Bitcoin for Rockstars
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I see a lot of these articles hailing Bitcoin as the answer to some monetary injustice or other, or as the fundamental underpinning of some revolutionary new product, but people totally ignore Bitcoin's technological limitations. Instead, the blockchain is talked about as if it's some magical box that is pretty much whatever the author needs it to be.
The amount of cognitive dissonance in the Bitcoin community regarding this topic is baffling. The whole point of side chains was that even core devs realized that Bitcoin can not scale. Yet side chains were hailed by the community as some sort of fantastic innovation that is 'good for bitcoin'.
Maybe these people are just talking their book, I don't know, but next time you read an article about Bitcoin or blockchain tech just realize that VISA can handle 47.000 tps. Bitcoin currently is doing slightly more than 1.
Inb4 'merkle trees', 'invertible bloom filters', 'something something moore's law', 'corporate shill', 'freedom hater', 'the market will sort it out', 'side chains', etc.
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Secondly, Bitcoin can actually scale by many orders of magnitudes, see the math and arguments there: https://en.bitcoin.it/wiki/Scalability You need solid counterarguments to this page to convince us it can't possibly scale.
Thirdly, Bitcoin has done 6 years in a row what critics have always said it cannot do ("nobody would want bitcoins", "the exchange rate will never reach $1/$10/$100", "it will crash and be forgotten after the Jun 2011/Mar 2013/Nov 2013 bubble", "the US govt will make it illegal", "big companies will never accept it", etc). So you need to sit back and start thinking why is it that Bitcoin keeps growing and reaching milestone after milestone, instead of throwing one more empty statement "bitcoin can't do X" with zero reasoning behind.
[1] WU does ~250 million consumer transaction/year.
Edit: @inoop I misremembered and meant WU, not Paypal
> PayPal, in contrast, handles around 10 million transactions per day for an average of 115 tps.
That may not be very relevant in SV, but they affect a lot of lives positively.
At the same time, they charge exorbitant fees, and remittance fees are stuck at around 10%. I'm looking forward to the day they're as redundant as an expensive long-distance phone call is made redundant, which is possible when you have native digital money like we have digital mail or telephony. Bitcoin to me is the most compelling proposal for this to this date.
The one thing that hasn't changed a great deal is accessibility to them. When buying, you are either subject to waiting periods, or have to conduct the transaction in cash in person. No one in their right mind will take credit cards or PayPal for them. I believe this is the major hurdle to adoption of crypto by the mainstream public. Writing tools to make BTC easy to work with is the easy part. Until they can be bought at Walmart or your local check cashing store, it's going to be a fairly rough road for new adoption.
Just acquire them like you likely acquire any other currency: accept it in exchange for your labour or the goods you have to sell. That's what I do, for online math tutoring. It's just some pocket change on the side for me right now, but it's helped me buy a few Christmas gifts already.
Firstly, 'conduct the transaction in cash in person'. That sounds pretty accessible to me. You have cash, you press a button on your phone which shows the nearest person selling it, you go there and buy it from them. Can it get any more simple than handing over money in return for an item, like buying a coffee?
But secondly, there are various companies right now that offer quick and easy purchase. Try Circle for example, you can instantly buy bitcoin there with a bank transfer, even though the transfer takes a day you get your bitcoin, and at 0% fees, too. If you compare that to just 3 years ago when your only option was shady and risky as hell, or hell, even a year ago, it's rapidly improving.
For example here in the Netherlands I could buy bitcoin between now and one minute from now, safely and legally and I'd receive my bitcoin right away, using just my phone and not leaving my seat or registering for any account. (Bitonic)
Can it be more simple? No. Will most people do it, with the shady reputation of Bitcoin and the people involved with it? No.
As for will people do it? The popular ways to do this (localbitcoins, mycelium) have actually showed record amount of transactions lately, so more people do it than ever.
Does that mean everyone does? No, but that has more to do with the fact it's a nascent thing rather than a shady reputation or a lack of accessibility.
Because it has the support of a vocal, passionate, educated community of tech people, some with a monetary stake in having it succeed, combined with the hide-in-a-bunker, sky-is-falling crowd, still feeling the effects of the financial crash.
Right now the network has <7000 nodes, a number that has dropped from almost 30K in the past few years. [0] The blockchain is <30GB and a node can expect to handle ~15GB/day of bandwidth. [1] You will also need at least a gig of RAM, preferably more. The UTXO is 500MB (which needs to be stored in memory).
So what we know is that despite the relatively low requirements of running a node, we are bleeding them faster than we can get new ones. People claim that storage space and bandwidth getting cheaper will solve the problem. Given past performance of the node landscape, that statement does not hold weight.
So what are the consequences of all this? Well, the node landscape will centralize very quickly as the bandwidth and storage requirements far outpace what most would be willing to provide the network gratis. Universities and large payment processors will be the only ones who can afford to run full (archival) nodes. Pruning and all that will help, sure. But in order for Bitcoin to remain true to its decentralized roots, a distributed node landscape is vital. If everyone isn't validating everyone else's transactions we have a big problem (imo, of course).
The number of full nodes decreased in large part because in the early history of Bitcoin in late 2010 or early 2011 your only option to have a secure wallet or to mine reliably was to run a full node locally. But nowadays there are many alternative lightweight clients using the SPV protocol, and a lot of reliable mining pools (it was in mid-2011 that pools started mining more coins than solo miners running full nodes). So of course many users stopped running full nodes.
[1] http://www.theregister.co.uk/2010/12/07/wikileaks_latest/
What is it about Bitcoin that makes seemingly everyone, no matter how unqualified, re-iterate the same naive knee-jerk trite at no end, at every opportunity?
Can we please stop repeating the same old debates on every article with Bitcoin in the title?
But yeah it's getting a little old. It's like someone posts a thread about some new solar invention, and the top comment is 'but the elephant in the room is that there is no global warming and it takes more energy to build a solar panel than it can ever generate' and we all sigh. This is a little less wrong than that, but the notion that bitcoin can't scale is simply false too, and and the topic itself is a lot more complex than 'it can' or 'it can't'.
The protocol is not set in stone. Scalability is a work in progress.
https://bitcoinfoundation.org/2014/10/a-scalability-roadmap/
Blockchain storage would still be a problem, but pruning old empty addresses will help a lot with that.
Really? Could you at least address why these things don't allow bitcoin to scale? It's pretty unproductive to criticize something, then say inb4 all the reasons why most criticism is invalid. It's like saying 'Humans are stupid because a child can't do math. inb4 comments about how adults can'. I mean why even post that?
Point is, 1mb limits are arbitrary, which is where the 1 TPS comes from, 1 TPS is how much transaction data fits in a 1 megabyte block. You know this, so say it.
And that 1 megabyte block can go to 10 megabytes. Why not to 1 billion megabytes? Because it's expensive to process that data (network to transfer it, storage to store it, CPU to verify signatures).
And it's a PERFECTLY sensible thing to then say, that moore's law affects the ability to verify more transaction signatures. Or that Kryder's law affects the ability to store more data. Or that Nielsen's law allows networks to transfer more data.
How childish is it to say 'inb4 perfectly fine reasons why my criticism is more nuanced'.
And yes, the blockchain can be pruned, requiring less storage. And yes filters can be used to require less data to be transferred. And yes it is possible to run light-nodes, where you only store some transactions and not others, so that you can make a small contribution to decentralisation.
But look at the current 1 MB blocks. That's 1024 kilobytes every 600 seconds, or 1.7 kb per second.
Now look at an example, take Bitpay, they have made public that they process close to half a billion dollars a year. (yes, peanuts compared to VISA, don't worry I know). And they've done this by utilizing a fraction of the bitcoin blockchain. Which itself is at a fraction of its current arbitrary 1 MB block capacity.
So a company that utilizes a fraction of the blockchain, which is at a fraction of full capacity, which utilizes 1.7 kb/s of network, is powering half a billion dollars of money processed per year, without any optimizations, and you're telling me that this can't scale up today, nor can it scale up up in the next 10 years despite moore, kryder, nielsen's laws, even after optimizations?
It's simply not true. I won't stand here and say bitcoin can scale to 1 million VISA networks, no. I know there are limitations, and I appreciate that a distributed, redundant, decentralized system is more expensive than having to run a single centralized node.
I appreciate that. But this notion that bitcoin can't scale at all to any significant TPS period is so devoid of any NUANCE.
And your comment about how core devs realized bitcoin can't scale. I'll leave you with these concluding remarks by Gavin Andresen, Chief Scientist of bitcoin's core development who virtually completely disagrees with you. (in a nuanced way with caveats) [0]. Doesn't make him right and you wrong in and of itself (although he's both a very involved guy, knows what he's talking about, but isn't on the hype train. i.e. he still calls bitcoin 'an experiment'.) but at least the notion that bitcoin core devs don't think it can scale is, again, a lot more nuanced.
As for the corporate shill, freedom hater etc stuff. I hear you, that kind of sentiment from some bitcoiners got old really fast. But it's not nearly as bad as a few years ago. A lot of cool sensible middle-ground folk have arrived who get as tired by a 'you're a corporate shill so your comment is invalid' remark by a crazy bitcoiner as a 'you probably think I'm a corporate shill, so you're a bitcoin nut whose comment is invalid' remark by people like you.
[0] Comments by Gavin Andresen on scalability: https://bitcoinfoundation.org/2014/10/a-scalability-roadmap/
There is a clear path to scaling up the network to handle several thousand transactions per second (“Visa scale”). Getting there won’t be trivial, because writing solid, secure code takes time and because getting consensus is hard. Fortunately technological progress marches on, and Nielsen’s Law of Internet Bandwidth and Moore’s Law make scaling up easier as time passes.
The map gets fuzzy if we start thinking about how to scale faster than the 50%-per-increase-in-bandwidth-per-year of Nielsen’s Law. Some complicated scheme to avoid broadcasting every transaction to every node is probably possible to implement and make secure enough.
But 50% per year growth is really good. According to my rough back-of-the-envelope calculations, my above-average home Internet connection and above-average home computer could easily support 5,000 transactions per second today.
That works out to 400 million transactions per day. Pretty good; every person in the US could make one Bitcoin transaction per day and I’d still be able to keep up.
After 12 years of bandwidth growth that becomes 56 billion transactions per day on my home network connection — enough for every single person in the world to make five or six bitcoin transactions every single day. It is hard to imagine that not being enough; according the the Boston Federal Reserve, the average US consumer makes just over two payments per day.
So even if everybody in the world switched entirely from cash to Bitcoin in twenty years, broadcasting every transaction to every fully-validating node won’t be a problem
Now the industry is whining that keeping track of who owns what is too hard. They dug their own hole. Let them deal with it. This is so typical of the music industry, which has been shooting itself in the foot since the invention of the tape recorder.
The article seems to be proposing some kind of a micropayment system, where every time someone buys a track of music, all the sub-payments to the various contributing parties get cranked out. That's not only too complicated, but the transaction volume would be huge. Bitcoin is not web-scale. The Bitcoin block chain is currently limited to about 7 TPS.
This idea comes back now and then. Ted Nelson's Xanadu had a micropayment system something like this. A bunch of fanatical libertarians tried to make it work. The free World Wide Web won out.
The amount of effort that the computer industry puts into keeping the music industry happy is excessive. Apple or Google could buy out the entire music industry for cash.
The "industry" is just a supply chain for auditory experiences, and when consumers became distributors as well, it cut out the supply chain folks. That is who is ultimately fighting back in all of this.
I think he's saying Katy Perry sends a song to Spotify along with a bitcoin-type address and at the end of the month they send the payment to that address, which divides it up between all the writers, producers and rights holders.
The US abolished the notice and deposit requirements via the Berne Implementation Act of 1988, almost a decade before TRIPS.
Bitcoin has a chance at becoming a currency because in the past it has been hard to reach a global consensus on value.
It may be possible to use a bitcoin based timestamping solution like https://github.com/goblin/chronobit to record the rights, but I can't see where the incentive is for everybody to support a distributed database of such rights.
> Counterparty works by storing extra data in regular Bitcoin transactions, which makes every Counterparty transaction a Bitcoin transaction, albeit a very small one. When Counterparty transactions are broadcast to the Bitcoin network they are verified by Bitcoin miners and saved in the Bitcoin blockchain to make a secure, verifiable record.
If you have any questions I can answer them here on HN.
I think this would make the blockchain much more useful for other 3rd parties to plug into and leverage said DB.