Bitcoin Core October Upgrade

[Wind_FURY]

People will still mint, trade, send, receive their dick pics and fart sounds on-chain on the Bitcoin blockchain simply because "they can".

Of course. But then, people willing to use Bitcoin as a P2P money will simply move to other subnetworks, while leaving on-chain spam, where it currently is. And then, you will have a choice: use the current client, and process all of that money-unrelated spam, or upgrade your client, and focus on monetary transactions.

--Snip--

Let me stop you there because you have already made the presumption that on-chain spam will be constant, and that fees will be constantly high because of that. I believe that we should also consider the fundamental economics of the fee market. If the price of a good or a service is high enough, then there would be decreasing demand for that good or service.

Fees will NEVER be constantly high because users will be priced out at some point, and many of them will wait for a lower, more favorable price.

There will be some shitcoinery in Bitcoin, but it will never be as massive as those shitcoin chains such as Ethereum and Solana. Check the current state of the mempool.

[stwenhao]

you have already made the presumption that on-chain spam will be constant, and that fees will be constantly high because of that

Yes. Because in the long-term scenario, if you have to share the full chain history from 2009, up to today, instead of sharing a cryptographic proof, that all of such history is correct, then you discourage many people from joining the network in the first place, and from making new full nodes. Which means, that if the chain will grow over time, then if our ability to synchronize the chain wouldn't grow accordingly, then it would take more and more time, to sync the full chain. And that can affect decentralization, because that approach doesn't scale.

Fees will NEVER be constantly high because users will be priced out at some point, and many of them will wait for a lower, more favorable price.

On-chain fees should be constantly high in the future, because otherwise, miners wouldn't have enough block reward to have enough incentive to keep mining the chain. As Paul Sztorc wrote in his Sidechain Vision, "Fee Revenues must rise". In practice, it doesn't mean, that the on-chain fee should be paid by a single user. You can have thousands, millions, or even more users, making their transactions on second layers, having all of that batched, and finally pushed on-chain, as a single transaction with high fee rate. If you want to scale seriously, you won't onboard everyone on-chain. Which means, that you will have a lot of users, making transactions only inside LN, only inside sidechains, or only inside other kinds of subnetworks, and all of that traffic should be batched, and confirmed on-chain. In this way, you can have thousands of users, paying a bunch of millisatoshis each, and have a single on-chain transaction, paying a bunch of satoshis, signed by all of them, and covering all of their needs in just a few kilobytes per batched transaction.

Check the current state of the mempool.

The current state of the mempool can show you, that a lot of traffic moved outside Bitcoin, which is why it could be bad in the long-term. Many people stopped using Bitcoin, just because of scaling issues. And if they won't be solved, then you will have only whales transacting on-chain, and all users will use centralized solutions, provided by those whales. And that's why decentralized second layers are needed, to not lock users into exchange-like or bank-like systems, where they have to trust, instead of verifying.

[Wind_FURY]

you have already made the presumption that on-chain spam will be constant, and that fees will be constantly high because of that

Yes. Because in the long-term scenario, if you have to share the full chain history from 2009, up to today, instead of sharing a cryptographic proof, that all of such history is correct, then you discourage many people from joining the network in the first place, and from making new full nodes.

Which means, that if the chain will grow over time, then if our ability to synchronize the chain wouldn't grow accordingly, then it would take more and more time, to sync the full chain. And that can affect decentralization, because that approach doesn't scale.

?

The context of that post of mine that you quoted is about the economics of the fee market. If the fees are too high during times of high-demand for block space, then that demand for block space goes down.

Fees will NEVER be constantly high because users will be priced out at some point, and many of them will wait for a lower, more favorable price.

On-chain fees should be constantly high in the future, because otherwise, miners wouldn't have enough block reward to have enough incentive to keep mining the chain. As Paul Sztorc wrote in his Sidechain Vision, "Fee Revenues must rise".

In practice, it doesn't mean, that the on-chain fee should be paid by a single user. You can have thousands, millions, or even more users, making their transactions on second layers, having all of that batched, and finally pushed on-chain, as a single transaction with high fee rate. If you want to scale seriously, you won't onboard everyone on-chain. Which means, that you will have a lot of users, making transactions only inside LN, only inside sidechains, or only inside other kinds of subnetworks, and all of that traffic should be batched, and confirmed on-chain. In this way, you can have thousands of users, paying a bunch of millisatoshis each, and have a single on-chain transaction, paying a bunch of satoshis, signed by all of them, and covering all of their needs in just a few kilobytes per batched transaction.

No it won't, because of the economics of the fee market. If demand pushes price too high, then demand simply goes down. Economics 101.

Check the current state of the mempool.

The current state of the mempool can show you, that a lot of traffic moved outside Bitcoin, which is why it could be bad in the long-term. Many people stopped using Bitcoin, just because of scaling issues. And if they won't be solved, then you will have only whales transacting on-chain, and all users will use centralized solutions, provided by those whales. And that's why decentralized second layers are needed, to not lock users into exchange-like or bank-like systems, where they have to trust, instead of verifying.

Which proves the point from the shitcoinery viewpoint.

[stwenhao]

If the fees are too high during times of high-demand for block space, then that demand for block space goes down.

And what is the solution? Of course keeping spammers on-chain, to force them to overpay, and batching real payments off-chain, to allow them to scale properly. Then, new rules are fully optional, and those, who want to overpay and spam the chain, can still do that. And as long as developers won't introduce soft-forks, which would remove the spam directly, this is what is probably going to happen: optional scaling for those, who will opt-in, and spammy chain for everyone else.

If demand pushes price too high, then demand simply goes down. Economics 101.

If instead of scaling, you think that people should switch from Bitcoin to something else, then it doesn't look like a good replacement for existing systems. Imagine having some dollars, and being told, that your neighbours are buying too much things, and you have to switch from USD to EUR for a while, just because of that (if someone used an argument, like "Bitcoin is too expensive to transact, please switch to Litecoin for a while", then it looks exactly like that). Bitcoin should be scalable, which means, that if there are thousands of pending transactions, then they should be batched and confirmed. If you push people outside of Bitcoin entirely, then you shouldn't be surprised later, that companies don't want to support Bitcoin, and they stick with fiat instead.

[Wind_FURY]

If the fees are too high during times of high-demand for block space, then that demand for block space goes down.

And what is the solution? Of course keeping spammers on-chain, to force them to overpay, and batching real payments off-chain, to allow them to scale properly. Then, new rules are fully optional, and those, who want to overpay and spam the chain, can still do that. And as long as developers won't introduce soft-forks, which would remove the spam directly, this is what is probably going to happen: optional scaling for those, who will opt-in, and spammy chain for everyone else.

I'm not debating for the solution. I'm merely saying that it's IMPOSSIBLE for the fees to be constantly high because of basic economics and fundamental human behavior.

If demand pushes price too high, then demand simply goes down. Economics 101.

If instead of scaling, you think that people should switch from Bitcoin to something else, then it doesn't look like a good replacement for existing systems. Imagine having some dollars, and being told, that your neighbours are buying too much things, and you have to switch from USD to EUR for a while, just because of that (if someone used an argument, like "Bitcoin is too expensive to transact, please switch to Litecoin for a while", then it looks exactly like that). Bitcoin should be scalable, which means, that if there are thousands of pending transactions, then they should be batched and confirmed. If you push people outside of Bitcoin entirely, then you shouldn't be surprised later, that companies don't want to support Bitcoin, and they stick with fiat instead.

I never said that Bitcoin shouldn't scale, but currently it simply can't scale on-chain. I'm not sure what the best solution is and neither does many people, even those that want to make themselves look "smart".

Plus if a user wants to use Lightning or Litecoin, that's the individual's choice. Both systems are permissionless, if a user wants to take that trade-off during high on-chain demand in Bitcoin, OK. Although currently, there's no need with fees at 2 sat/vB.

[tromp]

You can have thousands, millions, or even more users, making their transactions on second layers, having all of that batched, and finally pushed on-chain, as a single transaction with high fee rate.

I don't see why the fee rate would be high. Payment channel settlement transactions just pay nominal fees, no matter whether they result from a handful of txs, or thousand of txs. This is not a case of packaging a bunch of txs into a batch that preserves all their fees, but of one final settlement tx obsoleting all earlier ones.

[NotATether]

I never said that Bitcoin shouldn't scale, but currently it simply can't scale on-chain. I'm not sure what the best solution is and neither does many people, even those that want to make themselves look "smart".

Yeah

Next time Bitcoin fees rise like crazy, I'll be spending LTC on a daily basis. Or Ethereum. (And if even Ethereum's fees go crazy, then BNB.)

I am embarrassed to admit this, but Lightning Network is not feasible unless your channel is at least ten million sats large. Or you use someone else's node.

[Wind_FURY]

You can have thousands, millions, or even more users, making their transactions on second layers, having all of that batched, and finally pushed on-chain, as a single transaction with high fee rate.

I don't see why the fee rate would be high. Payment channel settlement transactions just pay nominal fees, no matter whether they result from a handful of txs, or thousand of txs. This is not a case of packaging a bunch of txs into a batch that preserves all their fees, but of one final settlement tx obsoleting all earlier ones.

I believe that stwenhao was proposing "batching" transactions on-chain, wherein an entity combines different on-chain transactions into a single one using a sort of script, with the fees shared by the users in that "batch"

I never said that Bitcoin shouldn't scale, but currently it simply can't scale on-chain. I'm not sure what the best solution is and neither does many people, even those that want to make themselves look "smart".

Yeah

Next time Bitcoin fees rise like crazy, I'll be spending LTC on a daily basis. Or Ethereum. (And if even Ethereum's fees go crazy, then BNB.)

I am embarrassed to admit this, but Lightning Network is not feasible unless your channel is at least ten million sats large. Or you use someone else's node.

Majority of users don't use their own nodes when they transact on-chain too. I have a wallet in my phone that doesn't connect to my own node.

[stwenhao]

I'm merely saying that it's IMPOSSIBLE for the fees to be constantly high because of basic economics and fundamental human behavior.

Fees for a single user can be low, while fees for the whole subnetwork can be high at the same time. If 1M sats is a lot, then 1k users paying 1k sats each is equivalent, and it can be cheap from their perspective.

I don't see why the fee rate would be high.

On-chain fees should be considered high in the future, because otherwise, miners won't have enough incentive to keep mining. Which means, that you can have a lot of users paying some low fee, but all of that should be batched, and pushed on-chain, as a high-fee transaction, because when the basic block reward will be constantly halved, then fees will be the only incentive in the future.

Also, as long as 1 sat/vB de-facto standard is not lowered, miners are guaranteed to get at least 0.01 BTC per block, as long as blocks are full. And if that limit will be preserved, and the price of BTC will rise, then transacting on-chain can be considered expensive in the future.

I am embarrassed to admit this, but Lightning Network is not feasible unless your channel is at least ten million sats large. Or you use someone else's node.

That's why other scaling solutions, like sidechains, are needed. In LN, you cannot send coins to someone, if that person doesn't have any opened channel. In general, LN is something like "layer one and a half", because you cannot send anything anywhere, like it is the case, when you have any blockchain in sidechains or altcoins. And if on-chain transactions will be expensive in the future, then sidechains and other solutions will be cheaper than LN, as long as LN forces you to pay for on-chain interactions, and as long as you have to make on-chain transactions alone, and pay alone the full cost of doing so.

Majority of users don't use their own nodes when they transact on-chain too.

Which pushes them to banking-like solutions, where they don't verify, but trust instead. Each SPV-like solution requires some level of trust. For example: many SPV nodes can collect a lot of data about their peers. If you run your own node, then it is much harder, because you send and receive transactions of your neighbours. But in SPV-like wallets, you mainly ask about your own addresses, your own transactions, your own public keys, and that allows making a lot of connections, even if you use some kind of CoinJoin, or other kind of mixing. All of your privacy is gone, if your SPV wallet asks other peers only about your coins.

wherein an entity combines different on-chain transactions into a single one using a sort of script

The Script of end users should be preserved: https://bitcointalk.org/index.php?topic=281848.0

Which means, that if Alice uses "<pubkeyAlice> OP_CHECKSIG", Bob uses "<pubkeyBob> OP_CHECKSIG", and Charlie uses "<pubkeyCharlie> OP_CHECKSIG", then instead of confirming on-chain Alice->Bob and Bob->Charlie, a single Alice->Charlie transaction could be confirmed instead. Of course, to properly count, how many bytes can be saved in that way, it is needed to write the code, which would observe unconfirmed transactions, and would tell for example: "unbatched size: 100 MvB, batched size: 70 MvB". I don't know exactly, how many bytes can be saved, when mempool is congested, I didn't write the code to count it yet.

[Wind_FURY]

I'm merely saying that it's IMPOSSIBLE for the fees to be constantly high because of basic economics and fundamental human behavior.

Fees for a single user can be low, while fees for the whole subnetwork can be high at the same time. If 1M sats is a lot, then 1k users paying 1k sats each is equivalent, and it can be cheap from their perspective.

Ser, you are talking about something else that's out of context from what my post was supposed to be saying. Please try to understand the post/context and please quote the whole post. 👍

Majority of users don't use their own nodes when they transact on-chain too.

Which pushes them --Snip--

That's all true, but ser, please get the context. It's also definitely true that NOT all users are capable, or want to be capable, OR simply not all users want to run their own nodes.  There are no rules against not running a node, no?

Bitcoin UX has been OK for those users.