$20/transaction would be worth every penny to me for a system I could trust. I pay more and get a lot less for bank wires.
But would it be worth it for the rest of the world? Again, just my opinion, but I think losing the ability to make a global transaction, that every other node in the world accepts, with transaction fees of 1 cent, would be more costly in terms of loss of Bitcoin's appeal to the average person than losing the ability to run a full node on an average PC.
It would also produce about $80,000 revenue for finding a block which should be sufficient to keep a _LOT_ of people in the game if they could do so with inexpensive gear that they could afford to lose.
I agree that block rewards are important, but there can be other ways of ensuring there are a lot of transaction fees other than having a 1 MB block size limit.
I guess we'll see. Right now I can and do trust a de-centralized bunch of commoners with GPU's poking out of milk crates with more value than I trust to Wells Fargo.
Fair enough. I personally am willing to see Bitcoin lose some of its ad-hocness in exchange for being able to use it any where in the world, which I think becomes much less likely if transactions are limited to 7 per second.
BTW, we do have a 'fully automated p2p solution'. It's called the modern banking system. The peers are the banks. The clients are the plastic wielding public. I fail to see much difference in a system you seem to envision where your vaunted 'enterprises' are the peers and the SPV users are the clients. You think any 'enterprise' is going to stand up to the regulators or walk away from their investment? Dream on.
I see the off-chain solutions as being every bit as ad-hoc as the transfer nodes and miners (if need be.) Every time one gets a mallet on the head, three more pop up out of a gopher-hole somewhere else in the world. That, my friend, is resilience.
To explain why I think relying on third party payment processors is what would end up making the BTC-economy look like the modern banking system, and why I think it would be very un-adhoc-like if these third party payment processors were to handle global-scale transaction volume, I'll explain how I imagine it will work:
You have a merchant who wants to accept BTC payments. He can't accept them through the Bitcoin network, because transaction fees are $20, so he needs a payment processor. This isn't a removed payment processor like BitPay that simply receives BTC payments from customers and converts it to fiat for the merchant the same day.
The payment processor would need to accept BTC-credit from a customer, and then hold it in an account on behalf of the merchant or sell it to a party that would be willing to buy that BTC-credit, and deposit fiat in the merchant's bank account.
Accepting BTC-credit is not a simple thing. It means having to be able to trust the BTC-bank that the customer has BTC-credit with. The payment processor won't just trust any fly-by-night BTC-bank, since it hasn't proven itself trustworthy.
More likely, there will be a network of trusted BTC-banks, that have trust-based relationships with each other, and use a centralized clearing house, like modern banks do, to settle their debts at the end of each day with on-chain transactions.
Parties who can't join this centralized clearing house, because of their size, or regulations, or any number of reasons that people are currently locked out of the modern banking system, are effectively locked out of the BTC-economy.
Merchants can't accept their credit, because the payment processor they use doesn't accept the credit of any BTC-bank that doesn't participate in the same payment clearing network as them.
The competitive advantage of the parties that have large user bases, or are members of networks with a large number of members, would be too great for outside competitors to overcome, leading to a very centralized and static BTC-economy. It would be just like Visa/Mastercard, or the bank payment systems, like CHIPS.
Regarding the current banking system being a "fully automated p2p solution", this is not true at all. The current banking system is based on contractual relationships that require trust and regulatory access. A fully automated p2p solution has no contracts and every thing is done through protocol.
If a node in a p2p network goes down, no one loses their money, because it's a distributed p2p network where there are thousands of other nodes that store the same information. They communicate through the internet, and form a global network. Setting up a node is only a technical process, with no trust-based relationships required. As long as you have the bandwidth and hard drive space, you are equal in standing to every other node.
Well, he/they also have some half-baked privacy and internal auction stuff floating around in the code. It's not like the guy was Jesus or something. Ultimately the user's will decide although the actual developers will have a big influence in assisting those decisions.
True enough. We should not assume Nakamoto was omniscient, and we should be able to change plans that he put in place.
I'm bringing this up though because we're talking about the vision for Bitcoin, since you said removing the 1 MB block size would go against your vision for Bitcoin. I think if we're going to have to decide between which vision to accept, those who want to keep the original vision start out with a stronger say than those who want to change it. Making what was planned to be a temporary block size limit into a permanent one should only be accepted if there is a strong consensus for it, not the other way around.
The blockchain would also appear to me in this case to be relatively easily jammed. What I mean is, say $20 is the upper limit on what people are willing to pay to transact over the blockchain. With a 1MB block size limit, that's roughly 2000 transactions per block, or 288,000 transactions per day. So it would cost roughly $5.76M to jam the blockchain for a day. How many days could Bitcoin withstand such an attack before confidence is lost? Also keep in mind that this number is fixed with the block size, so this can quickly become a cheap attack relative to the benefit of its success as the number of Bitcoin users grows.
Very good point.
