Bitcoin is currently suffering from significant scaling problems, which lead to high transaction fees. Numerous proposals to fix the scaling issue have been proposed, the two main camps being "increase the block size" and "muddle through by discarding less useful data" (aka Segregated Witness/SegWit). However, any changes require consensus from the miners who create Bitcoins and process transactions, and because it's not in their best incentive to do anything to reduce those transaction fees, no change has received majority consensus.
In an attempt to break this deadlock, there is a "Bitcoin Improvement Proposal #148" (BIP148) that proposes a User-Activated Soft Fork (UASF) taking effect on August 1, 2017. Basically, everybody who agrees to this proposal wants SegWit to happen and (here's the key part) commits to discarding all confirmations that do not flag support for SegWit from this date onward. If successful, this will fork Bitcoin, because whether a transaction succeeded or not is going to depend on which side of the network you believe.
However, BIP148's odds of success look low, as many of the largest miners out there led by Bitmain have stated that they will trigger a User-Activated Hard Fork (UAHF) if needed to stop it. Specifically, if UASF appears successful, instead of complying with SegWit, they'll start mining BTC with large blocks instead: https://blog.bitmain.com/en/uahf-contingency-plan-uasf-bip14...
Anyway, it all boils down to significant uncertainty, and unless you've got a dog in the race you'll probably want to refraining from making BTC transactions around the deadline or purchasing new BTC until the dust settles down.
And an important disclaimer: this is an extremely contentious issue in the Bitcoin community and it's really difficult to find info that's not polarized one way or the other. Most notably, Reddit's /r/bitcoin is rabidly pro-
BIP148 and /r/btc is equally rabidly against it. Here's one reasonably neutral primer:
Another aspect of the riddle is that SegWit will eliminate ASICBoost - which is an optimization developed by one of the biggest ASIC miners producer - so he is probably also against it. There is also the thing that ASICBoost is probably patented - so it has a lot of opposition in the community.
They state the ip is for defensive purposes only - however that is questionable given that anything they implement, automatically becomes prior-art. It is also contrary to the spirit and practice of the majority of crypto/alt projects.
It is unreasonable to attack miners for having interests, without disclosing that other interests may benefit from the current levels of network congestion that a skeptic would say are caused by having artificially small blocks.
Liquid Network and Lightening Network are different things and work in a different ways. A new version of liquid that uses some of he lightening technology enabled by segwit is probably in Blockstreams plans... but there are multiple competing open source implementations of Lightening Network being worked on.
Please link to the patents on the lightening network. I don't think you can.
There is no current network congestion. Free transactions are clearing after awhile and very low fee transactions are clearing right away.
All of the congestion of the past 3 months was from a spam campaign being run by the people who claim "bitcoin doesn't scale without larger blocks" ignoring that Segwit increases block size AND increases efficiency in using that capacity.
> Today we are excited to announce some important steps we are taking on the patent front, why these defensive steps are necessary, and our hope that others will see merit in our approach and follow our lead.
> Our Patent Pledge assures developers and users of our technology that we will not sue them for patent infringement, provided they comply with the terms and conditions of our pledge...
Edit: Here is a discussion of Blockstream's patent application for side car design,
> The application, submitted on 9th May and published earlier this week, outlines “systems and methods...for transferring an asset from a parent chain to a sidechain”.
Here is blockstream talking about Lightening,
> Blockstream’s work on the Lightning protocol began two years ago with the intention of enabling new applications and developing new use cases that could help further the adoption of Bitcoin and related technologies
Also presumably if segwit activates then Liquid is no longer needed?
Edit: The relationship between Blockstream and Lightning is underscored, by the fact that the largest contributor to the specification is a Blockstream employee (Rustee Russell),
No, it is not only open source but a healthy mailing list with a lot of interested parties.
> lead by Blockstream
No, Poon and Dryja are not employed by the company Blockstream. The latter seems to be more focused on their sidechain solutions.
> the work is even patent-encumbered
No, there is nothing to suggest this. Patents have to be public at some point.
lighting is designed to be able to farm out channel enforcement to other nodes on the network to prevent cheating while preserving privacy.
lighting does require more block space to operate globally than is available. It still scales better than bitcoin though.
10x the transactions is not much at all. The comparison with the VISA network is not a valid one - with micropayments the volume could be 100x or 10000x - we should be able to accommodate it.
The only solution is to begin handling transations off-chain. But the problem is that there is no one good proposal for it. Until it is clear how off-chain transactions work, we will keep seeing this sort of stuff.
This has nothing to do with the block size. The size of the chain is proportional to the number of transactions. Whether those are sliced-and-diced into small blocks or large ones is completely irrelevant to how big the chain is. The only thing the block size influences is how many transactions can be mined in one block, i.e. the rate at which transactions can be processed.
But yeah - the size of the blocks does depend on the number and size of transactions and if you don't have transactions to fill up the block in full (i.e. so that its size is just under the maximal block size) - then the transactions will be the limiting factor.
Why do you think Satoshi's gave it an artificial 1MB limit if it didn't matter?
I have no idea why Satoshi chose a 1MB limit. Probably for the same reason he chose a 21M BTC limit on the total number of bitcoins that can be mined: both are arbitrary numbers that he pulled out of a hat. But the next time I see him I'll be sure to ask.
The only proposals on the table for off chain storage add profiteering middle men to the system. I'd rather pay for storage.
This is eventually going to be a problem sooner or later regardless. The fundamental decentralization of Bitcoin depends on everyone having the whole blockchain. Any sort of "checkpointing" mechanism inherently relies on trusting authoritative nodes about network state, at which point it's no longer decentralized.
(However this is somewhat of a distinction without a difference. In practice you are trusting the nodes on the network anyway - the network is authoritative because everyone agrees to treat it as authoritative. If everyone agrees to trust some other blockchain as "the real truth" then you can either accept the new authoritative network or be on your own chain that nobody else accepts - which is what happened to Ethereum after the DAO hack.)
This is a fundamental limit to the Bitcoin model and will have to be addressed sooner or later. The data is already past ~100 GB (and totally incompressible) and that's with blocks so small that the network is choking due to lack of capacity. This is only a few years' worth of records, what does the big picture look like in 20 years?
Segwit is absolutely mandatory to allow interfacing other chains in a secure manner. Pretty much everyone agrees transaction malleability is a huge design flaw (apart from some Chinese farms which are abusing it via AsicBoost).
What I specifically have a problem with is the way both sides have drawn arbitrary lines here. It's not SegWit or a larger block, we can have both. And in fact the Core proposal does include a larger block, on a surface level this dispute is over how much bigger it should be (the Unlimited devs want a much larger block right away). Again, pretty much everyone agrees that transaction malleability needs to be fixed except that group of miners.
On a deeper level it's about a power struggle between the Bitcoin Core devs and the Bitcoin Unlimited devs, and between the various factions of miners.
But isn't mining power already consolidated?
Without full nodes validating consensus, miners can (will) force protocol changes (eg. change 21,000,000 coin limit) on users, effectively changing the decentralized leaderless attributes to a centralized dictatorial less-efficient PayPal. At this moment, bigger blocks mean a less-free (as in speech) bitcoin.
I have seen this myself with a production blockchain and blocks that were less than 1mb. Increasing the size increases this effect and gives Chinese miners and artificial advantage.
Plus there's no congestion on the network right now. There's not a scaling problem. It was spam.
Further, segwit increases block size and efficiency so there's no reason to not activate it.
This whole issue isn't about scale, core is still ahead of the curve on what's needed to scale, it's about control, and disabling ASICBOOST and keeping transaction fees high.
Plus there's no congestion on the network right now. There's not a scaling problem. It was spam.
Woohoo! No need for anyone to do anything then. Remind me again why everyone is trying to scale bitcoin?
Everyone is trying to scale bitcoin because bitcoin is growing dramatically... that doesn't mean that the "full blocks" and "high fees" we saw recently weren't due to spam.
Ironically, this has actually become a real Byzantine Generals problem. Guess Bitcoin can't actually solve that problem in the real world.
From what I understand, China isn't too keen on the whole endeavor since it circumvents their (stringent) capital controls. What happens if they turn the baleful eye of their deep packet inspection onto the Bitcoin network? (serious question)
(Background for those who don't know: encryption/etc don't work against the Great Firewall, it knows what a given type of connection "looks like" in terms of packets/activity, so it can identify (eg) a VPN session even if it's "wrapped" or "tunneled" across some other protocol. They use a massive amount of machine learning hardware to profile connections in realtime to pick out "suspicious" activity and those connections will be dropped after a few moments. It's not impossible to run arbitrary connections through the firewall but it's very difficult and getting harder all the time.)
Gas can mean ETH gas, petrol gas, or gas gas.
If there were no technical and economic tradeoffs to increasing the blocksize then yes, it would hard to see how otherwise intelligent people could oppose it. Everybody loves a free lunch. But there are tradeoffs, which you conveniently omit, which are giving those otherwise intelligent people pause, rightfully so.
Currently at 160GB or something with 1MB block, what storage do you think a node will require with 10MB block in the next 5 years when the usage will be growing?
You must remember that Bitcoin transactions are "settled" in that 7 TPS timescale, whereas VISA transactions are merely "recorded" in their 50K TPS rate.
In reality, it generally takes a minimum of 15 days for your VISA transaction to "settle" with your bank account. Thereby the true TPS rate is orders of magnitude lower for VISA.
With regard to latency bitcoin is still worse in practical applications - because VISA confirms a transaction immediately even if as you write it settles after 15 days - while bitcoin more or less settles after and an hour - but the first confirmation you get only after about 10 minutes.
Obviously in any case it will be faster than Bitcoin.
If we use the 7 TPS number that people seem to be using (even though the real number I think is slightly lower), then we end up with 220,752,000 transactions in a year; three orders of magnitude less than Visa.
Bandwidth != Latency
I think proof of work mining is extremely wasteful. But once it is in place, you can sign a merkle tree of any size. You can add as many transactions as you want. The problem is that the ledger has to grow and grow. It would be nice if something was developed where you didn't need to keep the whole history.
All the practical "here's how lightning's going to work" papers I've read so far leave me very skeptical. Here's an example: http://diyhpl.us/wiki/transcripts/scalingbitcoin/hong-kong/o...
The Q-and-A at the end in particular is interesting:
>Q: On the last slide, one of the assumptions was 3 channels per person. Assuming payment channels wouldn't be useful for retail sales, because you don't want to buy a coffee just to open immediately. Is that correct?
>A: Joseph might expand on this. Let's say you buy a coffee. You're probably buying a coffee only once, right? Well, maybe the coffee is $5, and you put $50 into the channel and leave it open. Then someone else comes to the coffee shop and she does the same thing. But she has a channel with the grocery store. There's me, coffee shop, Alice, grocery store, they all have channels. When I go to the grocery store next time, I don't have to open a channel. Payments are routed.
>Q: It sounded like everybody would have to open new channels.
>A: I am guessing the mean is going to be 3, but it will probably be an exponential distribution. Most people will probably have 1 channel, and then some might have 100s of channels open.
I don't know about you but while on paper that might work I still see a lot of hand waving, guesswork and rather unsubstantiated assumptions. Why would I decide to "lock" $50 worth of Bitcoins when I buy a $5 coffee? What's the incentive for me to do this? Where does this estimate of 3 come from exactly, I see it repeated everywhere but I can't find the maths behind it?
Here's an interesting attempt at simulating a real-scale ligtning network (why aren't there more of these? Aren't we talking about a $40bn market cap currency here?): https://hackernoon.com/simulating-a-decentralized-lightning-...
The simulation is rather unrealistic and I'm not sure how to interpret its conclusions. It seems to kinda work but there are issues:
>133,401 micropayments were attempted and 3461 (2.6%) of these failed. For successful payments the median number of hops was 19 and the median total fees were 2 bits (0.000002 btc) or 32% of the value transferred.
Now it could be caused by a bad simulation rather than a real issue with Lightning network, but frankly I can't tell at this point.
I don't have a horse in this race but as seen from the outside it all looks a bit rushed and amateurish. I don't know the whole story though, maybe I'm just poorly informed.
so if the transaction fee is $0.50, you get to transact at 1% cost
if you paid $0.50 for each coffee it would be 10%
Can you really imagine how this would work IRL?
"-Here you go sir, that'll be $32 please."
"-OK, I'm paying it Bitcoins... Oh, you don't have an open channel, I'm going to create one... Mmh, but how much to I put in? Let's say $100, I'll probably buy here again next week. But will that be enough? What if my total is just above that next time? I'll have to pay the fee twice. I guess I'll just make sure not to go over $100."
"-We also accept cash, Visa and MasterCard sir."
Again, maybe it can work, it just feels so "theoretical" so far, I haven't seen anybody paint a convincing picture of a what a "Bitcoin as Visa replacement" world would look like concretely.
It's much better than a Starbucks app.
And while this is an important feature of lighting, it's not actually a "feature" when compared to Visa or MasterCard and the centralized banking system from the point of view of the user. Ideally this should all be hidden away from the average customer.
People won't want to worry about graph theory when paying for a sandwich at a gas station. Existing payment solutions still wins hands down 99% of the time when it comes to convenience even if we imagine a "perfect" lightning network. I really have a hard time imagining what would drive a mainstream adoption of bitcoin over the current status-quo.
Lightning will work the same way. Nobody needs to worry about graph theory, they can just generally assume that the graph is fully connected, and that their software will be able to find a path from A to B.
What will be bitcoin's "ISPs"? Who makes sure the graph remains connected and usable? Who invests in the "infrastructure", making sure channels remain well balanced? Some say that Lightning will be self-balancing through a clever set of incentives, but that's again extremely experimental and untested.
Also note the big "net neutrality" thing going on in the US right now. What will prevent big players from teaming up and interconnecting with each other to facilitate transactions while leaving out the rest?
I don't have the answers to any of these questions, maybe it's just FUD. I'm just surprised that bitcoin is a couple of weeks from making such a huge jump into the unknown. It's extremely interesting to be sure, but I feel like some people are going to get severely hurt if this whole thing comes crashing down.
I don't see a reason that exchanges couldn't take on the role of ISP/bank in this situation. Essentially you have an account with 1500 BTC at an exchange, and you say that you want to put 500BTC into a lightning network. Then the bank centralizes itself in the lightning network graph by making connections with other large banks and some major companies.
Of course what we've just done is recreated the modern centralized payment processing scheme on top of the bitcoin network (ie. a mom and pop shop connects to square connects to BoA has my money which doesn't actually exist anywhere, and they make ledger changes and top up later).
You might even be able to make such a system work with no additional transaction fees. But I'm not sure of that.
God I wish this was still true. The internet is so fragmented now I have to have IPs in different nations for a unified experience.
It's called a credit/debit card.
Yes. This is basically the exact user experience of the Starbucks app, and it's a fine experience.
You pre-pay an amount, have a balance open, transactions reduce that balance, and you occasionally need to reload your balance with another credit card transaction.
Which is to say I don't think this is an intractable problem if there is good software with good user experiences to help out.
All that said, I'm not current on the block-size vs SegWit debate, so my analogy could be flawed.
Now take amazon, take that small shop on the street where you go twice a year because it's super expensive but it's also opened very late, take your car mechanic, take that guy on ebay you're buying a pair of socks from, take that restaurant in Berlin during your vacation where you'll probably never go back. Will you be willing to "pledge" 10 times the amount while buying there? And if not won't the fee be dissuasive? What's in it for me?
And won't that create negative side effects for competition? For instance if a new coffee shop opens next to Starbucks with your system I have an incentive to keep going to Starbucks since it already has an open channel (exactly what the Starbucks app is about, except I'm paying for it, not Starbucks), so effectively it makes it harder for newcomers to compete. Same thing for, say, amazon vs. some random ebay seller. The more popular a shop, the more likely it'll be to have an open channel pending. Isn't that going against the "completely decentralized currency" ethos? What good is it that the currency is decentralized if I can effectively only use it with a limited number of companies?
It would be pretty amusing to me to see the cyberpunk libertarian cryptocurrency turn into a glorified Costco membership.
The level of inefficiency here is mind-boggling. Surely this must be one of the least efficient, least environmentally-friendly computing ventures ever?
Sure the exchange rate of bitcoin has grown much - but it does not make it better value store now, rather the opposite.
OSI Model: http://www.webopedia.com/quick_ref/OSI_Layers.asp
Perhaps not the best example to use.
Waiting. Since 2011.
It's weird because people will argue about how bitcoin is safe because you can trust it, but it seems it's safer to pay for a centralized service and trust such a service because it's administered by very competent people with a high level of scrutiny.
If you look globally, that would mean bitcoin is much, much more expensive. It is just some kind of cool toy for people who hate the federal reserve.
It's colossal because of the sliding difficulty. The block period is a big portion of why the transaction rate is what it is.
This is an unfortunate misunderstanding on the part of the miners, and the math is really simple: imagine a network on top of Bitcoin, e.g. lightning.network, which can process 10 million transactions off-chain and settle it on the Bitcoin blockchain using only a single transaction. Imagine if every one of those 10 million off-chain transactions paid just 0.01 cent in fees... this would earn the payment processor $1000, which can only be realized by publishing a Bitcoin transaction, in competition with everyone else making a lot on off-chain fees. The result is that off-chain profits (in the form of fees) would allow off-chain payment processors to pay huge blockchain fees, because they can deduce it from the profit they've made on off-chain fees. Nothing, in my opinion, will increase Bitcoin fees more than layer 2 protocols creating more users and transactions (because fees are paid per off-chain transaction).
The point some miners are missing is that one billion off-chain transactions each paying a 0.01 cent fee is more profitable than 2,000 on-chain transactions paying $1 each. And if everyone is able to earn $100,000 in fees by publishing a single Bitcoin transaction, this must push up Bitcoin fees, since people will be competing on getting into the chain with the bidding power from their earned profits.
I don't understand this. Due to what would 95% of current miners find mining unprofitable at 8MB blocks?
Literally the only real throughput limit is end user's download bandwidth, which means 500MB blocks or so for 10Mbps download. Spv clients are fine for those unfortunate to have monthly limits.
>making it even more profitable to mine for big investors, than smaller fish.
Both storage and bandwidth are utterly insignificant cost items in a mining operation.
miners typically mine in pools. so they don't need to download the blockchain because the pool is doing it for them.
But it also reinforces for me just how not ready for primetime BTC is, and it makes me think the appreciation over the past year is truly insane.
Don't get me wrong, I think the concept is brilliant. I just don't see how nearly 10x value was created in about a year.
EDIT: Quick reference https://medium.com/@wintercooled/the-road-to-segwit-activati...
One of the most amazing properties of Bitcoin is that it's completely user driven. When it comes to the fundamental consensus rules, no amount of hashrate or corporate agreements can force a change onto the userbase. It's a system that intentionally resists central control. Any changes need to start with userbase support, and I'm just not seeing that with Segwit2x.
If I am wrong, I will find out soon enough.
All the definitions I heard are able to be manipulated easily:
-The/r/bitcoin consensus? Is mainly in existence because of censorship
-User wallets online? Can be easily created with AWS instances
-Bitcoin core? Who decides these bunch of people are in charge to represent all users and not a bunch of other developers?
One obvious alternative is to let Bitcoin follow economic incentives: Bitcoin miners gain Bitcoin, so they have a vested interest that their income is and stays valuable. Thus why not let the miners decide. This is also the only place where you can't influence/manipulate Bitcoin easily.
Quite simply, the coin price indicates support. After the split, there will be two versions of the Bitcoin network with independent prices. A non zero price indicates non-zero support, and as long as it's at least 25% of the original price, it'll probably be okay.
A high price indicates high support.
In the long term, the hashrate follows the price. Miners will mine the coin with the highest price, because they can't afford any other option. Electricity is expensive.
Isn't it at least to a large degree the other way round? That market value is following based on what is the most mined chain?
If there's a split and 80% of mining power switches to one branch. Then the 20% branch loses a lot of utility for at least some time. It now has five times slower transactions until difficulty gets adjusted(or you change the proof of work of bitcoin, which itself can be precarious). And now to a minor degree the minority chain has also less safety (less hashing power).
Meanwhile why should anyone buy or send Bitcoins at the point of a split? There's a real chance that one branch will die and then you can lose the coins. The best strategy is probably to wait. So the market at least is in some way inhibited during a split.
On the other hand I'd argue miners of the minority chain have a lot of pressure to change branches. Market is not yet a good indicator only hashing power and they'll lose money if they don't continue to mine on the more profitable chain. Their safest bet is to change chains. Also they know that other miners of the minority chain think probably similarly. That's why imo in Bitcoin history every fork/split was resolved very quickly and a branch "won".
Only the 2x part of segwit2x will need user adoption, but that comes 3 months after segwit has activated (next round of drama, long on popcorn)
Certainly, the last of those options seems to be popular recently.
Would you support something which has not been fundamentally tested?
> ... and tested implementation.
It will go online on the testnet tomorrow
It seems rather premature to call it working before it gets properly tested. And three weeks is a woefully short time to test something like this, fix any issues that are found, and then re-test.
July 14 - Agreement Participants Install and Test Milestone
None of the core developers support segwit2x.
I have no bitcoins, so I have no real preference in what happens. But watching politics destroy a 'decentralised' currency is good entertainment :)
SegWit was not created toward the end of increasing the blocksize, it was created to fix transaction malleability along with various other improvements. That it arranges the partitioning of witness data from transaction data to sort-of not count against the block size was a bonus, especially since a lot of dubious attempts at forking to a larger block size we're being given decent backing in terms of funds.
The point of fixing transaction malleability is that it allows for more robust smart contracts that depend on transaction validity. Once you enable these smart contracts, you start scratching at the surface of scaling methods that shift risk to the willing participants. As every Bitcoin transaction must be validated by every Bitcoin node, the entire network must inherit the risk of attempting to satisfy demand for transactions. Not just in terms of hardware requirements, but also in terms of the viability of paying for security of the network against a diminishing block creation subsidy.
The maintainers of Core, and plenty of other people in the Bitcoin community, see the scarcity of block space as a positive and as an inevitability. It's a positive in that it provides the incentive for security as the subsidy gets reduced, and inevitable as any 'spare' space in blocks can incentive superfluous transactions. There's plenty of development on the front of moving bitcoins between other chains with different consensus rules that would allow for better scaling, and for better development and testing of solutions that could eventually make their way to the main blockchain.
I'm personally of the opinion that once you allow for the transfer of bitcoins to and from second order chains, that Bitcoin can essentially enter a version freeze.
I find it hard to see how anyone could reasonably dispute it. Transactions were fast and cheap-to-free until mid-2015, when the blocks filled. Since then transactions have been slow and expensive.
A lot of ignorant people want to throw the baby out with the bath water though, so ultimately we're probably going to have two chains, one that does it the way the talent in the community says it should be done, and another that shifts responsibility around to a few scaled entities. My money is not on the latter.
it looks like some faction was spamming the network with transactions to create a false sense of urgency about the need to scale.
Scalability has improved somewhat during the past two years and most developers believe it is time to increase capacity as well. The question you refer to is how to increase capacity, within the scaling constraints.
I understand the ambition to be neutral in a contentious issue but one must be careful as not to spread misinformation. "Discarding less useful data" is not how segwit works at all. Segwit does away with the fixed blocksize and uses instead a flexible block size of up to four times the previous fixed limit.
The discarding you refer to is the backwards compatible aspect of segwit where it can communicate with older nodes that do not implement this feature by not sending them the data. It is not discarded and a supermajority of the network must use the full larger blocks in order for this to be secure. It is merely a transition method to allow for upgraded and non-upgraded nodes to briefly share the same network.
So what you refer to are two methods for larger blocks. One must be upgraded with a flag day where everyone upgrades or you lose money, and one allows for a transition with a certain amount of backwards compatibility.
It is also misleading to describe this as two "sides". The sides are mostly within social media. The technical debate has been had and there was overwhelming consensus among the developers that the backwards compatible way should be deployed first.
If the technology takes off and solutions such as Lightning prove viable, most developers agree that the non-witness part of the blocks probably needs to be upgraded as well.
Scaling is something developers care about, but in the nascent field of cryptocurrencies there probably no single solution.
It should be noted that with your credit card example, however, that credit card networks charge a percentage of the funds transferred while in the case of Bitcoin it is instead a fixed fee. Should you instead have said that it costs $5 to send $5000 it would have been equally true but sounded quite different.
That Bitcoin as it is described in the whitepaper doesn't scale to even a single US credit card network should be obvious to any reasonably informed reader. That every participant in the network store everyone else's transactions forever has its limitations. Does that mean the technology is useless? No, it means the use case is different from credit cards.
It seems possible to build payment systems on top of Bitcoin that fills those use cases, and sidechains and payment channels are research along those lines. But just as crypocurrencies were a theoretical possibility twenty years ago, one should not expect working products too soon. It's not like there is a shortage of payment solutions in the meantime. For end users, credit cards offer a negative cost, so even then we should not expect the use cases to be identical.
Not that this is a whole lot better, but the cost is $1.48 for fastest confirmation time, and $0.42 if a delay of 15-300 minutes is acceptable to you.
Paypal transactions, Swish (Sweden), etc. etc. are instant and often with zero fees.
* Fee is not dependent on amount of money you're sending. You can send $200M worth of Bitcoin to a company in China and it will only cost you $1.50, try doing that with a wire transfer.
* Transactions are "final": after 3-6 confirmations you can have a great degree of confidence it won't get reversed
* Compared to Western Union or MoneyGram, it's still faster and cheaper
But in its current state, bitcoin is definitely not a replacement for your Visa card when buying groceries at the store. Maybe Lightning will change that though.
2. So, if transactions cannot be reversed, and I erroneously send money, or am tricked into sending money, I can't get it back?
3. So, BitCoin wins only when compared to Western Union and MoneyGram. Oh, what an achievement.
In it's current state bitcoin isn't a replacement for anything, really
I've used the fee prediction engines to try to avoid low fees and still ended up waiting eight days for a transaction to process. I gave up on it during that week, only for it to go through after I paid another way.
I don't really get the debate, I mean maybe implement the solutions from both sides at once? I don't care, my local solution is to just avoid it as a payment network for now. That's its own kind of vote I guess...
I'm sure there will be a camp arguing that I just wasn't smart enough, with the corollary that UX as a discipline coddles whiners like me.
The game theory of fees and congestion is still interesting, with miners always interested in an incrementally more painful network for users, until the tragedy of the commons hits and it collapses.
Bitcoin has a first mover advantage, which led to some network effects increasing its popularity. Miners are extracting some rents from that popularity right now. But there may be a weird game theory here, where users are driven to prefer newer bitcoin clones with smaller (less secure) networks, simply because the fees demanded are far lower and (more importantly) more predictable. Price volatility of newer networks is a major a downside, but there's an equilibrium. Everything has a price, even volatility/stability. If you're doing one transaction and not storing value, then your risk on a new network is bounded by how long it takes you to get money in or out of the network and process the transaction. BTC will bleed off support, under some values of: BTC fee, BTC tx processing time, processing time variation, velocity in and out of smaller network, and volatility of smaller network. (This might be asymptotic and leave BTC the leader though, no guarantees.)
While creating a lot of confusion about long term coin viability, these forces could provide a useful equilibrium on power consumption, a downward force on how much power we want validating transactions. I've been worried about the power cannibalism scenario, where BTC becomes a payments standard but we're racing to commit all new power generation simply to verifying the network. But power use puts a floor on tx fees, and users with available alternatives put a ceiling on them, so... maybe we won't build a dyson sphere dedicated only to powering one payment network after all.
No really, this is exactly what Segwit2x is doing, but it is still heresy for the UASF camp.
Answer me this-- if it's opposition is UASF, why did bitmain, after Segwit2X got so much support, announce they were going to hard fork anyway?
The Bip148 crowd is happy with Segwit2X because it effectively activates the UASF represented by Bip-148. We don't really care which of the BIP mechanisms is used to activate segwit if segwit is (And I think they are changing 148 to activate along with Segwit2x so there's no split in the support between the two.)
Imagine there's 11 people waiting at a bus stop, and the next bus that arrives has 10 spare seats. There's no pricing model that will allow all 11 people on to that bus, regardless of how much the people want to pay, or even how you rate the users. So it goes with bitcoin.
Any distributed payment network will asymptotically approach unusability over time.
Otherwise miners are leaving cash on the table.
Can you explain how this jives with miners supporting Segwit2X, which brings both segwit and bigger blocks?
Segwit2X would activate effectively Bip148, though it was originally a proposal to use a different mechanism it is acceptable enough that Core is happy to have segwit activated that way.
Segwit will disable ASICBOOST as a side effect of improving the protocol. Therefore, BitMain has been launching FUD campaigns and numerous attempts to propose alternative software to stop segwit (XT, BU, BTC1, BTCABC etc.)
Segwit2X is a compromise-- but Bitmain does not like it because it activates segwit.
So BitMain has announced they plan to do a forcible Hard Fork of Bitcoin, splitting off into another chain, that they will privately mine-- and they intend to neutralize segwit on it.
They have publicly complained that segwit offers lower fees for transactions that use less resources.
The entire conflict (including the "scaling problems" which have recently been proven to be due to spam driving up transaction costs) is Bitmain attempting to increase and protect their near monopoly.
Please be aware that their fork, which will have nearly unlimited block size will increase their monopoly. Due to the great firewall of china, large blocks have trouble getting transmitted, so whenever a chinese miner finds a block, when the blocks are very big, they have a significant competitive advantage in finding the next block. Thus simply activating a spam campaign (which they have been doing the past 3 months or so already) will allow them to centralize mining in china because the chinese miners will start getting 2-3 blocks ahead. Further on their hard fork they can easily lower the difficulty and get many blocks ahead while private mining (but make it look like the difficulty is higher) -- admittedly a speculation but given their past exploits and announced plans to engage in further shady behavior I would not be surprised.
Here's the blog post where they announce their (very sketchy) hard fork: https://blog.bitmain.com/en/uahf-contingency-plan-uasf-bip14...
Incorrect. It would make 'stealth' ASICBoost mining improbable but still possible overall.
> Therefore, BitMain has been launching FUD campaigns.
Substantiate your claim.
> proven to be due to spam
Show it. Just show it already. Its a transparent blockchain but no one can show this spam, identify how it is malicious, show where it is coming from.
Show the spam already. Like ASICBoost its an invisible horror used to terrorize people into supporting your narrative. This is not very nice.
> I think you missed the key issue. Mining is largely centralized under the control of Bitmain, both via pools and indirectly via miners they have sold
False, bitcoin mining has never been as decentralized as it is now: https://coin.dance/blocks
> Segwit2X is a compromise-- but Bitmain does not like it because it activates segwit.
False, they are signaling Segwit2X and have been open to support segwit (except the arbitrary discount).
> So BitMain has announced they plan to do a forcible Hard Fork of Bitcoin, splitting off into another chain, that they will privately mine-- and they intend to neutralize segwit on it.
As per your own link, this is a plan against the UASF fork.
> They have publicly complained that segwit offers lower fees for transactions that use less resources.
And instead they back bigger blocks and flexible transactions which would give them even lower fees? If your statement was true then they wouldn't do that.
> The entire conflict (including the "scaling problems" which have recently been proven to be due to spam driving up transaction costs) is Bitmain attempting to increase and protect their near monopoly.
No, it is because Blockstream and Core wants to retain control. Do they support Segwit2X even when 90+ of all miner power signals it? No.
Segwit as a soft fork is a crappy implementation and reduces the security of Bitcoin. See:
Flexible Transactions is a superior proposal:
I am not for UASF and I think it's moronic (since it will lead to chainsplit and user confusion); segwit is fine though and FlexTrans are not a serious contender
You obviously have no idea what the maleability problem is and you didn't read and understand the linked articles.
Segwit does fix malleability, and this is critical for bitcoins future, for many reasons.
I don't like the part where they rush to implement everything as fast as possible. And from apart (and I don't follow Segwit2x that much), the changeset seems too big from bitcoind.
And they say openly they plan hard-fork, not this UASF where the S is not really that S and is almost guaranteed to result in a split and confusion.
They signal Segwit in a compatible way, so it's OK. Just the timeline is crazy.
Bitcoin mining has never been as centralized as it is right now with one man controlling over %70 of the hash rate via multiple pools. Many of those pools are just the same player operating under different names.
Segwit2X is in fact a compromise, and I linked to a blog post where Bitmain complains about it. They want to "activate segwit" but what they call segwit is not really segwit. The UAHF article I linked to is not Segwit2X it is a new hard fork they propose because they don't like Segwit2X. If they actually supported it they could just let it activate.
They back a solution that gives them more control over the network and higher fees, not lower fees. You think they will give lower fees but you're uninformed about the current fee situation.
Blockstream doesn't have control. You're pushing an uninformed narrative that makes Blockstream out as some sort of evil corporation--- the reality is block stream employees are a minority of core, core development is done in the public eye (unlike even Segwit2X and certainly any of Bitmains's hacks, like BU which was closed source for awhile before people just gave up on it.)
You keep talking as if the miners are supposed to be in control, as if that's right. It's not. Bitcoin was designed to be a balance, and the only error satoshi made was not realizing that his PoW was vulnerable to ASICs, which have resulted in centralization. You act as if there are a lot of miners and they are the bitcoin community, they are not, they are the minority. Alas they have spent a lot of money to dupe people like you into thinking they are the good guys.
Your articles are non-technical nonsense full of FUD written by people who do not understand the bitcoin code.
Here's the real threat to bitcoin-- people who are not developers are easily mislead by conspiracy theories backed up by thousands of shills posting this kind of crap narrative.
Thanks for the down vote, too bad you didn't have a technical argument.
The great firewall of china is not going away. The centralization threat is real. Segwit is the most tested code put out by core... and a whole lot better than the shitshow of alternatives we've seen put out by those who are trying to take over bitcoin.
You repeat the mistakes as outlined in this article:
> They back a solution that gives them more control over the network and higher fees, not lower fees. You think they will give lower fees but you're uninformed about the current fee situation.
How so? Because bigger blocks will give lower fees than Segwit only.
> Blockstream doesn't have control. You're pushing an uninformed narrative that makes Blockstream out as some sort of evil corporation--- the reality is block stream employees are a minority of core, core development is done in the public eye (unlike even Segwit2X and certainly any of Bitmains's hacks, like BU which was closed source for awhile before people just gave up on it.)
The censorship in those channels are well documented.
> You keep talking as if the miners are supposed to be in control, as if that's right. It's not.
You don't understand the point of PoW in Bitcoin.
> You act as if there are a lot of miners and they are the bitcoin community, they are not, they are the minority.
Doesn't matter. And btw, you think UASF is the majority? Because they are not.
> Your articles are non-technical nonsense full of FUD written by people who do not understand the bitcoin code.
Where are the technical arguments against these supposed "non technical FUD pieces"? You provide none.
Who profits from high fees? Core? No. Miners. BitMain is very adamant about not wanting low fees. The idea that Segwit, which quadruples block size and offers a fee discount is an attempt to keep fees high is absurd on the face of it.
>And btw, you think UASF is the majority? Because they are not.
You're convincing me that you're operating from a script and have no technical knowledge of the situation.
Segwit2X IS a UASF.
> And btw, you think UASF is the majority? Because they are not.
Segwit2x is the majority of signaling right now. (Though it's a fake out because Bitmain plans a hard fork.)
Your personal attacks and failure to address the technical issues speak for themselves, so I have not quoted them, nor responded.
> BitMain is very adamant about not wanting low fees.
Yet Bitmain supports larger blocks, you're not making sense.
> Your personal attacks and failure to address the technical issues speak for themselves, so I have not quoted them, nor responded.
What personal attacks? Sure, continue dismiss it as "FUD" or "non-technical people".
I point out a contradiction in Bitmains position and you say that means I'm not making sense? Once again, you are arguing that your ignorance somehow trumps the facts.
And of course, you resorting to insults is all the proof I could have needed.
Go educate yourself. Start at bitcoin.org
Then you immediately launch into narrative, one that avoids detailing how Jihan doesn't control the hashrate. Individual buyers and operators of Bitmain's mining hardware do. You are attributing things in plainly incorrect ways.
>Bitcoin mining has never been as centralized as it is right now with one man controlling over %70 of the hash rate via multiple pools.
Nothing about the owners or the choices they can make with their hashrate. All some narrative about "evil Jihan."
Right now there are 3 implementations of Bitcoin in the wild, and each of the 3 will react differently to different network events. The network is essentially splitting apart, with each fragment driven by a different faction.
If you don't know what the different factions are, you probably don't need to. Its needlessly involved, highly political, and full of echo-chambers and shouting matches.
What happens largely depends on how much support each faction has. Unfortunately, there's no real way to measure how much support each faction has until the fork actually occurs. Each faction thinks that its the largest by a significant margin, and thinks that the other factions have used underhanded techniques to bolster their visible support.
When the rubber meets the pavement, we will know though. If the network splits into three pieces, likely the coin price for each piece will move around violently, and one portion of the network will probably end up with a much higher coin price than the other parts. Or maybe it'll be an even three-way split, which will make things in the Bitcoin world very confusing.
As a huge Bitcoin fan, I hate to say this, but if you aren't clued into the various events, and you can't name the three factions or explain the beliefs of each, you should just stay away for a while. If you get pulled into the split without knowing what's going on, you are very likely to lose money. There will certainly be opportunists trying to take advantage of the situation, and you, being ignorant of the situation, will be the one who gets taken advantage of.
If you do know what's going on, you can name the factions, etc, then what you should do is pretty simple. When the split happens, sell all of your coins on the forks that you disagree with, and use the resulting money to buy coins on your preferred fork.
For anyone who cares, my alignment is with the status quo. I feel great animosity towards the hardfork faction (confusingly called Segwit2x), precisely because they have forced a situation where people who don't know what's going on are able to get hurt. They have also repeatedly, repeatedly, ignored very sound advice from the technical experts of the industry.
The UASF faction (confusingly, a 'pro Segwit' and 'anti Segwit2x' faction) has my spiritual support, but I don't think they have the numbers behind them to make a difference. I don't think running the UASF software is the right move.
I personally believe that overwhelmingly, the vast majority of people who use Bitcoin are probably largely unaware of what is happening, and are running the status-quo software (confusingly, the 'Segwit' software, or the 'Bitcoin-core' software). I'm guessing when the forks all happen, it'll be pretty dominantly vanilla Bitcoin with the highest price, and then a few weeks later it'll all be a bad memory, and nothing will have happened at all.
I guess we'll find out.
Make that 4...
Or keep all the forked coins in case you are wrong ?
If you aren't ideologically aligned, holding onto all forks is a perfectly sane choice.
For example, in this experiment small payments for correct and "don't know" responses sharply diminished the gap between Democrats and Republicans in responses to "partisan" factual questions.
Profit comes from knowing how the markets will move before they do (and performing arbitrage), not from owning the asset that has the greatest market cap.
How would you do this in practice? Most exchanges probably won't code in the ability to sell on multiple chains.