Bitcoin undoubtedly is a technical and social phenomenon, but it’s also definitely almost useless as a digital currency at the moment. Other alternatives like Bitcoin cash, litecoin, ethereum etc. are much more useful for actually... sending money to people. The dev team needs to make Bitcoin as good as Venmo for sending payments between people, or someone else will beat them to it. People have talked for a long time about currency X being better and replacing Bitcoin but with Bitcoin rising so fast that the network has basically shut down, this may be the first time another currency or fork has the opportunity to overtake it in market cap.
None of the coins can scale realistically on-chain as a peer-to-peer system. If you run the numbers, the transaction volume of 1B people making one transaction a day goes into the terabytes. If you externalize the costs of verifying that to third parties, you lose properties that make Bitcoin interesting to begin with.
For many people it was clear that off-chain transactions are the only feasible way to solve this. Small purchases in particular do not need to be broadcast to the whole network and can be routed in payment channels. Lighting Network is the most promising solution at the moment.
Nothing prevents a sharding as long as you have some way to prioritize in case of conflicts and you require delays from moving money into and out of accounts, but even that's not really needed.
You don't need to store Terabytes per day for 1B daily transactions. BC does it differently, but you could get away with 4 byte time-stamp, 4 byte amount, 32 byte source public key, 32 byte destination public key = unique transaction + 32 byte signature demonstrating sender with correct private key signed that transaction. Now, 1 billion of those = 100GB per day = 36 TB per year which sounds like a lot but most nodes don't need the full amount just current state + verifiable hash + new transactions.
But even that's not needed, suppose every node includes a subset of the account amounts so every K nodes allows you to recover the state of all accounts. That way you don't need a full database just the most recent K nodes and they have complete state. Some people can keep a historic archive, but the system operates even if that information was lost. (You would want some GC as well so accounts must either be larger than A or have a transaction within the last Z steps.)
Granted, managing pending transactions increases bandwidth needs, but nodes can manage reputations based on only forwarding valid transactions. Some metrics so their is some statistical chance of conformation and you end up with ~2x overhead for unconfirmed but likely transactions.
PS: You can also have the protocol grow so if the 11 of the last 20 nodes where full the new node is 1% larger.
Satoshi made a similar argument in Nov 2008 in response to a claim about Bitcoin not being able to scale:
"The bandwidth might not be as prohibitive as you think. A typical transaction would be about 400 bytes (ECC is nicely compact). Each transaction has to be broadcast twice, so lets say 1KB per transaction. Visa processed 37 billion transactions in FY2008, or an average of 100 million transactions per day. That many transactions would take 100GB of bandwidth, or the size of 12 DVD or 2 HD quality movies, or about $18 worth of bandwidth at current prices."
"If the network were to get that big, it would take several years, and by then, sending 2 HD movies over the Internet would probably not seem like a big deal."
Note: this was before the DoS attack in 2009 where hackers tried to freeze the network by creating blocks of uneven or massive size. Which is why in Oct 2009, satoshi imposed the 1MB block size limit (I presume was intended as a temporary stopgap measure) to prevent future similar attacks.
Long after the 1 MB limit was put in place, Satoshi wrote:
>>The current system where every user is a network node is not the intended configuration for large scale. That would be like every Usenet user runs their own NNTP server. The design supports letting users just be users.
-July, 2010
>>It would be nice to keep the [block chain] files small as long as we can.
>>The eventual solution will be to not care how big it gets.
>>But for now, while it’s still small, it’s nice to keep it small so new users can get going faster. When I eventually implement client-only mode, that won’t matter much anymore. (note to readers, "client-only mode" refers to SPV mode)
-August, 2010
and in an email to Mike Hearn:
>>The existing Visa credit card network processes about 15 million Internet purchases per day worldwide. Bitcoin can already scale much larger than that with existing hardware for a fraction of the cost. It never really hits a scale ceiling.
So your explanation for his reasons for putting in place the 1 MB limit are not consistent. Others have said that he was afraid that someone would soon come out with GPU miners and be able to DOS the network with large blocks, so put the limit there as a temporary measure. Now that mining hardware evolution has slowed, and the mining ecosystem matured, this kind of threat is non-existent.
> "So your explanation for his reasons for putting in place the 1 MB limit are not consistent"
Actually the reason I stated is consistent with what satoshi said:
"In 2010, a block size limit of 1 MB was introduced into Bitcoin by Satoshi Nakamoto. He added it hidden in two commits[1] in secret, when challenged publicly he said it is a safety measure to prevent miners from creating large spam blocks." [1]
But not consistent with what he said after the limit was put in place (see the quotes I provided). The motivation I suggested is consistent with all of his actions and statements.
Yea, noticed the typo. Anyway, you can get 1,000Mbit connections in much of the world for under 100$ per month which should be able to handle a full node.
Also, most people don't need to actually run a full node to be a miner. Assuming you trust someone running a full node and the block is signed by hash of hash of (node + random value ) < some value then most miners need only get that initial hash from the trusted party which is under 1kb. You can also send back the best hashes you find to the full node to demonstrate you actually have that hashing power.
It's appealing to have a lot of full nodes backing things up, but in practical terms I don't think it makes much difference if there is 1,000 or 100,000 full nodes. The important bit is for anyone to be able to trust the network not just to waste as much computing power as possible. And for that you can verify some random collection of transactions with less than full bandwidth which lets you verify the full node you're supporting.
PS: You could also set things up with shards, but again I don't feel it's nessisarily worth it.
Don't need home internet connection that fast. Just rent a server at a datacenter near an internet exchange point, and could get plenty fast bandwidth.
Google fiber charges 70$ a month for Gigabit network speeds without throttling in the USA. And get this it's profitable for them without subsidizing it.
If lightning network includes tech that can support billions of transactions, can it be used without bitcoin? Why not use lighting with an uncongested coin?
Yes, any coin that has segwit or a comparable fix for malleability can use lightning. Litecoin is already supported. You can even have atomic swaps between both over lightning channels.
Bitcoin is the most popular with the most resources behind it, so it makes sense to leverage off it. There's nothing stopping similar networks occurring on other coins.
If I pay for something using LN am I going to find it a superior experience to paying with cash or card, or am I going to find it a cumbersome experience for which I am charged an exorbitant fee?
There is upfront work (first you need some bitcoin, then you need to make an on-chain transaction to open a payment channel) but after that, lightning payments are trustless, instant, and with small fees (it's designed to support micro-payments).
But right now this is still VERY early in development.
The goal is to make it simple and inexpensive. Since it supports microtransactions in the sub-cent range and is irreversible, it would beat credit cards in those regards.
The most expensive step would be opening a channel, but there is work on reducing that cost.
Nobody has figured out how to do this yet... nor should they have. You shouldn’t over optimize before you need to and you’ve seen where the real bottlenecks are. But now we need it, and we’ve seen where the bottlenecks are. New technologies and techniques will be needed to match Visa and Mastercard in speed and reliability.
This is why I dislike it when people say "Bitcoin has a first-mover advantage". This is like saying Neils Bohr had the first-mover advantage when it came to Quantum Mechanics. Bitcoin is the Bohr model of blockchains. It was a huge first step, but it's not the last step.
We have yet to see Schrodinger's blockchain, and all of the altcoins claim they are it.
> "Bitcoin rising so fast that the network has basically shut down"
That is one way to view at bitcoin now, a very pessimistic one.
But an alternative positive view is that Bitcoin's network has proved its success at being able to process transaction up to the rate it was designed to handle (1 MB worth of transaction data per ~10min) without failing even in the face of sustained overcapacity barrage of transactions. No bugs since late 2010. No crashes. No successful 51% or other attacks. No double-spent coins. No invalidated transactions.
I think all block chain solutions have the same problem with scaling right ? IOTA sounds like it could potentially solve this since they seem to be P2P with accelerator nodes instead of relying on miners - but honestly I haven't looked too much in to it just put few hundred bucks to it if it actually ends up working.
> We are also working quickly to add support for a Bitcoin Cash (BCH) payment option on all BitPay invoices. Bitcoin Cash is a modified fork of Bitcoin which will allow purchasers to send payments with significantly lower bitcoin miner fees. Bitcoin Cash payments will allow us to re-enable payments as small as $1 or smaller.
They should probably focus on implementing segwit instead of these shenanigans.
BitPay lost a lot of credibility when they published instructions telling people to "upgrade" their Bitcoin wallets by switching to btc1, which was a hardfork that failed spectacularly. What they did was bordering on fraudulent.
Sure, and a 40% transaction fee reduction sounds great in theory, but with a median fee of ~$28.58 (https://bitcoinfees.earn.com/) it will still inarguably leave BTC at a significant disadvantage compared to virtually every other available payment option. Mind you, this calculation is done at current prices and network congestion; the numbers can only be expected to increase assuming further adoption. Not viable.
You must have been moving over $5000. 1% of 5000 is still $50.
The minimum fee for me yesterday was 0.004btc (about $55), the suggested fee was 0.008btc (about $112), and the priority fee was prohibitively high. My hd wallet had 3 inputs though which increases the fee. When I sent with the minimum fee, it stayed unconfirmed for a little over a day before it flat fell off the network. When I resent it with the suggested fee ($112), it stayed unconfirmed for several hours until the early morning when it started getting confirmations finally.
No it doesn't. The reason BTC is choked off is because the core devs are promoting the lightning solution instead of on-chain scaling because they have a stake in making money off the lightning network. And now that we've reach a critical mass of transactions this lightning network is nowhere to be found even though its been promised for years.
The core devs are like the DNC. They'd rather kill the blockchain than capitulate and update the block size.
edit: downvoting me out of visibility won't change the truth. The lightning network, which is driven by Blockstream, which makes up the most core devs, is planning to make money off of lightning network fees, and they aren't willing to give that up even if it means killing BTC. It's not even a secret - there is plenty of public info on Blockstream's business model.
The lightning network is no where near the availability to be used by everyone. Blockstream is trying to get it out as fast as they can, and they are trying, but it's not adopted yet, despite years of development and promotion.
The lightning network is backed by Blockstream, which employs the most core devs. Blockstream plans to make their profits by making fees off of providing lightning network channels to exchanges.
What competitive advantage would Blockstream have? Why would exchanges not peer directly? It is all open source protocols and software. There are three major implementations to choose from.
Certainly not running open source software on commodity hardware. Other than that I don't know, same as for 90% of Blockchain companies that get the same level of investment or more.
It doesn't have to be a permanent solution. Just a reasonable update.
And there is no such thing as a permanent solution. It's like a startup that runs out of money and dies because they spent years making the "permanent solution" rather than release early and often, iterating on the solution.
And enough with the obvious sound bites by the way.
That comparison to gold is only apt when the price of BTC is relativy stable. There is no relevant comparison to gold as an asset class when bitcoin is so volatile. In order to be a valid gold alternative it needs to have a stable, predictable value. Nobody that wants gold in their portfolio is going to want to replace it with an unpredictable and volatile asset.
There's no need for rhetoric comparing BTC to gold. It's not gold, it isn't like gold, and we dont need another form of gold. Let Bitcoin be its own thing.
Except in wartime during a huge recession, gold is still worth something because there's demand for it and it can be traded for fiat currency. Gold has that world-wide, century long track record, and history proves it does. Bitcoin has yet to survive recessions and wars. Thus far, it isn't even stable during boom.
As long as cryptocoins aren't accepted as much as fiat currency (and they're not even _remotely_ near 1:1), they'll be in lower demand during less glorious times. Practically nobody (less than now) will accept cryptocoins then because you can't use them to buy anything worthwhile. A man's gotta eat, and keep the chin above the tide.
I'd rather see merchants use Ripple until this whole BCash/Bitcoin war is settled and scalability is solved since it's faster. But yeah BCash transactions were less than 8 cents when I tried it.
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