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Date: Fri, 31 Jul 2015 14:15:04 +0200
Message-ID: <CA+w+GKRPPcgCO0pBP2PjKGU49tWuBoF1vRJzY+4fWn71HOVDPw@mail.gmail.com>
From: Mike Hearn <hearn@vinumeris.com>
To: =?UTF-8?B?Sm9yZ2UgVGltw7Nu?= <jtimon@jtimon.cc>
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Cc: Bitcoin Dev <bitcoin-dev@lists.linuxfoundation.org>
Subject: Re: [bitcoin-dev] Block size following technological growth
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Hey Jorge,

He is not saying that. Whatever the reasons for centralization are, it
> is obvious that increasing the size won't help.
>

It's not obvious. Quite possibly bigger blocks == more users == more nodes
and more miners.

To repeat: it's not obvious to me at all that everything wrong with Bitcoin
can be solved by shrinking blocks. I don't think that's going to suddenly
make everything magically more decentralised.

The 8mb cap isn't quite arbitrary. It was picked through negotiation with
different stakeholders, in particular, Chinese miners. But it should be
high enough to ensure organic growth is not constrained, which is good
enough.

I think it would be nice to have some sort of simulation to calculate
> a "centralization heuristic" for different possible blocksize values
> so we can compare these arbitrary numbers somehow.


Centralization is not a single floating point value that is controlled by
block size. It's a multi-faceted and complex problem. You cannot "destroy
Bitcoin through centralization" by adjusting a single constant in the
source code.

To say once more: block size won't make much difference to how many
merchants rely on payment processors because they aren't using them due to
block processing overheads anyway. So trying to calculate such a formula
won't work. Ditto for end users on phones, ditto for developers who want
JSON/REST access to an indexed block chain, or hosted wallet services, or
miners who want to reduce variance.

None of these factors have anything to do with traffic levels.

What people like you are Pieter are doing is making a single number a kind
of proxy for all fears and concerns about the trend towards outsourcing in
the Bitcoin community. Everything gets compressed down to one number you
feel you can control, whether it is relevant or not.

> So why should anyone go through the massive hassle of setting up
> exchanges,
> > without the lure of large future profits?
>
> Are you suggesting that bitcoin consensus rules should be designed
> to maximize the profits of Bitcoin exchanges?
>

That isn't what I said at all Jorge. Let me try again.

Setting up an exchange is a lot of risky and expensive work. The motivation
is profit, and profits are higher when there are more users to sell to.
This is business 101.

If you remove the potential for future profit, you remove the motivation to
create the services that we now enjoy and take for granted. Because if you
think Bitcoin can be useful without exchanges then let me tell you, I was
around when there were none. Bitcoin was useless.

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<div dir=3D"ltr">Hey Jorge,<br><div class=3D"gmail_extra"><br><div class=3D=
"gmail_quote"><blockquote class=3D"gmail_quote" style=3D"margin:0 0 0 .8ex;=
border-left:1px #ccc solid;padding-left:1ex">He is not saying that. Whateve=
r the reasons for centralization are, it<br>
is obvious that increasing the size won&#39;t help.<br></blockquote><div><b=
r></div><div>It&#39;s not obvious. Quite possibly bigger blocks =3D=3D more=
 users =3D=3D more nodes and more miners.</div><div><br></div><div>To repea=
t: it&#39;s not obvious to me at all that everything wrong with Bitcoin can=
 be solved by shrinking blocks. I don&#39;t think that&#39;s going to sudde=
nly make everything magically more decentralised.</div><div><br></div><div>=
The 8mb cap isn&#39;t quite arbitrary. It was picked through negotiation wi=
th different stakeholders, in particular, Chinese miners. But it should be =
high enough to ensure organic growth is not constrained, which is good enou=
gh.</div><div><br></div><blockquote class=3D"gmail_quote" style=3D"margin:0=
 0 0 .8ex;border-left:1px #ccc solid;padding-left:1ex">I think it would be =
nice to have some sort of simulation to calculate<br>
a &quot;centralization heuristic&quot; for different possible blocksize val=
ues<br>
so we can compare these arbitrary numbers somehow. </blockquote><div><br></=
div><div>Centralization is not a single floating point value that is contro=
lled by block size. It&#39;s a multi-faceted and complex problem. You canno=
t &quot;destroy Bitcoin through centralization&quot; by adjusting a single =
constant in the source code.</div><div><br></div><div>To say once more: blo=
ck size won&#39;t make much difference to how many merchants rely on paymen=
t processors because they aren&#39;t using them due to block processing ove=
rheads anyway. So trying to calculate such a formula won&#39;t work. Ditto =
for end users on phones, ditto for developers who want JSON/REST access to =
an indexed block chain, or hosted wallet services, or miners who want to re=
duce variance.</div><div><br></div><div>None of these factors have anything=
 to do with traffic levels.</div><div><br></div><div>What people like you a=
re Pieter are doing is making a single number a kind of proxy for all fears=
 and concerns about the trend towards outsourcing in the Bitcoin community.=
 Everything gets compressed down to one number you feel you can control, wh=
ether it is relevant or not.</div><div><br></div><blockquote class=3D"gmail=
_quote" style=3D"margin:0 0 0 .8ex;border-left:1px #ccc solid;padding-left:=
1ex"><span class=3D"">&gt; So why should anyone go through the massive hass=
le of setting up exchanges,<br>
&gt; without the lure of large future profits?<br>
<br>
</span>Are you suggesting that bitcoin consensus rules should be designed t=
o=C2=A0maximize the profits of Bitcoin exchanges?<br></blockquote><div><br>=
</div><div>That isn&#39;t what I said at all Jorge. Let me try again.</div>=
<div><br></div><div>Setting up an exchange is a lot of risky and expensive =
work. The motivation is profit, and profits are higher when there are more =
users to sell to. This is business 101.</div><div><br></div><div>If you rem=
ove the potential for future profit, you remove the motivation to create th=
e services that we now enjoy and take for granted. Because if you think Bit=
coin can be useful without exchanges then let me tell you, I was around whe=
n there were none. Bitcoin was useless.</div></div></div></div>

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