reason to limit it somewhere, and it may not be easy to come up with a good scheme to limit it, but seems to me a permanent 1mb limit is "right out".

[cypherdoc]

The things which concern me most are deep packet inspection and targeted blocking. 

Right, that is what I said.  it is whether you do or don't have a p2p connection.  This has nothing to do with increasing the block size.

And I'll say (again) that it is possible to 'have a p2p connection' in hostile environments which can pass small amounts of data, but will not live long or work well on large amounts.

Once Bitcoin make the jump to a bandwidth intensive solution it is unlikely to be able to go back, and that leaves it at significantly higher risk of a successful state directed attack.

tv, this is a judgment call on your part.  there is no data to support it either way.

i could just as easily say that if and when blocks have grown to the size you're talking about, that would mean actors like Paypal, Visa, and MC would have climbed onboard Bitcoin making it politically impossible for any gov't to attack it.

[tvbcof]

tv, this is a judgment call on your part.  there is no data to support it either way.

i could just as easily say that if and when blocks have grown to the size you're talking about, that would mean actors like Paypal, Visa, and MC would have climbed onboard Bitcoin making it politically impossible for any gov't to attack it.

Yes, it is somewhat theoretical.  I have, however, dabbled with techniques of covert messaging over the years for the fun of it and am probably a bit more aware than most of the technical difficulties of cloaking data channels.  (DPI's Achillies heal is that it is processor intensive, and just as a hashing function acts like a valve using this principle, it is possible to make life hard on the analysis part of a DPI system.)

I do not think it is at all improbably to imagine a world where the Internet is much more controlled than it is (or appears) at this time.  It's not likely in the plan of those in power in the US, for example, to end up being "Mubarak'd".

I think it is a false hope to trust that the strength of Bitcoin will be promoted by adoption by Visa, PayPal, etc.  Firstly because it is unlikely.  Secondly because even if this were the case it would mean that they are extracting sufficient value out of the system.  That means value from the pockets of the users.  In that case there would likely be nothing worth trying to protect.

[cypherdoc]

tv, this is a judgment call on your part.  there is no data to support it either way.

i could just as easily say that if and when blocks have grown to the size you're talking about, that would mean actors like Paypal, Visa, and MC would have climbed onboard Bitcoin making it politically impossible for any gov't to attack it.

Yes, it is somewhat theoretical.  I have, however, dabbled with techniques of covert messaging over the years for the fun of it and am probably a bit more aware than most of the technical difficulties of cloaking data channels.  (DPI's Achillies heal is that it is processor intensive, and just as a hashing function acts like a valve using this principle, it is possible to make life hard on the analysis part of a DPI system.)

I do not think it is at all improbably to imagine a world where the Internet is much more controlled than it is (or appears) at this time.  It's not likely in the plan of those in power in the US, for example, to end up being "Mubarak'd".

I think it is a false hope to trust that the strength of Bitcoin will be promoted by adoption by Visa, PayPal, etc.  Firstly because it is unlikely.  Secondly because even if this were the case it would mean that they are extracting sufficient value out of the system.  That means value from the pockets of the users.  In that case there would likely be nothing worth trying to protect.

well then the other way to look at it is that if the masses are the ones driving up the blocksize bandwidth, then there will be just too many of us for TPTB to do anything about it from a political standpoint.  i'm not saying you're wrong, scrutiny of my bandwidth usage is the last thing i want, but what we're talking about here is a theoretical situation which is mostly unpredictable.

[cypherdoc]

tv,

this is what i think needs to be supported, not squelched:

http://techcrunch.com/2013/04/29/chris-dixon-plans-on-investing-in-more-bitcoin-startups-says-more-entrepreneurs-are-getting-involved/

""I think for a lot of people in tech, finance has been this very frustrating area," says Dixon. "We see what happens on Wall Street, it's very corrupt, and it's so highly regulated that, when you do try to start a company, you run into all these regulations. [Bitcoin is] this release for the pent-up frustration. Finally something is happening in finance tech....[We spent] years in the desert there."

Read more: http://www.businessinsider.com/chris-dixon-why-silicon-valley-is-obsessed-with-the-bitcoin-2013-4#ixzz2RsTBynQW

if Silicon Valley takes Bitcoin by the horns and rides this wave, it won't matter what the gov't thinks.

[tvbcof]

tv,

this is what i think needs to be supported, not squelched:

http://techcrunch.com/2013/04/29/chris-dixon-plans-on-investing-in-more-bitcoin-startups-says-more-entrepreneurs-are-getting-involved/

""I think for a lot of people in tech, finance has been this very frustrating area," says Dixon. "We see what happens on Wall Street, it's very corrupt, and it's so highly regulated that, when you do try to start a company, you run into all these regulations. [Bitcoin is] this release for the pent-up frustration. Finally something is happening in finance tech....[We spent] years in the desert there."

Read more: http://www.businessinsider.com/chris-dixon-why-silicon-valley-is-obsessed-with-the-bitcoin-2013-4#ixzz2RsTBynQW

if Silicon Valley takes Bitcoin by the horns and rides this wave, it won't matter what the gov't thinks.

Firstly, I agree.  Facilitating the inclusion of people with financial power to get some skin in the game is a powerful tool.

I dis-agree that this is the be-all-end-all solution to thwart against state sponsored attack.  Relatedly, people with financial power have their own struggles going on between themselves and Bitcoin's future could become one of the weapons they use against one another.

Lastly I wish to make it clear that I see the entire crypto-currency world as being a cat which has escaped the bag at this point.  There WILL be a healthy exchange currency solution, and probably many of them.  There also WILL be a functional 'reserve' currency as well.  These functions have many areas where their functions and logical focuses diverge, and some of them are mutually exclusive.

The only real question is how Bitcoin proper will wind it's way through the landscape which is yet to be explored.

[gglon]

Just some raw calculations for distant future:
script:

Small mining pools will go out of business [if blockchain size> 1MB]

I can't see much difference for small mining pools between 1MB block with avg tx fee of $10 and 100MB block with avg tx fee $.1. Avg block revenue would be $42,000 in both cases. So even tiny mining pool that mines 1 block/day (0.3%) would make $150,000 a year with 1% fee. Full, reliable 100Mb/s connection (not shared with anyone) as of 2012 cost~ $30,000/year in Sao Paulo and 10 times less in New York/London - source. And the cost of 4TB/year is meaningless. Finally the revenue would be > 80% as opposed to ~99% for 1MB. And this is worst case scenario, since the pool can easily share 1Gb with 1000 other consumers and pay ~1% of the price (normally 1Gb is shared with 10,000 broadband connections)

alternative to increasing the block size: off-chain transactions

Off chains tx are fine as long as people would like to pay less fee than $.1. Otherwise miner would want to claim the fee, as shown in the above scenario.

I believe the consensus may be reached and something between 1MB and unlimited size will be finally accepted.

[tvbcof]

You seem to be saying that it is somehow invalid to consider problems which have not yet occurred.  That strategy is unlikely to result in a robust system.  This is not specific to Bitcoin but applies to almost any endeavor.

I said your issue is not related to a change in the block size.

You make a robust system by using systems engineering.  You look at the baseline (do nothing) and you come up with at least 2 alternatives (Larger block size, unlimited block size, etc.).  You take those scenarios and develop a risk matrix of probability vs. severity.  Then you look at possible remediation plans for the risks.  Then you put that all together and compare the risks of the different scenarios.  You don't just pull one scenario out of your hat and say 'this will cause a problem."  Every scenario has problem so you need to pick the best one.

In this case 'do nothing' is the solution which, to me, makes the most sense.

The most rosy scenarios for scaling via block size increase get us up to 'as big as Visa' range.  I've argued for a long time that that is simply not enough to run a fair fraction of street-level transactions of the world on, and the cost of doing this is reducing the number of potential 'peers' down to a low number of well connected and well capitalized entities.  Even then it likely fails at some point anyway and we are back to the same problem but with a much less desirable Bitcoin solution.

An alternate solution is to embrace multi-tiered and loosely coupled set of solutions and attempt to retain Bitcoin as the top-most tier in the hierarchy.  Bitcoin could perform that role adequately with the configuration we have today and would allow a multitude of highly dispersed transfer nodes to exist in support of Bitcoin proper.  And to my main points of this thread, there is a high likelihood that they could communicate with one another efficiently even under significant attacks by network carriers.  Such a solution would be difficult to stamp out...and thus something which I and others could have a lot of confidence in.

[cypherdoc]

i think we should design any future redundancy models after an industry that has done this before and has proven adept at disaster and attack modeling:  the military industrial complex.  

there must be readily available plans as to node density and capacity per square mile/kilometer that they put forth back in the 70's or even earlier required to withstand a nuclear attack.  any anticipated gov't interference in Bitcoin could be designed after this model in an effort to anticipate maximum damage and institute proper controls and response.

David Perry gave a good podcast talk the other night where he likened the crypto behind Bitcoin as military grade compared to even the stuff we see with RSA symmetrical encryption used by banks.  i'd never really thought about it that way before but from what i can tell after studying ECDSA public key cryptography, it sounds like he is correct.  

we should design any future blocksize expansion and calculate its effects with the goal of maintaining full nodes at a similar density to what maintains the structure of the internet in the US from a military defense perspective.

that should do it.