Bitcoin hasn't solved the scaling problem. All these BIPs are just short term fixes which don't address the core problem. I opened a discussion thread on bitcointalk hoping to catch the attention of the core developers, but it seems they don't read that forum anymore.
> All these BIPs are just short term fixes which don't address
> the core problem.
Wrong, SegWit (BIP 91 and 141) solves transaction malleability, which in itself will allow new layers (off-chain) to be built on top of the first layer (on-chain), which will allow orders of magnitude more throughput on number of payments per month.
Wrong. When you sign a transaction off-chain, you're signing a real bitcoin transaction, which you choose (or your software) to not broadcast to the network for convenience reasons (as you will likely sign more transactions later).
Cores and the rest have already discussed about scaling to death. Such a radical change cannot be simply applied to Bitcoin. You just explained what IOTA is. If you must get their attention, go to slack/IRC or start a reddit thread and if it collects much attention, cores will likely to read.
Not a great article. Perhaps best to downvote until a better one comes along.
Things to consider, which most people can agree on :
- SegWit2X [ segwit feature, followed by 2MB block size ] is seen as a compromise worth taking to move things forward past the current impasse, by a range of people who dislike SegWit and think an actual blocksize increase is urgently needed
- There is an immediate scaling problem : The mean and median blocksize is converging on the max blocksize of 1MB, and transactions waiting to get into the block blow out on a daily basis to 20MB. This backlog of waiting transactions causes users to pay high fees to get their transaction to the front of the queue, and causes delays in processing/confirmation times.
- there is a less urgent longer term scaling problem due to the linear architecture of the blockchain itself
My personal viewpoint :
- if you are only processing 3 transactions per second, there is substantial room for performance increases
- SegWit may help slightly in alleviating transaction pressure, and a 2MB block size will help a bit more. Given the voracity of the debate, SegWit2X is a practical compromise we should adopt to move forward. The USD/BTC market seems to agree with this.
- We do need a schedule for block increases over the next couple years so all parties have certainty, and so it doesn't create renewed havoc every few months.
- blocksize is just the first of several engineering optimizations that could see transaction throughput on the same linear architecture increase over 1000x. eg. We have a 150GB full blockchain - it would be half the size on disk if compressed.
- Even if LN or side chains are the way to scale, and only 0.1% of transactions are 'settled' on the main chain, we will still need a more efficient main blockchain, because the growth of transaction volumes will likely be exponential for the next decade.
- some people think the blocksize is a fundamental part of the genius breakthrough in technology that is the blockchain, and so cannot be tinkered with. This is wrong. Proof-of-work, monetary supply, miner reward, chained hash of the blocks, longest block wins, distributed redundancy are fundamental ideas at the core of bitcoin .. but blocksize is merely a technical issue, an artificial limit that was there to make implementation simpler, and always assumed that it would need to be increased well before it became an issue.
Unless things have changed in the last week, your info on the backlog of transactions is out of date. There was a concerted spam campaign from April to June of this year that made the backlog grow and transaction fees go up, but that has ended around the time Segwit2X was getting committed.
You also don't seem to understand that Segwit is an increase in the block size, up to about 4MB, and there are very good engineering reasons for keeping blocks smaller-- namely larger blocks increase centralization when the Great Firewall of China is taken into account.
In June mempools did go up to 100 or 120 MB ... I think due to new users, who then backed off as fees went up .. but even if we factor that out, there has been a steady increase over the past several years, and mempools are routinely up to 20MB every day - ie. 20x times the number of transactions are waiting for a block, as can fit in that block .. so they have to wait around to be cleared. This is not due mainly to spam, it is due to users wanting to send money with bitcoin.
I disagree that "SegWit is a block size increase" - taking the signature data out of the transaction, means the same 1MB block can squeeze in more transactions, but I think a more honest way of saying this is block "compression" or call it an "effective block size increase".
If segwit saves 50-60% of transaction space in the block buffer, then combined with an actual 2x blocksize increase, thats an effective block increase of ~4x .. which is urgently needed.
I also disagree that blocks need to be small due to the 'firewall of china centralization issue'. I suspect 8MB blocks would flow rather well across Chinas virtual borders, particularly if there are good economic reasons for those blocks to flow. Keep in mind we're talking a paltry 200MB of transactions per day .. I'm sure that level of bandwidth is dwarfed by general internet traffic.
Your explanations are presented as "very good engineering reasons", but I genuinely don't think they are.
Speaking plainly - transaction throughput, and thus user growth, is being strangled by a small block size.
Its almost never below 15MB - ie 15x as many transactions waiting to be processed, as can possibly fit in the next block. [ and blocks arrive on average every 10mins, so its a long wait to clear out the daily peak ]
To me these stats really do present a "very good engineering reason" to increase blocksize.
> - There is an immediate scaling problem: The mean and median blocksize is converging on the max blocksize of 1MB, and transactions waiting to get into the block blow out on a daily basis to 20MB. This backlog of waiting transactions causes users to pay high fees to get their transaction to the front of the queue, and causes delays in processing/confirmation times.
> Given the voracity of the debate, SegWit2X is a practical compromise we should adopt to move forward
Agreed.
> because the growth of transaction volumes will likely be exponential for the next decade.
Maybe the answer to this is extreme-pruning blockchains, e.g. MimbleWimble.
> some people think the blocksize is a fundamental part of the genius breakthrough in technology that is the blockchain, and so cannot be tinkered with. This is wrong
I don't think they claim that blocksize is directly fundamental, what they might say is that decentralization is fundamental, and blocksize changes could undermine it.
It's not compressable. Why would they not compress if it was possible already?
Block size increase is not engineering, it's giving up on thinking as it drags disk space and bandwidth with the increase and not solving a thing for the future.
Crypcocurrencies need to stop requiring us all to hold every transaction in one unified blockchain dump. There has to be some way to break the network out into shards while still preserving the distributed nature and ability to pay anyone.
No matter what we do, moving and storing every single transaction is insane. It's like my bank account needing to know what every person in the world's purchases are this morning. I shouldn't need to know what some guy on the other side of the world spent his lunch money on, just to buy my own.
What am I missing? Surely the uber com sci phd's have fully solved this?
The Ethereum project includes sharding as part of their scaling plan. Here's a fairly detailed overview of the problems involved, and how they're attempting to address them:
You don't need to hold every transaction why do you think you have to keep all blockchain? Right now you can use pruning on a client like Core ar Unlimited or you can use light clients like Electrum.
-They don't require everyone to hold the whole blockchain, you can have a thin wallet where the blockchain is held elsewhere.
-An ecosystem of multiple different currencies does create sharding.
-Merkle trees are a hierarchy of hashes so that someone can hold only the parts of the chain they want to look at and know that they are on the right chain by syncing large parts of it with their hash as a whole.
-At Visa level transaction rates of 300 Million transactions per day and the minimum size of about 4 transactions per KB in bitcoin, that means that at current 8TB hard drive prices it costs about $900 USD per year to store all the transactions. This would also require a steady connection of at least 870 KB/s to sync with the chain.
In short, there are plenty of solutions with even the extreme examples of involvement being very obtainable by the average person in a developed country.
It's not like Bitcoin does it because it _wants_ to; in fact, semi-anonymity is a semi-goal of Bitcoin. It's just a tough problem to solve differently.
I haven't heard of any recent updates, but I believe ZCoin was supposed to address this issue, to an extent.
This doesn't even remotely address the scaling problem, such as it may be. I'm not keen on forced blocksize caps as I don't see how that kind of planned economy model is compatible with the free-market money ideas behind Bitcoin, but even an unlimited blocksize would be unlikely to truly solve scaling.
Bitcoin simply doesn't scale very well because of the way transaction history need sto be stored. As long as the rate of blockchain growth can't be significantly reduced, transaction rate can't grow very much.
So small block proponents are likely to be right in that on-chain scaling is unrealistic, but if the market must be forced by developers to adhere to an artificial limit, I think that in itself implies Bitcoin is unlikely to be able to grow very far as the market is unable to self-regulate.
Bitcoin will never scale as well as a centralized system. But it's not necessarily a problem. Bitcoin only needs to scale well enough to succeed. For example, just looking at brute network statistics, a 1MB blocksize causes a well connected node to use approx 1 Mbps of bandwidth. Therefore with zero improvements in the way the blockhain is implemented, we could scale to a 100MB blocksize, allowing 350-700 tps, and the bandwidth would only cost $50-100/month (cost of a 100 Mbps unmetered colocated host in the US). Disk usage would grow 5TB per year without pruning, maybe 2-3 TB with pruning, that's $50-70 per year in HDD.
I don't know about you but I feel pretty good that without any algorithmic optimizations, Bitcoin seems to have a 100x scaling potential, with a full node still remaining affordable to run by a "serious" Bitcoin individual (~$100 /month).
100mbps guaranteed is not the same as best effort. Besides it's an average which would max out on bandwidth from time to time unable to process data at full speed.
And with that kind of cost, forget about individuals hosting.
Also since each block is so huge, others miners will take something like 30+ seconds to validate a block leading to an unfair start on the next block. (5% of a 10 min sounds like some serious gain.)
From what I've read, one of the issues is that it's very difficult to maintain that extra bandwidth through the Great Firewall of China, resulting in any miners on the other side of where the block was found being at a disadvantage as they will get the blocks too late to be competitive. This will result in mining finally being 100% concentrated in China.
This begs the question: couldn't the Chinese government intentionally delay even small (outgoing) blocks to give Chinese miners an advantage (with either benign or malicious motives)?
That's basically what the "selfish mining" attack is, isn't it?
I think the interesting thing about the government doing it is it doesn't require any coordination between miners within China. They wouldn't even necessarily know it was happening unless they looked for it.
you want as many miners as possible or the whole network will be in danger when there are only a few miners having 50% of the mining power. it would be grate if smartphones could mine when they are charging or idle, and also run a full node and make transactions.
> So small block proponents are likely to be right in that on-chain scaling is unrealistic, but if the market must be forced by developers to adhere to an artificial limit, I think that in itself implies Bitcoin is unlikely to be able to grow very far as the market is unable to self-regulate.
Apples and oranges. Blocksize trade-offs are related with how decentralized the network is/will be. Off-chain is a way to build layers on top of bitcoin to allow payments to start being only sent between off-chain payment hubs, which at the very long-term will convert on-chain(layer1) transactions into more of a settlement system (instead of payment system).
This, doesn't have anything to do with developers or project governance. Even if the network is decentralized, you cannot decentralize knowledge. In opensource, meritocracy is king, and obviously it will always be like this (so long as know-how is required to solve technical problems).
As long as economies of scale apply, mining will centralize, regardless of blocksize. Bigger miners can push out smaller ones.
As far as full nodes go, incentives are a big problem IMO: there's no direct profit in running one, so whoever runs a full node is either a hobbyist/altruist, or needs one to run a business. I don't really see what kind of user needs a full node yet is unable to pay for one, if Bitcoin is more of a high-value settlement network than a high-throughput payment network.
The point is, while blocksize has some effect on centralization I don't think it's all that big a factor in the end.
I'm not sure what you mean with your last point - that the code that gets used is always made by the developers best equipped to set economic policy? Because that is what decisions on blocksize are.
What's the point of Bitcoin if that's just a high-value settlement network?
From the perspective of end users, all the Bitcoin advantages materialize only if they use it directly as a payment network; otherwise they are de-facto using something else and it doesn't really matter how that something else is settled in the background, it matters how that something else works and if it works differently than Bitcoin, they're using that and not really Bitcoin.
From the perspective of users (organizations) who need high-value settlement networks, the classic alternatives (e.g. Target2) are better than Bitcoin since the needs are quite different, and the advantages of cryptocurrencies aren't that useful for high-value settlement, they matter mostly for end users.
> Because that is what decisions on blocksize are.
I disagree, blocksize is only related to decentralization/throughput trade-offs, not economic policy. The only economic policy that bitcoin has is the inflation rate, which is set in stone and very unlikely to ever change.
I can't really agree here. Blocksize sets a max cap on transaction rate, which is effectively a decision that the network should prefer high-value, low-frequency transactions, even though from a miner profitability (and therefore hashrate-security) standpoint, the opposite might be better. Might also be that a settlement network is the best use case for Bitcoin, but we don't know what the market would prefer because the scales are tipped in favour of high-value tx by people who believe they know best.
> I'm not keen on forced blocksize caps as I don't see how that kind of planned economy model is compatible with the free-market money ideas behind Bitcoin, but even an unlimited blocksize would be unlikely to truly solve scaling.
Bitcoin is not an economy, it's a protocol. Bitcoin does not consist of people, whereas an economy does. A planned economy is literally planning people's lives. An agreed-upon constant in a protocol is not related to this.
Block size is protocol's security parameter. Cap on block size is not artificial. Thought experiment: if block size is unlimited, would it affect security? The answer is obviously yes, so it's not artificial.
Satoshi added the block size cap as a DOS-prevention mechanism (to stop blocks from being bloated with 'dust' txns and grinding the network to a halt). It was done without any real discussion and the value was probably whatever felt right to him at the time. If he'd made it 10Mb, we'd be having this discussion in a few years time rather than now.
Yes, I agree it is very reasonable to debate whether limit should be 1 MB or 10 MB or whatever. I don't think it is reasonable to say it should be unlimited, or decided by market, or such.
> Satoshi added the block size cap as a DOS-prevention mechanism (to stop blocks from being bloated with 'dust' txns and grinding the network to a halt).
Please spare us the pure unsubstantiated and uninformed conjecture.
Jesus, not this bullshit again. It's not vaporware IF YOU CAN USE IT ALREADY. It's already available for you to use on Litecoin. Lightning works, it just needs the services to become user friendly now.
It's not whether Lightning works or not. We all know it's technically possible to send value using the Lightning Network protocol.
What remains unknown, however, is whether this form of clearing network will be sufficient to scale Bitcoin payment processing to a sufficient degree. This is yet to be determined. In other words: can LN support a billion users doing ~50k TPS while keeping fees per payment at or below VISA fees?
The Lightning Network is not a solution that allows scaling Bitcoin payments to an arbitrary high throughput and arbitrarily low payment fee. LN has a limit on throughput and a minimum bound on average fee, and what that is for a LN network with N payers and M payees we simply don't know yet. For example: what will the maximum throughput, and average fee, of an LN network with 10 million payers and 10 thousand payees be?
I think you are just a few steps too ahead. We aren't at billion users just yet but needs a solution in the near future and scaling to billion users can be discussed a little later.
The thing to realize is that right now, there isn't a scaling problem at all. There is one group of people doing everything they can to make sure that the block size limit is not increased, including censoring /r/bitcoin, posting non-stop with irrelevant and misleading information, making and breaking promises, etc. If the block size limit was lifted to 8MB, nothing would happen, everything would function exactly the same.
There is no technical reason for the limitation, no limits of bottlenecks have been reached now that the blocks are full and anyone could see that bitcoin as it stands takes very little CPU power and very little bandwidth to sync with the chain. If you can watch a stream on twitch or youtube, you can sync with bitcoin's chain with lots of bandwidth to spare.
That isn't a scaling problem and is a false dichotomy. A scaling problem would be if putting the max block size cap higher than it is now caused network problems.
Seeing that there is trivial resource usage currently and that the 1MB block size limit was chosen arbitrarily, that seems incredibly unlikely.
When I say there isn't a scaling problem and you say 'there has to be something to stop spam' these two things are not mutually exclusive. The fact that you haven't distinguished between one or the other is why FUD and propaganda works so well with bitcoin at this stage.
Bitcoin CAN scale globally right now if remove 1 MB cap. If someone doesn't want to hold every transaction of blockchain they can use pruning, and some us us use it already.
For a simple user, it's not worth to keep all blockchain, because it does not matter. they can't change it or include transaction into a new block if they not mining.
A 0-confirmation Bitcoin transaction similarly needs only < 1 sec to be broadcasted to the network. And a 0-conf tx offers as much security as existing payment networks (which are reversible). When I sell computer gear on Craigslist in person and someone pays me in Bitcoin, I only wait ~1 second for the tx to reach my phone's wallet before letting the buyer walk away.
A merchant needs to wait 1-2 business days before he can spend the money he received through these payments networks. With Bitcoin he only has to wait 1 block (~10 minutes), reducing pressure on his cash flow.
A merchant must wait typically 60 days for a CC transaction to be considered irreversible. With Bitcoin he only has to wait 6 blocks (~1 hour).
So, comparing apples to apples, Bitcoin is either as fast as, or MUCH faster than legacy payment networks.
What is less clear, however, is the capability of the traditional payment networks to improve. Before bitcoin et al, they might have had no reason to. I don't find it very likely that the 60 days transaction speed, for instance, is unfixable.
Some people just needs to get off their asses and dive deep into some horrific legacy code and/or processes and fix or rewrite them. If they are pushed hard enough, they'll do it.
A 0-confirmation Bitcoin transaction similarly needs only < 1 sec to be broadcasted to the network.
No, payment networks verify that the user can spend immediately. That is full confirmation in a few seconds. Bitcoin fails dismally here on very limited transaction volume by taking 10 minutes at best for something approaching confirmation and has no chance with the current architecture of POW of ever realistically replacing those transaction networks - both because of energy use and time.
A merchant needs to wait 1-2 business days before he can spend the money he received through these payments networks.
Yes, Bitcoin has the advantage here - you'll get your money faster, though there is no real technical barrier to existing networks paying out faster, the banks are just incompetent and greedy. This does depend how the payment is done - using FPS it's available instantly, using cc it's not (often more like 7 days, not 2).
A merchant must wait typically 60 days for a CC transaction to be considered irreversible.
That is a matter of policy, not tech. If Bitcoin were a serious transaction protocol, customers would demand the same features, or a guarantee in law that they could return shoddy goods - either way, the protocol is not the problem here.
When I sell computer gear on Craigslist in person and someone pays me in Bitcoin, I only wait ~1 second for the tx to reach my phone's wallet before letting the buyer walk away.
In that case you have no idea if that transaction is actually confirmed and not a double spend (typically Bitcoin requires at least minutes to confirm), that's not equivalent to them paying you by bank transfer in seconds. Comparing a zero confirmation transaction from bitcoin to a full confirmation transaction from a bank is disingenuous at best.
That's not even touching on all the other flaws of bitcoin as a method of payment - irreversibility (yes people really don't want that!), pseudo anonymity (just enough for criminals, not enough to stop states), complexity meaning average users hand their entire savings over to someone else, lack of insurance or regulation (yes people really do want that!), lack of backing as a currency making it extremely vulnerable should it become popular to being targeted and cornered by states or money markets, hidden centralisation through miner cartels running the transaction network and a small group of devs/companies producing the complex software required, energy use of POW which means it could never handle enough volume....
Using merkle trees to store transaction ledgers is really interesting, but with the current architecture of bitcoin is not a rival to current payment networks mostly because it appears to be designed for something else entirely (to replace fiat cash it seems, which is on the way out anyway).
No, payment networks verify that the user can spend immediately. That is full confirmation in a few seconds. Bitcoin fails dismally here...
To call a credit card transaction a full instant confirmation is disingenuous at best. If I were selling goods I'd prefer the 0-confirmation Bitcoin transaction to a credit card transaction. And just like how you might refuse a credit card payment from someone without an id, you might also refuse a 0-confirmation Bitcoin transaction with no or very low transaction fees.
In that case you have no idea if that transaction is actually confirmed and not a double spend (typically Bitcoin requires at least minutes to confirm), that's not equivalent to them paying you by bank transfer in seconds.
That's correct, but it's not a fair comparison for his example, as no one on Craigslist will send a bank transfer to you. Judging from context mrb was comparing it to a credit card transaction, which you can do with PayPal and their free credit card reader that goes into your audio jack. If some stranger on craigslist wanted to buy something from me with either a credit card or a 0-confirmation Bitcoin transaction, I'd chose the Bitcoin transaction. Perhaps you underestimate the difficulty in performing a double spend. Or underestimate the amount of credit card fraud that happens.
You also mention the energy cost as a concern. It was estimated that the energy cost of running the Bitcoin network was $400 million in 2016. Bank of America listed $60 billion dollars in just operating expenses for that same year (and this doesn't include investment losses). Sure there is a lot more going on at BAC, but even if only 10% of that is spent verifying transactions, it still cost more than all of Bitcoin. And that's just one bank.
Since this is just the POW algorithm, increasing the blocksize or using an off-chain solution to increase number of transactions won't cause a scaling in POW energy usage. The POW algorithm costs just as much energy to confirm 1 transactions as it would 1 million. All that energy isn't spent doing math to confirm the transactions, it's confirming the "signature" on the block which lists all the transactions.
complexity meaning average users hand their entire savings over to someone else
Ignoring the fact that you've certainly handed your entire savings over to someone else, I'd like to see the sources for this. Things are so simple now. It's gotten so easy to store Bitcoins on your phone or computer. You don't need to download the entire blockchain anymore, and you can backup your entire Bitcoin wallet with 12 words, which you can choose to memorize or hide somewhere.
... making it extremely vulnerable should it become popular to being targeted and cornered by states or money markets
I would argue it's already become popular. And I think Bitcoin being banned by state entities is probably it's biggest vulnerability at this point, but with so many businesses involved in it, I don't see that happening. In fact, things actually seem to be going the other direction. Bitcoin has officially been made a currency in countries such as Australia and Japan.
... hidden centralisation through miner cartels running the transaction network
If these miners were in America, with 8 to 10 different companies mining the majority of Bitcoin blocks, no one would be saying anything. But when you have the same thing in China, suddenly everyone is afraid of secret miner cartels.
... and a small group of devs/companies producing the complex software required
The core Bitcoin software is open source. It can be inspected for vulnerabilities at any time, and with so much money in Bitcoin, it's being looked at very closely. Being open source also means people can make their own versions at any time. I know of two popular projects hoping to grab the official Bitcoin name right now. And sure if such projects get popular enough, and far enough along, the community could break out into an all out war. Each side trying to find as many vulnerabilities in the others' software as possible. But whoever wins will be the most organized, and the ones who makes the best, most stable, and most reliable code.
... it appears to be designed for something else entirely (to replace fiat cash it seems, which is on the way out anyway).
I do agree that Bitcoin has many traits of cash, such as irreversibility and pseudo anonymity. But I don't think it's "just enough (anonymity) for criminals". Banks can trace serial numbers on bills, and Bitcoin can be traced from transaction to transaction. Both can be traced when spent and you go in person or have something shipped to you.
However, Bitcoin's similarities to cash don't leave it dead in the water. Imagine what people thought when the first printed bills started being used, "Oh too many problems here for this to ever be a thing. What's to stop them from printing double the bills? Coins have intrinsic value and when I receive one I have the value instantly."
The "solution" to the scaling problem spoken about in the article allows off-chain Bitcoin transactions (by fixing transaction malleability). This allows for layer 2 services, and these will have a lot more in common with credit cards. The big one you've probably heard of it the Lightning network, which should allow for millions of transactions per second with complete and full confirmations in < 1 sec, and yes, with no chance of a double spend. There's no reason someone couldn't offer a service that also plays mediator for shoddy goods. Bitcoin might seem rather limited now, but it's by no means hit a technological dead end.
To call a credit card transaction a full instant confirmation is disingenuous at best.
It is fundamentally different from a Bitcoin transaction - it checks the user has the funds in seconds. I assume you're referring to refund/chargeback policies, that is a policy, not a technical limitation. CCs will be replaced, but I suspect not by bitcoin.
I agree in theory for most of the technical points on speed there are possible mitigations, but do think the design simply goes in the wrong direction in ways which are fundamentally flawed (e.g. POW, anonymous transactions, tokens for coins). It has some of the worst attributes of cash IMO.
But whoever wins will be the most organized, and the ones who makes the best, most stable, and most reliable code.
I find it far more likely if Bitcoin actually becomes mainstream that it would suffer collapse or hostile takeover as there is no backing authority, and lots of interested parties who stand to make a lot of money from manipulating the price of both transactions and the currency. I just don't believe the meritocratic tech utopia you paint here is close to reality - why would the best win? The bitcoin space is full of frauds and cartels already, even when it is not in widespread use.
My main problem with Bitcoin however is that it's a solution to a problem we just don't have.
Using transaction ledgers without users holding private keys is a feature. Central authority and reversible transactions is a feature (even if the store doesn't allow reversing, an authority should be able to add balancing transactions to reverse). Trusted and public identity of partners is a feature. Confidence in a currency backed by tangible goods is a feature.
The tech is interesting and something tangential may well develop from it (like verified public contracts, or public bets, or notarised transactions or similar), but I don't really want pseudo-anonymous monetary transactions with anonymous partners, or to possess a hoard of tokens someone can steal, based on an extremely volatile currency vulnerable to cornering. What I do need is fast verified transactions with known accountable partners on a stable currency, with the possibility of disputing payments and reversing fraud, which is what we already have with FPS, debit cards, or credit cards.
It's a difference that doesn't matter to the payment recipient. The sender can steal funds with charge back fraud. Period. Therefore the CC tx is not "fully confirmed". This is the #1 reason merchants love Bitcoin. A great solution to the very real problem of CC fraud.
It is fundamentally different from a Bitcoin transaction - it checks the user has the funds in seconds. I assume you're referring to refund/chargeback policies, that is a policy, not a technical limitation.
I'm not referring to policies, we were comparing the initial < 1 second transaction. You keep bringing up "checking the funds in seconds" but checking the funds doesn't mean anything if they are just going to result in a chargeback. What I'm talking about here is the trust you give that < 1 second transaction. And I honestly believe a 0-confirmation Bitcoin transaction more strongly guarantees value than a credit card transaction, and has a greater likeliness of ending up in your possession. And this is without any technological improvements on the horizon.
but do think the design simply goes in the wrong direction in ways which are fundamentally flawed
You've shown you might not understand how POW works in previous replies by claiming the power used for the POW algorithms scale with the number of transactions. A block with only one transaction takes just as much work as a block full of transactions. It's possible you are also misunderstanding other components of the design. Anonymity is also a common misconception. If you want to exchange your Bitcoin for goods or services, the person on the other end of that exchange can follow that Bitcoin all the way back to the miner who first mined it. There's no such thing as a hidden transaction. Sure you could launder the money, but that happens all the time with any currency. Alphabay, a large darknet market was recently shut down by federal agents who traced Bitcoin transactions back to their owners. If all currencies had the open ledger of Bitcoin it would actually make it easier to track these things along with other important things such as government spending or the workings of a nonprofit.
I find it far more likely if Bitcoin actually becomes mainstream that it would suffer collapse or hostile takeover as there is no backing authority, and lots of interested parties who stand to make a lot of money from manipulating the price of both transactions and the currency.
I'd still argue that Bitcoin is quite popular now. Rothschild just invested in Bitcoin just yesterday, and not Bitcoin companies, actual BTC through GBTC. There's a LOT of money in Bitcoin now. Bitcoin's market capitalization is roughly 45 billion dollars. Surely that'd be worth a hostile takeover right now if it were possible. And without a doubt there are a lot of parties interested in doing so. But it hasn't happened. The mining "cartels" you fear so much have just bent to the will of the people - that's the news in this article. This change allows for off-chain scaling of Bitcoin; something that goes directly against the miners self interest as they stand to miss out on fees for transactions done off-chain. This is something they've been fighting for years. And yet, here we are. (Also, I still maintain that if these were simply 8 to 10 American companies instead of Chinese, this wouldn't be nearly the issue it is to people.)
Prices of everything are manipulated all the time, with or without (and by) banking authority. You don't even have to get into controversial stock price manipulation to see this. You can just look at the gold and silver markets which always seem to be in the news, but made big headlines just in June for large scale manipulation. And Bitcoin is well known for being volatile, and has had insane price swings in the past, but that didn't make it collapse either.
I just don't believe the meritocratic tech utopia you paint here is close to reality
That's why I only brought it up last in my original rebuttal. I feel I was able to counter much of what you had said with the technology as is.
why would the best win?
It's really amazing to see. But it's that what looks to have just happened. Someone will probably write a book on all of this in the future. For a short oversimplified summary, "Bitcoin Unlimited" was a different group of Bitcoin developers who hoped to become THE Bitcoin developers. They made a competing client with different approaches to scaling and took a different technological path. These approaches were much preferred by miners. But bugs in their client were exploited several times, taking out a huge numbers of their nodes at once several times. The type of exploits that would have crippled the network had everyone been running their nodes. In the end, the community and economic powers sided with a group calling themselves "Core", as their code had fewer bugs and was more well tested. Their supporters were better organized and through market forces alone were able to force the miners to adapt a scaling solution that went against their own self interest. I suppose only time will tell if this was the right path, but I believe Bitcoin to be better now than before all of this went down.
My main problem with Bitcoin however is that it's a solution to a problem we just don't have.
A lot of things seem this way at first. No one realized how significant the internet would become. If you had asked someone 20 years ago if they thought the United Nations would state that internet access is a human right, they would have laughed at you, but that's exactly what happened just last summer.
Using transaction ledgers without users holding private keys is a feature.
You don't need to hold a private key if you want to trust your bitcoins with a 3d party. There are legitimate companies right now that you can use to store and exchange your Bitcoins. There probably always will be. Gemini is completely licensed and insured. But you keep overlooking how simple using a private key has become. You also mention holding onto tokens several times, which is also a thing no one does manually. Only the oldest digital wallets generated tokens randomly, nearly all are "deterministic" now and generated on demand. From just 12 words you can regenerate your entire wallet and have all of it's history and tokens restored.
Central authority and reversible transactions is a feature
I think central authority's advantages are up for debate. This is something that's been with us so long it's become scary to imagine a currency without it. It may not be a conventional opinion, but there do seem to be advantages on both sides of this issues. And it's a big part of what initially drew people to Bitcoin when it was new. The subprime mortgage crisis had just happened and the bailouts were on their way and a lot of people felt betrayed. Things like that happen around the world all the time. Right now Venezuela’s annual inflation is over 750% due in part to corruption.
No central authority can inflate Bitcoin’s price or devalue it by manipulating its supply. With Bitcoin, there is no risk of money printing (by the government, or others). There's no single point of failure. If the US Government were to default again, or fail completely, it could have harmful effects on the currency.
even if the store doesn't allow reversing, an authority should be able to add balancing transactions to reverse
This is also an issue for cash, but hasn't been a problem. Once you've given it up, there's no way to reverse that transaction if the store doesn't allow it. Of course services were built on top of cash to allow just this. Why is it such a stretch to imagine similar services for Bitcoin?
Trusted and public identity of partners is a feature.
You can associate your public identity with Bitcoin addresses. If you want to take payments only by people with public trusted identities, you're free to refuse any exchange of goods or services.
This trust goes even further though. Most digital wallets let you "sign" a message as proof of who you are or proof of what you are saying. You're able to "notarize" something just by signing it digitally. This is why all those people who have come out of the woodwork claiming to be Satashi (the inventor of Bitcoin) have failed. They can't sign a simple message saying this is who I am.
Confidence in a currency backed by tangible goods is a feature.
I'm surprised this is so far down your list. I think this is one of the greatest arguments against Bitcoin. Economists say being able to pay taxes with a currency is ultimately what gives it value. Bitcoin falls back on an older model of value, scarcity.
Bitcoin is still very young, and there's nothing wrong with being cautious and watching from the sidelines. But I feel a lot of what you're saying comes from simple misunderstandings. And perhaps complexity is an issue, but people don't have to understand payment gateways or settlement layers to use a credit card.
Volatility is certainly an issue, but if Bitcoin continues being adopted its volatility will continue to decrease. There are a lot of problems that still need to be solved to bring Bitcoin into everyday life, but it does offers solutions to problems as well. No more out of control inflation due to supply manipulation. Corruption can be spotted so much easier (in government or business) with a public ledger. It's also both portable and borderless in a time when the world is becoming more connected.
That's one way of putting it. Another way to look at the blocksize issue is: should the supply of transaction space be limited by free market mechanisms alone, or by committee decision/voting/negotiations?
There is an argument that block propagation and orphan rates acts as natural barrier to the blocksize.
With a very large blocksize limit, miners who produce blocks which are very big, run the risk of a smaller block from a competing miner winning the race, as it is faster to validate and propagate over the network.
This limiting factor should mean the blocksize converges to a size that the network can comfortably handle.
This isn't fundamental. The large-block miner can pre-stage copies of the block (before the nonce has been found) at a few replicas. If they successfully find a nonce, they blast the nonce to all of their replicas, which immediately disseminate the complete block.
> The bitcoin network simply wasn't designed to be able to handle the kind of volume it is experiencing as more people are beginning to use the currency, and the 1 megabyte "blocks" of transaction data that get uploaded to the blockchain are full.
If you work in IT this is like a monthly meeting of the team. You ALWAYS hear "oh we are so suprised, it wasn't designed for such an amount of users/load/whatever". It's just not true. It's a show. And I really don't know why this argument STILL works. If you run 10 topics in parallel, 7 will report this exact reason. If you check them out closely 3 report that truthfully, but really let you wonder why management decided to put so stupid people on top of these projects in the first place. 4 actually have planned for this to happen, and where just not sure if they run into it this month or next month.
https://bitcointalk.org/index.php?topic=2036368.0