From: Thomas Zander <thomas@thomaszander.se>
To: Bitcoin Dev <bitcoin-dev@lists.linuxfoundation.org>
Date: Tue, 11 Aug 2015 08:31:11 +0200
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Subject: Re: [bitcoin-dev] Fees and the block-finding process
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On Monday 10. August 2015 23.03.39 Mark Friedenbach wrote:
> > So, while LN is written, rolled out and tested, we need to respond with
> > bigger
> > blocks.  8Mb - 8Gb sounds good to me.
> 
> This is where things diverge. It's fine to pick a new limit or growth
> trajectory. But defend it with data and reasoned analysis.

We currently serve about 0,007% of the world population sending maybe one 
transaction a month.
This can only go up.

There are about 20 currencies in the world that are unstable and showing early 
signs of hyperinflation. If even small percentage of these people cash-out and 
get Bitcoins for their savings you'd have the amount of people using Bitcoin 
as savings go from maybe half a million to 10 million in the space of a couple 
of months. Why so fast? Because all the world currencies are linked. 
Practically all currencies follow the USD, and while that one may stay robust 
and standing, the linkage has been shown in the past to cause chain-effects.

It is impossible to predict how much uptake Bitcoin will take, but we have 
seen big rises in price as Cyprus had a bailin and then when Greece first 
showed bad signs again.
Lets do our due diligence and agree that in the current world economy there 
are sure signs that people are considering Bitcoin on a big scale. 

Bigger amount of people holding Bitcoin savings won't make the transaction 
rate go up very much, but if you have feet on the ground you already see that 
people go back to barter in countries like Poland, Ireland, Greece etc.
And Bitcoin will be an alternative to good to ignore.  Then transaction rates 
will go up. Dramatically.

If you are asking for numbers, that is a bit tricky. Again; we are at 
0,007%... Thats like a f-ing rounding error in the world economy. You can't 
reason from that. Its like using a float to do calculations that you should 
have done in a double and getting weird output.


Bottom line is that a maximum size of 8Mb blocks is not that odd. Because a 20 
times increase is very common in a "company" that is about 6 years old.
For instance Android was about that age when it started to get shipped by non-
Google companies. There the increase was substantially bigger and the company 
backing it was definitely able to change direction faster than the Bitcoin 
oiltanker can change direction.


On the other side, 3Tb harddrives are sold, which take 8Mb blocks without 
problems.
You can buy broadband in every relevant country that easily supports the 
bandwidth we need. (remember we won't jump to 8Mb in a day, it will likely 
take at least 6 months).
We should get the inverted bloom filters stuff (or competing products) working 
at least on a one-to-one basis so we can solve the propagation time problem.
There frankly is a huge amount of optimization that can be done in that area, 
we don't even use locality (pingtime) to optimize distribution..
From my experience you can expect a 2-magnitude speedup in that same 6 month 
period by focusing some research there.


Another metric to remember; if you follow hackernews (well, the incubator more 
than the linked articles) you'd be exposed to the thinking of these startups.
Their only criteria is growth. and this is rather substantial growth. Like 
150% per month.  Naturally, most of these build on top of html or other 
existing technologies.  But the point is that exponential growth is expected 
in any startup.  They typically have a much much more agressive timeline, 
though. Every month instead of every year.
Having exponential growth in the blockchain is really not odd and even if we 
have LN or sidechains or the next changetip, this space will be used. And we 
will still have scarcity.

Remember 8Gb/block still doesn't support VISA/Mastercard.
-- 
Thomas Zander