Please do not change MAX_BLOCK_SIZE

[Peter Todd]

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?

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

It depends on how big you are. Right now transactions cost about $12 each in terms of the inflation subsidy, which also shows how the Bitcoin price is being held up by investors, not the utility of Bitcoin as a payment system. If you are a small mining pool you have every reason to keep that 1MB limit... but if you are a large mining pool, why not make huge blocks filled with almost free transactions and force your competition out of business?

Orphaned blocks are interesting too, because if a mining pool is trying to do that what makes sense for your competition is to produce blocks with no transactions in them at all to keep collecting the inflation subsidy. When you do that you don't need to know what transactions are on the network, nor do you need to validate blocks. Of course the people mining at your pool might leave, but only if the largest pool pays miners more in reality - they might not if the business isn't there.

It's a really strange set of incentives.

Incidentally I'm planning on making sure code that makes it easy for miners and mining pools to do exactly this is available, although I hope people use it in a different way: when you know a block has been generated, but haven't validated it fully, attempt to mine a zero-transaction block that would orphan that block. But the way incentives are, mining in the no-validation way is what's most profitable.

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[piotr_n]

Well then we can only hope that none of the existing pools will choose the "force your competition out of business" model, and so if Bitcoin Foundation want to turn bitcoin's main chain into a paypal replacement, they will have to start from investing in a mining hardware, prior to building the data centers for running the nodes.

[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?

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.

I wish you good luck with the change Gavin although, like piotr_n says, people are either stupid or ignorant.

You are the one who needs to focus on leading the development team according to the Bitcoin community, not the other way around. I would recommend having more than a rough consensus on this issue.

[piotr_n]

like piotr_n says, people are either stupid or ignorant.

I actually said the opposite. You wish they were, but I doubt that they are...

[Peter Todd]

Well we can only hope that none of the existing pools will choose the "force your competition out of business" model, and so if Bitcoin Foundation want to turn bitcoin into a paypal replacement, they will have to start from investing in a mining hardware, prior to building the data centers for running their nodes.

Indeed.

More to the point, people who are putting time and money into Bitcoin payment systems should think really carefully about how little we know about what Bitcoin is going to look like in the future. I had an interview with the BTC Journal at the conference, which included this segment on where I thought Bitcoin would be in five years: http://www.youtube.com/watch?v=2Z902nIOvL0 In short, I don't know.

That uncertainty is the truth of the matter. We've already had to ban sub-cent microtransactions in Bitcoin - the 0.8.2 release now blocks them as "spam" - and we have no idea what the cost of transactions will be in the future. Given that uncertainty if the Bitcoin Foundation wants to promote Bitcoin as a payment system they really should be looking at technology that genuinely can scale rather than relying only on technology where scaling directly conflicts with decentralization.

[LvM]

The brick wall thing seems like a particularly silly analogy.  
There are a lot of question marks between where we are and where we want to be.  It seems imprudent to assume that they will all be resolved to our liking.

It's complete economic and historical ignorance to assume the best way to answer any of those questions is with central planning in the form of transaction rationing.

1000 times this.

I know rationing from my personal experience living in a part of the USSR. Imagine standing in line for 6 hours with your mother just to get meat for Christmas...
I would advise anybody who does not get what "rationing" means and what it leads to to try that. It should be an enlightening experience.

The less centralization & control, the better. Let the market decide.

100 000 000 times this

Mining should be stopped at all.
If we need "more" BTC a small algorithm is enough, setting for example

1 old BTC = 100 new BTC

[caveden]

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.

But if you're convinced miners would not go above the 1Mb limit, why are you afraid of replacing a hard-coded constant by voluntary/decentralized/p2p/spontaneous-order limits?

When it's time to drop the limit, soft-limits configs should be available on bitcoind. The default first entry could be precisely 1Mb, just to keep as is. Block generators would have to manually change that configuration in order to start easily accepting larger blocks... otherwise they would refuse them until they're deeper.

As you say, they'd likely not change it so easily. They'd only change if they consider the potential extra-revenues from adding more transactions more valuable than the risk of being orphaned - and that's precisely demand pushing for more supply.

[caveden]

It's complete economic and historical ignorance to assume the best way to answer any of those questions is with central planning in the form of transaction rationing.

+1M

[ShadowOfHarbringer]

It's complete economic and historical ignorance to assume the best way to answer any of those questions is with central planning in the form of transaction rationing.

+1M

+n, n->∞

I actually was under the impression that we are libertarians here and we should push for any solution that decreases centralization.

No block size limit = free market decides the proper size
Block size limit = central planning

Central planning never works and is bad. Aren't 300+ million casualties of communism enough to prove that ?

[Peter Todd]

I actually was under the impression that we are libertarians here and we should push for any solution that decreases centralization.

No block size limit = free market decides the proper size

You mean the 3 people controlling the pools that have the majority of hashing power control the blocksize.

[ShadowOfHarbringer]

I actually was under the impression that we are libertarians here and we should push for any solution that decreases centralization.

No block size limit = free market decides the proper size

You mean the 3 people controlling the pools that have the majority of hashing power control the blocksize.

Actually, no. Individual miners have freedom to choose a pool which suits their interests better or simply use the P2P pool.

OR start a new pool and convince enough people to use it.

[Peter Todd]

I actually was under the impression that we are libertarians here and we should push for any solution that decreases centralization.

No block size limit = free market decides the proper size

You mean the 3 people controlling the pools that have the majority of hashing power control the blocksize.

Actually, no. Individual miners have freedom to choose a pool which suits their interests better or simply use the P2P pool.

OR start a new pool and convince enough people to use it.

Indeed you can, but you've moved away from the standard Bitcoin model where we hold miners hostage by saying if they do something we dislike, we'll ignore the blocks they mine. If we were having a discussion about what the inflation subsidy would be, no-one would ever suggest putting it to a miner vote; as Jeff Garzik said a few months ago the decision is very much like the inflation subsidy: http://garzikrants.blogspot.ca/2013/02/bitcoin-block-size-thoughts.html (he proposes a fixed blockchain growth rule, although that has many problems of it's own because you can't predict the future)

[ShadowOfHarbringer]

I actually was under the impression that we are libertarians here and we should push for any solution that decreases centralization.

No block size limit = free market decides the proper size

You mean the 3 people controlling the pools that have the majority of hashing power control the blocksize.

Actually, no. Individual miners have freedom to choose a pool which suits their interests better or simply use the P2P pool.

OR start a new pool and convince enough people to use it.

Indeed you can, but you've moved away from the standard Bitcoin model where we hold miners hostage

Well perhaps there could be a configuration settings in the normal(non-miners) clients for that too.

So then we could threaten miners that we won't accept/relay/confirm their blocks if they don't comply with our demands.

[caveden]

You mean the 3 people controlling the pools that have the majority of hashing power control the blocksize.

A display of FUD and economic ignorance in a single sentence.

[piotr_n]

But if you're convinced miners would not go above the 1Mb limit, why are you afraid of replacing a hard-coded constant by voluntary/decentralized/p2p/spontaneous-order limits?

Because I'd prefer this community to stay united, in order to protect the network, instead of starting a war on who has a bigger hashing board.

Besides, I cannot resist the feeling that there is some hidden agenda and it hasn't been necessarily planed to leave the default at 1MB, but rather to sneak the patch through, without doing too much noise around it, hoping that nobody would notice. Just a fact that the lead developer is getting paid by the very same people who have a vast interest in making bitcoin nodes unavailable for an average citizen of the world - it itself indicates at least a possible conflict of interest, though some people might just simply call it a corruption.
On top of that, nothing has been consulted with the community. Gavin jumps into the thread with an announcement "The block size will be raised" because "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."
What the hell? Are we supposed to just believe that whoever he talked to in San Jose was a good statistical representation of the worldwide bitcoin community and so the bitcoin community surely wants him to lift the limit from the protocol, and they want him to do it ASAP?

[jdillon]

Nothing has been consulted with a community - Gavin jumps into the thread with an announcement "The block size will be raised" because "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."
What the hell? Are we supposed to just believe that whoever he talked to in San Jose was a good statistical representation of the worldwide bitcoin community and so the bitcoin community surely wants him to lift the limit from the protocol, ASAP?

The wording "using Bitcoin for products and services" is very specific. As Peter pointed out earlier the fact that transactions currency cost $12 each shows very clearly that the market does not think Bitcoin as a payment service is valuable now, but instead either thinks it will be in the future, and/or sees Bitcoin as valuable as a pure investment.

"Actually writing code" is misleading. The core developers other than Gavin have a consensus that while the blocksize may be raised in the future decentralization is important and raising the blocksize must be balanced against that concern. Unfortunately for the payment side of Bitcoin that consensus also is that off-chain transactions will be required for low-value payments and you can see that consensus in action by how the developers decided to block microtransactions from Bitcoin on the basis that they weren't valuable enough for the resources they use. The question is how low is too low? No-one knows what that answer will be because as long as payments happen on a decentralized consensus system the cost of a transaction depends on how popular Bitcoin becomes. Put another way, O(n^2) scaling is a bitch.

A more interesting question is to ask why doesn't the foundation ever talk about off-chain transactions? My guess is they know that FinCEN has them in a nasty bind now that they've made it clear that Bitcoin is ok provided you use it exactly the way they want you to: as an easily traceable blockchain-only payment method. Promoting alternatives would raise ugly issues around money laundering and so on. Right now if someone went off and implemented one of Peter's anonymous chaum-token using fidelity bonded banks it would most likely be used not as a payment system, but as a way to launder money.

Yet it would also provide an answer to the scalability issue, just not one the Foundation can back, and probably not a solution that the Foundation's publicly visible and mostly US-based members can use to accept payments anyway regardless of how well it works. That gets back to the issue of his repeated thunderous public statements of course. What do they do? They discourage anyone from working on alternatives. If they don't exist, people won't have any option but to raise the blocksize.

The worst scenario for the Foundation is if off-chain transactions are developed to the point where they are a secure and usable way of moving funds, yet the legal situation in the US doesn't change or gets worse. The rest of the world could easily choose to leave the blocksize as it is, gradually pricing companies who must follow strict anti-money-laundering laws out of Bitcoin entirely.

As for you Peter, and indeed anyone else who cares about Bitcoin's future, don't let yourself get distracted by forums. Your efforts to make the problems Bitcoin has as a payment system clear, like the replace-by-fee project and making mining more decentralized with pooled-solo mode, are good and you should keep them up. Writing code and non-forum PR is a far more valuable use of your time than chatting to angry internet trolls like ShadowOfHarbringer and Gavin.

edit: Speaking of, I agree with that anonymous timestamper. You should be encouraging UTXO timestamping and other abusive uses of Bitcoin that we know threaten Bitcoin in the future now, precisely to make the risk clear. With Bitcoin it's not unlike security disclosure, where not disclosing the security risks puts us in much greater harm in the future. Gregory Maxwell's concept of our "startup capital" has value, but at the same time we should get a sense now of how valuable people see abusive use when we know we have no way of stopping them in the future other than by making the use expensive. So yes, turn off your timestamping servers until someone is willing to pay you properly to run them.

edit #2: Note how I'm not saying that the foundation is trying to get Bitcoin under FinCEN/US government control, just that they are taking a perfect rational approach towards promoting the blockchain as the solution to all payments given the limitations public companies in the US face.

[Gavin Andresen]

angry internet trolls like ShadowOfHarbringer and Gavin.

I'm doing well this month, so far I've been called an "Angry Internet Troll", a "coward", and a "nazi".

[ShadowOfHarbringer]

angry internet trolls like ShadowOfHarbringer and Gavin.

I'm doing well this month, so far I've been called an "Angry Internet Troll", a "coward", and a "nazi".

The funny thing is I don't even remember being angry in the last 72 hours...

Well, I guess that jdillon knows better what i feel then.

[piotr_n]

Obviously none of you is going to address jdillon's key argument, that is:
Bitcoin Foundation is doing (more or less consciously) everything to:
1) get bitcoin under control of the US government.
2) disturb anyone in solving the scaling issue by other means than increasing the block size

[ShadowOfHarbringer]

Obviously none of you is going to address jdillon's key argument, that is: Bitcoin Foundation is doing everything to get bitcoin under control of the US government.

That is not the topic of the discussion, so i ignored it as offtopic.