Bitcoin on the other hand uses an "Unspent Transaction Output" architecture. Basically your balance is made up of all of the credits and debits (inputs and outputs) you've made with that account. So sending bitcoins requires referencing "unspent outputs".. which may be lots and lots of different transactions.
That's one difference, and there are others, such as the time taken to confirm blocks (current block time on ethereum is 16s). But there are still lots of scalability issues to be addressed, which are actively being worked on.
Vitalik Buterin has a great couple of posts on some of the issues:
https://blog.ethereum.org/2014/09/17/scalability-part-1-buil...
edit: Not sure why this was getting downvoted. Just to clarify, in case it seemed like I wasn't answering the parent. The points above are one of the ways in which "every operation must be verified by every node" is less costly on Ethereum. Obviously if it takes less compute time per transaction, you can scale to larger numbers of transactions per second. Ethereum has already passed Bitcoin in this regard, and has hit at least 8 transactions per seconds at one point, while Bitcoin's ceiling is 7 transactions per second. In addition, prior to launch I believe they managed to push the test network up to 25 transactions per second.
VISA does 56,000 tps.
So it's really simple. How are you going to hit 56,000 tps on the blockchain. The Bitcoin community, which is far bigger and generally more experienced than Ethereum's just spent 18 months vigorously debating this question. Do you suggest Ethereum has come up with a better answer?
And the criticism here is around the selling point of Ethereum: "everything goes on the blockchain". You're telling me after 18 months of debate, the best you've got to say about that is: "an account based architecture"?
What is it about widgets fully encapsulated in a blockchain-native smart contract on Ethereum that makes it so much more scaleable than a similar widget on Bitcoin's blockchain?
1) It produces blocks every 17 seconds. It can do this without neglecting security, because orphan blocks count as uncles and are included in the security of the whole network.
2) It has a scalable/dynamic blocksize. The miners can scale the gas limit up or down by a certain amount. If the current gas limit (pi million) gets hit, miners can start increasing it.
3) Tx fees purpose is primarily for DDOS protection & solving the halting problem with turing-complete scripts. It's not a fundamental element for security, because the issuance rate is constant. This means that a "fee market" doesn't need to exist as much as in Bitcoin, in order to make sure the blockchain remains alive. It has an infinite, but predictable supply, rather than finite.
4) Future scalability improvements include Casper PoS, which will decrease block time to around 1 - 4 seconds & sharding, which will remove the need for every node to process every part of the transaction space.
These additions will mean that for the current period, transactions will increase, and perhaps lead to more centralization as not many will run nodes to keep the whole state. This is a trade-off in return for running more transactions.
None of your talking points magically address the extreme costs of prerequisite physical infrastructure needed to hit 56,000 tps.
Bottom line, it's impossible to match the throughput capacity of just a single credit card company on any blockchain, be it Bitcoin or Ethereum or BBQCoin, without incurring enormous costs in terms of CPU and bandwidth. This is to say nothing of doing decentralized exchanges, order matching, and option contracts - all of which Ethereum has been advertised as doing on a blockchain. For that you'd need hundreds of thousands of tps.
Most of the people in the ethereum project are delusional teenagers looking to get rich quick.
https://news.ycombinator.com/item?id=11184214
Note: Reply there if you do.
Granted, this doesn't deliver the physical infrastructure to process that many transactions - but that will happen over time. Visa didn't process 56k tps on day one, either.
If it's going to take hours to generate a block, I'm worried that it's going to take forever for an app to generate enough ether to get anything done; buying the stuff using real money is a nonstarter for most applications, so generating it on demand is the only real option.
The end goal is to prevent only having large institutions running nodes and to keep the system more decentralized, hence the need for better scaling options. (Bitcoin has become more decentralized as it has aged, with fewer small nodes running)
And I'm not saying that Ethereum has it all solved, just that the system is different enough that some of the issues are not applicable. It's not useful, in my opinion, to just throw up your hands and say "It can never scale!!". First because there's no absolute limitation for scaling, only things that make it costly. Back in the day, if you asked someone how the early Internet was going to scale, it would have seemed like an equally impossible task. There's plenty of time to work on the issues before we need 56,000 tps.
Right, but that wasn't the question I raised. I asked what does Ethereum do different than Bitcoin that makes its blockchain more scaleable? The answer is, of course, nothing. If merge-mined sidechains and overlay protocols are your solution, Bitcoin is non-stop innovating in that direction.
> It's not useful, in my opinion, to just throw up your hands and say "It can never scale!!".
But if you're just going to throw up your hands and say "put it in the cloud", that's no different than what Bitcoin bigblockists want to do.
But I did answer what it does different. I cited a few of the many things it does different, one of which is an account based model. Another is faster and unlimited sized blocks. And if you care to read more of the development threads, you'd find lots of other solutions. Ignoring facts and continuing to say "The answer is, of course, nothing" is just FUD.
Here's a quote from Vitalik in October:
"Scalability: using a combination of sharding schemes, random sampling, heavy use of Merkle proofs and asynchronous calling in order to increase the potential transaction throughput from ~10-20 transactions per second to over 100000 (or, if super-quadratic versions are used, a theoretically unlimited number). The basic concepts behind scaling have been set in stone for over six months, and our research team is highly confident that the general approach is valid;"
> But if you're just going to throw up your hands and say "put it in the cloud"
Who said anything of the sort? I'm saying it's a hard problem, but it's tractable and takes resources and time. What's that got to do with the cloud??
Ultimately I don't understand the whole negative attitude on scaling. Obstacles are not a reason to not attempt something, and certainly not potential scaling issues. Making the Internet was hard. In 1993 people could have said "computers are expensive.. and think of all the cables you'd have to lay! It's going to be millions of miles of cables! It'll never happen! This whole WWW thing is just a toy fad!"
Until there's a real need for bitcoin to support this sort of volume (if ever) I don't think comparing bitcoin to visa tps wise proves anything.
If there's enough customer adoption where there's a need to handle that kind of volume you can rest assured there will be infrastructure to support it and instead of a loose group of "core devs" there will be an official salaried department (at visa? :) ) working on this full time.
But since we're talking about "decentralized systems", the question is who owns the blockchain infrastructure. Is the blockchain going to be serviceable on home desktop PCs, or are you going to need a datacenter?
To really drive this example home, could you please quote me a price on building out a Tier 1 datacenter with gigabit fiber? Because last I checked most people don't have that kind of money in their sofa cushion. And it isn't even remotely feasible to acquire that sort of infrastructure anonymously.
Yet that's what it's going to take to hit 56,000 tps on a blockchain any time this decade or perhaps even after [1]:
> Next month, the worldwide semiconductor industry will formally acknowledge what has become increasingly obvious to everyone involved: Moore's law, the principle that has powered the information-technology revolution since the 1960s, is nearing its end.
A common mistake is confusing "popularity" with decentralization. BitTorrent is both popular and decentralized. It doesn't take a datacenter and a 10-machine cluster to participate in a BT swarm as a full-on peer. As an aside, it's no surprise the creator of BitTorrent is staunchly against scaling Bitcoin in datacenters [2].
[1]: http://www.nature.com/news/the-chips-are-down-for-moore-s-la...
[1]: http://www.agner.org/optimize/blog/read.php?i=417
[2]: https://medium.com/@bramcohen/bitcoin-s-ironic-crisis-32226a...
"Big boys" do though. And that is my point exactly - if there's enough tx volume (driven by consumer adoption first and foremost) to warrant this expense - someone will do it. Also, in reality bitcoin isn't all that decentralized. Sure, individual nodes on the p2p network are all over the place however the vast majority of them are members of mining pools, with 3 biggest Chinese pools accounting for 30+ % of the total hashrate.
So if one of the major card networks steps in and takes over that chunk, as a consumer I'd be looking at a more reliable system to deal with.
If you're willing to put the entire system into the cloud and hand over the backbone of Bitcoin to big banks and megacorps, you end up with a system no different from fiat currency over time. It ends up being a State controlled fiat money, because all of the infrastructure providers are Corporations - creatures of the State.
Inflation? No problem, we'll just have the usual suspects update the code. Freezing accounts? Narcoturrerism? No problem, we'll update the code. Etc. Having a P2P electronic cash system means accepting that the system is going to be different than government scrip.
The blockchain was never meant to be PayPal. It was meant to bootstrap a cryptoeconomic system outside the bounds of politics and the law. It's completely irresponsible to give that vision up for the ability globally broadcast low value, meaningless consumer payments - especially since you can achieve that by building higher layers of abstraction.
As for being "outside the bounds of politics and the law" when it really comes down to it you can only go so far especially if there's something as sensitive and highly visible as "money" is involved. Even in the reasonably "soft" western countries there are subpoenas, cease and desist orders etc. All of that can be set in motion by the government who has the final say. In China - they just disconnect the whole country from the internet :)
That's what I keep telling them. The whole of credit processing and banking... even the Fed... runs on centralized, transactional architectures with redundant datacenters and optionally redundant checks from mutually-distrusting parties. What people want to do can be built on a highly-efficient, log-based system with distributed checking run by a foundation (or international collaboration) in a neutral country. It would be simpler, more secure, use less energy, faster, and so on. Additionally, we can choose what level of detail we want in reporting or auditing to reduce data overload.
These blockchain models want everything to go on a blockchain whose operational hurdles even they can't agree on. It's like this subfield of IT is ignoring simple solutions to simple problems while pushing complex solutions with complex problems.
So, I add to your own question: what is it about a smart contract on Bitcoin or Ethereum that couldn't be done with a signed email or website document optionally run through a few cryptographic notaries? The latter is not only simpler and more efficient: it's in use commercially with many courts already approving of concepts and some implementations.
Conversely, Bitcoin never promised smart contracts. To the extent Bitcoiners take part in Ethereum debates, we're only doing it because we know the real game Ethereum is playing is diverting investment capital away from Bitcoin.
Even if that were true, that would necessarily be a bad thing in the interests of not putting all your eggs in one basket.
Otherwise - Blockchains totally suck at everything, and these private-blockchains/blockchains without energy are completely inane and stupid
Of course, the problems on authorities' side might be better or worse with the new models. Nonetheless, my argument is that these blockchains are essentially a combination of specific tech, ledgers, distributed verification, cooperation, and incentives on infrastructure side. You can do all that without blockchains using simple, dumb tech with different organizational structure & participation rules.
We should be smart enough now not to put all of our trust in to one system, and instead to foster a biological-style heterogeneity of systems, all of which we can opt in/out of on a dynamic basis based upon their various objective properties and our risk model versus requirements (==motives).
BOOM! Now you're seeing what I'm talking about. Regardless of the tech, it ends up coming down to the people controlling key companies, organizations, or code. Plus the legal system. So, I prefer just fixing that angle on a centralized system run by mutually-suspicious parties with open verification and incentives aligned right way.
"instead to foster a biological-style heterogeneity of systems, all of which we can opt in/out of on a dynamic basis based upon their various objective properties and our risk model versus requirements (==motives)."
That's a good idea. I'd push several good ones if they were available. Preferably they'd be really different from one another to maximize the diversity benefit. Another angle on that is to derive the currency value from a set of high-value or stable commodities. That was what high-assurance engineer Clive Robinson pushed for as an alternative to either gold or our currency. Turns out, there's an altcoin company doing exactly that. Can't recall the name.
How is that different from a Bitcoin wallet address aka public/private key combo?
I only downvote abusive comments and spam.
As for Ethereum I have a lot of work understanding how the whole thing works. I sense there is a lot of promise and potential there.
However like the internet when it was emerging, I suspect the Ethereum project will probably be attacked without thoughtful discussion.
* No guarantee of transaction execution
* Turing-complete smart contracts are slow
* Scaling is a moonshot
* Oracles break the trust model
* Public blockchains struggle to stay decentralized
More here:
https://makebitcoingreatagain.wordpress.com/2016/02/10/5-cha...
Bitcoin has a multiple-factor greater mindshare. More developers, more researchers, more conferences, and more overall maturity.
There are a lot of incorrect things in this thread.
It is important to note that this is not a resource for distributed general computation - it's for running smart contracts. Per the Ethereum development tutorial, "you will not be able to do anything on the EVM that you cannot do on a smartphone from 1999." https://github.com/ethereum/wiki/wiki/Ethereum-Development-T...
This is not a very good article - it's rather breathless and short on technical detail. In particular, calling it "the World Computer" is completely not what Ethereum will be capable of.
Additionally, raising the block size cap is only a stopgap measure. Eventually you will reach hard bandwidth or disk storage limits and the only way will be to throw some transactions outside the blockchain.
It occurs to me as I write that Ethereum may have similar problems down the line, when platform updates turn out to be direly needed, but would disrupt the operation of well-established and lucrative apps.
So you will be able to. He has done a lot of thinking around tree chains and scaling and optimiztion.
Btc is limited inamount of coins and came first, its value is as a currency.
Eth is the first popular blockchaindb. Coins are needed to pay miners and powet dapps.
If a currency cant be traded it idnt worth anything, however sidechains seem to provide a way to convert from one to another