UASF is soon to fail blockstream core small block forever chain. Real bitcoiners support big blocks.
I fully agree with you here ; and that doesn't even mean that segwit should be avoided - I even think segwit is a good idea ;
what is a bad idea is to keep the blocks small. Now, what's my personal opinion of whether and how bitcoin should upgrade ? I think I don't care, but I think that bitcoin is an interesting experimental environment to observe different phenomena.
As I said elsewhere,
I think bitcoin's design is broken beyond repair if one thinks it is ever going to be a daily currency, and the funny thing is that what is hailed as the most important aspect of bitcoin, namely
the 21 M coin limit, is exactly what is killing it as a currency (but which has probably got it off the ground with greed). Now,
this 21 M limit is ALSO what implies difficulties with big blocks and is ALSO what is making mining a centralized business. In fact, the big failure of bitcoin as a currency comes from this 21 M limit, and I think it is one of the fundamental "contractual propositions" of bitcoin, which is why I say: it is broken beyond repair. If ever one wanted to repair it, one would need to touch this sacred principle, so the only thing to do is to start all over from scratch. I'm not saying that bitcoin is going to die, it isn't. But it cannot become a currency.
My reasoning is as follows:
a) The limited number of coins turns bitcoin into a collectible, of which a lot of them are created when bitcoin was cheap, and of which it was to be foreseen that they could become very expensive. This turns bitcoin into a speculative asset, of a similar kind as ancient paintings: very expensive collector (hodler) items, with of course also very unpredictable future value. Now, a currency needs to be a reliable unit of account, which a speculative item never can be. But contrary to something like gold that "always existed", bitcoin's recent "printing" has caused HUGE seigniorage for early adopters, which are of course induced to start a greater fool game, which will be imitated by layers and layers of greater fools. The expectation of price increase in the future will have to break down at a certain point, at which the last layer of greater fools will be very, very disappointed. This is different with a ancient collectible. You do not necessarily expect a price rise. You are careful in your investment and you are satisfied if you find a "same fool". It KEEPS value, it can increase or decrease somewhat, but you do not expect double digit yearly gains. Bitcoin's initial seigniorage has delivered multiple digit gains and it is essentially what dominates its market.
==> a collectible with huge initial seigniorage becomes a speculator's asset, not a currency.
b) The limited number of coins induces a lowering of the block reward. The block reward is needed because it is the "spend value" on security: anyone willing to spend more than the block reward on proof of work, can rewrite history. This is the somewhat silly cryptographic protection of proof of work: your protection is the amount of value you spend on it. If an attacker is willing to spend more, he can break the protection and re-write history. This becomes interesting if many transactions in blocks become much larger than the block reward. Because of the limited number of coins, the block reward has to go down. So fees are needed. Hence, transactions need to be scarce for fees to be important, or the system becomes insecure. This induces friction on transactions, which will hinder its usage as a currency even more, but doesn't mind for relatively rare transactions of "old paintings".
==> transactions need to be scarce, for the fees to pay for the security. The induced friction hinders the asset to become a competitive currency.
c) The relative slowness of the transactions and its friction makes that for day-trading, clearing houses are better: most volume of trading will hence not be done on-chain, but will be using IOU on clearing houses (exchanges). This will end up requiring legal protection and these clearing houses will become new "banks" ; their centralized systems are much lighter and quicker than any decentralized network and will be much more performing. As such, bitcoin will be just a "backing" of these bank IOU. Note that these clearing houses came essentially into existence because of the speculative nature of bitcoin. They are not "sales points of coins" as they were intended, but they are trading clearing houses because of its highly speculative nature.
==> the nature of bitcoin (speculative and friction of relatively slow transactions) induces the existence of highly regulated clearing houses in which bitcoin IOU are the true "currency" and bitcoin is just its backing asset.
d) the throat-cut competition in PoW and its lottery aspect makes for mutualising the lottery-risk, hence gives rise to at most a few tens of pools (the Poisson statistics and the 10 minute blocks make that many more pools would not make sense as they wouldn't win enough blocks for the lottery statistics to smooth out quickly). As PoW is not only used for coin creation, but also for consensus (over everything), this turns these pools into the real powerhouses of bitcoin. They have a huge stake in making mining profitable, which is finding the right balance that squeezes out the maximum of fees the market will bear.
==> the idea of using PoW not only for coin creation, but also for consensus finding, makes that bitcoin will end up in the hands of an oligarchy of a few tens of people at best.
PoW has become cut-throat, and it is a slow lottery, because of the difficulty adjustment, which was needed to keep the coin emission rate limited. If the coin emission would have been flexible, that is, with a value-limit on it, that would actually solve about all problems bitcoin is facing.
So, my "proposition" (which is impossible, I know) to repair bitcoin would rather be:
a) separate coin creation with PoW from consensus (with PoS). This keeps the power in the hands of the owners.
b) put a limit on difficulty, which fixes the *value* of the coin, and not the number of coins. This takes out most of the speculation, because the value of the coin is capped. This will turn coin creation into a non-competitive game, and hence take out the pools, take out the cut throat competition and take out the lottery aspect ==> no more oligarchy
c) PoS without rewards is something that can work very fast, is cryptographically much more secure, doesn't waste resources, and can work with essentially unlimited blocks ; we don't care about orphaning some. This takes out the friction of payment and the slowness of payments, and ensures true decentralisation.
d) the value regulation instead of the number-of-coins regulation brings bitcoin much closer to Nash's "ideal money".
There can be a limit on block size, because the SPEED of block generation is arbitrary (with non-remunerated PoS). Nothing would stop building a LN type of network on top of it, because of the unlimited settlement capacity of the underlying system which is needed to keep LN permissionless.
