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You are confusing Segwit with Lightning network. Segwit is just a version that optimizes transactions. It's an extension of an unused opcode from the previous version, allowing previous nodes to view Segwit blocks as compatible, therefore only requiring a "soft-fork." Pro-Segwit people tend to be pro-Lightning, since it is not feasible to validate Visa-scale transactions in such an inefficient, centralized manner. This camp views Bitcoin more as a user-controlled store of value/bank account, still requiring a hierarchy of processors to handle day-to-day transactions.

> Bitcoin main, on the other hand, is moving toward SegWit, which introduces third-party middlemen.

SegWit does not introduce third party middlemen. SegWit is just a different way to calculate the transaction hash that needs to be signed, such that it doesn’t include the signature script. This was arguably the way it should have been all along, since the signature script itself isn’t signed (it contains the signature). This means bypassers can modify it without invalidating the modified transaction (if they don’t touch the actual signature data but only add e.g. a NO_OP opcode).

And then muddying the waters is the argument that larger blocks are going to centralize it because poorer people won't be able to run a full node in their homes. (Versus paying $10 for a VPS to do so.) Conveniently ignoring that no one wants to run a full node for a settlement layer between big financial companies.

But further screwing it up is ASICBoost, which isn't compatible with other proposals like Segwit. That allows the small block folks to accuse the miners of opposing changes only for financial gain.

Sure, something needs to give. A transaction is about 225 bytes for the common case. So doing even 1000/sec means around 1.8Mbps (plus overhead) just to get the flow of transactions.

> So doing even 1000/sec means around 1.8Mbps (plus overhead) just to get the flow of transactions.

Huh, maybe we should come up with a cryptocurrency where you are awarded new blocks for the storage and bandwidth you contribute to the effort, rather than for how many hashes you can calculate per second.

After all, if we're hoping to handling transactions on the scale of Visa, and we don't like centralization, we need to think about decentralized storage of all that information sooner or later. SegWit might not be the perfect answer, but you can't keep requiring everyone to store every transaction that ever happened. We need a solution that is both distributed and publicly verifiable. Something like IPFS comes to mind.

And in order to incentivize people to contribute storage and bandwidth, there would have to be a way to reward those who do so. I think this would be much more useful than the current situation where we basically reward people for wasting a lot of energy.

They don't need to store everything. All that's needed is the list of addresses and balances (UTXOs), and the last few blocks. A hash chain of 10 years of 10 minute blocks is only a few MB, so it should be something we can distribute reliably. UTXOs are a couple GB but will grow.

There are no balances in bitcoin. It's all deltas.

But, now you have a stateful application running in the cloud, vs an immutable blockchain. And that implicitly means you are now trusting authoritative nodes to hold that state. This is basically moving closer and closer to just a bunch of nodes running a database with some consensus mechanism, rather than an actual blockchain.

(I'm not personally sold that this is actually a distinction that matters - after all, we are already implicitly trusting "authoritative nodes" to deliver the blockchain, and the same mechanism that prevents alteration of the blockchain right now would also prevent altering the database state. Namely, that nobody else is going to accept the version of history where I own infinity bitcoins, regardless of how we record that state.)

A middle ground might be to have the full state available to nodes that want to verify, but also implement a "checkpoint/epoch" mechanism on top for "fast clients" who aren't overly concerned about a massive concerted-but-silent attack on Bitcoin escaping notice.

It's not THAT hard to run a full node, even with 32MB blocks. But for people that want to kickstart a local node, they don't need the entire history if there's a trusted checkpoint mechanism. So they can participate, validate new blocks coming in, while they never or slowly download the historical blockchain.

A hash chain of every block is only a few MB so it's not that big of a deal to make sure the chain is immutably stored.

> It's not THAT hard to run a full node, even with 32MB blocks.

Not at present, but if you increase the block size then you ramp that up pretty fast. Let's say there's a block every 9 minutes (nominally 10 but the network is reactive to increased hash power so it's a bit less in reality). That's 58400 blocks per year, which with a 32 MB block size would translate to 1,868,800 MB per year.

A growth rate of 2 TB per year would very quickly take you past the point where "anyone can have a copy". Yes, it would still be feasible for power-users who could dedicate a whole HDD or some NAS space to it, but that's implicitly conceding the whole "anybody can have a copy" point, and the growth would still be continuing unabated.

And the problem is - Bitcoin's transaction rate is currently so slow that 32 MB is not really a big enough block size. Going from 7 tx/sec to 224 tx/sec is still pitiful for a global network, again Visa does 50k tx/sec at peak.

I agree that it seems highly plausible that some form of "checkpointing" mechanism could be securely implemented.

In fact if you "trust the network" then there's no reason to download the blockchain at all, you can run the Electrum client. And if you think all the nodes are lying to you... how do you ever get the blockchain securely in the first place, regardless of a checkpoint mechanism?

Power users that could dedicated a $50 drive? Storage just keeps getting cheaper. Bandwidth is more likely to be a limiting factor. But looking at dedicated servers, $50/mo gets you 8TB of disk + plenty of bandwidth.

Checkpointing cannot be hard. The hashes of 58400 blocks is not even 2MB. So with a few dozen megs you can checkpoint every single block. Then you can download blocks on-demand if you need to find particular transactions or whatever. What is really lost if we tossed the previous blocks after a year and just kept balances?

But you're right: who needs to run a node?

I'll add to this that Coinbase freezing everyone's Bitcoin Cash is a great example of the problems with giving up decentralization.

Coinbase warned people for a month that they wouldn't support Bitcoin Cash.

I thought they made the announcement 10 days before the fork, not a month.

I'm not sure why you are saying this as if you're defending Coinbase. Warning someone you're going to seize their assets a month in advance doesn't make it any better for them when their assets get seized.

I'm not saying Coinbase is somehow ethically wrong for doing this, I'm saying that one benefit of decentralization is that no one can seize your assets.

You confused Segwit with Lightning Network. Segwit only helps to enable Lightning Network. It is not required for LN.

The important distinction with SegWit is that you can always go "on blockchain" to keep a transaction really private if it needs to be. Liquidity + optional complete anonymity + scalability. Plus I think there will be ways of getting SegWit to be more anon over time.

Bitcoin cash's solution will not scale. It's probably going to fail. [90% confidence.]

Sure, if you're willing to pay on-blockchain fees, which are only going up given a constant block size.

Neither option provides anonymity, so that's fairly irrelevant to this conversation. SegWit claims of future anonymity may come true, but given it's antithetical to a centralized business model, I wouldn't hold my breath.

I don't see how segwit is giving up decentralization at all. Decentralization isn't binary. There will be many many providers that can offer more streamlined and user friendly access to bitcoin. That's decentralization. You will still have the option of interacting with the blockchain directly. That's decentralization.