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From: Eric Lombrozo <elombrozo@gmail.com>
In-Reply-To: <2107342B-1D9E-4575-B7E4-3B69D51B1A17@gmail.com>
Date: Fri, 26 Jun 2015 19:54:37 -0700
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To: Owen Gunden <ogunden@phauna.org>
Cc: bitcoin-dev@lists.linuxfoundation.org
Subject: Re: [bitcoin-dev] The need for larger blocks
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I should add that a strategy of =E2=80=9Clet=E2=80=99s avoid fee =
pressure as much as possible. let=E2=80=99s avoid even thinking about =
how we=E2=80=99ll transition as much as possible.=E2=80=9D strikes me as =
at least a tad bit myopic.

- Eric Lombrozo

> On Jun 26, 2015, at 7:18 PM, Eric Lombrozo <elombrozo@gmail.com> =
wrote:
>=20
> I=E2=80=99ve been pondering this whole scale issue considerably=E2=80=A6=
and am left with the conclusion that blockchains are ultimately dispute =
resolution mechanisms. The vast majority of crypto negotiation will be =
taking place at levels lesser than global consensus in the future - =
global consensus is just far too expensive to require for every single =
cappuccino. There really is little need to take most cases =
globally=E2=80=A6unless the participants disagree. I=E2=80=99ve =
commented in other places that blockchains are essentially a =E2=80=9Cfix=E2=
=80=9D to the prisoner=E2=80=99s dilemma - they make cooperation the =
equilibrium strategy.
>=20
> Regardless of whatever linear factor we scale the blockchain by, it is =
simple math to see that any exponential growth (even if for a short =
time) in usage will overwhelm the current network. If we ever intend to =
take bitcoin mainstream, we will most likely experience at least a short =
time of exponential growth=E2=80=A6at least until we either reach an =
inherent limitation or until we saturate. As Pieter said earlier, FAPP =
right now the demand for payments might as well be infinite. We=E2=80=99re=
 nowhere near the ability to service it all.
>=20
> The block size issue is really a usability issue at this point. There =
are two fundamental things we need to solve:
>=20
> 1) There=E2=80=99s no model for how we=E2=80=99ll introduce a fee =
market, even though the design of Bitcoin fundamentally depends on fees =
for its survival (at least in the current form of the design.)
>=20
> 2) There=E2=80=99s no mechanism for how to perform fee bidding and =
estimation. Most wallets simply have no way to do this without serious =
usability problems.
>=20
>=20
>=20
> If we=E2=80=99re going to talk about block fees, let=E2=80=99s keep it =
in the context of these relevant issues and not confound it with the =
scalability issue=E2=80=A6these are two very different issues.
>=20
>=20
> - Eric Lombrozo
>=20
>=20
>> On Jun 26, 2015, at 1:44 PM, Owen Gunden <ogunden@phauna.org> wrote:
>>=20
>> On 06/26/2015 02:23 PM, Jeff Garzik wrote:
>>> Failure to plan now for a hard fork increase 6(?) months in the =
future
>>> produces that lumpy, unpredictable market behavior.
>>>=20
>>> The market has baked in the years-long behavior of low fees.  =46rom =
the
>>> market PoV, inaction does lead to precisely that, a sudden change =
over
>>> the span of a few months.
>>=20
>> Which market participants are you referring to?
>>=20
>> I entered the bitcoin market with open eyes, aware that it faces hard =
scalability challenges by design. I was also aware that because of these =
challenges, eventually transaction fees would have to rise.
>>=20
>> Nevertheless, I made the decision to invest because of the utility I =
gain from the anti-censorship, privacy, control, store of value, and =
security aspects of bitcoin -- many of which stem from decentralization, =
which others have demonstrated to be linked to the block size.
>>=20
>> On the other hand, there are undoubtedly other market participants =
who heard hype about "zero fee transactions to anywhere in the world", =
believed it would scale, and made (mal)investments as a result.
>>=20
>> As for how many market participants of each flavor, and how deep =
their respective pockets, who knows? My experience in markets has lead =
me to realize that it's never wise to assume I know what "the market" =
does and doesn't know. If Jeff Garzik is right about what the market has =
priced in, then yes, filled blocks will be rocking the boat. But who's =
to say that the smartest, biggest investors and traders don't already =
see this scaling problem, and have already priced it in? In this case, a =
sudden large increase in the block size is actually rocking the boat. =
The point is, you can't know either way, so trying to pre-empt the =
market in this way is erroneous.
>>=20
>> Regarding entrepreneurial investment specifically, why should we =
favor the entrepreneurs who require a more centralized bitcoin over =
those who were more considerate of the possibility of rising transaction =
fees when making their business models?
>>=20
>> In my mind, we should favor neither, which is why I'm basically in =
agreement with Pieter that this sense of "emergency" shouldn't really be =
a part of the debate.
>>=20
>> Not that I'm taking a stand on the specific block size issue either =
way. I just think this particular line of reasoning (presupposing what =
information the market has and has not already baked in) is unsound.
>> _______________________________________________
>> bitcoin-dev mailing list
>> bitcoin-dev@lists.linuxfoundation.org
>> https://lists.linuxfoundation.org/mailman/listinfo/bitcoin-dev
>=20


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