The True Cost of Bitcoin Transactions | Hacker News Reader

The True Cost of Bitcoin Transactions

moneyandstate.com

108 pointslisper115 comments

There is a small faction of the Bitcoin community working exceptionally hard to prevent any block size increase. I find their motives really baffling. They had some legitimate arguments a few years ago when discussion of this issue first started but those have all since been superseded by improvements in the protocol like xthin.

They now resort to distasteful tactics by running anyone out of town that even so much as suggests a block size increase. They are also working overtime to censor any comments that challenge their world view on the /r/bitcoin sub reddit which is why you see such hostile comments mentioned by the OP in response to users asking about slow transactions. /r/bitcoin is now just an echo chamber where yes men regurgitate the agenda of a select few. Eeveyone else is shadow banned.

edit: anyone that doubts this go make a comment in /r/bitcoin that contains the word "censorship" then view the page in incognito mode. The comment is immediately hidden by the automoderator. It really is nuts.

Article about the history of censorship in /r/bitcoin https://medium.com/@johnblocke/a-brief-and-incomplete-histor...

Follow the money, it's not baffling at all.

Can you explain better? How does changing the blocksize affect the amount of money?

> Eeveyone else is shadow banned.

On reddit, only admins can shadow ban, and they claimed that they stopped doing it over a year ago, in my understanding.

Subs can do a pseudo-shadowban by setting up automoderator to delete any comment you make automatically without explicitly banning you.

None of the comments I make in that sub seem to show up any more and the only reason I realized it is because I stopped getting any responses and checked from an incognito window. Sure enough nothing there. I know others who have experienced the same. Some people are outright banned as well.

I don't even bother with r/bitcoin anymore. The level of groupthink is insufferable, but hard for me to say whether it formed naturally or via direct influence (considering it's Reddit, both are likely)

I agree. I think it is a natural consequence of the censorship. If you censor comments and ban users that dissent people take the hint pretty quick that diversity of opinion isn't welcome and look elsewhere.

The one hope I have for this whole thing being resolved is that historically there are examples in Bitcoin of groups that were once very influential being superseded. Most notable is probably Ghash.io which had so much hash rate at the height of their power that people were afraid they could perform a 51% attack and that Bitcoin was doomed. Today they don't even register a percentage point.

That's really baffling, I perceived quite the opposite.

Based on what? Can you name a single dev that expresses support for bigger blocks that hasn't been systematically ridiculed and excluded from Bitcoin Core development by the small block crowd? It isn't even possible to get an accurate perception of Bitcoin Unlimited support from reading the traditional Bitcoin discussion forums like /r/bitcoin because there is ZERO tolerance for discussion of bigger blocks unless it in a negative context.

That's a false premise. There is a block size increase when segwit activates. The debate is mostly if we should have a hard fork as well as (or even instead of) a soft fork.

I think most developers are rightly scared of a hard fork, especially as we've seen what happened to Etherium lately. There was double spending as every node was not perfectly aligned with this. And then, contrary to expectations, the old chain survived. "Would you like to pay with Bitcoin Classic, Bitcoin Core or Bitcoin United?" That's not what anyone wants.

The ETH / ETC situation was only possible because ETH has a much smaller block time than Bitcoin and the difficulty re-target happens every block instead of every 2016 blocks. The upshot for Bitcoin is that any chain with a minority of hashing power will die off.

Dev's are just FUDing to keep control and scare people.

SegWit is a block size increase. Pretty much every developer in the bitcoin community supports SegWit.

> Pretty much every developer in the bitcoin community supports SegWit.

Only in the censored outskirts. I recommend everyone to read John Blocke's articles: https://medium.com/@johnblocke/the-importance-of-clear-defin... https://medium.com/@johnblocke/its-not-the-censorship-resist...

- 105 businesses and projects from the Bitcoin space support SegWit and are working on implementing it in their products: https://bitcoincore.org/en/segwit_adoption/

- 54 bitcoin developers signed the "capacity increase roadmap" published by Bitcoin Core: https://bitcoin.org/en/bitcoin-core/capacity-increases

- 45 companies and individuals signed in support of Bitcoin Core: https://bitcoincore.org/en/supporters/

- 85% of the nodes on the network are running Bitcoin Core: https://coin.dance/nodes/share

All of that due to censorship in one subreddit, while there are multiple other forums that people talk in? I have to say, that's quite impressive.

Impressive numbers! Bad luck the only metric that happens to matters, miner vote, is still below 25% and seems to be going slightly down...

http://bitcoin.sipa.be/ver9-10k.png

No, actually, it's not safe to vote for a fork until a large percentage of nodes are on board. Miners are doing their job and waiting for the community first. It took me 4 months to upgrade my nodes because I'm not really "in the business" like I used to be. Probably a lot of other people are just slow too.

The censorship isn't just in /r/bitcoin it also happens on the dev mailing list, on the bitcoin.org website, and on the BitcoinTalk forum. BitcoinTalk, /r/bitcoin, and bitcoin.org are controlled by the same person.

I'm pretty sure this was a sarcastic shitcomment. People who have a basic idea of how finance works understand that decentralized financial products lead to market making.

Can you expound on why? I'm interested in hearing both sides of this.

I've been an outside observer of the block size debate for a while now, so here is my naive take on it:

The anti-block size increase camp says that increasing the block size is only a temporary fix, and that no blockchain can accommodate Visa levels of throughput.

They also posit that any increase in the block size will make running a full node more difficult, meaning Bitcoin will become more and more centralized and consolidated around the big mining pools that have the hardware to handle bigger block sizes.

However, many in the anti camp are pro segwit (segregated witness), a code change that does several things and is the first step to enabling off-chain networks like Lightning Network. These are basically pools of Bitcoins tracked by networks off the blockchain that would allow you to instantly exchange Bitcoins to anyone else in your network.

This is a big problem for miners who have poured lots of money into their rigs, because now the blockchain would be little more than a settlement network. There would be far more transactions occurring off the network, meaning less money for miners.

Again I'm no expert on this but this seems to be the crux of the debate. The Core developers seem to be OK with having the blockchain relegated to being a settlement network (similar to how Visa, your bank and merchants work together), but many people are opposed to this, partly because these off-chain networks would quickly form large central "hubs" which would obviate many of the benefits of Bitcoin (anonymity, privacy, security and decentralization).

I've also been keeping tabs on the debate and I agree with you except on one account: Not everyone want the Bitcoin to be the next Visa or Paypal, some are perfectly content with a 10 minute confirmation delay as long as the blockchain remains fully distributed and anonymous, whereas others see a business opportunity that could make themselves rich and influential down the line.

The entire narrative about larger block making the network more centralised is a red herring. The network has been going in that direction for quite some time without a block size increase and in any case, going from 1MB to 2MB or even 16MB isn't going to change the economics of running a full node that much, which is to say there are no incentives for non-miners to host a full node at all, regardless of the alleged computing and network overhead (and worse, it can make you a more likely victim of DDoS attacks[0]). The entire point about keeping the 1MB limit (which was meant to be a temporary cap anyway) is to artificially create scarcity in transaction capacity and coerce people into accepting SegWit and eventually fully functional side chains.

This is probably fine for those who believe that A. Bitcoin will become mainstream and B. the ends justify the means, but I find this to be a very unethical position to take.

Disclaimer: I don't own a single cent in BTC, nor do I have association with anyone involved in the Bitcoin scene.

[0]:http://www.financemagnates.com/cryptocurrency/news/the-lates...

> partly because these off-chain networks would quickly form large central "hubs" which would obviate many of the benefits of Bitcoin

The Lightning Network is open-source and decentralized. It has no "hubs", but rather just peers that route payments to each-other using a payment routing algorithm. Lightning has no counterparty risk, as no one can ever steal your bitcoins and you're always in full control.

The best way to describe Lightning is as an write-cache layer. It improves the scalability properties of Bitcoin by many factors, makes micro- and nano- payments a reality, reduces fees to fractions of a cent, and even improves privacy (using a Tor-like onion routing for anonymized payments).

https://www.youtube.com/watch?v=MpfvhiqFw7A

https://bitcoinmagazine.com/articles/understanding-the-light...

What do you mean that Lightening has no counter party risk? It's my understanding that you have to constantly monitor the Bitcoin network as long as a payment channel is open to make sure your counter party doesn't try to cheat you.

I also don't buy that hubs won't tend to centralize since hubs with channels open with a lot of other peers will naturally be central points.

Yes, you have to watch for cheating attempts, but you get all your money back plus a bonus if you catch someone doing that. If you're doing that properly (and there's no reason you won't), then there's no counterparty risk.

Edit: also, you can outsource this task to someone else, who'll take a small fee out of your bonus if he catches the cheating for you (and only if he does).

That sounds horrible. All your counter party has to do is DDOS your node off line then they can steal your lightening network funds. Outsourcing the task to a centralized service also sounds bad. At that point you have to trust that service.

Anyone that looks at lightening can plainly see that it has a number of properties that aren't as nice as pure Bitcoin. With Bitcoin if I get knocked offline there is zero chance of my counter party stealing funds from me and you don't have to put your trust in any centralized monitoring service to prevent your counter party from stealing from you.

> Outsourcing the task to a centralized service also sounds bad. At that point you have to trust that service.

You don't have to trust that service. He can't steal your money, you don't lose any privacy if the other party doesn't cheat, you don't pay anything to the service if there's no cheating attempt, and the 3rd-party service is financially incentivized to help you prevent cheating.

So, no, you don't "trust" anyone in any more meaningful sense than saying that you're "trusting" the miners.

Yes, you absolutely have to trust the service.

If I have a channel open with Alice and she wants to cheat me but I've out sourced my monitoring to Bob Alice only needs to pay off Bob to go along with her cheating me. I have to trust Bob not to collude with Alice. In Bitcoin I don't have to trust anyone. Surely you can see that there is a difference in the two models.

You can have as many Bobs as you want, which can all function at a very low cost and compete for users with low fees and high service quality. I can easily imagine registering your transactions to tens of different service providers, making it quite impossible for Alice to pay them all of (or even know who they are).

How do you know bob didn't setup many nodes to perform a sybil attack on you? You don't.

How do you counter the description of the network in this article? It seems like de-facto hubs will form out of necessity to avoid creating a channel on the fly, which requires getting a transaction committed to the blockchain.

https://chrispacia.wordpress.com/2015/12/23/lightning-networ...

> Routing paths are much harder to find when values are considered.

Hard, yes, but definitely possible. There was some great work done on P2P routing for Lightning by the developers at BitFury.

http://bitfury.com/content/5-white-papers-research/whitepape...

> We could end up making more on-chain transactions ... Well, it will have to close one of its existing channels. So the process for making a transaction when your wallet can’t find a route is: 1) Make an on-chain transaction closing out an existing channel. 2) Make an on-chain transaction opening a new channel with the payee.

This is not true. You can close an existing channel and open a new one in a single transaction.

> The vast majority of users will be offline.

Some will, some won't. Some will set this up on a VPS, some will use hosted services, some will be professional liquidity providers (early adopters with lots of coins?) that have a machine dedicated to this.

He's making a prediction that he cannot really support in any way.

> Channels cannot be created on-the-fly.

RBF is opt-in, only if you mark your transaction as such. If you don't want RBF, don't use RBF. His assertion that RBF is somehow required is not true.

> Recipients have to be online.

Yes, they do. This is perfectly fine for some use-cases, and not good for others. For use-cases where the recipient is offline, people can always resort to on-chain transactions.

I'm not sure what this has to do with hubs, though.

Basically, he's making tons of assumptions and guesses (some of them based on incorrect/outdated technical information). You should go and read-up yourself on the technology and the improvements the developers are coming up with.

That is part of it. I think some miners are against any increase because it will lower fees. Without a blocksize limit fees tend to zero, which is fine while there is the block reward but they still want to milk the congestion fees. To say they are pro segwit or pro unlimited is bluffing. They are pro status quo and congestion and high fees.

The idea that lightning will lead to a hub, in the case of Unlimited believers they think this will be Blockstream and therefore think that the core developers who work for Blockstream are blocking a blocksize increase for nefarious reasons when they are doing it to avoid a hard fork and to maintain the incentives of miners while enabling cheap off chain transactions.

That idea that a natural hub monopoly will form is ill thought out as explained here: https://youtu.be/fst1IK_mrng?list=WL&t=6072

>They also posit that any increase in the block size will make running a full node more difficult, meaning Bitcoin will become more and more centralized and consolidated around the big mining pools that have the hardware to handle bigger block sizes.

With a bigger block size what hardware constraints begin to appear?

> This is a big problem for miners who have poured lots of money into their rigs, because now the blockchain would be little more than a settlement network. There would be far more transactions occurring off the network, meaning less money for miners.

So the motivation is strictly monetary?

> With a bigger block size what hardware constraints begin to appear?

Mostly it is an issue of disk space and network bandwidth. right now a 1 MB block is produced every 10 minutes. That has to be transferred over the network to every node and each so called "full node" has to store that block. The total size of the Bitcoin block chain for all time is currently ~100GB and grows 1 MB every 10 minutes under current conditions. If the block size grew too big that you couldn't transfer a block within the 10 minute space between blocks then your connection is too slow to run a node. On the disk space front you can run what is called a "prunning" node which discards older parts of the block chain that are no longer relevant which reduces disk space requirements greatly.

There is also the issue of the initial blockchain download where when you are setting up a new node you have to download 100GB of historical block chain data to catch up to the current state of the network. These are all solvable problems though and Bitcoin's inventor envisioned that some day full nodes would be run out of data centers on heavy duty hardware. Small block supporters have argued that that hurts decentralization because some poor guy in Africa can't run a node on his Raspberry Pi and 3g internet if the block size gets much bigger. On the other hand if you are too poor to run a full node with a larger block size then you can hardly afford to pay huge transaction fees to transact on a network with a constricted block size so the whole argument that limiting the block size decreases centralization doesn't really hold water because in the end it limits user growth which is the ultimate decentralization mechanism.

> So the motivation is strictly monetary?

I think so. This whole stink started because some guy who happened to have a ton of BTC was upset that people running full nodes didn't get a cut of any of the transaction fees. Today, the main company that is pushing the Segwit / small block agenda hopes to push everyone to their off chain lightening network where they can collect the fees instead of the miners. Miners don't want to do anything that will jeopardize their profitability long term and keeping the block size too small limits their ability to control the supply of their product (block space).

> This whole stink started because some guy who happened to have a ton of BTC was upset that people running full nodes didn't get a cut of any of the transaction fees.

What? Who?

> Today, the main company that is pushing the Segwit / small block agenda hopes to push everyone to their off chain lightening network where they can collect the fees instead of the miners.

Lightning is open-source and was invented by Lighting Labs, a company that has nothing to do with Blockstream. Blockstream are merely working on one out of 6 Lightning implementations that exists in the market.

Also, Lightning is designed for peer-to-peer routing (and not a hub-and-spoke topology) and it is expected that everyone with some spare bitcoins would run lightning nodes to collect fees, so there should be plenty competition.

Finally, Bitcoin Core is an open-source community composed of tens of developers from all over the world and from different associations, plus hundreds of testers, reviewers and other contributors. Nearly all of them support SegWit very strongly, not only the ones associated with Blockstream.

See: https://news.ycombinator.com/item?id=13627371

>What? Who?

Mircea Popescu, He is the original guy who started promoting the idea that it was a mistake to raise the block size unless some incentive to run a full node was added to the system. I don't think he actually supports segwit either, he thinks soft forks are crap. He is the original voice in opposition to block size increases though and many people listen to him.

http://trilema.com/

A lot of people disagree with your characterization of how lightening networks will play out. Since they don't really exist in real world usage yet hard to prove one way or the other.

> He is the original voice in opposition to block size increases though and many people listen to him.

Many developers were opposed to reckless block size increases, I think you're giving that guy's voice too much weight. I personally never heard of him.

> A lot of people disagree with your characterization of how lightening networks will play out. Since they don't really exist in real world usage yet hard to prove one way or the other.

They sure do (early and still somewhat buggy alpha, but it does exists and does work):

http://lightning.community/release/software/lnd/lightning/20...

>it is expected that everyone with some spare bitcoins would run lightning nodes to collect fees, so there should be plenty competition.

Thanks for getting back to me in another comment and I find this assertion interesting. As I said earlier, currently there is no incetive for small players to run full nodes so the network tends towards centralisation over time. How do we know the fees involved in Lightening are sufficient that average users can be convinced to act as intermediataries?

Without a blocksize limit then block space has unlimited supply so the price will be zero. Miners will get LOWER fees so if they think lightning is their enemy and Unlimited is their friend then they don't understand economics.

Those who want the security of on chain transactions will still pay the fees and those who accept the very slight risk of having to watch for channels being dropped for the benefit of lower fees will choose lightning transactions. There's no conflict and is the only way to get the store of value security and low transaction fees with high volume.

The standoff is the miners milking fees for as long as possible. They don't want larger blocks or segwit. This will be broken by having a less efficient lightning without segwit.

Thank you for the concise rundown.

The debate is largely about the risks of doing an hardfork (what Bitcoin Unlimited is doing) versus softforks (what Segregated Witness is doing).

I recently presented these slides on this topic, but they assume a fair amount of background:

https://www.docdroid.net/TouvFPl/embassy-future-politics-feb...

You're painting a very unbalanced picture.

> There is a small faction of the Bitcoin community working exceptionally hard to prevent any block size increase.

This small faction is composed of nearly ~all the technical experts we have in the Bitcoin space, over 100 businesses and projects that support SegWit, the majority of bitcoin users that I'm personally familiar with, the majority of full-nodes on the network (~85%), and the vast majority by pretty much every metric you choose.

https://bitcoincore.org/en/segwit_adoption/

https://bitcoincore.org/en/supporters/

https://coin.dance/nodes/share

https://bitcoin.org/en/bitcoin-core/capacity-increases

> /r/bitcoin is now just an echo chamber where yes men regurgitate the agenda of a select few.

r/bitcoin is the largest and most active bitcoin community by far. It had to start engaging in more heavy-handed moderation when the voting bots, sockpuppet accounts and other manipulation made it impossible to conduct productive discussions. Its sad, but I don't really see an alternative.

https://www.reddit.com/r/Bitcoin/comments/4biob5/research_in...

https://bitcoinmagazine.com/articles/a-closer-look-at-reddit...

https://www.reddit.com/r/Bitcoin/comments/3hf5z7/determining...

https://news.bitcoin.com/the-block-size-debate-and-sock-pupp...

https://www.reddit.com/r/btc/comments/5n3wsw/birds_by_bitcoi...

You don't deny that censorship is taking place you are just rationalizing it by calling it "moderation". Lets be clear what is going on there goes way beyond what is commonly understood as moderation. They are systematically silencing a large segment of the Bitcoin community.

If your side really had the support you claim the censorship wouldn't be needed.

Do you think HN has no moderation?

Every online community has moderation to some degree. The manipulation, voting bots and endless stream of sockpuppet accounts made it impossible for people like me to discuss ideas and proposals, the signal-the-noise ratio was unbearable to the point of stopping productive discussions to an halt.

Yes, moderation sucks. But no moderation sucks harder. I don't really see a better approach to this.

If you have some time, I truly recommend you to read the "Well-Kept Gardens Die By Pacifism" piece on LessWrong:

http://lesswrong.com/lw/c1/wellkept_gardens_die_by_pacifism/

Again, people aren't taking issue with simple moderation. They are taking issue with the fact that certain view points are totally censored from the forum. I would be willing to bet 100% of the comments I've made in this thread would be deleted by moderators in /r/bitcoin simply for the fact that I'm expressing views counter to those they want to promote. I have high confidence they won't be moderated here though. Clearly something is different about /r/biticon censorship vs. HN moderation.

The simple fact that some of my comments even have the word "censorship" in them means they will be automatically deleted from /r/bitcion.

Bleh. There is no automatic deletion. I've tested this multiple times. Also I've mentioned altcoins, bitcoin unlimited in a positive light, and everything else people say is moderated away. I've never been censored once. Downvoted - sure. Censored... nope.

The only way to guarantee censorship is to make 100 fake accounts and then upvote an article that promotes a hard fork or alt coin.

Spam, fake upvoted articles, and personal attacks are attempted to be moderated. There is, no doubt, a bias that moderators have for certain topics.

But without moderation, any forum would be overrun with spew.

Comments are not being deleted on r/bitcoin for expressing views, discussing ideas or debating proposals.

Comments that promote the use of alternative clients that attempt to alter the bitcoin protocol rules prior to building consensus around the proposal, however, are. An hardfork protocol change that does not have significant support from the community is basically an altcoin that starts from the current UTXO set, and so is considered off-topic for r/bitcoin.

Would you say that the r/bitcoin moderators removing posts about ethereum as being off-topic also engage in "censorship"?

Sigh.

> Comments are not being deleted on r/bitcoin for expressing views, discussing ideas or debating proposals.

Yes they are.

> Comments that promote the use of alternative clients that attempt to alter the bitcoin protocol rules prior to building consensus around the proposal, however, are.

Comments promoting non-core clients are. Segwit is a disruptive change to the protocol and yet is has been allowed since day one. And also: how are you supposed to building consensus if it's censored? The cognitive dissonance is amazing.

> An hardfork protocol change that does not have significant support from the community is basically an altcoin that starts from the current UTXO set, and so is considered off-topic for r/bitcoin.

A hardfork doesn't an altcoin make. "Significant support from the community" is a misnomer. Bitcoin is built around nakomoto consensus, not some flimsy community definition.

> Would you say that the r/bitcoin moderators removing posts about ethereum as being off-topic also engage in "censorship"?

When negative posts are allowed then yes it's obvious.

> Comments promoting non-core clients are [being removed].

No, they are not. Promoting alternative client software that is compatible with the Bitcoin protocol is definitely allowed. btcd, NBitcoin, Bitcoin Knots, Toshi, Haskoin, bcoin, Bitcoin-S and pynode are all allowed, because they're all compatible with the protocol are not trying to forcefully deploy an hardfork that has no consensus.

> how are you supposed to building consensus if it's censored? The cognitive dissonance is amazing.

Discussion of ideas and proposals is not censored. You are free to build consensus by discussing your proposal and convincing other stakeholders in the ecosystem to support it. But you cannot go ahead, skip the discussion part, and promote a controversial non-compatible client that is highly likely to hardfork the chain and split bitcoin into two currencies.

All in all, people seem to agree with the moderation policy of r/bitcoin. Everyone are well aware of these policies, yet it is still the most popular bitcoin forum. Apparently people like it when their community moderators makes it possible to conduct productive discussions by removing noise.

> Bitcoin is built around nakomoto consensus, not some flimsy community definition.

"Satoshi Nakmoto" was meant to give the miners one power: deciding which transactions to include in their blocks. It was never meant to be used to decide on the protocol rules and the validity of chains.

Altering the bitcoin protocol requires consent from the entire bitcoin ecosystem, not just the miners.

> trying to forcefully deploy an hardfork that has no consensus.

This doesn't make any sense. By definition a hardfork can only be successful if it has consensus.

> Discussion of ideas and proposals is not censored.

Keep deceiving yourself.

> All in all, people seem to agree with the moderation policy of r/bitcoin. Everyone are well aware of these policies, yet it is still the most popular bitcoin forum.

The logical fallacy is strong in this one.

> It was never meant to be used to decide on the protocol rules and the validity of chains.

Wrong again, that's the whole point. Why am I arguing with someone who obviously doesn't understand how bitcoin works and openly support censorship? Just a waste of time.

> By definition a hardfork can only be successful if it has consensus.

Nope. BU has no threshold in place. If it had a 95% or even 80% consensus level built in, the resistance to it would be 1/10th of what it is now.

> Keep deceiving yourself.

Try it. Try posting something promoting BU, and don't go and try to pump it up with fake votes. Sure it will be unpopular - because BU is broken software - but it won't get moderated away.

https://www.reddit.com/r/Bitcoin/comments/5u6d6j/i_am_new_to...

https://www.reddit.com/r/Bitcoin/comments/5rreaj/is_bu_rapid...

> By definition a hardfork can only be successful if it has consensus.

What? No. Splitting the currency and payment network in two is a very realistic outcome following an hardfork.

I recently made some slides that go into details about the hard- vs hard- fork dynamics:

https://www.docdroid.net/TouvFPl/embassy-future-politics-feb...

> Wrong again, that's the whole point.

No, miners do not decide no the validity of blocks. It is the whole network who does so. If the miners ever try to cheat the system (creating more coins than they should, steal money that doesn't belong to them, etc) their blocks would be rejected by the rest of the network as invalid.

> Why am I arguing with someone who obviously doesn't understand how bitcoin works.

I actually happen to be a software developer that founded a bitcoin startup, so I think I'm at least somewhat qualified for this. https://www.bitrated.com/

Segwit is a block size increase. After activation blocks on the block chain will be up to a max of 4MB, with an average of 2.1MB There is no meaningful definition of a block size increase that does not include segwit, which increases the size of blocks on the chain.

Most of those devs and businesses are vocally advocating for segwit - a block size increase.

I was sure you're talking about the chinese miners as I started reading your comment...

The ones who oppose a block-size increase today are the miners and the anti-Core crowd. The rest of the bitcoin community, including its technical and business community, are pushing for an increase to 2MB blocks in the form of SegWit.

And I think the "hostile comments" referred to by the OP are the non-stop personal attacks and toxicity that is happening on r/btc.

Your comment is a good example of the double speak and gas lighting I often see in /r/bitcoin

> Your comment is a good example of the double speak and gas lighting I often see in /r/bitcoin

It would be a lot easier if people responded to the actual arguments being made, instead of throwing general accusations at people who're trying to have a rational discussions.

I have responded to your actual arguments in other comments here. I just don't know where to start with this one. Your comment fundamentally misrepresents the position of what you term the "anti core crowd" and so it is hard to have a rational discussion when you can't even acknowledge the position of the other side of the argument.

Miners want a hard fork block size increase. You claiming they don't is gas lighting. Core isn't providing it. Segwit is not a block size increase but it's supporters started branding it as one to better market it. That's the double speak part. It's false to call it a block size increase because it isn't. It isn't even guaranteed to increase transaction throughput which is the larger reason for wanting a block size increase. It actually encourages some types of large transaction by discounting the witness data.

> Segwit is not a block size increase but it's supporters started branding it as one to better market it.

Segwit allows twice as many transactions (of the mix being used today) to fit in a block. It does so by enlarging to blocks to up to 4MB.

How is that not a block size increase?

https://segwit.org/is-segwit-a-block-size-increase-705df6a87...

https://www.weusecoins.com/eli-segwit/

> It isn't even guaranteed to increase transaction throughput which is the larger reason for wanting a block size increase.

It is guaranteed to increase transaction throughput as soon as miners activate it and wallets start producing segwit transactions.

There are currently over 20 wallets that pledged to adding segwit support, including all the most popular software ones and all 6 hardware wallet manufactures (Trezor, Ledger, KeepKey, OpenDime, BitLox and Digitalbitbox). About half of them already have their SegWit implementation ready (before segwit even activated!).

https://bitcoincore.org/en/segwit_adoption/

So, yes, its very certain that wallets will start producing segwit transactions as soon as its activated by the miners.

> It actually encourages some types of large transaction by discounting the witness data.

All transactions have witness data and they all enjoy the extra capacity and lower fees that segwit brings us.

This article completely ignores the block reward -- the real cost per transaction is more like $7 [0]. The blocksize really needs to change too, last time I did a bitcoin transaction, every recent block was 95%+ full. Its an arbitrary limit, but its contentious and political to change. It really made me want to avoid Bitcoin in the future.

[0]https://blockchain.info/charts/cost-per-transaction

The whole point of the block reward is to subsidize the network until transaction volume can grow to an equilibrium point where the network can be supported on fees alone. The fact that transaction volume is capped by the block size is troubling because it won't be able to grow to that equilibrium point.

As the value of Bitcoin grows, transaction cost grows relative to other currencies. Really transaction costs in strictly btc/byte have decreased. Pretty much everyone agrees the block size will need to grow at some point, including core devs. It is the current proposed method of introducing this change (via hardfork) that is questioned and scrutinized.

There is at least one prominent core dev that recently seriously proposed _decreasing_ the block size to 1/3rd of what it is currently. The problem is that the block size needed to be increased last year. Agreeing that it needs to be increased at some unspecified point in the future minus any specifics is just a stalling tactic.

Yes some devs believe there is centralization pressure of mining blocks caused by the propogation delay of 1MB blocks. Further increasing the size of blocks would thus increase centralization pressure. Changing any number of variables leads to emergent properties which change mining behaviors. Game theory needs to be considered before tweaking the consensus protocols of Bitcoin. The open source nature of Bitcoin allows for many opinions and critisms and hopefully many more proposals for change in the future.

The issue of propagation delays with bigger blocks was fixed with xthin blocks (aka: compact blocks) months ago. That is no longer a valid reason for limiting the block size.

There is very limited technical documentation on xthin so it is hard for the community to accept and test it. If Bitcoin were to implement xthin (or an alternative proposal such as compact blocks) it would be much better to release outside of the block increase. again the main contention is the mechanism for change that the Bitcoin unlimited enthusiasts want to impose, a contentious hard fork

And to clarify, the software may have been released (in Bitcoin unlimited's release), but is not used by the Bitcoin network as a whole. Very few nodes are running this implementation. And to many is untested/unproven

You are just spouting false propaganda now. The Core equivalent to Xthin, "Compact Blocks", has been released in Bitcoin Core since version 13.0.0

Please point out where I am spouting false propaganda.... You previously conflated xthin and compact blocks as if they were the same thing. Xthin is not being used by the network. And there are developers who have reasons to believe that increasing the block size will have a centralizing effect on mining. This is not "fixed" as you stated before.

You said: "If Bitcoin were to implement xthin (or an alternative proposal such as compact blocks) it would be much better to release outside of the block increase."

Fact: Both xthin and compact blocks are different implementations of the same idea. Both have already been implemented and released and are in active production.

Blocks are supposed to be full, otherwise fees are zero. The question is what fees should be, and what the minimum reasonably transaction amount should be for it to be included on the chain... not what blocksize should be. "Fullness" is not a thing.

Pretty funny to see that SEPA money transfer from Kraken to EU bank account costs just €0.09 for any amount. Arrival is guaranteed (though can be late too of course). So the cheapness of bitcoin and high cost of modern fiat transactions are both overstated.

In eg the US, a domestic wire will cost you $30. In the US and EU I believe, credit card fees are much worse (1.5-3%). If paying internationally cross-currency, you'll often lose quite a bit in the exchange.

Though I see that you said "modern fiat transactions", so maybe payments in the US don't count :)

The same way Uber was/is cheaper than Taxi, the cost is subsidised by someone else (Uber's investors, or in this case miners and speculators of Bitcoin)

I don't think physical automatic wire transaction cost is more expensive than SMS. High transfer/transaction fees in most banks are, on contrary, are subsidizing losses from other risky activities.

Appreciate the pragmatic, user-focused view. There's rarely empathy for new users in this space, and it's refreshing.

One point which your post/this post is missing:

Transaction fee = power consumption + profit.

Bitcoin fee has to hit a fee amount which has less eco impact than a normal banking system.

That's just the transaction fee paid to miners. You also have to consider the currency conversion cost of getting into and out of Bitcoin. Most sellers use Coinbase to immediately get out of Bitcoin. There's also a volatility risk.

And if you look at hardware, energy and all the other costs, then you probably still end up in the $5 to $10 range as true costs per transaction. But this will not become fully visible until the block reward becomes negligible or the demand for new coins becomes essentially zero so that the deflation becomes visible.

If what you say is true then that would imply that miners are losing money. I don't think that is the case. Total network hash rate has strong growth. People don't normally invest huge sums to turn a loss.

They are not losing money, they get the block reward to sell. This in turn makes all Bitcoin users pay indirectly due to deflation but that is currently not visible because there is money flowing into the system.

But you can just do the math for yourself - the network hash rate is currently 3,160 petahash per second, 300,000 transactions are processed per day, an AntMiner S9 - the most efficient currently available miner as far as I can tell - consumes 98 joules per terahash and you can buy electricity for 5 cents per kilowatt-hour. With this numbers you end up at 1.24 Dollar per transaction and that is as optimistic as it gets when looking at electricity costs. Then add costs for hardware, rent, cooling, labor, profits, ...

Ah, you mean if you divide the block reward by transactions per block. Yeah in that case it's about $7 per transaction right now. That is why we need to increase on-chain transactions so that those fixed per block costs are amortized over a larger number of transactions.

If Eric was serious about this he would have targeted this post at chinese miners who are stalling on activating segwit (which is a 2x blocksize increase and the foundation for instant & nearly free txs via the Lightning Network).

Segwit is not a 2x block size increase. That is marketing spin that Blockstream started spreading to try and fool people into supporting their agenda w/o having to compromise and raise the block size. Segwit does _not_ increase the block size in the sense that people are discussing and in some cases it might even make the transaction throughput much worse than the current system.

The whole reason people want bigger blocks is for higher transaction throughput on-chain. Segwit doesn't deliver that.

https://np.reddit.com/r/Bitcoin/comments/5f507l/core_is_the_...

SegWit allows twice as many transactions as soon as miners and users update their software. How is that not a capacity increase?

https://segwit.org/is-segwit-a-block-size-increase-705df6a87...

You can play semantical games but segwit gives about 2x onchain capacity. And the only thing holding it up is a group of chinese miners/pools. Anyone truly wanting more onchain capacity should be engaging those miners/pools.

Of course that's not really what people bitching about tx fees want.

That's my point exactly people calling segwit a block size increase are playing semantic games. Miners and devs met a year ago and agreed on a path forward of segwit+hardfork blocksize increase to 2MB. Now they are trying to get people to activate segwit w/o a 2mb increase. It's not a mystery why this is happening and it isn't just Chinese miners that oppose it.

You admitted that "The whole reason people want bigger blocks is for higher transaction throughput on-chain."

And said that "Segwit doesn't deliver that".

Segwit delivers that.

The link I provided in my first response to you clearly shows that segwit can result in much lower transaction throughput.

The comment you linked to refers to blocks that were specifically made to be big using non-standard scripts that are larger than usual.

For the current mix of transactions happening on the bitcoin network, SegWit will give us an effective block size of 2.1MB (or 2.1x transactions compared to today), and a bit more over time as people start using more advanced scripts.

According to the video below SegWit creates 4x effective transaction space in the same 1MB block. I assume that is a theoretical ceiling unlikely to be achievable in reality?

https://www.youtube.com/watch?v=DzBAG2Jp4bg

No, it creates 4x effective transaction space in blocks that can now be as large as 4MB. It does not compress data more efficiently or makes transactions smaller in any way, it is a block size increase in every sense of the word.

The only ones who see this as 1MB block are old nodes that didn't upgrade to a segwit-compatible client. But for nodes that do upgrade, the block is simply larger.

But you're right in that 4MB is the maximum theoretical ceiling. That 2.1MB number I mentioned is what we get according to kind of transactions that we have on the network today. It'll go a bit higher as bitcoin users start using more advanced scripts, but not by much.

Erm, targeted at? You mean he would have, what, written it in Chinese?

Note he said most businesses are looking for Segwit activation + a hard fork blocksize increase (ours included). The "Chinese miners" have expressed that desire as well. Segwit is stalling because it's not what the market is asking for.

SegWit is supported by over 100 businesses and projects, and pretty much by ~everyone in the technical bitcoin community. It definitely is what the market is asking for.

https://bitcoincore.org/en/segwit_adoption/

The market also includes miners. Do they appear excited to activate Segwit? As I understand it, they're waiting for a HF blocksize proposal to go with it.

Many of the businesses in that list that preparing for Segwit, but would still prefer that scenario as well (including many of those with the largest user bases).

Lastly, I'm in the technical bitcoin community. I agree most of us are in support of Segwit- just the show of hands at Satoshi Roundtable this year made that clear- but many of us would also like to see a block size increase, and the dev / miner impasse ended.

EDIT: Segwit signalling by miners is currently < 25%. https://blockchain.info/charts/bip-9-segwit

Segwit requires 95% of miners to activate. Currently about 75% of hash power is controlled by a group of chinese miners/pools. This is about the % of hashing power that is missing for Segwit to activate.

Aware of how Segwit activation works, thanks. I'm speaking to the miners' motivations. They've been asking for a simple blocksize increase for quite some time. See the HK agreement if you don't get the politics.

Yes that's the issue here, the miners are playing politics by trying to flex their power. But no one is willing to play petty games. There's an obvious win for everyone sitting on the table ready to go. Political games will be ignored.

The Core devs signed an agreement with these miners a year ago in Hong Kong, and the agreement was broken. Here are the consequences.

Clearly, politics won't be ignored- or Segwit would be on track for activation.

The part you're missing is that Bitcoin is totally fine if it never changed from how it is today. Anonymity will come via Tumblebit. Lightning network can already work even without segwit.

Segwit never getting activated may even be a good thing. It will show everyone that Bitcoin has crystalized and can never be changed via petty human emotion. This was always Bitcoin's true selling point and we may be about to demonstrate it.

So yes, politics can and will be ignored.

Not at all. Like many in the space, I've had to consider and come to terms with the fact that this might be the best version of Bitcoin we have, forever.

But that's not politics being ignored- this is still a group of humans who couldn't come to an agreement after much politicking. That's politics being exhausted.

I do share your optimism that we have a system that can survive gridlock. It just won't fulfill much of its early promise.

The core developers have been playing political games for 2 years.

They've stopped all important changes that people are asking for, so now the shoe is on the other foot.

Play stupid games win stupid prizes. The core devs will get nothing unless they compromise.

> for instant & nearly free txs via the Lightning Network

It's amazing we're putting all our hopes on a technology best labeled as vaporware. You make it out like it's readily available but the fundamental problem of decentralized routing hasn't been solved and it may even be unsolvable.

The simple fact is that blockstream is pushing segwit precisely for it being a necessity for lightning network, not because it's a good thing for bitcoin.

The correct solution would have been a blocksize increase long ago but the same people supporting segwit has been actively blocking all attempts at a blocksize increase previously. Why the sudden change? As another comment said, "Follow the money, it's not baffling at all."

This political argument that it's all just a plot by Blockstream is what is causing the division where the technical benefits of segwit are clear to anybody who knows what they are talking about.

As soon as it became about people and BS conspiracies instead of technical rational solutions it was only going to end up in slagging match.

You're dodging my technical argument well yourself. Segwit implemented as a soft fork isn't clearly full of benefits. But it seems you're just appealing to authority.

I didn't write the and test code myself so you can label that as appealing to authority all you like but I have looked into it and understand the benefits of moving the witness to a subtree of the merkle root so that it can be dropped when it is no longer needed as well as the other changes that are included in the update that allow further soft fork changes enough to see the benefits. I don't just accept someone saying it is good or bad.

Can you explain why such an obvious refactor that is backward and forward compatible isn't a clear benefit?

No it isn't sufficient and won't instantly increase the transaction throughput but the the arguments against it that I've heard are weak and almost all political and could also be argued as appeal to a different authority.

There are two visions of what people see as scaling and are pushing for, on-chain and off-chain. Segwit helps both so being against it can only be politically motivated.

That's good!

I found this article describes the problem well: https://medium.com/the-publius-letters/segregated-witness-a-...

I'm not against segwit but I and many other have problems with segwit as a soft-fork. The push for a soft-fork segwit seems to be politically motivated.

> Can you explain why such an obvious refactor that is backward and forward compatible isn't a clear benefit?

If seen as a blocksize increase it isn't backwards compatible as old transactions will not get the benefit. It is also not transparent as all wallets needs to be updated to support the new transaction format. No such extra effort is needed for a blocksize increase.

It is in fact necessary to push for on-chain and off-chain scaling, nobody is against that. The position for "big blockers" has been the same for years: we need actual bigger blocks. See: https://medium.com/@johnblocke/the-importance-of-clear-defin...

The Lightning Network is not bitcoin. The people who are fighting against block size increase are the same people pushing segwit. While there is nothing inherently wrong with segwit and the Lightning Network, they are ignoring the most important improvement to Bitcoin itself, which would be a pure block size increase.

But SegWit is a block size increase. It allows twice as many on-chain transactions by making the blocks twice as big.

This "SegWit vs block-size increase" talk makes no sense to me.

https://segwit.org/is-segwit-a-block-size-increase-705df6a87...

The block size increase with segwit is marginal and a side effect. It's a complicated feature that is meant for purposes other than block size increase. Don't obfuscate the issue. I'm talking about a simple tweaking of a parameter to increase block size.

> The block size increase with segwit is marginal

It's not marginal. According to the mix of current transactions on the bitcoin network, SegWit gives us an effective block size of 2.1MB. Over 2 times more transactions compared to today, which is more than what Bitcoin Classic was pushing for until not too long ago.

https://www.weusecoins.com/eli-segwit/

https://segwit.org/is-segwit-a-block-size-increase-705df6a87...

> and a side effect.

Indeed it is! The main goal of SegWit is fixing the malleability problem, everything else is an bonus.

The other bonuses are pretty awesome themselves, too:

https://bitcoincore.org/en/2016/01/26/segwit-benefits/

> I'm talking about a simple tweaking of a parameter to increase block size.

A "simple" block-size increase requires an hard-fork, which is anything but simple. Hardforks requires a network-wide coordinated upgrade where everyone updates on the same time, at the risk of a currency split and old nodes being open to attacks if not everyone upgrades in time. Hardforks are highly risky and very very slow to deploy safely.

I recently presented some slides on this topic, the relevant part starts here:

https://www.docdroid.net/TouvFPl/embassy-future-politics-feb...

The same slides, shown as a summary image: https://twitter.com/TraceMayer/status/829558034351398916

https://bitcoincore.org/en/2016/01/26/segwit-benefits/#block...

What they did to Mike Hearn was a disgrace.

Who is "they" and what did they do to Mike Hearn? (I know Hearn left the Bitcoin community and pronounced it a failed experiment, and I know there was some harsh criticism for that assertion...but, did it go beyond that?)

Bitcoin core team. Ostracized him for forking BitcoinXT, impugned his reputation, etc.

The "average" cost of a Bitcoin transaction is just that, the average. It's not (part of) the true cost. The "true" cost is specific to the transaction. The last time I sent around some Bitcoin, it was around 20$ worth and the fee was whatever the client recommended me. It didn't amount to anything near the average. Why would I care about the average?

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