Please do not change MAX_BLOCK_SIZE

[maaku]

My point is that the same argument applies to Open-Transactions, or any other known distributed money system, except perhaps zero-knowledge proof systems which are still theoretical. In Open-Transactions you are given the information necessary to audit the server's actions. If you want to make an apples-to-apples comparison, you should be accounting for this computational cost incurred by users who do such validations.

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[lch]

The very security model of Bitcoin requires there be multitude of full nodes, unless, if there was only one full-node, then non-bitcoin transactions could be possibly slipped in (unaware to SPV nodes).

For the current standard of decentralization to hold, we need a constant ratio of full nodes vs users.  Having only a few full nodes is a very much a higher-trust security model than what the Bitcoin Network currently provides.

People who advocate a high tpc, must necessarily, advocate a more centralized full-node processing network.  (Because of the QUADRATIC cost of maintaining the decentralization).

Than would it be worth it, to take a portion of the transaction fees and distribute them to the owners of the full nodes. After all they are contributing just as much to the security of bitcoin.

This softens the effect of a mining monopoly that is currently highly centralized.

[da2ce7]

My point is that the same argument applies to Open-Transactions, or any other known distributed money system.

While Bitcoin was small, a low-importance transactions were fine, as the entire network size was small.  However as the network increases in size, so must the 'importance' of the transactions.  Otherwise it becomes disappointingly costly to maintain the network -> thus, creating great economic incentives to centralize the network.

If, for example, fees are LINEARLY related to Network-Size, then the cost of maintaining the network will be LINEAR * LOG (number of unspent outputs).  Or just LINERAR, if you have an unlimited amount of random access storage (eg. RAM).  This is a sustainable proposition. (The fees will pay for the cost of running a node).

The position argued, by some, is that the cost to make a transaction on the Bitcoin network should be CONSTANT.  This means that the cost to run a node on the network (while maintaining the same quality of decentralization); will be increasing faster than the amount of fees, per node.  -> Thus creating an economic situation, where either:  Nodes are subsidized, or the ratio or full nodes vs. uses goes down.

I, personalty, value a very decentralized and non subsidized processing network of Bitcoin full-nodes, more than the utility advantage of having low importance transactions.

[justusranvier]

The position argued, by some, is that the cost to make a transaction on the Bitcoin network should be CONSTANT. 

The cost to make a transaction should be equilibrium point at the intersection of the supply curve and the demand curve.

I'm not sure who constitutes the mysterious "some" you're talking about. Do you have a link to a specific post?

[amincd]

As opposed to removing the limit, letting malicious miners make massive blocks?  Privatizing profit, and distributing the pain?'

There are intermediate solutions between a 1 MB block limit and letting a node create a block of any size.

If you can't run it over Tor or similar you've just destroyed a much more important part of the philosophy.

You can either have digital cash, or you can have a Bitcoin that can be run fully through Tor. You can't have both. Given the philosophy of Bitcoin is to be a digital cash, and being able to run through Tor was not a design goal, raising the block limit, as Nakamoto intended and the devs have been planning for years, is the right decision.

I'm not concerned about censorship of nodes, because they can be run in any jurisdiction in the world. As long as there is some free jurisdiction in the world, the Bitcoin network will be up, and people can access the nodes through encrypted channels if need be.

The important point is that people be able to control their own private keys. If transaction fees go up to $30 due to a 1 MB block size limit, then people will have to trust BTC-banks with their private keys, and transactions will have to take place through these intermediaries. Bitcoin would no longer be a p2p cash.

[Nubarius]

[...]
This is why I will re-iterate, that Bitcoin was NOT designed for large-scale microtransactions.

This is not about microtransactions, at least not in the sense most people understand that word. With the current 1 MB limit per block, the number of transactions is capped at around 7 per second, which roughly translates into 200 million transactions per year. So, if there were 20 million users of Bitcoin in the whole world (a very conservative estimate of what Bitcoin can achieve), the average user would be able to carry out 10 transactions in a year. Say I wanted to get my salary from my employer and then pay my landlord in bitcoins, that would be 24 transactions in a year. With a 20-million user base, such "microtransactions" as paying a salary or a monthly rent would be off-limits to most people. Even if I was willing to pay a hefty fee to get more blockchain space than your average Joe Bloggs, my landlord would have trouble getting his bitcoins out of the chain and would end up saying "But why don't you just pay me in euros?".

The solution proposed by the "do not change MAX_BLOCK_SIZE" advocates, if I understand them correctly, is that I shouldn't use the blockchain for such mundane transactions. Transactions like paying a rent would be handled through off-chain processors that provide me with BTC tokens. But then I'd be using bitcoins as a mere denomination, like the IMF's SDR or the old European ECU. Certainly not what Bitcoin was designed for. And it's far from certain that Bitcoin could even survive in such a scenario. Why would ordinary people even run Bitcoin nodes if it becomes just an infrastructure for Google/Facebook/Baidu Credits? It would make as much sense as running a SWIFT or LCH.Clearnet node (if these systems worked as distributed networks).

[drawingthesun]

So why not to just keep this point at the 1MB, as Satoshi originally designed?

Bitcoin was never designed with a 1MB limit initially.  You can check it doesn't exist in the early versions of the source code.  That was added later as a safety limit to prevent an early attacker from massively bloating the blockchain and thus killing off the project.  Imagine if in 2010 there was no block limit you had to download a 5TB blockchain just to start using this experimental currency with very little actual value or use.  Most people wouldn't and the "ecosystem" might have died in the crib.  1MB limited the size of the blockchain to no more than 52GB per year.  High and luckily early volume was much lower but it provided an upper bound while Bitcoin was young.  When the average block has 2 to 8 transactions it doesn't make sense for a single bad actor to add GB worth of transactions to hinder future users.  Bitcoin is far more developed now so it likely is time in the near future to take the training wheels off.

I really wish this was better known, the amount of people shouting crap about how Satoshi intended for 1MB block size is sad. So many misinformed people here....

Satoshi did not intend the 1MB block size to be final at all and it was not even in the paper or in the original code. He envisioned a much larger dynamic block size.

[piotr_n]

Satoshi did not intend the 1MB block size to be final at all and it was not even in the paper or in the original code. He envisioned a much larger dynamic block size.

So what?
Thinking about Tor and the current 1MB limit, still seems like a reasonable number to stop at.

So just stop, take a breath, look around and see how the market responded... and then try to improve it further, if needed.
By increasing the block size limit now, you are not improving anything - you are only making transactions cheaper for satoshidice, which is especially stupid when you consider the fact that the transactions are essentially free ATM. As kjj has nicely phrased it, currently the transactions are being added to the chain on a charity basis - why would anyone aim to make them even cheaper, at the cost of an exponential growth in the price of infrastructure required to run a node, or a miner?

IMO the 1MB limit is the best moment to stop this madness, let the fee market work, and just think about the best way to go from there.
If the best solution to the scaling problem the developers have is magnifying the scaling problem, then I am honestly disappointed.

[solex]

Why would ordinary people even run Bitcoin nodes if it becomes just an infrastructure for Google/Facebook/Baidu Credits? It would make as much sense as running a SWIFT or LCH.Clearnet node (if these systems worked as distributed networks).

Excellent post. People won't run nodes if they are priced away from the blockchain, and the worst-case scenario of centralization would occur: Bitcoin with just major companies running server-farm nodes.

Thinking about Tor ....

once the blockchain-pruning solutions are up and running Tor will be usable for a long time, probably indefinitely.

[piotr_n]

Why you assume that it would need to be Google/Facebook/Baidu Credits?
Why do you think that a bitcoin backed payment processor cannot be built as just yet another lightweight P2P network, protected by a cryptography?

Why do you guys keep repeating that one would be forced to give all his private keys to a bank?

And what blockchain-pruning has to do with making mining available via Tor?

[solex]

Why you assume that it would need to be Google/Facebook/Baidu Credits?
Why do you think that a bitcoin based payment processor cannot be built upon a P2P inrastructure?
Why do you guys keep repeating that one would be forced to give all his private keys to a bank?

Relying on 3rd-party providers for using BTC makes the above very possible (p2p won't be used by bitcoin-banks as they will want control of their systems).

And what blockchain-pruning has to do with making mining available via Tor?

This is the 2nd software change needed, as well as blockchain pruning:

I believe the last objection raised was that a higher block size limit would make it impossible to mine anonymously, but I think that has been debunked with the notion of "read the firehose of transactions non-anonymously, then broadcast just new block header + coinbase + listof(truncated transaction hashes) anonymously."

If this 2nd change works then Bitcoin will be massively scalable and can become the success everyone wants.

Why don't you want Bitcoin to have this chance to succeed?

[piotr_n]

I believe the last objection raised was that a higher block size limit would make it impossible to mine anonymously, but I think that has been debunked with the notion of "read the firehose of transactions non-anonymously, then broadcast just new block header + coinbase + listof(truncated transaction hashes) anonymously."

If this 2nd change works then Bitcoin will be massively scalable and can become the success everyone wants.

You are right - if it works, then Tor mining should be easier, though the scaling issues of a home node still remain.

Anyway let's at least hope that they will prove the debunking thesis working, before touching the number.
Though after learning that decentralization is not considered as particularly important, I am not so certain about it...

Why don't you want Bitcoin to have this chance to succeed?

Because for me Bitcoin has already succeeded and increasing the block size is playing with lethal forces that we don't even understand.
So it has succeeded, but if you act irrationally, you can easily screw it up.

[solex]

I believe the last objection raised was that a higher block size limit would make it impossible to mine anonymously, but I think that has been debunked with the notion of "read the firehose of transactions non-anonymously, then broadcast just new block header + coinbase + listof(truncated transaction hashes) anonymously."

If this 2nd change works then Bitcoin will be massively scalable and can become the success everyone wants.

You are right - if it works, then Tor mining should be easier, though the scaling issues of a home node still remain.

Anyway let's at least hope that they will prove the debunking thesis working, before touching the number.
Though after learning that they don't consider decentralization as particularly important, I am not so certain about it...

Why don't you want Bitcoin to have this chance to succeed?

Because for me Bitcoin has already succeeded and increasing the block size is playing with lethal forces that we don't even understand.
So it has succeeded, but if you act irrationally, you can easily screw it up.

We might be getting closer to agreement  . I was thinking just now that the software changes for scalability might be well advanced even before 1MB blocks are common. That would be a nice outcome.

With regard to playing with lethal forces: because for most of Bitcoin's lifespan blocks have been way below the 1MB limit (and only recently approached the soft-limits), then it has operated with no effective block limit. Letting it hit the 1MB actually introduces a lethal force where it didn't really exist before.

[paraipan]

...

That has nothing to do with microtransactions, normal growth in "macrotransactions" will bump up against the limit in a year or three.

So why the rush? Why not let the merchants and users ask for change when the need arises?

[Peter Todd]

Someone asked me to reply....

So Gavin's idea for mining in an anonymous, free from coercion and central control way goes like this:

Step 1. Run a high-bandwidth, publicly visible Bitcoin node.

Step 2. Send the blocks you mine over Tor.


This came up at the conference at the developer round table - it was kinda funny talking to some Argentinians after about the plan. (at the conference Gavin's idea was Step 1 would involve a "censorship-proof satellite" - I think he's since figured out that space isn't known for decentralized grassroots efforts) Those Argentinians figured the discussion they'd wind up having with their local authorities would go roughly like this:

"Q: So tell us why are you running a full Bitcoin node exactly? You don't happen to be mining by any chance do you?"
"A: Um...."


In any case we need mining to be more decentralized, not just done at a few big pools. Anonymity and censorship aside requiring  high-bandwidth sure won't help the situation we're in right now where almost 50% of the network is controlled entirely by two pools.

[ShadowOfHarbringer]

Step 1. Run a high-bandwidth, publicly visible Bitcoin node.
Step 2. Send the blocks you mine over Tor.
(...)
"Q: So tell us why are you running a full Bitcoin node exactly? You don't happen to be mining by any chance do you?"
"A: Um...."

This is not a problem, really.

Dedicated servers are so cheap these days you can easily set up a machine in a random country.

Check this out:
http://www.ovh.co.uk/dedicated_servers/

REALLY CHEAP.

[piotr_n]

Dedicated servers are so cheap these days you can easily set up a machine in a random country.

Yeah - like the guy who once had Liberty Reserve..

[Peter Todd]

...

That has nothing to do with microtransactions, normal growth in "macrotransactions" will bump up against the limit in a year or three.

So why the rush? Why not let the merchants and users ask for change when the need arises?

You have to understand where he's coming from. He and the Bitcoin Foundation are pushing Bitcoin as a system to do payments on the internet; the recent San Jose conference had the tagline "The future of payments" after all.

It's a lot harder to convince people that investing time and money into implementing Bitcoin for payments is a good idea with a 1MB limit on transactions. Removing the blocksize limit entirely and making it something that miners decide solves that problem from that perspective: regardless of what the demand from transactions are at least one entity will always be able to meet that demand at a cost approaching the cost of bandwidth and servers. That's why Gavin likes to talk a lot about "free market forces" and "competition" when it comes to mining, and has said before he's happy to see the smallest 20% or so of miners and full-node operators get forced out of business by rising costs every year.

From the perspective of someone who wants to accept Bitcoin payments on their online store letting the majority of miners decide what the blocksize is solves the uncertainty of how much transactions will cost. They connect directly to miners to send their transactions and don't care if Bitcoin is controlled by six people or six million. From the perspective of someone investing in Bitcoins because they want a decentralized store-of-value, AKA electronic gold... well they might see things differently.

[caveden]

The block size will be raised, that is the overwhelming consensus among the people who are actually writing code and using Bitcoin for products and services that it needs to happen.

And there is a tiny minority of people who will loudly proclaim that isn't true and that the core developer are going to destroy Bitcoin if the block size is raised.

If you want to be helpful, please organize a list of objections to raising the block size limit and responses to those objections.

I believe the last objection raised was that a higher block size limit would make it impossible to mine anonymously, but I think that has been debunked with the notion of "read the firehose of transactions non-anonymously, then broadcast just new block header + coinbase + listof(truncated transaction hashes) anonymously."

I'll soon be writing up a plan for how we can safely raise the block size limit.


RE: central planning:

No central planning is why I would like to eliminate the hard, upper blocksize limit entirely, and let the network decide "how big is too big."

RE: "the plan"  :   The plan from the beginning was to support huge blocks.  The 1MB hard limit was always a temporary denial-of-service prevention measure.

Thank you Gavin for keeping common sense on this matter.

Little suggestion to the dev team: when dropping the block size limit, also consider implementing "replacement code" that would give block generators the ability to control the block limit themselves through soft-limits. Soft-limits could be useful not only on the size of the block, but on the amount of "unknown transactions" you see in a new block - spammer-miners would have to fill their blocks with transactions that are not on other generators' memory pools. In other words, don't forget to provide the tools for block generators to collectively control the block size.
You may bet that, as soon as there's no longer a hard limit on block sizes, some of these "Bitcoin should crippled and limited to a SWIFT2.0"-people will attempt to spam the network with gigantic blocks, if only to "prove their point".

[piotr_n]

...

That has nothing to do with microtransactions, normal growth in "macrotransactions" will bump up against the limit in a year or three.

So why the rush? Why not let the merchants and users ask for change when the need arises?

You have to understand where he's coming from. He and the Bitcoin Foundation are pushing Bitcoin as a system to do payments on the internet; the recent San Jose conference had the tagline "The future of payments" after all.

It's a lot harder to convince people that investing time and money into implementing Bitcoin for payments is a good idea with a 1MB limit on transactions. Removing the blocksize limit entirely and making it something that miners decide solves that problem from that perspective: regardless of what the demand from transactions are at least one entity will always be able to meet that demand at a cost approaching the cost of bandwidth and servers. That's why Gavin likes to talk a lot about "free market forces" and "competition" when it comes to mining, and has said before he's happy to see the smallest 20% or so of miners and full-node operators get forced out of business by rising costs every year.

From the perspective of someone who wants to accept Bitcoin payments on their online store letting the majority of miners decide what the blocksize is solves the uncertainty of how much transactions will cost. They connect directly to miners to send their transactions and don't care if Bitcoin is controlled by six people or six million. From the perspective of someone investing in Bitcoins because they want a decentralized store-of-value, AKA electronic gold... well they might see things differently.

I still don't see it how they are going to convince the miners to drop the 1MB limit.
Is there even a single mining pool that would not want to see 1MB limit at work, at least for awhile?
When they see it, when they see the size of the incentive the limit gives them, it will make them even more motivated to never unlock it.

Counting on the pool operators that they will just unconsciously start mining version 3 blocks, just because it will be a default setting in bitcoind version 0.8.4 onward...
One would need to think that these people are either stupid or ignorant, which I don't think they are.