Sacrificing Decentralization for Scalability

[No Rest Labs]

What are you opinions on this- Algorithms that sacrifice decentralization for scalability are not ideal, as they increase the attack surface from powerful adversaries.

There are many variables to this statement- Decentralization, scalability, protocol security, why sacrifice? Is there a better way to think about it all and what are your thoughts on this?

[1714859708]

1714859708

[nc50lc]

What are the examples of those "Centralized Algorithms"?
AFAIK, mining algorithms are designed to decentralize the transaction processing and production of coins in the first place.

What do you mean by "Algorithms that sacrifice decentralization for scalability"?
Easier algos which are more scalable than others can be centralized? I believe, no.
Whenever those powerful adversaries come up with an ASIC that can outperform the masses, the battle of the hashes will still continue, the coin will still be decentralized.

[Wind_FURY]

There are many variables to this statement- Decentralization, scalability, protocol security, why sacrifice? Is there a better way to think about it all and what are your thoughts on this?

Yes, an offchain layer on top of Bitcoin. I only speak for myself, but I believe a hub and spoke model for the Lightning Network would be "ok" for more efficiency and scalability.

[monsterer2]

Every time you consider increased centralisation for whatever reason, you must ask yourself this question: why am I not simply using VISA?

[HeRetiK]

What are you opinions on this- Algorithms that sacrifice decentralization for scalability are not ideal, as they increase the attack surface from powerful adversaries.

There are many variables to this statement- Decentralization, scalability, protocol security, why sacrifice? Is there a better way to think about it all and what are your thoughts on this?

Decentralization vs scalability vs security seems to be one of many tricky trilemmas, with Bitcoin being the first technology to bring decentralization and security together -- the other two possible combinations having been covered by banks and BitTorrent respectively (amongst others).

So yeah, in the case of cryptocurrencies I fully support decentralization and security over scalability, because otherwise, what's the point? Security is necessary to transmit value, otherwise you can't use it as a money. Decentralization is necessary as a means to an end to achive trustlessness and permissionlessness -- a benefit that centralized solutions do not seem to offer. This leaves scalability as a bit of a stepchild, but that doesn't mean that it can't be improved upon.

The problem when discussing these matter is often that different people have different opinions on (a) what constitutes sufficient decentralization or sometimes even (b) whether decentralization is important at all. Prime example for (a) being the whole Bitcoin vs BCash discussion, AKA "big blocks lead to centralization" vs "payment channels lead to centralization". Prime example for (b) being the likes of Ripple and effectively every ICO ever made, whether they admit it to themselves or not.

Regardless of what your thoughts are on this matter, cryptocurrencies offer something that has been unprecedented so far: Choice. You now have a shitload of currencies to choose from, no matter your preference. Which of these choices will make a real world difference, only time will tell.

[DevilOper]

AFAIK, mining algorithms are designed to decentralize the transaction processing and production of coins in the first place.

But it naturally strongly tends to concentrate the minig power since the reward depends on it.

[Samarkand]

AFAIK, mining algorithms are designed to decentralize the transaction processing and production of coins in the first place.

But it naturally strongly tends to concentrate the minig power since the reward depends on it.

I think this is rather a consequence of the "winner-takes-all" nature of the Bitcoin block reward.
After all there is only a remuneration for the first miner, who successfully mines a block, which makes mining only economical
if you either have a large percentage of the total hashrate or are part of a mining pool that enables
you to partake in the block reward even if you don´t mine the block yourself.

Otherwise there is a really high risk of investing money into hardware and electricity (and the other
associated costs) without ever receiving a single block reward.

On the other hand this design has several advantages, because once the big miners have invested
huge amounts of money into their operations they are heavily incentivized to ensure the integrity
of the system. This is one of the beautiful game theoretical implications, because it simply is uneconomical
to attack the system if you have a huge percentage of the total hashrate, because you would earn
even more by continuing to play by the rules of the Bitcoin network.

[HeRetiK]

AFAIK, mining algorithms are designed to decentralize the transaction processing and production of coins in the first place.

But it naturally strongly tends to concentrate the minig power since the reward depends on it.

I think this is rather a consequence of the "winner-takes-all" nature of the Bitcoin block reward.
After all there is only a remuneration for the first miner, who successfully mines a block, which makes mining only economical
if you either have a large percentage of the total hashrate or are part of a mining pool that enables
you to partake in the block reward even if you don´t mine the block yourself.

In part sure, but I wouldn't underestimate the effects of economics of scale.

Large mining operations can stay profitable at lower margins, which in turn makes it harder for smaller miners to remain profitable, further feeding into the profitability and thus growth of large mining operations. I'm afraid this is inevitable with pretty much everything that is turned into a business though.

[hatshepsut93]

What are you opinions on this- Algorithms that sacrifice decentralization for scalability are not ideal, as they increase the attack surface from powerful adversaries.

There are many variables to this statement- Decentralization, scalability, protocol security, why sacrifice? Is there a better way to think about it all and what are your thoughts on this?

Cryptocurrencies can only be valuable if they are truly decentralized, otherwise they are just electronic payment systems similar to PayPal and Visa. So, in my opinion decentralization is more important than scalability, because even if a coin doesn't scale well, it can still be used for storing value or big transactions, as settlement layer and so on. But "decentralization" is often a very misunderstood term, and it's actually only a mean to an end - a game-theoretic balance that makes uncooperative strategies unprofitable. For example, the current state of Bitcoin mining can hardly be called decentralized, but thanks to the network of nodes and strong community of users, miners are kept in check. The rejection of forks like SegWit2x and Bcash shows that Bitcoin community is not willing to take any tradeoffs for short-term scalability, even though transaction fees can get very high during big congestions.

[bitmover]

Scalability is not an issue yet.

Wait for the problem and a developers will find a solution in time
Sacirifice decentralization now is a terrible idea
 
I am happy bitcoin is not doing that

[globe-biz]

What are you opinions on this- Algorithms that sacrifice decentralization for scalability are not ideal, as they increase the attack surface from powerful adversaries.

There are many variables to this statement- Decentralization, scalability, protocol security, why sacrifice? Is there a better way to think about it all and what are your thoughts on this?

Sounds like you need to start another fork coin.
bitcoin is not centralized, the day it is its price will fall and it is not the same thing

[DevilOper]

On the other hand this design has several advantages, because once the big miners have invested
huge amounts of money into their operations they are heavily incentivized to ensure the integrity
of the system.

That's exactly what any other big business, notably big [centralized] banks, is interested in.
So what makes you thinking that their wision "to ensure the integrity of the system" would be further along with small particular participants?

Wait for the problem and a developers will find a solution in time

Why decentalized system should depend on some developers?

[bob123]

Wait for the problem and a developers will find a solution in time

Why decentalized system should depend on some developers?

Any project (regardless whether open source or closed source) does rely on developer to enhance the project.
An open source project (e.g. bitcoin) does also rely on developer.

A lot of time has passed since the first version got released. A lot of good tweaks have been done

Where do you think do all of these improvements (e.g. segwit) come from? From independent developer.


There are even more enhancements coming (LN, Schnorr signatures, Coinjoin, ...). All from independend developer.

[DevilOper]

Wait for the problem and a developers will find a solution in time

Why decentalized system should depend on some developers?

Any project (regardless whether open source or closed source) does rely on developer to enhance the project.
An open source project (e.g. bitcoin) does also rely on developer.

A lot of time has passed since the first version got released. A lot of good tweaks have been done

Where do you think do all of these improvements (e.g. segwit) come from? From independent developer.


There are even more enhancements coming (LN, Schnorr signatures, Coinjoin, ...). All from independend developer.

Your mistake is that you are entirely focused on "developers" while the keywords are: "decentalized" and "depends on".

[Safebit.io]

In my opinion, there has to be some tradeoff. As of right now, going completely decentralized is impossible due to the following reasons:

- People need some kind of protection in case their crypto is lost or stolen.
- Smart contracts are an amazing solution - but what do you do in case of a dispute? You need a human element.
- Tech is not perfect. Smart contracts work very well - until there's a bug.

The best way to deal with these problems is to add additional layers on top of the blockchain, some being tech layers and some being social, human to human layers.

At Safebit, we are solving this problem by providing an applications layer that can offer Safebit wallet users various insurance and arbitration tools that will be able to help them out in case of a dispute/loss/theft. That's probably the best way to close the gaps today.

This definitely prevents complete decentralization, but we will not have complete decentralization until we get sufficiently advanced AI to manage our disputes for us.

To answer your question head-on, I, like Satoshi, think that the blockchain can scale as-is.

Moving over to PoS, sharding, and other methods may be helpful, but our storage, bandwidth, memory, and performance are all growing well enough to make it work.

Andreas Antonopoulos had an interesting talk on this subject in 2016, where he referenced the fact that scalability debates ("can it scale?") are as old as the internet. Back in 92, people didn't think the internet could scale for websites and email attachments. As we all know, that's not the case anymore.

[DevilOper]

He meant any developer can build improvement for Bitcoin.
But the community will make a consensus whether to adopt new improvement by using client version which support that improvement and miners can show their support by include some text on Coin Base text.

So there won't be any dependence and decentralization can be preserved.

I clearly see his (and your) point why you seem missed mine.

"Majority" (AKA "consensus") does never stand for "decentralization", and never did.

Othervise you have to admit the centralized banks are decentralized since they are functioning under the rules developed by government adopted by "community" that "made a consensus".

[amishmanish]

- People need some kind of protection in case their crypto is lost or stolen.

That is what backups should be for. If you intend to provide things like wallet recovery, then it is the same as using wire transfers with banks.

- Smart contracts are an amazing solution - but what do you do in case of a dispute? You need a human element.

What kind of human intervention do you envision. A smart contract implemented on a supposedly decentralized global computer removes the use of third parties for this task. If you have an option for human intervention, then how is it different that just contracting things out to a law firm.
What is the value proposition for any such solution that wants to take decentralization away and introduce third parties to provide the traditional recovery services and human intervention??

[DevilOper]

what's decentralization for you and how can Bitcoin have new technology/implementation besides majority/consensus system?

Obviously in really decentralized environment any peer-to-peer action (transaction, messaging, video streaming, whatever) does not need any "consensus" or other kind of approval from the third party. The only concern is a double spending problem but 1st)-blockchain and PoW does not 100% guarantee to avoiding it, and 2nd)-it might be resolved by the other means, than just burning the electricity and warming up the air.

Unfortunately bitcoin by it's nature has only imitation of decentralization. Moreover, what attracts most people to invest into bitcoin, it's mining, etc, is an idea of making money from it. Since last word of PoW is "work", it gives an illusion of something useful, the work cannot be useless, people think. Thus it puts PoW virtually far advantageous over PoS (since PoS is naturally the same as paying interests on money lending without investing those money anyhow into the real economy). Without rewarding for mining nobody will spend thousands (and probably even millions) of dollars/yuans/euros/pesos, etc. onto the hardware and electricity.

Also, "consensus" by "community" to use Bank was made in past and now most people simply use existing system and many improvement is forced by government/banker.

Yes, and this is exactly what is going on with bitcoin.

[mu_enrico]

Each Cryptocurrency and it's community have different opinion, such as :
1. Bitcoin choose decentralization over scalability, features (such as Turing-complete smart-contract & private transaction) & network throughput (higher TPS).
2. BCash choose features (by re-enable few OPCODES), network throughput (by increase block size) & "scalability" over decentralization (i think they sacrifice it too much).
3. Monero choose features & decentralization over scalability & network throughput.
In the end, each people have different thought over this problem. But mostly i agree with Bitcoin developer/community choice, even though i think block weight increase (where regular user run full nodes even after increase) would be better.

I kinda agree with this, but what makes a coin more decentralized than others? For example the BCash side arguing that nodes without hash power are simply "no effect" on decentralization. That's said, only nodes with hash power are counted. Any comment on this? Thanks.

[bitmover]

Each Cryptocurrency and it's community have different opinion, such as :
1. Bitcoin choose decentralization over scalability, features (such as Turing-complete smart-contract & private transaction) & network throughput (higher TPS).
2. BCash choose features (by re-enable few OPCODES), network throughput (by increase block size) & "scalability" over decentralization (i think they sacrifice it too much).
3. Monero choose features & decentralization over scalability & network throughput.
In the end, each people have different thought over this problem. But mostly i agree with Bitcoin developer/community choice, even though i think block weight increase (where regular user run full nodes even after increase) would be better.

I kinda agree with this, but what makes a coin more decentralized than others? For example the BCash side arguing that nodes without hash power are simply "no effect" on decentralization. That's said, only nodes with hash power are counted. Any comment on this? Thanks.

In my opinion, these are things to consider while think in centralization:

• Mining centralization: Different pools. Different computers with different hash power, distributed geographically. In this point, bitcoin is somehow centralized
  
• Coin distribution: An image that is worth a thousand words
  
  
• Consensus mechanism: Anyone if free to buy equipment and join bitcoin mining. I think the consensus mechanism favors decentralization. Other coins, like ripple, do not allow that as they have a master node.
  
• Developing: BIP (Bitcoin improvement proposals) allows decentralization in development.
  
• Central authority: There is none in Bitcoin. Is there in bitcoin cash? Ethereum?
  

These are a few points i just thought now...