Hacker News new | past | comments | ask | show | jobs | submit login
Did Bitcoin just prove it can't scale?
361 points by graniter on Dec 9, 2017 | hide | past | favorite | 477 comments
The past few days have shown what happens when many people attempt many transactions using Bitcoin. The network slowed to a crawl. Transaction prices went through the roof. And we still are at a point where only a tiny fraction of people are using Bitcoin, and only a tiny fraction of all financial transactions are using Bitcoin.

How is this expected to work with 7 billion people using it for every tiny financial transaction? I don't think it can.

I have owned BTC for 5 years and I am enjoying the rally, but with the high transaction fees, back log, and long transaction times, I wonder how well it can really work as a replacement for banks.

Am I wrong?




Others here are touching on Bitcoin being like the "1.0" of cryptocurrency, but it's actually a lot more than that. In the public eye, it's a symbol of what cryptocurrencies can be.

You're suggesting Bitcoin just proved it can't scale, but it actually just proved it did--just not with transaction volume. The network continued to process transactions averaging one block every ten minutes exactly as it was built to do, despite the heavy load.

To put it differently: A different online payment system could have stopped accepting transactions, or run out of resources, allow transactions it shouldn't have, disallow ones it should, or something else terrible. But Bitcoin didn't. If you wanted into the next block, you'd need to pay more, but that's (from a technical perspective) entirely by design.

What Bitcoin is proving is that it has clear and well-understood limits and continues to work well within them, and that's incredibly important for public perception. IMO, if Bitcoin's transaction capacity never scales, it'll still be a huge technological success. Other cryptocurrencies can try their hand at scaling, but Bitcoin needs to be rock solid to the extent possible for all cryptocurrencies' sake.


Bitcoin is a lot of things, and many of them interesting, but suggesting that ~4 t/s is impressive or "scaling" is an insult to kids in high school writing rails apps that can do 100x the volume.

We already know at least 2 obvious ways to improve the transaction flow rate of bitcoin in trustless ways, and many others are being proposed that do not also create energy arms races.

Please don't redefine success.


What Bitcoin does absolutely is impressive, just not in terms of transaction volume. Comparing it to a rails app is pointless.

If we can improve the transaction rate without risk, then let’s do it. It just gets tiring seeing post after post suggesting it’s a valueless failure if it can’t be used for coffee. Let’s just keep it in perspective. It doesn’t need to supplant Visa to be successful.


The entire purpose is to replace fiat. It’s objectively a failure if you can’t buy coffee with it.


It is to replace central bank control of the money supply (which happens to be fiat).


It provides a ton of value even if you can’t reasonably buy coffee with it. The path to replacing fiat is not adding risk or unpredictability to the figurehead cryptocurrency.


I’m not sold on Bitcoin but I don’t agree with your definition of what it needs to be successful. There is no reason that actual bitcoin end-users need to deal directly in bitcoin. If Bitcoin were to ever become a major currency, a big if, there would be financial institutions (banks) issuing instruments (physical or digital notes) backed by real bitcoins held by those institutions. Real bitcoin transactions would be mostly performed between such institutions, or anyone else willing to pay the higher transaction fees. Most people would have their needs perfectly served by relying on bitcoin banks, at least for performing frequent transactions. Though they might very well seek to hold large sums directly in BTC.


Bitcoin and The Blockchain are only useful when you absolutely can't trust anybody but yourself. Why would financial institutions need Bitcoin and its immense overhead when they all can use the law as a tool to ensure adequate trust? If they can trust each other at that level, all they need is a simple database.

In other words, "financial institutions" have no need for the blockchain.

Want proof? You think the NASDAQ uses anything more than a (fancy, probably very high priced, extremely robust) database to store its stuff? They deal with all kinds of people who are actively trying to fuck them over every day and every second. They have no need for the blockchain. Neither does any other "financial institution".


What if russia and china decide to start their own global trade system based on something. http://www.zerohedge.com/news/2017-12-02/russia-china-and-br... And they don't trust eachother because well why would they. Would they have a use for a global, distributed, trustless system to keep inventory?


This defeats the entire purpose of bitcoin. The goal is a decentralized currency that isn’t controlled by shady political interests, and can reasonably replace normal currency.

Why would you want Bank 2.0?


No it doesn't. The purpose of Bitcoin is sound money.. A finite currency immune to governments' and central banks' desire to devalue currency for debt financing.

Bitcoin is more scarce and therefore better store of value than any fiat currency could ever be.

Do you not understand second layer solutions do not put your Bitcoin at risk? You commit to a payment channel which defaults to closing the channel according to original amounts when opened.. if the other party doesn't follow through. Again, your funds are not at risk so it's not like a bank, and there's no fractional reserve nor devaluing, so the SOV use case is preserved.

Not at all like current fiat money system.


You can certainly have fractional reserve banking in a Bitcoin financial system, just as we did under the gold standard. Banks would give you an incentive to deposit BTC with them (could be interest rates or lower transactions fees) and then lend out some percent of those deposits. Voila, FRB and money supply growth.


The bank would have no capital to lend at fractional reserve. It could not lend out 90% deposit value without getting run on, because there is no deposit insurance. There is no M1 money supply growth coming from the central bank. You would be buying a bond but also necessarily acknowledging the possibility of default, unlike today in the funny money world of perpetual debt money.


Fractional reserve banking predates deposit insurance by hundreds of years. All of what you say was also true about gold, which was of relatively static supply.


Well bitcoin fluctuates like crazy for one. It shouldn't cost me more than a dollar to make a transaction. Some exchanges charge upwards of $4/transaction now.

The vision was, you can have transactions of any value with very minimal fees. like less than 10 cents. People would have micro transactions for all sorts of things.

But what it has now become is a place to store your money. 10X growth in one year. And you can't trust your exchange to still be there when everyone tries to convert that 10X back to cash if the price were to take a dip.

I would love to see online marketplaces taking a flat fee in cents because they can bypass dumb credit card percentage based fees and can still be profitable because they are doing it at scale processing thousands of transactions a second on a digital currency


Bank 2.0 could also run its ledger of debts and credits on a public/easily auditable blockchain, and make a lot of guarantees that Bank 1.0 can't.


There will always be derivatives of underlying assets. Preventing that is not the “entire point” of bitcoin. Replacing the underlying asset, currently fiat currency, is the point.


Proof of stake is still bound to CAP theorem though. Even CASPER can not guarantee full consistency, availability, and partition tolerance.

There is also FLP impossibility, which reduces to the halting problem in an asynchronous distributed system setting.

By this logic, Bitcoin can never “scale”.


100x the volume of hello world or a basic CRUD app does not make it more impressive than what BTC has achieved. (Disclaimer I hold no BTC).


POS is neither secure nor an obvious solution.


Just 100x?


If proof of stake proves itself to actually work, Bitcoin will adopt it. Migrating a 200 billion dollar network to an untested PoW proposal would be irresponsible.

Arbitrarily increasing blocksize without addressing propagation delay and centralization impacts is also irresponsible.

Bitcoin has been tirelessly working on the scaling problem in a responsible way. SegWit will allow up to 12t/s. Mimble Wimble and Schnorr Signatures will further compress transaction size and increase t/s to roughly 20t/s. All this without increasing propagation delay (increasing blocksize).

Lightning network further reduces the number of onchain transactions necessary.

Rootstock adds ethereum compatible smart contracts to bitcoin as a side chain.

All these technologies responsibly scale Bitcoin. Your comment implies Bitcoin is stagnant which to me implies you don't know what you're talking about.


PoS will never be adopted by Bitcoin. The mining pools that have invested in PoW won't allow it.

Every attempt to date to improve transaction rates on BTC have been hampered by a small group of developers who have a vested interest in it not scaling for reasons explained here: https://www.reddit.com/r/BitcoinMarkets/comments/6rxw7k/info...

Bitcoin won't get any of the improvements you hope it will because there is too much money vested in keeping it exactly how it is today.


Despite Bitcoin primarily using miner signaling for consensus changes so far, miners don’t actually matter as much as users: https://en.bitcoin.it/wiki/Economic_majority

If the vast majority of users and services decided to switch to PoS tomorrow there’s absolutely nothing miners could do about it.

That said, I’m not saying it would be easy to get consensus for such a major change. Futures markets might be useful for determining how much support for a change there is.


SegWit was activated. Lightning is working. Mimble Wimble and Schnorr signatures are in development.

I understand big blockers are upset they didn’t get their way. They need to understand the reason big blocks don’t have consensus is that they increase propagation delays and propagation delays leads to centralization. Core devs are pursuing many alternative and intelligent scaling avenues.

Also, miners don’t determine consensus rules. If PoS works, another UASF initiative will arise and everyone running a node can decide the new PoW scheme. The fact that you don’t understand this leads me to believe you don’t have a good understanding of the technology yet.


You should realize block propagation is largely a solved problem using xthin, compact block and graphene. We could scale to 1GB and propagation would not be an issue.

> Core devs are pursuing many alternative and intelligent scaling avenues.

Their strategy of stalling for the last couple of years is the least intelligent approach they could have taken.

> Core devs are pursuing many alternative and intelligent scaling avenues.

Yes they do, that's the point of Bitcoin.

> If PoS works, another UASF initiative will arise and everyone running a node can decide the new PoW scheme

You mean if PoS works they can fork and use their altcoin.

> The fact that you don’t understand this leads me to believe you don’t have a good understanding of the technology yet.

The fact that you don't understand this leads me to believe you're either a Core shill or you have been seduced by their pretty words. The whitepaper makes all this clear.


You continue to ignore the actual research.

http://www.tik.ee.ethz.ch/file/49318d3f56c1d525aabf7fda78b23...

The above directly demonstrates how block size results in significant propagation delay.

I ask you again: can you show me the research which demonstrates increasing blocksize won’t result in significant propagation delay?


Bitcoin Unlimited is successfully testing 1GB blocks: https://news.bitcoin.com/bitcoin-unlimited-reveals-gigablock...

As I already wrote what matters is propagation between miners which is already very fast, even according your own link, which examins propagation throughout the network as a whole not between miners specifically.


This news article doesn’t tell me anything other than if you have a few state of the art computers geographically close all connected to a state of the art internet connection they will maybe be capable of mining 1gb blocks.

If that’s your idea of research, best of luck to bcash.


> bcash

triggered


The lighting network completely undermines the entire purpose of bitcoin, and blockstreams seeming desire to sabotage bitcoin for daily use coincides suspiciously with their outside “investment”.

If you read the original bitcoin white paper it is clearly evident that the purpose of bitcoin was as a currency. These insane fees, wait times, and rediculous technical decisions by core have made it such that bitcoin is becoming “bank coin” aka only used for settling between large groups and useless for individuals (unless you’re a speculator).

This has to change


If you believe lightning undermines the whole purpose and is the product of sabotage (or whatever core is being accused of these days), there are multiple forks to choose from that don't use it.

No need to attack Bitcoin, just go all in on Bitcoin Cash , put your money where your mouth is, and move on.


Yea! And I wish all these American liberals would stop complaining about Trump policies. Put your money where your mouth is and move to Mexico already! /s


Terrible analogy. To be more accurate, you would copy america and change the policies you want. Then the market decides on what they believe in and want.


Yea, no. Lightning network still depends on the bitcoin network. All it means is any two parties can transact off chain and settle up later. Not sure what the problem is.


That the Bitcoin network is being crippled in favor of these solutions.


You’re upset the core devs didn’t let Bitcoin become a centralized coin? If you refuse to acknowledge the benefit of SegWit or the other scaling solutions then I can’t help you.

Big blockers have their Jihan and Roger coin now. Stop trying to steal the bitcoin brand. If there was consensus for big blocks then Bitcoin would have activated. Jihan and Roger couldn’t convince the educated people that their proposals would work. Now they’re throwing a tantrum.


Sigh. Increasing the block size to 2MB nor 8MB for that matter will not make a centralized coin.

Segwit (besides being a crappy implementation) is by far not enough scaling.

That you blame Jihan and Roger is typical stupid propaganda which doesn't belong here.


According to actual research here: http://www.tik.ee.ethz.ch/file/49318d3f56c1d525aabf7fda78b23...

Each additional kb results in an additional 80ms of delay until the majority learns about a block. Increasing to 8mb means you’re adding a 9min delay in propagation. That is pretty much guaranteed centralization.

Perhaps you have some research you can point me to that demonstrates otherwise?


Which does not take into account xthin/compact blocks which cuts down propagation time a lot. In the future graphene will further reduce the time necessary.

How you can conclude a 9min propagation delay for 8MB blocks is beyond me as miners are basically directly connected to each other. This is the only thing that matters decentralization wise.

Bitcoin Unlimited are successfully testing 1GB blocks: https://news.bitcoin.com/bitcoin-unlimited-reveals-gigablock...


Your link is a news article and not actual research. The details of their specific test are barely provided. Please provide actual research as I have provided you.


This overcautious, "let's test everything for 10 years before trying it" approach is exactly what Bitcoin doesn't need when it has 0.001% of world transaction throughput.


Bitcoin is the conservative approach to any change that decreases the keystone of decentralization that allows it to survive. The market is deciding what it values.


The market is reacting to the fact that Bitcoin is in the public consciousness, and that is a result of years of advocacy done for Bitcoin, when its advocates (e.g. Roger Ver, Coinbase, PayPal, and all of the other signatories of the SegWit2x agreement) still believed that it would scale with large blocks and thousands of transactions on-chain per second.


Is there any data available on how long BCH blocks take to propagate? It's testing big blocks out in the real world so we can see how much delay that introduces and whether that leads to a significant increase in centralisation.


The BCH blocks are all very small. Go look at their blockchain stats. Most blocks are 10kb in size. The network is barely used. Once they start actually mining big blocks we’ll get some real data. I think it’ll be very interesting to see, tbh.


Ah that's a shame it would have been really interesting to see how that worked in reality.

I wonder if it could be measured the _other_ way around - i.e. are the sustained tiny blocks on BCH _increasing_ decentralisation compared to BTC right now? I can't find any good information on block propagation time though :(


I am not sure why it matters what the original purpose was. It seems that current consensus of bitcoin is to be a competitor to gold for store of value. there may be other cryptocurrencies that act more like currencies


> It seems that current consensus of bitcoin is to be a competitor to gold for store of value.

Only made by the incompetent/corrupt developers. Regular users just don't want to pay outrageous fees.


what outrageous fees? you can send a billion dollars for 10 bucks.


I'd be surprised if you weren't aware that the fee isn't proportional to the amount being transacted. A $10 fee on a $10 transaction is outrageous.


right, but you can set the fee to 20 cents, if you are willing to wait for a confirm


This you may not be aware of, but there have been periods where the fee has remained in excess of over $1 for over 72 hours. A 20 cent fee will not cover you there.

Looking at my transaction history, of my last 10 transactions, all had fees in excess of $1, one as high as $14.

I'm not losing any sleep over it, but I'm also not going to call the fees reasonable.


I agree, bitcoin is not good for micropayments. But that's not the only use case that matters.


It depends on your definition of "micro payments" ... With a fixed number of bitcoin ever in existence for it to ever become a real world currency two things have to happen A) it's value inflate to a value that is an order of magnitude of all the value of the world .... B) be cheap enough, and fast enough that you can buy gum at the corner store

Without micro payments it's stuck in a niche paying ransoms and doing drug deals


it's one of the only usecase that matters if you're talking about using it as a general-use currency...


Yes, but my original point is biggest holders of btc are talking about it as a digital replacement for gold, not as a general use currency


> If proof of stake proves itself to actually work, Bitcoin will adopt it.

I wouldn't hold my breath for that. Bitcoin still is having a holy war about increasing the blocksize.

One side effect of this whole deal is it shows that it is incredibly hard, if not possible, to change a decentralized system. By its very design, it will be all but impossible to make any breaking changes to bitcoin at this point.

> Lightning network further reduces the number of onchain transactions necessary.

Besides being complete vaporware, I do love how the solution to Bitcoin's scaling problems is to not use it...


Lightning isn’t vaporware. Follow the project on github, they are very active. Better yet, watch the first lightning transaction happen on mainnet which occurred just last week: https://youtu.be/a73Gz3Tvx3k

With regards to blocksize, the only reason it’s not widely embraced is because it’s known to directly impact propagation delay. One side couldn’t care less about centralization, the other side cares dearly. SegWit was activated, which compresses transaction size and doubles transactions per second without impacting propagation delay. Mimble Wimble and Schnorr signatures are coming soon, which are also soft forks and compress transaction size even further. There’s plenty of change happening that are all very intelligent scaling solutions. Big blocks are not intelligent nor difficult to implement.


It's not only vaporware, it's uneconomical. That demo doesn't withdraw Bitcoin - it locks it up. Two transactions for every channel. Lightning Network is just another bank, a third party with fees.


Strange definition of vaporware you have, considering I just showed you lightning network operating across three different implementations of the protocol on the main bitcoin network.


>Lightning Network is just another bank, a third party with fees.

source? afaik it's open source and it charges no fees.


The lightning network is not a decentralized solution. It gives more power/trust to a few large exchanges.


This is by design. If you break bitcoin, such that it’s only usable by large financial institutions, you completely remove the decentralized nature that made it attractive in the first place.

Congratulations guys, you made the banks SWIFT 2.0. I’m sure they appreciate it very much.


How is allowing two parties to transact off chain, and settle up later on chain, not a decentralized solution?


Because of the cost involved in setting up a channel. It's still not suitable for paying for a coffee or restaurant for example... Unless the cafe/restaurant happens to have an existing channel with an exchange that you yourself happen to also have a channel with; then you pay through that exchange... You can see how in this hypothetical word, it would be better to have fewer exchanges... More centralization.


The lightning network is actually a textbook example of a decentralized network. But I agree, how it will work out in practice is unclear and it could lead to centralization. I see it as a trade off between cost and convenience on one side and freedom on the other.


Complete vaporware? Uhm, no... https://www.coindesk.com/lightning-last-test-shows-bitcoin-s...

There have even been successful atomic Bitcoin<->Litecoin cross-chain transactions with Lightning last month.


> I wouldn't hold my breath for that. Bitcoin still is having a holy war about increasing the blocksize.

It doesn't matter - it can fork. And if the fork offers something compelling, it will get used. Even Bitcoin Cash, which is not (very) compelling, is now tradable more than most altcoins.


20 entire transactions per second? Amazing! Who has ever heard of software that could do 20 things in a second?


What it does is not just arbitration things, but establish global consensus and an unalterable log of that consensus.

If you've tried linking distributed Oracle databases between just a few different sites, you'd understand this has tons of failure cases and is, in fact, not a solved problem, even in the centralized world.

(Bigtable probably gets the closest these days, if you want proprietary and not globally auditable.)


> What it does is not just arbitration things, but establish global consensus and an unalterable log of that consensus.

That is nice. But can I, and everybody else in the USA successfully use Bitcoin on Black Friday? According to the National Retail Foundation, in 2016 over 101 million people went out on black friday to buy something. If Bitcoin could somehow 10x its transaction rate to even 40 transactions per second (which it can't and probably never will) it would take almost 30 days to process every order. At its current rate of 4tps, you are looking at about 292 days--during which, according to Wolfram Alpha, Venus will have made 1.3 trips around the sun.

So again, yeah, great job. Bitcoin solved some technical problem. Go team! But who gives a crap if some technical problem doesn't solve any real problem? Isn't that what we engineers exist to do? Solve real-world problems?


Lightning Network protocol has reached v1.0 and they have demonstrated transacting real bitcoins instantaneously on youtube.


That's a problem that hasn't been solved (yet).

That shouldn't diminish all the other things that BTC does successfully.


When the correct answer is “bitcoin“, what is the question? I genuinely, genuinely, don’t see any task for which it is the best solution — not even for anonymous online payments or secret ways to store wealth.


"what is the most well tested and carefully developed payment system today that allows me to have complete control of my funds without having to trust any third party?"


I see your suggestion and raise you “precious metals”


a) Precious metals are not portable enough. With Bitcoin someone can transfer any amount of value within a few minutes to the other side of the globe (and no-one can stop you from doing so).

b) Precious metals are too reliant on physical security. Someone can break into your house much easier than into i.e. your hardware wallet.

c) Besides these, precious metals are not a payment system, much less a programmable one. You can't code for example a logic that requires multiple untrusted parties to sign a transaction for it to complete.


Do wire transfers solve no real problems? I do essentially all of my large transactions usinng bitcoin.


I don’t think I ever claimed 20 t/s was sufficient. Just pointing out the throughput has increased by an order of magnitude and there is a tremendous amount of ongoing innovation in this space.


Marvellous, one whole order of magnitude! If you manage another factor of 5000 and Bitcoin will reach what Visa and Mastercard (and, separately, another cryptocurrency) managed several years ago.


Does every conversation about bitcoin have to devolve into snark and disrespect? It's not fun. It doesn't do any good for anyone.


Good question. I’m frustrated by the unwillingness of bitcoin (specifically bitcoin, not blickchain or cryptocurrencies in general) fans to recognise the flaws. It’s like… huh, like politics. Or religion, which is kinda also politics.


This is low level trolling. Visa and Mastercard are not decentralized. Centralization is an easy way to scale. They are not apples and oranges.

Also, Bitcoin settles transactions in 30 days, merchants get their funds in 30 days if they are lucky to not have the charge back.

Apples and oranges.


> Centralization is an easy way to scale

That is one reason why I prefer centralised to decentralised. I have yet to see a justification for the cost of decentralisation. This cost is an important thing, not a trivial thing.

Other reasons include but are not limited to the governance mechanism of things like bitcoin not being demonstrably better than the governance systems of any other currency, but that’s a much longer topic of discussion.


Which cryptocurrency supports 60k t/s?


BitShares, apparently. Press release June 10, 2015, claimed 100,000 t/s.


Never heard of it. I suspect their claim is either bogus or their coin is a database.


There are far too many cryptocurrencies to keep track of, bit even if the claim is false, Bitcoin is still absurdly slow compared to existing normal systems.


What existing “normal” systems?


Visa and Mastercard, like I wrote a few layers above.


My bad, I thought we were comparing global decentralized and trustless systems.


12 or 20 transactions per second? Let me regale you with a story from my youth... Once upon a time, it was 1985 and I worked at a company that developed a “Transaction Processor”. A multiprocessor CP/M system, with a “4th Generation” integrated app development language, a data store with an mathematician-optimized b-tree indexing system, paired with the fastest 120MB drives we could find through a series of phone calls and sample evaluations. It would be considered a proto-server by today’s standards. We were so proud at Comdex, bragging about 60 t/s to anyone passing by.

We had a gentleman visit our booth from one of the big 4 airlines. He asked us what we were going to do to get to 1800 t/s, because that was the load requirement for the reservation system he and his division were tasked with creating, deploying and maintaining.

I’m fairly certain a currency system needs to scale beyond what a single airline needs in terms of transactions per second.


I'll believe any of that will work when people don't cite Satoshi's holy insight as a reason why the block size shouldn't increase.


It shouldn’t increase because simulations of increasing blocksize have demonstrated centralization. If we didn’t care about decentralization we’d just use a database.


Could you point me to some sources that discuss simulation of the blockchain network? I would be interested to learn more.


Sure, here you go: http://www.tik.ee.ethz.ch/file/49318d3f56c1d525aabf7fda78b23...

Tl,dr: each additional kB in blocksize adds approximately 80ms of delay until the majority learns about a block.


Why?


Why what? Why does increasing block size increase propagation delay? Here’s the research paper on it: http://www.tik.ee.ethz.ch/file/49318d3f56c1d525aabf7fda78b23...

Tl,dr: each additional kB after 1mb adds an additional 80ms in propagation delay. It’s not just bandwidth that’s the problem. Nodes need to validate the block, then communicate that block to other nodes who also need to validate. Big blockers are drinking Roger Ver koolaid. The man doesn’t even know how to program, yet has convinced an army of redditors he knows best.


> Why what?

why does increasing propagation delay lead to centralization?


Because miners on the other side of the world don’t hear about the latest block until much later than other miners? Miners who hear about it first get a head start mining the next block. If the delay is significant, you get a single mining cartel.

Mining a block is suppose to be a lottery, not a race.


Thanks for the clarification here. I've read a lot of your comments today, and this is the first time I've understood your point.

I've learned a lot, btw... so thanks for that too.


So, you pretty much admitted that Bitcoin is unfit and outside of the fact that many people are vested in it, a new project would be a better idea unless we're emotionally and financially tied to the prehistoric thing.


Is there a good place to start reading about all of these scaling proposals, and maybe keep up to date on new ones as they emerge? Failing that, got any good links to papers/blogposts about the ones you mentioned?


Couldn’t have said better.


The size of blocks is not core to the algorithm of Bitcoin though. What would you say to the person trying to send $30 only to have $20 of it eaten up in fees? Come back later when you can afford to use Bitcoin?


Use a different cryptocurrency.

Seriously. And I'm not trying to be cheeky. If Bitcoin ends up only being a settlement layer, it'll still be a colossal success just being a decentralized, supply-limited, uncensorable, world-accessible payment system and store of value.

If someone else solves the scaling debacle better, I'll be the first to recommend that normal people switch to it. But it's not easy, and the world is watching Bitcoin. Governments are starting to accept its existence, big financial institutions are starting (just this month) to allow options trading, etc. That stuff is far more important even for other cryptocurrencies than low fees.

After six months of no issues with Bitcoin options trading, it's only a matter of time before other cryptocurrencies get the same treatment. That's why we need Bitcoin to be rock steady and predictable, while others can try to solve these tough problems.


This sounds a hell lot like changing the goal posts.


No, plenty of us have been saying this for a long time. Here is a HN post from 5 years ago where I say:

“even if it's only ever used for politically sensitive transactions, and it never takes off as a consumer payment service, it will be a very big economy” https://news.ycombinator.com/item?id=5526684#5526972

The goalposts for Bitcoin have always just been “can it sustain its market cap?”


Also it's not like everyone you see on the Internet is the same person.

Anyone who was hoping for it to replace credit cards didn't understand the system. Lots of other folks have known the limitations of Bitcoin for years and what we're seeing today was totally predictable.


To be fair, becoming a quarter trillion dollar store of 'digital gold' is a hell of a pivot.


Does that matter? If you're looking to develop a drug to treat hypertension but end up with Viagra by accident instead, do you throw it away because that wasn't the original goal?


It certainly matters if you've still got a lot of people running around telling anyone that will listen that the drug is a sure-fire cure for hypertension.


There's a lot of people in the world running around telling people all kinds of things.


If the production of Viagra at scale winds up causing global health problems, then yes, you throw it away.


This may be straining the metaphor a bit, but I think you underestimate how much individuals want a magic sex pill.


Tell that to the FDA...


Oh it absolutely is. I'll acknowledge that. If Bitcoin is amazing at 7/12 of the things it set out to do, and sticking to those seven will pave the way for the other five to be done by other cryptocurrencies, that's fair to me.


Yeah, well.... It would seem "transactions" should be among the things that a currency does well.


Not necessarily. Bags of grain or N cows did not do transactions well. Yet they were successful as currencies for millennia.


times have changed since...


I'm pretty sure bags of grain are still a significant unit of value exchange[1].

[1] yep: http://www.nasdaq.com/markets/wheat.aspx


They have, and we have bitcoins instead of bags of grain.


"Use a different cryptocurrency."

I started using Bitcoin Cash instead and I'm loving it. All the good parts about Bitcoin Core w/o the brain dead approach to scaling.


Yep. I expect the fee market alone will drive normal people toward Bitcoin Cash.


Dogecoin has much cheaper fees than Bcash and its block confirmation target is around 1 minute -- roughly an order of magnitude cheaper and faster than Bcash.


A note to readers: "Bcash" is a derogary term used by Core supporters to undermine and discredit Bitcoin Cash. Always be mindful when someone uses it.


“Bitcoin cash” is a name chosen to confuse newcomers and attempt to steal the bitcoin brand. The CEO of bcash refers to Bitcoin as “SegwitCoin” and their official /r/btc subreddit regularly claims to be the real bitcoin.

Bcash is an appropriate name for the altcoin to eliminate confusion.


This is the kind of propaganda Core is pushing.

Note that there is no CEO and the very same people who refer to Bitcoin Cash as Bcash refer to Ethereum Classic, Bitcoin Gold and others by their proper name...


Of course there’s a CEO. Here’s an official statement from him: https://falkvinge.net/wp-content/uploads/2017/11/letter-from...


Doge has unlimited inflation it is nothing like Bitcoin Cash.


That doesn't matter if you only use it for transactions. Step in, transact, step out.


Who is going to pay you for your Dogecoin if no one wants to hold them?


This is indeed the folly of only valuating a coin for its transactional properties.


Who's going to work for USD if no one wants to hold them?


No one, but that's an irrelevant hypothetical because people do want to hold them and that's unlikely to change. Even if people in the US did want to get paid in a different currency, they would still need some USD to pay their tax bill.


United States persons with tax or debt obligations, obviously.


Bcash is already over-inflated relative to Bitcoin due to its mining algorithm. When the block reward diminishes enough, and fees don't supplant it, Bcash will hard fork to infinite inflation.


It's 0.001% over-inflated? So it reaches the 2020 halving earlier, and wins then too.


In the ~4 months since its creation, 115,975 Bcash tokens were mined ahead of schedule.


It is about 60 days ahead at most and it doesn't matter because the hard cap of 21 million coins is till the same. This has gotta be the dumbest argument I've ever heard.


The hard cap is the same until it isn't -- when Bcash has to hard fork to infinite inflation in order to incentivize mining because fees won't supplant the mining reward.


Not gonna happen.


Explain to me what will incentivize mining on Bcash when the fees are too low compared to Bitcoin? The mining subsidy, by design, is eventually supplanted by transaction fees.


For those interested in this "inflation", there is a good chart here:

https://fork.lol/blocks/height

As it says, "Block height. BCH is currently ahead by 9272 blocks." with the block height of both being about 500k.

In fact, with the rate that BTC gains hashing power, and its comparatively less responsive difficulty adjustment algorithm, it is expected to overtake BCH's block height in the next couple of years.


If i gave you a search algorithm with a big db then asked if it could done quicker would you prefer to spin up more cpu's or try to improve the algorithm?


I would spin up more CPUs. Because changing code in the near term is expensive and hard. Spinning up more CPUs is cheap and easy and ensures my company remains successful while I optimize the algorithm.

Using your analogy Bitcoin Core is saying they are going to shut down Bitcoin service to all new users until they implement a new algorithm that hasn't been proven yet and is still years away from being ready.


^ Exactly. The answer should almost always be spin up more cpu's.


Depends on the search algorithm; if it can be parallelized, then modify the algorithm to take advantages of multiple CPUs. If not, then start throwing more threads at it.

In Bitcoin’s case, I don’t think we have a lack of CPUs though.


the velocity of money increases price, look at how the price of litecoin is rising when bitcoin mempool is congested, if Coinbase didnt play politics, Bitcoin Cash will be pumping right now too, decentralized exchanges are coming though in the coming years it will change the whole market dynamic


Exactly. But the critical fight is public acceptance and a lack of government interference. To win that, all Bitcoin needs to do is keep doing what it's doing.


> If Bitcoin ends up only being a settlement layer, it'll still be a colossal success just being a decentralized, supply-limited, uncensorable, world-accessible payment system and store of value.

So, what happens when all the bitcoin are generated and mining is complete?


Mining is still very profitable due to transaction fees.


I'd say stop storing your spending money as btc, it's an asset not cash. Can you liquidate your 30$ peice of gold in < 4 hours for market value? Probably not.


"Bitcoin: A Peer-to-Peer Electronic Cash System"

Peer to peer cash.

Not "Gold", not "asset", but "Peer-to-Peer Electronic Cash".


The IRS classifies and taxes it as an asset because functionally it is an asset. The design is speculated to be based off of hashcash and maybe it was suppose to be used as cash and in a way it is still useful as "electronic cash" for online orders since wait times are less relevant.

http://www.hashcash.org/papers/hashcash.pdf


The IRS is wrong.


How so?

And obviously it doesn't matter if the law is wrong, it's still the law. But in this instance, why do you believe it to be wrong?


The IRS classifies and taxes it as an asset because functionally it is an asset. Satoshi was doing a bit of marketing with the title of his paper.


Bitcoin cash is still that.


Bitcoin Cash does indeed have very low fees... and about a tenth the transaction volume of Bitcoin proper, with few places using it, mainly just a handful of people involved in creating it.

It's certainly not as ridiculous an option as it was back before the difficulty adjustment fix when its supporters were promoting it as the fast option despite it usually taking days for transactions to confirm (supporters responding that block times were as low as a minute sometimes, and they were right... except it was a entirely bimodal distribution, with most of the time spent in the "hours per block" part).

However, the increased transaction capacity people are promoting is still about 100x its current transaction rate, and it's entirely unclear how well it'd handle scaling up by that much in practice. Especially since I'm pretty sure it lacks some of the scaling work that the original Bitcoin has. Also, the rampant dishonesty and all the attempts by sites and services owned by a guy with a major investment in it to trick people into thinking it is Bitcoin don't inspire confidence.


Bitcoin Cash has been around for 3 months. 1 tenth the volume in that time is extremely impressive given than popular services like Coinbase and Bitpay don't even support it yet.


Exactly. Price aside, the growth is insane. Things are being built. Merchants are coming back online. Within a few months the sentiment will start to change for BCH.


For those who don't know, Bitcoin forked into 1 "new" Bitcoin (kept the name, changed the model from currency to speculative asset), and 2 Bitcoin Cash, that continued development along the original crypto-currency design.

https://www.investopedia.com/tech/bitcoin-vs-bitcoin-cash-wh...


Indeed, what part of the name "cryptocurrency" would lead someone to believe it to be like cash?


Currency A currency in the most specific use of the word refers to money in any form when in actual use or circulation as a medium of exchange, especially circulating banknotes and coins. A more general definition is that a currency is a system of money (monetary units) in common use, especially in a nation. Under this definition, British pounds, U.S. dollars, and European euros are examples of currency.

Wikipedia


Yes, a "currency" should be treated as an asset, not cash.

The pro-BTC arguments are becoming absolutely inane


To me it sounds like an admission that Bitcoin doesn't work too well as a currency.


It's classic goalpost-moving.


AKA pivoting.


Currency A currency in the most specific use of the word refers to money in any form when in actual use or circulation as a medium of exchange, especially circulating banknotes and coins. A more general definition is that a currency is a system of money (monetary units) in common use, especially in a nation. Under this definition, British pounds, U.S. dollars, and European euros are examples of currency.

Wikipedia


Stores-of-value aren't "actually used" nor "medium of exchange". Bitcoin Cash fixes Bitcoin, restoring its utility and will cannibalize Bitcoin's market share.


I can take my maple leave or krugerrand and change that in any crash for gold/western union/money exchange shed for almost market rate in minutes. There are plenty of them. Even I take a cap that is its faster and cheaper than bitcoin.


I can take my seed words inside my brain through airport security.

Let's not get started on verification of the asset!


tbh, the smaller amount transacted, the less decentralization is necessary IMO. This is why people will tell you to use other, more centralized, less secure cryptos.


Dude,

It literally stopped accepting transactions.

After 72 hours your transaction is dropped.

Without further notice. Until then you must guess if it was processed or not.


Well, that's not accurate either. Miners sort transactions by fee and fill up a 1MB block.

Use https://estimatefee.com/. Not paying enough to win the fee auction is not the same as no transactions getting through at all. You seem a bit misinformed to be using the "Dude" prologue.


Incorrect. The fact is the network lacked the capacity to handle the requested number of transactions, and in turn auctioned off the tickets to the lifeboat to whoever paid the most.

You’re arguing “nobody died in the titanic that didn’t pay enough”, when the problem is clearly there aren’t enough lifeboats.


why are you equating space on a global ledger with space on a lifeboat?


It's called an analogy.


The market doesn't function when people can't transact freely. Price signals get distorted. When the blockchain is frozen, we don't know the actual supply and demand of Bitcoin.

Bitcoin Cash fixes Bitcoin by providing a capacity market, where transactions can cost whatever nodes / miners can compete at.


https://bitcoin.stackexchange.com/questions/43155/do-unconfi...

K thx bay


Dropping low-fee unconfirmed transactions is not the same as not accepting transactions.


What is low fee to you? Because there are people paying several bucks to do a transaction right now that are being dropped.


Sorry—-I meant low relative to the other pending transactions. They’re not low at all relative to other payment methods.


This is certifiable.


I mean from an end user perspective maybe but it's always been an auction where you can buy yourself priority. Nothing has really changed except now there are more people bidding higher.


The thing that has changed is that the supply has been artificially limited where as before there was ample supply.


Child pays for parent. Use it.

https://themerkle.com/what-is-child-pay-for-parent/


TL;DR you perform a new transaction that depends on the prior, unconfirmed transaction. To do this you have to pay double fees for the new transaction to make it attractive to miners to confirm both.


not really. by default, bitcoin core rebroadcasts your uncofirmed transactions periodically (not sure about the other clients). so as long as your client is open once every 72 hours, it won't disappear from the mempool. whether it gets confirmed is another story.


If you give a recommended fee it can go as fast as ever.


This is such a silly comment. This is like saying that you have a Bus with 20 seats and 40 people that want to ride. Your advice isn't get a bigger bus it is get to the bus stop earlier. It doesn't matter how early everyone gets there in the end there are only 20 seats.


You are right although I don't fully understand your analogy but bitcoin never guaranteed all transactions will go through because it couldn't because noone could make a system with infinite capacity.

20$ transaction fee is an incentive for the users to restrain themselves to smaller number of larger transfers.

Is the limit too strict? Probably. Miners still get a lot from mining rewards and don't need to be incentivised with fees yet, but there must be some limit that will force people pay for transactions because when mining rewards end there will be nothing to keep miners mining.


Visa manages to make all of its transactions go through. Mastercard doesn't seem to run into scaling problems. Paypal can transfer money at pretty much any time. Why is bitcoin exempt as a transaction layer?


I don't know how many times I couldn't pay with my Visa because system is down or slow today or transaction gets rejected for whatever reason. I believe there's a subset of whole Visa thing that always works, does what it supposed to do and processes everything it supposed to (while cashing in few percents on each purchase) but it is far from perfect from the point of view of the user.

The real difference is that visa has percentage fees on volume and bitcoin has fees dependent on number of transactions want to do at the moment. It's sensible since to avoid trusting single party bitcoin nodes all keep all thansactions that ever happened. Incentivising people to limit their number is a good thing for bitcoin network.

But thanks to that bitcoin won't ever be Visa 2.0

For me bitcoin for payments should work similarily to how prepaid phones work. You land in another country, you buy a card from local provider, you charge it with bitcoins and you usr it to shop.

I think bitpay is already doing something like that.


> 20$ transaction fee is an incentive for the users to restrain themselves to smaller number of larger transfers.

In my country (the Philippines) everyone is buying from high school kids to office workers.

The current minimum transaction fee is around $40. To exchange your bitcoin to Philippine Peso (PHP), the fixed conversion fee is 5%. If those don't seem a lot, get this: 83% of Filipinos earn below $400 a month. Most of whom I know are HODLing their bitcoin because it's too expensive to move their money. They would rather wait for their investment to reap huge gains before they cash out.

Bitcoin here is branded as a "get rich quick" investment scheme, and that's understandable, bitcoin doesn't have a valuable use case here. You can't buy anything here with bitcoin.


5% is a ripoff. In Poland I can trade bitcoin to local currency at pretty much no cost except bitcoin neteork fee. Maybe additional 0.10%-0.30% for transaction at the exchange and 0.50$ for bank transfer.


OP saying that it was designed that way. We can disagree about whether or not the intended design is practical or not, but it's "technically" successful because it's operating exactly as it was designed.


True that, at times 10$


Citation needed.


https://bitcoin.stackexchange.com/questions/43155/do-unconfi...


Bitcoin could become a payment system for the rich but it will never be an all-purpose decentralized payment system.

There are hard physical transaction limits which cannot be surpassed without seriously compromising decentralization... To the point that what would be left of the network would essentially no longer be 'Bitcoin'. Any attempt to abstract away from the blockchain through some kind of batching or delayed settlement would completely undermine the trustless nature of Bitcoin... What would be left would be no better than the current banking system.

The whole point of a cryptocurrency is that you can have your own wallet from which you can spend without going through any intermediaries... All potential Bitcoin scalability solutions that I've heard of rely on exchanges being given more power/trust in order to abstract away from the Blockchain.


Not sure what is going on in this thread, but every comment defending lightning or current bitcoin implementation or bitcoin-core is being massively downvoted... And they are substantive or at least informative comments.


IMHO (because to claim to "know" anything about how this is all going to turn out is to be a fraud), Bitcoin is the proof of concept for this whole crypto thing.

It was the first. It was the genesis idea. But good lord, do we think it's the actual solution? What would be the odds?

I imagine that Bitcoin will play its part as the public face of the blockchain revolution, but something else - or many other somethings - will be the successors that we actually use in the future. (Pick your own alt-coin as the successor; good luck.)

If I had a large holding in Bitcoin now I would be cashing out or I'd be nervous. I'm not saying it won't go higher, I'm saying that at some point its demise is inevitable. Might be quick, might be slow, but it'll happen because Bitcoin is not the technically best solution in this incredibly exciting field. It's not even close.


> it'll happen because Bitcoin is not the technically best solution in this incredibly exciting field

Not only that, but it's shown that it doesn't have the ability to make the changes necessary to innovate and stay current.


In fairness (I'm personally not a Bitcoin supporter) from the outside, it seemed more like the problem is no one can agree on who should be pushing changes and innovation: Core Dev or the coalition of miners?


> In fairness (I'm personally not a Bitcoin supporter) from the outside, it seemed more like the problem is no one can agree on who should be pushing changes and innovation: Core Dev or the coalition of miners?

If you step back and look at any kind of "libertarian" driven project this becomes a problem. When everybody who makes something inherently distrusts authority or having anybody "in charge", you can never really build anything big. I'd say bitcoin provides good evidence that to make any big change in a system the buck always has to stop with some individual.

With nobody in charge, you'll just drift around at the same local maximum--sometimes going up a bit, sometimes going down a bit, but never moving to an even larger but different source of value.

I dunno... just a thought....


Your thoughts are fine, don't undermine yourself by saying "I dunno... just a thought" like that.


It has evolved to be a store of value and it's doing an amazing job at that. Thinking from the perspective of the developers (many of whom have very large amounts of BTC) a slow and deliberate rate of changes is a very good thing. Making a mistake here would mean hundreds of billions of dollars would be lost. I am all for other cryptos moving quickly and breaking things to test out new ideas. Who in their right mind would take the same mentality on Bitcoin?


Why is this praiseworthy in bitcoin and seen as delaying progress and selfishly holding onto gains in taxi companies?


Bitcoin is absolutely not a good store of value. A good store of value is a reliable store of value: one where you can place your assets and go back and get them at any later time.

As a deflationary currency, bitcoin would be a hypothetically good store of value if a bitcoin actually had any intrinsic or even just de facto value. But it clearly doesn’t: it’s only the conversion to and from USD (and others) that has given it any value at all as an investment vehicle to some. And _that_ value isn’t guaranteed preserved one bit.


Most asset classes look like that, though. Gold has some intrinsic value as a good conductor/reflector of heat. But it's not really so very much superior to aluminium or copper or whatever to make it worth what it is worth. It is expensive because it is scarce. That's it. Bitcoin is the same. (They are obviously very different in other ways, but you get the point.) Things don't need to have intrinsic value to be valuable. They simply need to be desired by the market.


I agree with you - I actually implicitly meant everything you said.

The crux of the matter lies with your last sentence: "They simply need to be desired by the market"

Ergo, the quality of an asset as a "store of value" (the point of contention I was addressing in my comment) is directly mapped to the desire. BTC's desire is insanely volatile, automatically making it a poor store of value.

My point is precisely that all assets used as currency are oftentimes intrinsically worthless. It's the demand - and the liquidity it provides converting to and fro said currency from other goods or currencies - that makes it a value storage vehicle. BTC, as a "value storage vehicle," is a very poor choice. Gold isn't.


Gold isn't even in the same realm of volatility as BC, though. You put money in Gold and you're pretty sure if the world burns it's still worth something. You put money in BC at breakfast and you may be a pauper by lunch.


What is being missed by your analysis is that the value in a blockchain comes more from the network than the tech. There are thousands upon thousands of blockchains of no value. You could fork bitcoin or some other chain right now and start it on your laptop. Doesn't mean anything - the network is the value.

So taking this into account, when the shackles of Bitcoin's simplicity and limitations become unbearable, the network will evolve through protocol upgrades or through a contentious fork where the hash power and development resources will move to. In either case your coins and value are retained.


If humanity decides to walk the path of the worser tech, you can build a metropolis from diamond and light elsewhere as much as you want- nobody is going to migrate. They are going to pay outrageous sums, to upgrade the path the group is already heading down, the will pay to bribe and cast aside tech that holds them back. Alternative standards, no matter how pure and clean from a technical point of perspective, will be ignored.

Linux vs Windows allover, in fintech infrastructure and protocolls.


Jep, that's why you just invest in bitcoin if you want to make money


> What is being missed by your analysis is that the value in a blockchain comes more from the network than the tech.

That is the reason why anyone can't just create a new coin and expect everyone else to value it, but that doesn't mean there can't be any viable competitors. And if a competitor with a sufficient advantage got popular enough, it could take the lead.

For example, the hack Bitcoin used to become popular was to be deflationary, which encourages speculation. That got the value up before it was cool, but it stays deflationary -- even gets more so -- once it's popular, and the consequent speculation causes high volatility. Once you're popular, being deflationary becomes a liability instead of an asset.

It's possible for a coin not to be deflationary and have the supply set by computing costs. If the value of the coin falls below the energy cost of creating them, people stop creating more of them and the value stabilizes there (so it doesn't keep going down). But as demand for the coin increases the value rises above the threshold and people start mining again (so it doesn't keep going up).

That stability would be a huge advantage. But it's not possible to convert Bitcoin to that because its deflationary nature is priced into its value. Making it non-deflationary would make it worthless to speculators, which would eliminate most of its current valuation.

So all it would take is for a non-deflationary coin to become popular enough for people to trust it not to disappear overnight and the people using it for transactions rather than speculation would prefer it over Bitcoin.


That wouldn't work because mining blocks also validates transactions.


Difficulty is adjusted approximately every two weeks, so the network would self adjust to a reduced mining rate.

Mining isn’t used to validate transactions. You can validate transactions without mining. It’s purpose is to secure the network. The network validates transactions using asynchronous cryptography and nodes only transmit valid transactions. Mining secures those transactions from being overwritten.


> That wouldn't work because mining blocks also validates transactions.

It's possible to validate transactions with proof of work and compensate the work with transaction fees rather than the creation of new coins.


> creation of new coins.

If your crypto-coin starts life with all the coins instantly sprung into existence, that means everybody gets to buy their coins from you--the founder. There is a name for this--it is a pre-mine scam. All you do is mine most of the coins yourself, then go pimp your coin so it gets some buyers, and sell them all off for a sweet profit.


It isn't that new coins can't be created, a coin may be worth e.g. $100 and it costs $101 in electricity to create another one so nobody does until the demand for coins increases.

But the amount of work required to validate a transaction need not be as much as it takes to create a coin, and people will continue to be willing to pay someone 5c to do 4c worth of computation to validate their transaction.


Yep, a non deflationary currency would be precisely one that has its coins created all the time, instead of in a predefined amount as bitcoins. (You can think of mining as "discovering" one of the predefined bitcoins instead of creating a new one). The problem is that for a currency to be slightly inflationary, as it should be, you need to tie it to an economy and make political decisions about it- and then you're back at square one.


With atomic swaps and other innovations in the space, the cost of switching networks is becoming smaller. It’s hard to say how all of this will pan out, but I’m guessing we’ll see a much more diverse space than what you’re picturing.


> If I had a large holding in Bitcoin now I would be cashing out or I'd be nervous. I'm not saying it won't go higher, I'm saying that at some point its demise is inevitable. Might be quick, might be slow, but it'll happen because Bitcoin is not the technically best solution in this incredibly exciting field. It's not even close.

My guess is that this is less of factor than you think. I don't think that HTML/CSS/JS is the best technical solution for creating websites, and yet that is what all browsers use and there are few signs that that is changing anytime soon.


> something else - or many other somethings - will be the successors that we actually use in the future.

Right now, the top 3 crypto-tokens are Ethereum-based, as are 89 of the Top 100:

https://coinmarketcap.com/tokens/

Word-find "token" here to see what the word means in this context:

https://en.wikipedia.org/wiki/Ethereum


This is my thought as well, and I don't understand why it isn't more commonly stated. The sheer chances that the very first implementation of this technology turns out to not only be viable for long-term success, but is actually adopted as such, seems extraordinarily low.

There's what I call the "football" effect. The player jumps on the football after a fumble, and while he's the first to grab it, there's a handful of 250 pound guys about to jump on top of him.

Bitcoin is the first to the football, but over the long term I think it's going to get inevitably crushed.


There's also something called "first mover advantage", which kind of contradicts your "football effect". There have been a ton of altcoins created, none of which have crushed Bitcoin. Bitcoin is still holding on to the football quite handily.


Also, the first person to jump on the football does get possession of the ball for the team, so there's that.


I'm personally skeptical that incumbency is a significant advantage, particularly given that Bitcoin now is impractical to use directly for most transactions. If your transactions are being done off the blockchain and it's trivial to switch to denominating them in a non-Bitcoin currency, and there's no particularly strong reason for people to accept Bitcoin as payment over a different currency, what's the barrier to entry for a new crypto-currency?


The barrier to entry is low. The barrier to mass adoption is high. Bitcoin is winning that war handily compared to any other cryptocurrency. There are definitely flaws with Bitcoin that will need to be ironed out, but the world's most elegant cryptocurrency is useless if no one has heard of it or uses it. First mover and marketing often trumps technological advantage. A non-techie doesn't care about Ethereum or Monero, but they do care about Bitcoin when the news is talking about how valuable it is everyday. Bitcoin is changing the mindset of what money is to the masses, this can't be said for other cryptocurrencies.

Perhaps Bitcoin will fail at some point in the distant future, but for the time being it is absolutely the most influential cryptocurrency, this can easily be seen by all altcoins' value being pegged to their BTC conversion rate.


Their are a few examples where the first impomentaion adapts and wins. However, email needed to change over time and adapt, but Bitcoin is very resistant to change which is going to kill it.


I see this as the 1.0 era of blockchain. There may yet be an amazon or a google lurking amidst all of the pets.com ICOs out there. If I had to guess who would survive, I would say SAFE.


Somebody who feels compelled to sell their Bitcoins because the technology is not ready has probably not acquired any in the first place.

Whatever technology replaces Bitcoin is likely something you can buy with Bitcoin. That's why people rush to buy something which obviously isn't "ready" (but maybe "good enough"). It's speculative, but do not think that people who invested a lot in this didn't think this through at least as much as you have.


> do not think that people who invested a lot in this didn't think this through at least as much as you have.

Yeah, it's not like I can go on to /r/bitcoin and read multiple dedicated screeds along the lines of "I'm recommending my friends to invest savings in BTC for retirement". Whereupon someone replies "They should keep something in a Roth IRA for diversity", and the OP comments, "What's a Roth IRA?"

Yes, there are sophisticated investors.

But in a lot of cases, the only thoughts going through peoples heads is "Get Rich Quick". There's more discussion of "what color Lamborghini am I buying?" than anything else on those forums right now than anything else. Well, beside 'HODL! HODL! Even if the market corrects $10,000 tomorrow, HODL!'.


Is the argument that you think Reddit users are representative of Bitcoin investors?

Most of the time it feels like these discussions are stuck rehashing old arguments in circles, but this was truly innovative. Thank you for not being predictable.

As for the argument itself, I think you are correct not to make any investment decisions based on what you described.


With 520,000 subscribers, is your argument that Reddit is -not- a statistically notable segment of Bitcoin investors?


Just because someone is subscribed to a public forum doesn’t necessarily mean they’re holding or investing in bitcoin, just as easy to observe.


> Whatever technology replaces Bitcoin is likely something you can buy with Bitcoin.

Now THAT is the speculation to end all speculations.


Moving from bitcoin to another crypto currency is still chasing out, unless I misssed your point.


You do realize bitcoin is constantly evolving and can change its code right? If another crypto creates a better scaling tech, bitcoin can incorporate that idea.


Can, but won’t as has been proven repeatedly.


libsecp256k1, which was developed for Bitcoin, uncovered bugs in OpenSSL. It also increased signature validation speed by 5x.

https://bitcoin.org/en/release/v0.12.0#signature-validation-...


Proven when? He said better tech,not bigger blocks.


SegWit, Mimble Wimble, Schnorr Signatures, Lightning Network, and Rootstock all prove you're talking out of your ass.


> It was the first. It was the genesis idea. But good lord, do we think it's the actual solution? What would be the odds?

If superior technology comes along, what will prevent Bitcoin from adopting this, and using its network effect to outmaneuver a competing blockchain?

A couple of months ago, the Bitcoin network adopted the SegWit protocol change, which could be considered a minor fix (no major improvements to scalability). If the Bitcoin network can agree to adopt a minor fix, why wouldn’t it be able to agree to adopt a major scalability improvement as well?


Adoption of Segwit (a minor change) was neither quick, easy or without controversy. It does not lend much faith in the Bitcoin community ability to deploy big changes in a timely manner.


The consensus rules of bitcoin are supposed to be incredibly difficult to change. That's a feature, not a bug.

Changing consensus rules is only easy if the network is centralized. That's not something I want to have in my money.

If new technology demonstrates it's value beyond doubt, upgrading the network will have vast consensus.


> Bitcoin is not the technically best solution in this incredibly exciting field. It's not even close.

Just curious here: What would you say are technically better solutions than bitcoin?


I'd argue some of the cryptocash ideas thrown around in the 90s were vastly superior on the technical front. We've had the schematics for instantanous, high transaction volume, offline, double-spend resistant, completely untraceable and anonymous, digital cash for 25 years... with no blockchain or energy crazy energy consumption requirements.

Why didn't these technologies succeed? Because none of those properties have any business advantage over boring, simple, centralized credit-card processing and back then everything was sealed up in patents until it missed the boat.


that is a tough question as many other alt-coins have yet to be challenge by the huge volume that btc/eth experience. Some might say litecoin for one.


I also like litecoin for the purely selfish reasons of it still being (relatively) cheap. BTC prices are out of my ability to play, and most ICO's are derivatives of 'ScamCoin'. LiteCoin is one of the few options it feels I can still get in on the action with a purpose driven coin with a strong/transparent dev team.


You know you can buy fractions of a BTC, right?


Some say NEM https://steemit.com/altcoins/@vincent4384/is-nem-really-the-...


One can argue that Dash is superior for payment. But because of network effects and bitcoin's battle tested security (and utility as store of value or settlement layer) even I as a big (but not fanatic) Dash fan hold more Bitcoin than Dash (BTC 55%, DASH: 21%, EOS:24%) If Dash becomes mainstream, then that 21% of mine will be enough for me. :)


bitcoin is already used in pseudo reserve de-facto currency to trade other currencies. perhaps it will stay that way - a way into crypto world.


If you have a bitcoin and cash out the amount you make us fixed/limited to the current value if a bitcoin. If you don't cash out the maximum you could possibly lose is 1 bitcoin but that amount you could make is largely unlimited. Your bitcoin could triple or 100x in value.


As engineers and technologists we must always be mindful of our impact on the planet. Bitcoin has been a disaster when it comes to environmental concerns. It is a shadow on techs efforts to lead the way toward a sustainable future.

We need to figure out a way to solve this issue, especially if cryptocurrency utilization is to increase, in particular through Bitcoin:

Bitcoin uses about 32 terawatts of energy every year, enough to power about three million U.S. households, according to the Bitcoin Energy Consumption Index published by Digiconomist, a website focused on digital currencies.

By comparison, processing the billions of Visa (V) transactions that take place each year consumes the same amount of power as just 50,000 American homes, according to Digiconomist.


> Bitcoin uses about 32 terawatts of energy every year

terawatt is a unit of power, not energy. You probably meant 32 terrawatt-hours every year.

Instead of converting to energy per year, I would just say that bitcoin consumes a few (between 1 and 10) gigawatts of power. That way you can compare to power plant output to get a sense of what that means.


Is that really a fare comparison? I mean Visa and Mastercard use the global banking infrastructure to complete its transactions. I cant open a Visa or Mastercard account but I can generate a wallet in one second and use it instantly.


I have two questions:

1) Is this wallet going to have any spendable money in it one second after creation, or do you have to wait for the network to process your transaction like everyone else?

2) How often is it useful to create a wallet in one second?


My point wasn't really about comparing Visa/Mastercard connected accounts with cryptoaccounts.

I just wanted to highlight that for a traditional transaction to be completed between to accounts requires a lot more energy and infrastructure than just the energy consumed directly by those services.

Nevertheless I still think its outrageous that so much energy is wasted mining BTC.


Please quantify the energy use of the conventional approach — many people want to make the same point as you, but there don’t seem to be any (easily referenced) numbers estimating the energy cost per transaction of the alternatives.


The number I've seen is about 1 gigawatt, +- 50%. That's about one big power plant.

It could be worse. Bitcoin mining is centralized in mining centers running custom ASICs, mostly located in cold areas with cheap hydroelectric power. That wasn't the original plan. If Bitcoin mining was widely distributed, we could have a billion laptops mining in the background. Laptops running 24/7, wearing out their ICs through electromigration, and consuming power from all sources at retail rates.


They're not running in places with cheap hydroelectric. It's cheap coal. It's all coal.

https://qz.com/1054805/what-its-like-working-at-a-sprawling-...


In Sichuan it's at least partly hydroelectric. In northern China it's probably mostly coal. People mine in other places, too, even here in Shenzhen.


You're wasting energy for posting comments too. If we think a way like this, we can't no anything.


What on earth is this logic. Bitcoin is _by design_ inefficient. Its scaling inefficiency is the principle method by which it ensures fairness. That's what PoW chain commits are. That's how they work.

Bitcoin was ALWAYS going to be inefficient. It was assumed that hardware would scale to keep up with demand, but that hasn't proven true in the advent of ad hoc mining pools.


> It was assumed that hardware would scale to keep up with demand,

No, it was designed to stay at "one block every ten minutes" regardless of the hardware added or overall hashrate of the system. Which is why you hear a lot of people arguing over block size and block compression: you always have one block every ten minutes, how many transactions can we squeeze into that block?

The only thing that adding more hashrate does is waste more power, since the network will adjust.


The power consumption is what I was alluding to. I guess I was too vague.


If commenting burned ten cents of electricity, no matter how efficient computers get, that would be a huge problem too.

Each post uses as little electricity as is feasible. Efficiency improvements lower the amount of electricity used. Reducing the use 90% would mean 90% fewer posts and ruin the posting experience.

Bitcoin doesn't try to minimize electrical use. Efficiency improvements increase the amount used. Reducing the use 90% would lower the transaction rate 0% and ruin nothing, but we can't do that because it's set up as a competition.


This is needlessly pedantic. OP is advocating for mindfulness, and lists a number of statistics for reasonable context.


The dose makes the poison.


Except Bitcoin is inefficient by design (it’s what proof of work is) and the dosage is the market cap and transaction load. So what you’re really saying is bitcoin at the scale it was meant to operate at is poison.


No, the dosage is the hash rate (if more hash rate joins, the difficulty is automatically adjusted to keep it at 1 blocks / 10 min). The transaction output is constant, and market cap is irrelevant to the energy inefficiency discussion.


You are both right and wrong.

There have been multiple attempts at scaling Bitcoin on-chain by raising the blocksize. They have all been unsuccessful because they have been blocked by the Core developers and their supporters using censorship, troll campaigns, ddos and abuse. It's not due to technical reasons but because they want to redirect scaling off-chain, using technology they coveniently develop. The very same developers actually supported bigger blocks a couple of years ago but changed their tone to support the scaling approach their company favors. After the last attempt (Segwit2x) it's clear Bitcoin won't scale on-chain.

However the technical limits of the technology ha never been reached, tested or even been fully researched. Bitcoin Cash is for example a fork which aims to scale on-chain by increasing the block size. If all transactions from Bitcoin would be done on Bitcoin Cash the network would work fine today.

Where the actual limit is we don't know. It's probably not possible to support every financial transaction for everyone. For that we do need off-chain scaling in addition to many other improvements.


Maybe you are right and it would be technically feasible to bump the block size limit 2x, then 2x again and maybe later 2x again... Basically every time people demand extra cheap block space for their transactions someone would have to lead the charge and coordinate a hard-fork (probably with a lot of drama). But then we (as a community) would set a dangerous moral hazard there and be like the U.S. Senate increasing the debt ceiling limit every year or so.

For reference this is a year-old article from Gregory Maxwell, a prominent Bitcoin Core developer, explaining his view: https://www.reddit.com/r/Bitcoin/comments/438hx0/a_trip_to_t...

I think Greg is right. And at least this scaling situation puts a lot of pressure on Bitcoin blockchain and accelerates whole ecosystem to quickly develop and deploy layer-2 solutions like Lighting Networks or parallel 2-way-pegged solutions like sidechains. Which is in my opinion a good thing even for the price of hampering Bitcoin growth in short-term.

And from technical point it is beneficial that Bitcoin Cash folks forked the chain and will experiment with their own scaling solutions. It will be interesting to watch future technical developments on both sides.


Which is why a dynamic block size should be implemented. (This is on the roadmap for Bitcoin Cash).

For reference here's a paper by Peter R, a prominent Bitcoin Unlimited developer, arguing that a blocksize limit is unnecessary: https://www.bitcoinunlimited.info/resources/feemarket.pdf

Who's right I do not know. But even if Greg is right he's worrying about a potential problem decades from now. We have very real problems right now we should solve first.

I would also be wary of any claims Greg makes as he has clear conflict of interests against raising the blocksize. He's one of the founders of Blockstream whose goal is to earn money developing 2nd layer solutions. With working on-chain transactions what use would their 2nd layer solutions have?


>It's not due to technical reasons but because they want to redirect scaling off-chain, using technology they coveniently develop.

But how does that benefit them? Lightning network is open source, so it's not like they can make money on transaction fees.


https://mobile.twitter.com/adam3us/status/923309367260274688

Good reason to believe the entire thing was simply the old system attempting to hijack bitcoin.

https://www.reddit.com/r/btc/comments/7fsbw5/divorcing_the_s...


>https://mobile.twitter.com/adam3us/status/923309367260274688

selling a SaaS (presumably with support) to enterprises is a bad thing now?

>Good reason to believe the entire thing was simply the old system attempting to hijack bitcoin.

>https://www.reddit.com/r/btc/comments/7fsbw5/divorcing_the_s....

most of the post wasn't really relevant to the on-chain vs off-chain discussion, so i'm going to quote (what i think is) the relevant bits

>The divorce of the transaction layer from the settlement layer enables corrupt influence and tampering within the system in much the exact same way as the fiat system. [...] The core treachery that has been inflicted upon the project is what? You guessed it; to divorce the settlement and transaction layers from one another, which makes it once again subject to the exact same weaknesses as gold in the modern world with its laughable 542 to 1 paper to physical transaction to settlement layer.

how i'm understanding the argument it is that by separating the transaction/settlement layer, it would lead to fractional reserve banking, as seen in fiat currencies. how does lighting network achieve that? to start a payment channel that can handle x BTC in net transactions, you have to lock x BTC beforehand, so it's not like using lighting network is equivalent to issuing IOUs for bitcoin. am i missing something?


People now envision bitcoin as 'store of value', and less like an actual currency. I imagine there are many technical and financial reasons why it will never be suitable as a currency. (Deflationary by design, technical limitations on size of blocks leading to slowness of transactions)

Does being unsuitable as a currency mean it's also unsuitable as a 'store of value'? The answer to that isn't obvious to me.

The value of the US dollar comes in part from our ability to pay taxes with it (and perhaps ultimately from the US military). Cryptocurrency has no central authority to enforce its value via taxes or military, and isn't particularly suitable for day-to-day transactions. Without either of those properties, I have a hard to imagining it being a particularly good store of value. But we'll see. I think we're all watching an interesting experiment unfold in real time.

I don't think the current price of btc has anything to do with whatever utility it may or may not have as a currency or store of value. The price is entirely informed by speculators hoping to sell it the following day for 100% ROI. I think a collapse is inevitable.


And the store of value vision is built on the idea that it'll be possible to convert BTC into any other currency at any time.

The other way around: If you can't buy most stuff with it (the case right now) and can't convert it into your everyday currency (maybe happens if the exchanges suddenly go down for some reason, even only temporarily), what's the value of Bitcoin?


> what's the value of Bitcoin?

Selling it to someone else for more than you paid next week.


You're evading the question. If you can't at some point in the chain trade your fancy bitcoin beads for services or goods, then how is it any different than monopoly money? Right now it is useful because it can be easily traded for currencies that can purchase those things.


Stores of value tend to have high liquidity. I hate the analogy, but a single exchange (or a series of exchanges) going down doesn't prevent you from selling your gold. Your preferred method of selling gold may be temporarily unavailable, but it'll be back.

Meanwhile, keeping with that analogy, actually selling gold takes quite a long time when you hold the physical asset yourself, and the fees are not small there either, as validation needs to be performed to confirm the gold you're supplying is authentic.

Truly, I hate the analogy, because digital assets like this are supposed to be better, not just as bad, as their physical counterparts.


The thing is, if one ore more major exchanges go down, there might be a panic, which rapidly decreases the selling price and thus, the value of BTC. So where is your store or value, if you can’t withdraw?

What if a law is passed that allows BTC currency conversion only to a small amount per day, because of whatever reason?

Currencies like the USD don’t have this property. There is no need to exchange your money to make it valuable.


Ah, the "Greater fool theory".

That's not sustainable though when you have perfect replacements readily available.


> The value of the US dollar comes in part from our ability to pay taxes with it (and perhaps ultimately from the US military).

It doesn't come from either of those things. It only has value because people believe it does, otherwise they would all try to get rid of it as quickly as possible.


> It doesn't come from either of those things.

Yes it does. You have to pay your taxes in U.S. dollars, so people have to use it. That's one of the purposes of taxes: so that the government-issued currency is used.


It's quite obvious that the value of USD comes from much more than the taxes people have to pay. If the only demand for USD was from people paying taxes, it would be worth only a small fraction of what it is actually worth.


The "demand for USD" is really demand for goods and services that are priced in USD. Because everyone living in the U.S. uses USD because that's what we pay taxes in in the U.S., most people in the U.S. offer their goods and services in exchange for it.


The demand for USD comes from the legal structures that exist in the United States for things like debts, torts, taxes, etc. Basically, if you take out a loan to buy a house, you have a legal obligation to repay it regardless of how it is denominated by your bank; but if you fail to meet that obligation, you will need to deal with a bankruptcy court, which will only deal in USD. So if you take out a 40BTC mortgage and fail to pay, the judge will first convert the value of the house into USD and work out a way to repay (all or part) of the debt in USD. By forcing you to convert what assets you have to USD, the court is creating demand for USD.

Of course, banks know this (it is the core of their business) and will therefore denominate loans in USD to avoid the risk of an unfavorable conversion during such a proceeding. Such an unfavorable conversion is exactly what the creditors in the MtGox bankruptcy are facing, because the proceeding involved converting their BTC accounts into JPY according to the exchange rate in 2014. Due to the change in BTC prices recently, that means that under the law the creditors will be fully repaid using what BTC assets MtGox still has, despite the fact that the creditors would receive a far greater payout if they received the amount of BTC that had been in their accounts at the time of the hack.

Beyond debts, there are also torts. Suppose I crash my car into your house and you sue me for the damage I caused. The courts will order me to pay in USD; so again, the courts are creating USD demand by creating an obligation to pay with USD.

So the demand for USD is only indirectly due to demand for goods and services; after all, there must be some reason why merchants are pricing their wares in USD. The direct driver of demand is the law itself, hence "fiat" currency.


> So the demand for USD is only indirectly due to demand for goods and services; after all, there must be some reason why merchants are pricing their wares in USD. The direct driver of demand is the law itself, hence "fiat" currency.

That's exactly what I was saying: the goods and services are priced in USD because the legal structures require USD. I just used taxes as the most simple example.

But the whole point of the legal structures requiring USD is to get people to offer goods and services for sale in exchange for it. That way the government can purchase goods and services from the private sector to use as public goods, without having to first "get the money" from somewhere else.


That you have to pay taxes to the US gov't in USD, and you have to treat all transactions as if they were denominated in USD, gives it intrinsic value. But if the US gov't were to print USD indefinitely and destroy people's expectations of its value, its value would correspondingly collapse--aka hyperinflation.

If you want a challenge, try explaining why the Somali dollar still held its value despite being a fiat currency that lacked a government to back up its value for well over a decade.


The value of anything depends on demand; the demand for USD comes in part from the need to pay taxes to a government that will only accept USD (and more generally, from the fact that in the United States, the law only recognizes USD as money -- so things like debts, torts, etc. wind up being measured in USD, so anyone who has a legal obligation to make such payments will add to the demand for USD).


And they believe that because a team of police will descend on you if you don't pay your taxes for long enough. You can even get your whole country messed up if you make too much noise about switching oil denominator from USD to something else.


> It only has value because people believe it does,...

Have you ever asked yourself why they believe that? It's because they can pay their taxes with it, but also, as it says right on the front, "this note is legal tender for all debts, public and private." As long as the US government is still a thing, this phrase means what it says. I haven't seen anything so far to convince me that BTC has more stability or longevity than the US or EU (or Britain...).


You're confusing the value of 1 US dollar with the agreement that a dollar bill is worth 1 US dollar.

The dollar bill is worth 1 USD because the government asserts that.

That doesn't make 1 USD anything. It just means the dollar bill is worth 1 USD.

The government has no power to prop up the value of the USD if the world decides it's worthless.


> The government has no power to prop up the value of the USD if the world decides it's worthless.

I don't see "the world" deciding USD is worthless anytime soon: people in third world nations keep pristine US cash in their closets as a store of value; a lot of international trade uses dollars as a common currency; etc. If "the world" decides that dollars are worthless, that will be the least of my problems while I'm cowering in the bomb shelter I don't have.


Agreed. I think the USD only has value because enough people believe it does, and I think that will continue to be the case for quite some time.

Same for BTC.


It might be different if Middle East decides it prefers to be paid in yuans not usd. Of course you can then rain a bit more democracy on them but then again China might take offence.


> The government has no power to prop up the value of the USD if the world decides it's worthless.

The US government has plenty of military power that it can and does use for this exact reason.


How would they pay their taxes? Or how would two countries buy oil from each other (when USD was agreed upon)?


>perhaps ultimately from the US military

Does this have something to do with aftermath of Vietnam War in 1970s? US got broke, to recover, they made a pact with Saudis, ditched gold and use USD instead for reference currency, and oil transactions are in USD (i.e. 'petrodollars')

Then things went downhill globally.


Two popular refrains on scaling:

a. Block size - This was increased in bitcoin cash. What many people are not aware of is the paper 'Information propagation in the bitcoin network' by Decker and Wattenhofer in 2013. The average time for a block to be seen by a node is ~13 secs. As per the paper:

"For blocks, whose size is larger than 20kB, each kilobyte costs an additional 80ms delay until a majority knows about the block." -'Information propagation in the bitcoin network.

So, increasing the block without increasing the block time actually increases chances of double spending. But, increasing block time is well simply delaying the payments.

b. Lightning network - Off-chain transactions. Fascinating idea. The problem is it goes to a form of centralization. And if things hold the companies running these channels will invariably meddle in some transactions. But the stated goal of bitcoin was -

Commerce on the Internet has come to rely almost exclusively on financial institutions serving as trusted third parties to process electronic payments. While the system works well enough for most transactions, it still suffers from the inherent weaknesses of the trust based model. Completely non-reversible transactions are not really possible, since financial institutions cannot avoid mediating disputes. The cost of mediation increases transaction costs, limiting the minimum practical transaction size and cutting off the possibility for small casual transactions, and there is a broader cost in the loss of ability to make non-reversible payments for nonreversible services. With the possibility of reversal, the need for trust spreads. Merchants must be wary of their customers, hassling them for more information than they would otherwise need. A certain percentage of fraud is accepted as unavoidable. These costs and payment uncertainties can be avoided in person by using physical currency, but no mechanism exists to make payments over a communications channel without a trusted party


Anybody can run a lightning node. I intend to do so.

It's not like PayPal where if you want to pay using PayPal you have to use PayPal-the-company. With Lightning, if you want to pay using Lightning you can use any route you like over the Lightning Network to reach the recipient of the payment.


If you run your own LN node, your channel is associated with your IP, and your transactions are associated with your channel. It is the same as reusing a single bitcoin address for all your transactions, with all the consequences [1], except this time you can tracked down to your physical location. In vanilla bitcoin you can at least generate addresses at will, while opening and closing payment channels every now and then undermines the whole idea of the off-chain transaction layer.

[1] - https://en.bitcoin.it/wiki/Address_reuse


if you don't want your IP associated you can host anything on a cloud provider, run it through a tunnel, VPN, or TOR.


Good point, but since there's no obvious reason Lightning Network couldn't work over Tor hidden services, I expect that to happen in time.


> How is this expected to work with 7 billion people using it for every tiny financial transaction?

https://lightning.network/

tl;dr: a network of off-chain, transitive payment channels. two on-chain transactions (to fund and settle channel) allow for ~unlimited, ~free, ~instant transactions across a p2p network of nodes off-chain


Payment channels (which Lightning Network uses) allows for unlimited transactions, but not an unlimited number of users, because — as you say — two on-chain transactions (deposit+withdrawal) are required to initiate and finalize a transfer. Given that the Bitcoin blockchain can only handle ~20M transaction per month, this means only 20M people can deposit to/withdraw from the Lightning Network (LN) per month.

To this critique, some reply that merchants will just start trading unsettled (off-chain) LN transactions to pay their suppliers, but no one has presented any model of how this would work in a real economy, with merchants needing to pay suppliers, who need to pay their suppliers, who need to pay their employees.


~20M transaction per month are an arbitrary limit. The economic majority recently decided against increasing that limit, but this doesn't mean it's not going to get increased at some later point.


There are very good technical reasons for that limit. It is not as simple a problem as "voting".


Of course there are technical reasons for that limit. But whatever the correct size of the limit is - the current limit is almost certainly too low. The Ethereum blockchain is able to handle a significantly higher amount of transactions without implementing all of the performance optimizations that Bitcoin has (such as compact blocks).


Sure, LN alone might not be enough to serve the daily transactions of billions of users. Still, it proves how layers built on top of the blockchain can improve the efficiency by several orders of magnitude with some reasonable trade-offs. LN is probably just the first of such layers.

Things like sidechains, cross-chain atomic swaps, various block space usage improvements (eg. Schnorr signatures) are also in the pipeline right now, all of which could further improve throughput.

So while LN may not be the silver bullet, it makes me hopeful that at least from a technical perspective, Bitcoin will be able to scale to become a global currency.


There will be large rewards for companies that do tackle these types of problems though. It's still early in the game.


> It's still early in the game.

Bitcoin is 9 year old tech--that is an eternity in tech. Lightning network has been touted as "the scaling solution" for many of those years and has yet to see any use. And even then, the scaling solution Lightning Network provides is "don't use bitcoin". All the solutions for bitcoins scaling problems boil down to "don't use bitcoin".

So if the only way to scale Bitcoin is to not use it... again... what is the point?


I think people equate Bitcoin with the blockchain and by that understanding I think the parent poster is correct. The current blockchain doesn't scale and isn't suitable for every tiny transaction.


Or https://raiden.network/micro.html


“A Fast and Scalable Payment Network with Bitcoin Duplex Micropayment Channels”

https://www.tik.ee.ethz.ch/file/716b955c130e6c703fac336ea17b...


Why do you think this fixes the transaction speed problem?


Obviously no, the current version of Bitcoin does not scale.

I don't see why you think that means Bitcoin _can't_ scale though. In order to convincingly make that claim, you'd need to be able to prove that all existing proposed solutions for scaling the network (lightning, block size increases, etc) cannot possibly work.


Off Topic: Is anyone else creeped out by having an open ledger? As soon as I transact with someone or an entity, they now have access to view my wallet's holding/transactions via pub key. I don't know how I feel about Overstock having that information.


You never use the same address twice. scatter received coins over other addresses.


The fees to move the coins to another wallet just to pay for coffee would be 4x the coffee.


you don't have to pay fees to transfer to yourself, assuming there is no rush.


Like all tech it's a double edged sword.


The piece you are missing is that this problem is a direct result of the Core dev teams deliberate choice not to scale. They have a strangle hold on development and vehemently opposed any proposal to scale through block size increases as was the original intent.

Bitcoin Cash isn't having these problems and won't have these problems in the future. Many people aren't aware of the underlying issues driving the transaction backlog in part because the historically important forums where Bitcoin is discussed have suppressed any discussion of this issue for a couple years now.

https://www.yours.org/content/a-roadmap-for-scaling-bitcoin-...


So if we say it “won’t” scale - would that be more accurate? It can, but chooses not to? Seems like a distinction without a difference.


The point is it is a team issue not a tech issue. The team behind Bitcoin Cash which is rooted in the original Bitcoin block chain is scaling Bitcoin w/o issues. The Bitcoin Core team who has control over development of the legacy chain is the problem not the technology itself.

It would be like if there were two auto makers one claimed that you can't make a car that holds more than two people and refused to do so. Along comes another auto maker and builds a bus off the same concept. Doesn't mean that automobile tech is bad it means the team insisting it can't / won't scale is incompetent.


There was an instance of SatoshiDice taking up half of a Bcash block consolidating UTXOs the other day. Congestion will happen on Bcash, as will a hard fork to infinite inflation due to lack of transaction fees to supplant block rewards.


I'm talking about Bitcoin Cash. You must be confused "Bcash" is a fork of zcash that hasn't launched yet.


Didn't you hear there's an existing fork of Bitcoin called Bcash too? This new altcoin you're talking about will have to change their name, because we all know starting an altcoin with the same name as an existing one doesn't go so well.


Either way neither of those "bcash"'s are What I'm talking about Bitcoin Cash. I think you are confused.


[flagged]


For those who don't understand what this is about: one of the tactics that trolls like grubles use is referring to Bitcoin Cash as Bcash as a form of derision. Bitcoin Cash does not call itself Bcash and the term Bcash is considered derogatory.


“Bitcoin cash” is a name chosen to confuse newcomers and attempt to steal the bitcoin brand. The CEO of bcash refers to Bitcoin as “SegwitCoin” and their official /r/btc subreddit regularly claims to be the real bitcoin. Bcash is an appropriate name for the altcoin to eliminate confusion.


It's truly interesting how using an abbreviation of an open source project's name brings out the venomous commentary like yours.


We are all aware of your stupid troll attempts.


That's why I tell you guys to just use bitcoin cash instead. Bitcoin cash uses bigger blocks that can accommodate more transactions per second. We are going to increase it as more people use it. Right now the transactions are nearly free.


Ok.

We'll just ignore the issues associated with increasing full-node storage requirements even faster than they're already increasing. And lower transaction fees lead to lower block rewards which lowers mining profitability. Both of these things result in more centralization.

While we're at it we'll forget the post-fork difficulty adjustment faisco brought to us by the Bitcoin cash devs. We'll just trust their competancy and good will.

Also we won't think about the legitimate off-chain solutions for transaction rate scaling, or how the side-chain concept dates back to early Satoshi emails.

There are better alt coins for cheap and fast transactions. Besides, recommending something based entirely on those two factors is a massive oversimplification.


Lower transaction fees leads to more volume of transactions. They’re going for the amazon approach of razor thin margins which should lead to more transactions overall. They plan to keep transaction fees around 1 penny by increasing the block size as it fills up. Next fork for Bitcoin Cash will give it 32mb blocks.


Yeah I realise that. Even if it does work (noting currently most BCH blocks are tiny) then the chain will grow by ~135Gb per month (the entire Bitcoin chain is ~145Gb). Running a full node means you now have to buy a hard-drive (or two) and hope your internet connection isn't capped. You also have to be OK with really slow block propagation (which you really shouldn't be).

There are some very good reasons for small blocks and higher on-chain transaction fees.


The idea is that bitcoin is decentralized. But common sense tells you that by having an append only system, eventually you will need a supercomputer to deal with the blockchain.

Naturally, the blockchain will have to be hierarchical, or find ways to compact it.


This has always seemed to me to be the elephant in the room to me.

I brought this up with some ethereum devs at one point in a forum a year or two ago, and they addressed the questions pretty openly and graciously, but I still wonder about it. Essentially, they talked about the presumption of branches, subchains, etc. When that happens it seems the system would be a little more complicated than the classic crypto-libertarian currency model.

These chains get pretty large, and the overhead in terms of time and storage space seems well beyond what most people are used to now. Maybe people just have to get used to 15 minute payments, and having an extra drive or computer for financial transactions, as the cost of decentralized finance and economics, but from the current vantage point it seems burdensome to me, and only more so as adoption would grow.


Lightning allows instantaneous and cheap payments without the need to hit the chain. Mimblewimble allows for pruning of block chain history down to a few dozen bytes per historical transaction in the limit. If it is still an issue then at some point we could decide to checkpoint the UTXO set of a block sufficiently buried in the past (say, 1+ year) and just sync from there.


> Lightning allows instantaneous and cheap payments without the need to hit the chain.

But a transaction to set up a channel needs to hit the chain first. What's the intended workflow for occasionally (once every few weeks) instantaneously ordering pizza via Lightning? Would I have to set up a very long lived channel with my preferred pizza place in advance?


No no no, that's just payment channels. Lightning is multi-hop payment protocol on top of the traditional channel idea. Alice has a channel with Bob, and Bob has a channel with the Pizza company, and the Pizza company has a channel with its employees for salary and tips. On delivery, Alice pays Bob, Bob pays the Pizza company, and the Pizza company keeps some and forwards on just Alice's tip to the delivery guy. This is coordinated and setup in less than a second of communication among the parties along the route (meaning Bob and the Pizza company need to have their nodes online; but there can be non-routable offline signers at the endpoints; the Lightning routing is an online protocol however), but the payment is atomic -- intermediaries like Bob only get their money if they forward it on (minus a reasonable micro-fee), and either all channel updates happen or none at all. It only takes about the same amount of time as a point of sale credit card transaction to setup and sign, and completion of the atomic signing step is finality of settlement, so long as the parties remain online to check for preemptive or fraudulent channel closure.

Lightning allows sub-second transactions with finality of settlement for any routable path along a peer-to-peer network of payment channels. Because of the six degrees of Kevin Bacon idea, anyone can pay anyone else on the network with a dozen or so different hops in the worst case, each hop taking a really small fee, like a hundredth of a percent. A true peer-to-peer electronic cash system, if you will.

As in this example, your long-lived channels as an individual are likely to be with your employer or payroll company, your mortgage company, your telco, your favorite restaurants, and other other regular payments you make or sources of income. As an organization your channels will probably be with your suppliers (accounts payable) and major customers (accounts receivable), as well as payroll and office supply companies, etc. But you're able to reach everyone on the network through these starting points. This allows you to do things like proactively "pull" in funds from accounts receivable to cover expenses, by routing through that part of the network. It maps pretty well onto both the individual and corporate use cases.

It also allows micropayment in bitcoin again.. the cost of a payment is basically the cost of maintaining these online routable nodes, and the message communication, which is probably sub-cents in the limit. It's possible you can, e.g., do a 5-cent payment per article view on a news website, or per song played on a future Spotify, etc.


OK, thanks for this explanation! None of this appeared in the Lightning explainers I have seen so far.


Dosen't the blockchain already compact? Correct me if i'm wrong but once a block is hashed and confirmed as the most recent block, why would you need to store the previous blocks?


Full nodes must store the hashes that are generated from previous blocks. If they didn't, how would you know that the most recent hash really is the generated as a result of hashing the previous block recursively? A malicious attacker could forge a previous block, act as the next one is the current block based on the hash of the forged block, and there would be no way to verify that the hash of this block is valid or invalid.


I was under the impression that attack would not work because as long as the majority of nodes are "honest" there would be no way for an attacking node to outpace the chain. Each node votes with their cpu so the combined compute/speed of honest nodes would always outpace the introduction of a corrupt block. Since the the most recent "confirmed block" is a hash of the previous successful block it just continues.

However I admit much of my assumptions are just from reading the original paper so i'm probably over-simplifying. I guess it would make sense they need some history but not sure why they would need all of it since the previous blocks are confirmed?


"Balances" are stored on every block. If you threw away the beginning of the chain, you could keep generating blocks, but you couldn't spend any transaction outputs that are stored in the thrown away parts of the chain.

Unless I'm missing something something pretty big about how Bitcoin's blockchain works.


https://en.bitcoin.it/wiki/Full_node

"Full nodes are the most secure way to use Bitcoin, they do not suffer from many attacks that affect lightweight wallets...[a]s explained previously, full nodes enforce the consensus rules no matter what. However, lightweight nodes do not do this."


This is a mostly solved issue.


Cash is decentralised.


In America, cash production is only legally done by one centralized entity, and it is done by them on a regular basis. As far as I know, this holds true in all developed nations.


Banks are allowed to emit debt at the condition that a fraction of it is backed by some liquidity.

Banks decide where and when to create this debt so yes, money production is indeed decentralized.

If you’re referring to actual coinage and notes then yes, facilities are indeed centralized, but with electronic debit cards the lines are blurred further


However, let's say I run a dollar store. Can I afford to do an exhaustive verification for every dollar I receive? maybe not.

There are security features built into each bill that help me establishing if it's legit or not, that I can do myself without third parties.


pretty sure there are parallels with DNS. If BTC is the root of trust networks then that is probably enough for one protocol - and good enough to survive.

Root node back others networks (think top level domains and delegated subdomains). IMO, it needs to be _very_ expensive to keep minimal blockchain size and avoid spam.


Have you seen any announcements from merchants, businesses, exchanges regarding downtime due to congestion? Probably not, because the spam-prevention mechanism built into Bitcoin by Satoshi themselves is working as intended.

On the flipside, you have Ethereum with more or less unbounded block sizes having issues with Cryptokitties congesting the entire network. Numerous entities using Ethereum are unable to do business due to the equivalent of Beanie Babies clogging the network [0][1].

[0] https://www.coindesk.com/ethereums-cryptokitties-blockchain-...

[1] https://twitter.com/myetherwallet/status/874285733707526145


It's the same case for Ethereum. Blocks are bound by total gas, and you can ensure your transaction is included into a block quicker by paying a higher gas fee, if you are willing.

For about $0.40 you can get an ETH transfer into a block in a couple of minutes. https://ethgasstation.info/


Growing pains. Think about it, it's been less than ten years since bitcoin was created. Give it time. The code will change and it will be able to scale. We now have multi-millionaires that have a very strong incentive to make sure it never fails. 20 years from now the bitcoin code and network will be very different and many of the bugs will be worked out.

I was a disbeliever but now I am a true believer. Bitcoin is here to stay. The only danger is that countries will make it illegal. It really is a danger to the way countries manages their economies. But only time will tell. Keep the coins and enjoy the ride. You won't be sorry. Lucky you.


Bitcoin can be used for transactions? And here I thought it was just used as free money!


What would concern me is, for example, if the cost of a transaction grows faster than the price of a given bitcoin in dollars. If that trend would continue for too long, then I suppose my bitcoin could get trapped in the system for an indefinite period of time, that is, from the time I no longer can justify moving the bitcoin because of high transaction fees to the time I can. It seems that this situation suggests a lower bound on the amount that makes sense to store in a bitcoin wallet. I wonder what that lower bound is today.


That has already happened as transaction fees have increased from less than 1 cent to $5.


I’m not sure why so many people ignore that Bitcoin and all other serious cryptocurrencies are focused on their next generation scalability improvements. Several of the most viable blockchains like EOS are built to be scalable and the legacy coins like Bitcoin are working to adopt similar ideas. When the entire 2018 roadmap is about scalability, it gets boring reading these same posts about how it’s too slow and doesn’t scale without any reference to their work in progress.


Because the whole 2016 roadmap and the whole 2017 roadmap was also about scalability. All they've done so far is throw their hands up and say "it's a really hard problem trust us guys". And nobody has shown any sort of traction on a solution: the developers admitted Lightning Network won't solve scalability concerns.

Some people are getting a little tired of the pony show.


Then people will move to Ethereum and EOS (or whatever competing blockchains get scalability first). With interoperability of blockchains, transactions can be done on alt blockchains that are cheap and fast instead of on the Bitcoin chain.


Bitcoin involves broadcasting all transactions; that is obviously not scalable, regardless of block size, regardless of PoW, regardless of other design details.


You don't have to broadcast all transactions to all parties. Merkle trees can summarize past transactions, so not everyone needs a copy of the entire blockchain.


This video: https://youtu.be/GtKhYx2Vlb4 helps explain and address the thought process you're going through now. Bitcoin scaling issues are analogous to many internet technologies such as Ethernet. With Ethernet people initially thought there was no way it could scale to support the whole world because the tech just couldnt support anything more than 1mbps, yet people found a way. They built new technology on top of it, they changed packet routing algorithms and they even changed the underlying physical hardware used. The only thing that remains is the name and the brand, Bitcoin will probably go through a similar development process.

In upcoming Bitcoin technology, the lightning network is really exciting. It's a layer that runs on top of Bitcoin which allows thousands or possibly millions of transactions per second, performed instantly, with almost zero fees. It may have bottlenecks of its own, but I'm sure we can overcome them.


My view of BTC is as digital gold, in that, it is the standard to which other easier-to-trade (digital or fiat or not) currencies are anchored in (so like gold standard). Ever since I started reading about it, this was how it was sold. The new gold standard. In this regard, high transaction fees/times was expected. POW is a feature, not a bug.


Many say that Bitcoin's primary use is a store of value and a horrible medium of exchange. In that light, being unable to make small transactions makes sense, you store your wealth in Bitcoin and leave it there, kind of like a savings account, the high fees and slow transactions don't matter because you are not moving funds. High fees also reduce the amount of transactions in kind of an equilibrium,the higher fees go, the less people are willing to transact, thus lowering fees to the point of usability.

The other camp that wants to use Bitcoin for small transactions is either in the illusory lightning network camp, or more realisticly investing in bitcoin cash. In my opinion, bitcoin has proven itself to be a great store of value but a poor medium of exchange, so just treat it as such.


Anything that fluctuates in value by 20% of more in a day can't be called a store of value.


It makes me a bit sad the way bitcoin has gone, I remember buying things with BTC a few years ago.

Some sites even built "order status" page that gave direct feedback of the transaction e.g. confirmations. I thought that was really cool.


I don't know what you mean by "prove". People have known about the block size limit for years. It's been increased, but most haven't updated their software to make use of it yet. Lightning now works on mainnet, but no one is using that either.

Maybe it's more proof that no one cares?


I think I'm living in a different world than yours. Where I live, it's all different that what you said.

The block size hasn't increased. Instead, a new chain forked out with an 8MB block size, it's called Bitcoin cash.

Lightning network hasn't launched yet. A few people are testing alpha on the main net and that's it. (Btw I'm a skeptic of lightning network so i'm not advocating lightning network here).


I think he referred to SegWit, which increases the block size a bit under special conditions. That's the thing about bitcoin scaling: instead of improving scaling by increasing the block size (which will be required anyway even with Lightning), a solution that requires only changing the thousands of full nodes, they go for SegWit, which requires changing millions of wallets. Then everybody wonders why adoption isn't instant.

And Lightning, yup. I tried to use two Lightning implementations on the test net and neither worked, but they have been declared "ready!" by fans.

And Lightning deserves skepticism. Releasing software 1.0 means nothing: it requires a totally new infrastructure, with new wallets (again) which have to be online to receive money, hubs which don't exist at all today, liquidity providers willing to leave money locked in channels, (but hey, at least we didn't have to upgrade full nodes) and has completely different failure modes than the blockchain on top of the failure modes that are already there. As far as I understand it isn't even possible to receive more money than you already have with Lightning, and any part you open a channel with can block your funds for as long as the channel timeout has been set (and you don't want short/underfunded channels or you may end up paying more in transactions than you would have with a pure blockchain).

Also the opening and closing of channels means that if Lightning is actually successful the current block sizes won't be sufficient. It's at least one transaction to open the channel and another to close it, and because you want to keep a warm channel so you can buy coffee, you will want to do that whether you end up using the channel or not, but you also don't want it very long otherwise your money will be stuck if the channel goes down. So essentially you need to pay subscription fees to the blockchain for using the channels as well as well as commission to the channels for providing liquidity to you.

Maybe some super-centralized thing will come out of it and we'll all connect to the Coinbase Channel or something to do trustless centralized off-chain transactions (as opposed to trusted centralized off-chain transactions that they provide now) but even that has a host of problems when you think about it.

It's... a complicated system. It's cool and very interesting but it won't happen overnight and it's not guaranteed to actually work.


I think lighting is more to trading webs, if you want to transfer from bittrex to blockchain.info it would be trough light so all this kind of transactions would free the blockchain


Segwit was a 4x block size increase.

Lightning works. You can go download the repo and make apps with it today.


> Segwit was a 4x block size increase.

I am starting to feel like you guys all live in a different earth than me. On the earth I live, SegWit did not increase 4x block size.

> Lightning works. You can go download the repo and make apps with it today.

Everyone I know who has ACTUALLY downloaded and run the node thinks is extremely underwhelmed. I suggest you follow your own advice and go download lightning network client and run it yourself and try to use it and see what happens. Then we can talk.


Segwit isn't a a block size increase. It allows for a tiny amount more transactions but it's very clear it's not enough. An actual block size increase (say to 8MB) would solve the current problems.

LN is years from being actually usable by the masses. This is from their developers themselves.

> Maybe it's more proof that no one cares?

That's a pretty idiotic thing to say. The technology isn't ready yet despite the developers being aware of the problem for, as you say, years.


> Segwit isn't a a block size increase. It allows for a tiny amount more transactions but it's very clear it's not enough. An actual block size increase (say to 8MB) would solve the current problems.

But what about the new problems it would introduce? I run a full node and even now it eats a significant portion of my bandwidth. With even larger blocks I would probably drop off the network altogether. And I'm sure I'm not the only one out there in this situation. Therefore, I don't think Core developers are exaggerating in their concerns about the centralization pressure caused by overly large blocks.

Moreover, wouldn't increasing the block size simply kick the can down the road? One advantage of the current fee pressure is that it strongly encourages the development of 2nd layer solutions. There are right now at least three independent teams working on Lightning Network implementations and they seem to be making quick progress...


> But what about the new problems it would introduce? I run a full node and even now it eats a significant portion of my bandwidth.

Not everyone need to run a full node.

> Moreover, wouldn't increasing the block size simply kick the can down the road?

If you see it only as a temporary measure then sure. But it would for the time being solve Bitcoin's very urgent current problems.

Also any 2nd layer solutions require a blocksize increase, so the argument is kinda backwards.

> One advantage of the current fee pressure is that it strongly encourages the development of 2nd layer solutions.

Which is basically Core/Blocktream's plan. 2nd layer solutions is their whole business model...

But why opt out of something that we know works for a solution which isn't ready and may not even work?

Scaling should be done both on-chain and off-chain. Favoring one to the exclusion of the other is just wrong.


"No one cares" is interesting.

That's as if there was a frenzy to buy a new brand of car and no-one cared that the cars' engines actually break down after 50 meters.

That being said, I think it's true - but it's a hint that the current "mass adoption" is mainly fueled by speculators and not by people who genuinely believe in it's purpose as a currency.


Bitcoin, like gold, is useless as a currency.

humans trade on credit not by exchange. Always have done.


Seems pretty popular in places like India.


You are correct. One interesting point to note is the high disparity between prices on different exchanges.

COinbase shot through the roof, but other notable exchanges were sometimes $5k out for a number of hours. This proves that either people couldn't cross trade (i.e. buy cheap on one market and sell high on the other) or didn't know how to (which is suspect)

this could be because the transaction speed stalled trades, meaning that effectively each exchange became its own global market, either way, having large disparities between exchanges is problematic.


One of the questions I have is why is that a requirement? Why does one network need to support the entire global populations? I mean if it's to be used as fiat currency then I only need it to pay for things roughly in my extended community. Why aren't there seperate networks developing in distinct geographic areas?


Yes, BTC has weaknesses. No, it cannot scale up to "7 billion people using it for every tiny financial transaction" likely even with Lightning. It doesn't need to and you should please ignore the people who say it will.

I love BTC, I think it's great. I think other cryptocoins innovate where BTC can't. But the BTC zealots who act like BTC will displace general purpose banking (or zanier still, the entire financial industry) make this conversation so frustrating.

BTC can be a success without this all-or-nothing campaign. In fact, it is a success because it will continue to exist/store value, and operate as a medium of exchange. It will have hiccups and scaling challenges and we will entertain proposals like segwit and LN which don't radically alter the coin's design.

Unfortunately they alter enough of the design to disturb the economics/incentives for the different roles. Those different roles have had well-aligned incentives for a long time and hopefully they don't continue to drift apart. This is the greatest risk facing Bitcoin IMO. For a long time I was worried about a weakness in the signature hash. But the bounty for that has been so enormous for so long that I'm doubtful one will ever be discovered. So Bitcoin is truly a robust coin, and it can continue to serve us well. If the 15000USD value is based on "7 billion people using it for every tiny financial transaction" then people should probably start shorting BTC (maybe tomorrow evening w/CBOE/Gemini).


Bitcoin is a quasi-legal worldwide distributed mechanism for financial gambling that everyday people can now participate in from their smartphone.

Clearly it has scaled well, it is now one of the more successful means of gambling extant. The fact that it is becoming unusable for any other purpose could have implications, but it's self evident that this use case has scaled considerably.


Bitcoin is Myspace.


You are not wrong. The same math that created BitCoin necessarily ignores the basis for the value is a sociopathic waste of time.


Of course it can't scale. Blocks can't grow larger than 1 MB, which means no more than three transactions per second.

If you want scale, you have to look to Bitcoin Cash (which carries on Bitcoin's original vision of being a massively scalable peer-to-peer electronic cash) or Ethereum.


I use electrum wallet and never had a problem with the default settings - transactions appears after 20 mins.


That's about 19 minutes and 59 seconds longer than what would be acceptable for a digital cash system.


You just need to wait for a few seconds for the transaction to be "pending" though, which is enough for small-medium payments. Unless you're worried the guy buying a 5$ burrito from you will mine a block with his double-spent transaction.


A service could pop up that offers to double spend your $5 transaction and refund you a percentage of the amount. If they mine the block you scam a few bucks, if they don’t you paid full price. It would be profitable for the miner and for the burrito buyer at the expense of the burrito seller. If such a service becomes common, that seller is going to start making you pre-order your burrito 20 minutes in advance – at which point people will just switch to cash, credit, or a blockchain without these problems.


you can also walk out of the store with the burrito without paying but that is also stealing. this small transaction issue will be solved technologically but the changes are incremental because of the risks involved.


I think you're right. Bitcoin sucks. It cost around $5 to make a single transaction back in August, and that was when Bitcoin was at 1/3 of its current price in US Dollars. Does anyone know what the cost to make a single transaction is today (in US Dollars)?


I sent $30k for less than $5 and the transaction was confirmed within 15 minutes (second block), the network is fine. Yes it isn't free transfers but they are still possible if you don't mind waiting and your transaction is reasonably sized you are fine.


Watch this prediction.

https://us.teamblind.com/article/update-from-block---btc-fut...


Bitcoin is like gold, has always been. It's pretty bad for routine payments.


Bitcoin has always been slow compared to other alt-coins such as Litecoin.


My understanding is... There is a scaling problem. It could be help by increasing the block size (like segwit2x) But the miners don't want to fix it because they like the high transaction fees.


A global currency controlled by a few warehouses in china sure does sound optimal.


I thought the big miners were the ones pushing for increasing block sizes b/c it would create an even higher barrier to entry to successfully mine a block that would allow the big miners to get bigger and consolidate power...


As others have pointed out, your understanding is backwards. Mining is heavily centralised already (in China of all places!), and larger block sizes would only exacerbate the mining centralisation, which is probably why the biggest fans of larger blocks are the Chinese miners.


You have it flipped. Recall that most miners (by hash rate) supported segwit2x. Miners want bigger blocks because they can make more through volume.


How is this expected to work with 7 billion people using it for every tiny financial transaction? I don't think it can.

It's not meant to. It stores wealth. Nothing more.


I believe ripple has solved the problem with scaling. It can handle more than 1500 tps and the throughput can be increased upto 50k tps


The idea seems to be that BTC is a store of value (eg: gold) and payments is something to be implemented on a different layer.


Quantum computation will prove much more about the limitations of these cryptocurrencies that we expect.

#shorsalgorithm


Bitcoin is competing with gold, not visa.


Not just BTC. iota, which is supposedly scalable, has come to a screeching halt over the last few days as well


IOTA is however fundamentally flawed. It can never be decentralized if it ever even becomes useable.


Bitcoin Cash can easily scale.

There never was a "scaling problem." The only problem is "people that don't want Bitcoin to scale."

https://www.reddit.com/r/Bitcoincash/comments/7gmn8t/there_n...


Couldn't bitcoin blocks be 100 times larger? What's the drawback of huge blocks?


What are the best resources for staying up to date with Bitcoin and Ethereum development?


Check out Bitcoin Cash if you want a scalable on chain crypto currency. Bitcoin Cash has the same history as Bitcoin up until August 1st, 2017 when they forked off the majority chain. Bitcoin Cash allows you to send any amount of money to anyone in the world for about 1 penny per transaction.


And if its transaction volume were equal to bitcoin what would happen?


Well right now Bitcoin Cash has 8x the capacity for on chain scaling 1mb blocks on BTC vs 8mb on BCH. Next Bitcoin Cash fork gives us 32mb blocks or 32x transaction capacity.

Simplified a little bit I know you can pack segwit transactions into 1.7mb blocks on BTC.


Crypto-neckbeards be like "Bitcoin is going to $500,000!"


There are altcoin solving all these problems


Not sure if it will ever scale. Look into Iota.


Litecoin is the solution. It was not designed to be a Bitcoin replacement, but rather to handle this exactly.


No it wasn't. It's 99% a copy of Bitcoin with small configuration file differences. It is configured for one order of magnitude more transactions, but it provides no architectural scaling innovations. It's just like Bitcoin -- can only be used at scale as a settlement layer.


Litecoin is similar to Bitcoin, but it was the first to make some of the changes that were made to both, like Segwit ...


and what happens if Governments decide by law that bitcoin is illegal?


Buy Ethereum


Etherium


Betteridge's law of headlines.


> have owned BTC for 5 years and I am enjoying the rally, but with the high transaction fees, back ...

That sir is a first world problem!


[flagged]


Well, would that happen we would have a lot more to worry about than the price of a virtual coin...


[flagged]


Dude, the Winklevoss twins are Bitcoin billionaires. This is hardly the currency of the proletariat.


[flagged]


You clearly failed to understand what 'hacker' means in this site's context, which is here a general term for a tech-savvy, overall outside-of-the-box thinker that desires to read a variety of interesting things (and maybe discuss them).


[flagged]


Demonstrably incorrect.

https://www.google.com.au/search?q=bitcoin+site:news.ycombin...


Sorry to nitpick, but -

Your link shows some early posts on HN about BitCoin

How do you know when his parents got interested in BitCoin?

(Otherwise, how can you demonstrate his statement is incorrect?)


I stopped mentioning my parents the same time I moved out of my childhood room.


I moved out of my childhood's room but still have an active conversation (if by WhatsApp only) with the folks. We have been discussing Israel a lot this week, for example.

You should appreciate your parents while they're there, they are finite beings.


True for everyone whose parents are still alive, and aren't horrible people from whom the child should keep their distance!

But that's all really beside the point. Someone was comparing HN to their parents, to imply that HN is full of old farts, whereas I used the same shitty associative logic to say that anybody who compares things to their parents probably still lives with them. Fun stuff!


Litecoin is the solution.


Same question back in 1994 about the internet. "build things that don't scale. PG".


"Then sell them to sucker companies who will throw out all your work and redo it better." was the rest of the quote, right?


Maybe we learned that coinbase can't scale its website, but that has nothing to do with the ability of BTC to scale.


Did you try to make a BTC transaction lately?


I don't think you're wrong and there are other problems too. Widespread Bitcoin adoption would require more energy for mining coins than the entire world can currently produce.


Bitcoin has no particular requirement for energy, it’s an arbitrage involving the prices of three components: 1) a bitcoin 2) a KWh of power 3) mining hardware.

As long as the value of newly minted bitcoins makes it profitable to buy mining hardware and burn off power to earn them, the amount of power used by bitcoin miners will increase.

So, way before Bitcoin miners consume all of the world’s energy, either energy prices or mining hardware prices will increase, or the bitcoin price will fall, to make mining unprofitable.


If energy prices increase, indicating an energy shortage, mining does not increase, and Bitcoin can't scale past that point. I was not worried about Bitcoin eating all the world's energy.


And a kWh of power is of course done with coal. How pathetic.


I believe most mining operations make use of hydro-electric power, simply because it’s much cheaper than burning off coal.


Also practically free hydro-electric power which would otherwise be wasted.


That's not true at all. If the power were not used by Bitcoin miners, it would be used by other industries, and less more-expensive (coal etc) power produced by other power plants.


> Widespread Bitcoin adoption would require more energy for mining coins than the entire world can currently produce.

No. Bitcoin could work exactly the same even without any more hash power, or energy consumption, ever being added.

This is because mining is only a competition to produce a block and defines the security of Bitcoin. But it has no bearing on how many transactions the network can process.

Any scaling that happens is completely orthogonal.


Yeah it's amazing how little people complain about this issue, especially when alternatives exist that leave the idea of a blockchain intact (proof of stake, for instance).


How is energy consumption correlated to adoption? Thought it was the result of the mining “competition”, as the difficulty adjusts to the mining power


The rally is partly because it can’t scale and people are unable to get their bitcoin to an exchange to sell it. Instead it is stuck in the mempool... and there is an increasing amount of bitcoin that can’t be moved because fees surpass its value.

For a bitcoin that has scaled see Bitcoin Cash.


>The rally is partly because it can’t scale and people are unable to get their bitcoin to an exchange to sell it.

that's demonstrably false. there's plenty room of you're willing to pay enough in transaction fees. if you don't want to pay $5 in transaction fees to cash out $5000, that's your problem. either that or you don't want to pay $5 to cash out $10, but in that case that has no appreciable impact on trading volume.

>For a bitcoin that has scaled see Bitcoin Cash.

if you mean bitcoin with block size limit lifted, then yes. but right now it's handling less transactions than bitcoin so it's not fair to say it has scaled.


The median fee is currently $15 and there have been around 200k unconfirmed transactions for days. Is it false in addition to this that around half of all bitcoin addresses hold less bitcoin than the current fee? That’s a massive constriction of supply. Very few people are transacting at amounts of $5000 where the fee might make sense.


It's not really designed to handle every little transaction. I would expect it to be used by exchanges and banks as a settlement layer, with most transactions happening off-chain.

It's a mistake to look at recent news, because this has been known since the very beginning.


There is a thread on the site with the original Bitcoin paper right now. The first sentence of the abstract:

> A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution.

A peer-to-peer network without going through a financial institution. The design was certainly intended to scale up to large numbers of small transactions.


There is a group of people who want to alter the purpose of Bitcoin away from the original goal away from "p2p cash" to purely a "store of value".

The design can of course support more transactions than it currently does but that is being worked against by this group.


it would and it will imo. I just don't think bitcoin is it.

It has however bootstrapped a few potentials. Until its decided which that might be, bitcoin kinda serves its purpose.


root DNS services do not service _every_ lookup _but_ they back delegated authorities, which does scale. Same for blockchain tech.


So you're saying Bitcoin needs banks like every other currency then?

So what's the point of it again?


Not only is BTC epicly badly designed (energy consumption=Denmark) but it doesn't solve a problem that anyone actually has (and neither do any of the other cryptos). Nobody uses them to pay for things, and nobody has any incentive to start doing so, because paying for things is not currently a problem. Compare with the Internet boom: along with the stock bubble, millions of people began using this new tool which changed their lives forever. Compare with the housing boom: tons of people got something, at least temporarily, that changed their lives, namely a house. Now look at cryptocurrencies. They having zero effect on ordinary life because they don't solve a problem that anyone has.


You must not have any experience with international transfers or currencies other than euro and USD.


Indeed I don't. Nor do most other people. That's one of the reasons why, to first approximation, zero people are using them. And even if lots more people suddenly begin needing to transfer non-reserve currencies internationally, these transfers are going to run into legal issues which, despite fantasies of bitcoin enthusiasts, are not going to be evaded just by putting "crypto" in a prefix.


Your claims are fallacious. Most people, i.e. 51%+ don't use USD or EUR. Many people also make international transfers. There is a use-case and your observations that zero people use btc are anecdotal at best.

Pray tell what kind of legal issues would suddenly arise if it became mainstream.


Trouble is it's still not mainstream enough for everyone to start accepting it as a form of payment but that will change with time. For instance visit amazonbitcoin.com and see what happens!


Sure, I can buy some btc and go buy something with it in some places. But where is my incentive to do that, rather than just go use my credit card or an ACH transfer? Btc is not more convenient, it's not cheaper, and whatever gain in privacy there currently is will not survive a transition to mainstream usage...although the first two problems ensure that there never will be mainstream usage.


This whole bitcoin bubble has taught me that people are much dumber than I had previously believed. Warren Buffett said it best, "Be fearful when others are greedy, be greedy when others are fearful."


> How is this expected to work with 7 billion people using it for every tiny financial transaction? I don't think it can.

Give it ~30 years, for the cost of CPU time/storage space/internet speed to cost 0.1% of what it does today, and — in combination with off-chain clearing — this becomes feasible.

For Bitcoin to even work as money in the first place, people need to store their savings in bitcoins. This transition will take at least ~30 years anyway, which leaves ample time for computing costs to fall to a level where 1GB blocks are realistic. Combined with an off-chain clearing protocol (like Stroem[1]) for consumer-to-merchant payments, this should allow Bitcoin to scale to ~10bn people.

[1] https://www.strawpay.com/docs/stroem-payment-system.pdf


You may place too much value in the transactions of fiat currency. You can still do an in-person trade.

Credit payments may seem instantaneous but they are not. Research the gold standard and who actually stores the gold not the paper receipts for it.

The endgame for bitcoin...Transaction fees? Popup currencies ala private currency?

I hope we are solving some fun math problems with all this distributed hash power.




Guidelines | FAQ | Lists | API | Security | Legal | Apply to YC | Contact

Search: