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"Bitcoin can't scale" by edicted

View this thread on: hive.blogpeakd.comecency.com
· @edicted ·
$44.92
"Bitcoin can't scale"
![scalescaling.png](https://images.hive.blog/DQmQCo3eNDUv1msh6A9V14BzPh3uzxcrDZvMyMiSC6HBAbY/scale-scaling.png)

###### Most crypto users assume that Bitcoin will never be able to scale.
Many people within the cryptosphere believe that Bitcoin cannot scale.
Even Bitcoin maximalists believe this, to an extent. 
They view the Lightning Network as the 2nd layer that allows scaling.
But even then most maximalists believe that the 1st layer won't scale,
instead opting to outsource scaling to the second layer and beyond. 
Whether or not that is a viable solution is debatable. 

I've heard many people make the claim that over time Bitcoin fees will simply skyrocket to the moon and it will cost over $1000 to make a single transaction.  This would in turn limit Bitcoin use to the richest people and institutions in the world (only million+ dollar transfers make sense in this scenario).  This logic makes sense in certain contexts.  The block reward keeps decreasing and the token price keeps increasing.  Surely the fees will continue to go up exponentially as well.  

But that's just the theory, and the reality of the situation is far from the theory.  At the heart of this is perhaps the Lightning Network, but there are other factors in play as well.  For example, custodians of Bitcoin provide an infinite amount of scaling opportunity.  An exchange can trade around fake derivative Bitcoin all day long completely off-chain.  Of course we all know the risks to derivative Bitcoin: it only works if the centralized agent is not only trustworthy, but also competent and immune to cyber attacks, which is essentially impossible to guarantee. 

However, the biggest reason why Bitcoin will scale into the future has a very simple answer: the block size.  Most of the cryptosphere just automatically assumes that Bitcoin's block size will never be increased.  I personally guarantee that this is a very aggressive and perhaps even foolish assumption to make.  The block size will be raised; it's only a matter of time. 

It's easy to see why many would brush this idea away and dismiss it completely without a second thought.  After all, both BCH and BSV where born of the block size debate.  Given all that drama, how could we possibly assume that the Bitcoin network would finally capitulate and increase it?  

The answer to this is simple: Bitcoin fees are not $1000.  In fact, Bitcoin fees during the 2021 bull run were significantly lower than fees during the 2017 bull run ($50+).  I believe the highest fees I ever saw this most recent time around were about $20, and at these prices and network usage it's fairly easy to transfer around any amount of Bitcoin for less than $1 in the present time. 

I think one of the most understated reasons for why Bitcoin will increase the block size is that Bitcoin will eventually be flipped in market cap by another token.  This will in turn flip maximalist's worldview upside-down.  Many literally believe that such a thing is impossible, when all it would take is Ethereum going x3.  Maximalists believe this can't happen because Ethereum is "centralized", but they fail to consider that Ethereum's market cap can x10 simply because it is centralized and centralized money can pour into it at any time in an attempt to take over the network with a money attack.  Certainly, this would be an ironic twist of fate. But then again, markets are anything but rational; something maximalists refuse to understand in a seemingly willful act of defiance of how the real world operates. 

Another obvious reason Bitcoin will eventually increase the block size is the simple fact that technology upgrades are outpacing the cost of running a Bitcoin node.  Even though all data on the Bitcoin network is static and permanent the blockchain only increases in size 1-2 megabytes every 10 minutes on average.  Using a 1.5 MB average, that's a 79 gigabyte increase per year.  That's nothing compared to the cheap terabyte hard-drives we can buy right now, imagine what that number will be like in 10 years.  It's almost guaranteed that we'll be able to buy petabyte hard drives by then and it won't cost an arm and a leg.  Will Bitcoin really only be increasing in size by 79 GB per year once we get to the 2030's?  It sounds absurd when stated out loud.  It will be even more absurd if on-chain transactions are $100+ and the cost to run a Bitcoin node is basically nothing and not increasing the block size has been crippling the network for years as it tumbles down the market cap rankings.  There is no way the Bitcoin network is willingly going to allow that to happen in real time. 

The entire reason for keeping the block size small is so that it's cheap and sustainable to run a node.  Bitcoin has to do this because Bitcoin does not allocate inflation to nodes like Hive does.  Hive nodes can be massive because we directly incentivize their operation.  Bitcoin nodes can not.  It's that simple.  However, in ten years when Bitcoin fees are out of control it only makes sense to increase the block size because doing so will not really increase the cost of running nodes.  It will only be seen as a scaling solution at that time with very little (if any) drawbacks. 

#### Conclusion
Bitcoin is scalable. 
The Lightning Network might go somewhere (no promises). 
Bitcoin custodians allow off-chain transactions (but require trust). 
The block size will be increased. 
It's only a matter of time before it does.  
Likely either in response to ridiculous fees, or being flipped in MC. 
I guarantee it. 

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vote details (512)
@andablackwidow · (edited)
To be honest I never understood the argument that allowing bigger blocks will lead to centralization. First of all, mining node is not even required to keep past blocks - pruned node can mine just fine. Second: the bitcoin blockchain size is almost trivial for even dated PCs (and pruning was implemented ages ago, so it is easy for anyone to run consensus node). Third: while there is a variation depending on transaction sizes, on average doubling size of block only adds one layer to the merkle tree. On top of that the nonce (the thing miners try to find) is added to the header on top of merkle root, the root is computed once per block, so increasing block size does not make mining process slower in any measurable way.
Edit: heh, minutes after sending above I finally found where "the problem" is - the nonce is only 32 bit number, once exhausted the miner has to change the merkle tree somehow, with extra nonce being typically used. Since that extra number(s) is part of coinbase transaction, it changes whole tree, at least on the branch that leads to that transaction. Which means doubling size of block should add on average one extra hash every 4 billion hashes. Doesn't sound that horrible to me, I must be missing something still.
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@bil.prag ·
$0.02
if speed of internet and speed of computers (price and size of drives) continues to go up there is no reason to not make the block size bigger. 
👍  
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vote details (1)
@brianoflondon ·
$0.02
How do they incentivise the miners to run software that cuts transaction fees just as their block rewards are becoming smaller?

Do they just hope they'll suddenly make it up in volume?

I can see that being a hard sell to the miners. It doesn't matter how many nodes upgrade, if all the mined blocks stay small because the miners keep them that way.
👍  
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vote details (1)
@edicted ·
Having trouble understanding this question. 
Miners want bigger blocks.
Bigger blocks have more fees. 
They make more money. 

Bitcoin can easily negate the problem of dwindling inflation by simply doubling the block size every four years as inflation is cut in half.  According to Moore's law, they could easily double the blocksize every year and should have very few problems. If we quadruple the block size and this cuts fees in half, the miners are raking in double the fees. 
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@brianoflondon ·
$0.03
I guess I'm not really thinking it through to where there is a significant enough increase in fees per block to make mining happy.

I'm a little bit less gung ho about the future of Bitcoin than the Maxi crowd I work with because right now I'm looking at the disaster which is leveraged hardware mining and thinking if miners can't make money on Bitcoin (and miners are the ONLY part of Bitcoin which the core protocol rewards) then where is the money to keep it going?
👍  ,
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vote details (2)
@chekohler ·
RE: "Bitcoin can't scale"
Lightning network isn't the only scaling solution, but its more of a stacked solution, yes most people going off-chain are using Lightning, but there is also the liquid network, a federated system, of which there could be several liquid networks if the market deemed it worthwhile.

Since Liquid is a fork of bitcoin it's compatible with lightning so you can establish a LN channel with liquid meaning you're broadcasting your channel open with liquid and not using block space

Lightning will also have channel factories which can be used with wumbo channels so it will require less touching of the base chain

Then you have additional layers like eCash/Fedimints and RGB that are running on top of Lightning which provides even more transaction volume optionality

That's not to mention the work done on drivechains and statechains that will all be compatible with lightning


Yes at some point bitcoin will have to increase blockspace but all these solutions are buying time for hardware to catch up and to ensure that when that time comes it does not prune nodes from the network

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@iykewatch12 ·
I think Bitcoin is been marked for a cycle of few persons using price to scare away more people. Hive is welcoming, it's evolving and allows expansion for rapid adoption . More people, more power.
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@justina7osun ·
RE: "Bitcoin can't scale"
Due to high gas fees of Bitcoin transaction, I suggest scalability of 50 - 50 because users will prefer alt coins with lower fees and hope for a hold. Thanks for sharing 

Posted Using [LeoFinance <sup>Beta</sup>](https://leofinance.io/@justina7osun/re-edicted-5df8yh)
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@melbourneswest ·
great breakdown and the Lightning Network will contribute greatly to the scaling issues. 
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@piya3 ·
I hope bitcoin very soon big pumping. And it's just my opinion.
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@yibbiy ·
$0.12
Now you mentioned blockchain size, how quickly does HIVE blockchain size increase?  Would we encounter the sustainability issue before BTC? 
👍  ,
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vote details (2)
@edicted ·
$0.11
Great question and it is very hard to say. 
There are a dozen technical bottlenecks that only devs know about. 
At the current max blocksize for Hive, we increase by 225 GB per year, 
But Hive blocks are never full so we have no idea if we can increase that limit. 
We have to stress-test the network in the wild to know for sure.
That only comes with real adoption. 
👍  ,
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vote details (2)
@andablackwidow ·
$0.02
It is actually more than that. Max block size voted for by witnesses is currently just 64 kB (which is also smallest allowed max size). With 10.5M blocks per year we get over 641 GB of potential new raw block log. Now, we have a compression since HF26, which cuts it in half on average, plus like you said, blocks are rarely full - it is apparent considering 7 years of block log are not even 380 GB after compression.

When it comes to consensus/witness node, during work for HF26 I've run flood test with just custom jsons (it was to expose any places in code that could be optimized that don't depend on the operations themselves). Once some optimizations were in place I wasn't able to saturate 1 MB blocks, even while sending presigned transactions. True, the test was running six witness nodes and the flooding threads on a single computer. Later we've run flood on mirrornet (with mix of actual transactions translated from mainnet, just squashed to smaller number of blocks) and 2 MB blocks (maximal allowed max block) were just fine. But flooding hived for limited time (we were running out of source transactions) is one thing. There are other essential services that must work, f.e. Hivemind, and that is a whole different story. I don't know about flood tests being run on "full stack". Hivemind in particular has a lot of work to be done still, unfortunately some of it involves changes in APIs which is always a pain to synchronize with those that are using it.

One more unknown is how the RC will behave in environment of bigger blocks and more sustained traffic. Observing flooded mirrornet was not enough due to short time frame. Personally I think witnesses should increase max block size to 96 kB (or even 128 kB), so we can observe how whole system behaves in real conditions. It won't affect us in any way during normal traffic (blocks are 22 kB on average) but should cover occasional spikes as well as prolonged high traffic during some events in Splinterlands.
👍  ,
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