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From: Eric Lombrozo <elombrozo@gmail.com>
In-Reply-To: <558DB997.4030209@phauna.org>
Date: Fri, 26 Jun 2015 19:18:20 -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
Precedence: list


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I=E2=80=99ve been pondering this whole scale issue considerably=E2=80=A6an=
d 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.

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.

The block size issue is really a usability issue at this point. There =
are two fundamental things we need to solve:

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.)

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.



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.


- Eric Lombrozo


> 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


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