What are the capacity constraints, if any, of Bitcoin?

[Leo]

Regrettably, I don't. In the first instance, I'm not a techie - have an interest and skirt around the edges but struggle to keep up. Secondly, despite having a year free, I don't have enough time to check stuff out as thoroughly as I'd like. I intend to spend some time on studying crypto & conventional trading in the coming weeks (thank you BTC!).

It's the technical challenges that intrigue me more, how they are proposing to address some of these problems and how near or far away they are from a solution that can live up to lot of the hype that surrounds cryptos.

Reading through the whitepaper, looks like the suggested timeout is 3 days. I have been unable to find any discussion or more recent developments that would suggest it has changed since as LN continues to evolve.

 

[Leo]

Philip mentioned a maximum of 7 transactions per second compared to something like 7,000 per second using Visa.

Just to clarify one point, Visa achieved 47,000 transactions per second in busy holiday spending back in 2013, we don't know what the maximum capacity is. Current technology / bandwidth constraints can not handle the data volumes that would be required to increase the bitcoin blocksize to achieve anything close to this, hence the focus on layer 2 protocols such as the Lightning Network.

 

[Gus1970]

Hi Leo, with renewed enthusiasm, for the benefit of the Irish bitcoin community, see my answers below

Wow! A whole 14tps! An amazing 0.002% of what Visa alone can process, that certainly is progress.

In the message you responded to I said "1MB = 7 transactions; 2MB = 14 transactions etc." I would have expected the readers to understand that you can do that with 3MB, 4MB etc. There have been tests run ob the BCH testnet with xGiga Blocks and they worked. 1GB equals to 1,000 MB.

Why don't we enable 20k transaction per second now? Because we barely get 5 transaction per second today. I can expand if you need more details, but I would really like to make sure we are clear on this point because it seems pivotal to our conversation.

If a user's complete transaction history can be laid bare for the world to see, how is that private?

I would agree with you if you knew who the person transacting is. And that's what the banks have access to today. They know you, they know what you bought at any time you use your cards.

With bitcoin the situation is different. Everybody (even me and you) know about every transaction that has ever happened from day one.
With bitcoin come some responsibility, in fact you become your own bank and it is up to you to defend your privacy. There are some very good suggestions in this document: https://bitcoin.org/en/protect-your-privacy

Please let me know if you have any further question on bitcoin privacy.

Well, I won't but I'm not in law enforcement, but let's not pretend it's impossible or not happening regularly as your point suggested

In the case of criminal convictions, I think governments might apply force to get the keys out of the criminals, I am not sure what the rights of citizens are in this case but if the person refuses law enforcement cannot take the keys out of his brain. They are not a physical thing that can be seized, do you understand? What i am led to believe is that the prosecutors might offer the criminals a deal with the caveat that they share the keys, in that case the decision is of the criminal to take or not take the deal, but the keys cannot be seized.

A better example. Say i am a criminal and I am under investigation, they have seized all my assets but I haven't given them the keys to my crypto. I die. The crypto dies with me, nobody can access it.

I am neither interested in being a criminal nor to protect them. On the other hand, if i believe i have not committed a crime, I cannot be forced to reveal my keys. I am the only responsible for them, if i decide to give them to somebody it is my decision. Is this more clear now?

Do you have cases, not related to crime where people have been forced to share their keys? If you do, please by any means share, I would be extremely interested.

It doesn't affect me in any way as I don't see bitcoin adding any value to me in terms of a means of payment or store of value for as long as that volatility continues.

Volatility is a property of an asset. Bitcoin is a new asset and has different rules, simple, if you don't like it don't use it as a currency.

I hope I clarified your doubts, but by any mean, feel free to answer any questions.

Best,

Gus

 

[Gus1970]

we don't know what the maximum capacity is. Current technology / bandwidth constraints can not handle the data volumes that would be required to increase the bitcoin blocksize to achieve anything close to this, hence the focus on layer 2 protocols such as the Lightning Network.

BCH is scaling increasing block size - GB tests have been run in the BCH testnet and it worked.
BTC is scaling with second layer - I know how it works but I am not able to get into the nitty gritty of 2nd layers, maybe somebody else in here can

Other crypto are using other approaches, it's the normal evolution of science, experiments are happening until the problem is not resolved then the best approach generally prevails.

Look at the motor industry for example, could you travel in comfort from Dublin to Cork with the first model car? No. Probably the roads were not good enough. People didn't say "allright, cars don't work" they built better cars and improved the ecosystem. That's how science evolution works, no different from bitcoin.

 

[Leo]

In the message you responded to I said "1MB = 7 transactions; 2MB = 14 transactions etc." I would have expected the readers to understand that you can do that with 3MB, 4MB etc. There have been tests run ob the BCH testnet with xGiga Blocks and they worked. 1GB equals to 1,000 MB.

That is indeed true, and I'm not aware of anyone arguing with that, but your tone suggest this is a trivial matter, and block sizes will naturally increase as demand for volumes increases. The debate on increasing the block size has been going on for more than 7 years now with no sign of consensus within the bitcoin community, and as I'm sure you appreciate, consensus will be required to make any such change. BTC was formed as a result of the frustration of some members of the community on lack of movement on this topic. So while theoretically possible, how likely is it to happen any time soon? How likely would any adopted change be to getting us into the thousands of tps?

Why don't we enable 20k transaction per second now? Because we barely get 5 transaction per second today. I can expand if you need more details, but I would really like to make sure we are clear on this point because it seems pivotal to our conversation.

Well, the block size required to deliver 20k tps is also a challenge. But there are also vested interests within the bitcoin community that like the higher fees that the current low transaction volume limits attract.

Please let me know if you have any further question on bitcoin privacy.

You're fine, I understand it well, as do a number of the criminals who were previously using bitcoin on Silk Road only to have that public ledger or all their activity expose their activities to authorities. They thought they had complete privacy.

In the case of criminal convictions, I think governments might apply force to get the keys out of the criminals, I am not sure what the rights of citizens are in this case but if the person refuses law enforcement cannot take the keys out of his brain.

They are not a physical thing that can be seized, do you understand?

Thanks, I work in IT security, in understand cryptography. As part of the search/arrest warrants in such cases the authorities in many developed nations are entitled to demand handover of cryptographic keys. Failure to cooperate will lead to further charges and tougher sentencing, so it seems in many cases, those accused of crime are cooperating and handing over their keys. Mandatory Key Disclosure is incorporated into Irish law under the Criminal Justice act, failure to comply is considered an obstruction of justice.

As I said earlier also, it's still not clear how the Feds managed to obtain Ulbricht's keys when he clearly wasn't cooperating or making any kind of deal.

On the other hand, if i believe i have not committed a crime, I cannot be forced to reveal my keys. I am the only responsible for them, if i decide to give them to somebody it is my decision. Is this more clear now?

It's not a matter of what you believe, but what authorities such as the Gardai believe and what they can convince a judge of. If they obtain the appropriate warrant, you are obliged to hand them over.

Do you have cases, not related to crime where people have been forced to share their keys? If you do, please by any means share, I would be extremely interested.

I don't but to go back to your original point that I responded to, you stated:

bitcoin exists so that banks and governments cannot block, cannot freeze, cannot revert anything that is of a citizen’s possession

Do you now see how this is not the case, and governments are actively seizing these assets?

Volatility is a property of an asset. Bitcoin is a new asset and has different rules, simple, if you don't like it don't use it as a currency.

I fully understand that, but surely you understand that high-volatility assets are really only suitable for speculation, and it would be ill-advised to place a significant amount of any portfolio into such assets?

 

[Leo]

Look at the motor industry for example, could you travel in comfort from Dublin to Cork with the first model car? No. Probably the roads were not good enough. People didn't say "allright, cars don't work" they built better cars and improved the ecosystem. That's how science evolution works, no different from bitcoin.

The first cars were obviously a long way off what we have today, but also a massive improvement over the existing alternatives. That is the real nature of successful disruptors.

My argument is that in this analogy, bitcoin in particular due to its technical limitations would be a car with one wheel that kind of gets you to the same place, but takes longer and costs more.

 

[Gus1970]

The first cars were obviously a long way off what we have today, but also a massive improvement over the existing alternatives. That is the real nature of successful disruptors.

We were talking about transaction rate, the parallel was for transaction rate. Can I ask you to stay in topic?

 

[Leo]

We were talking about transaction rate, the parallel was for transaction rate. Can I ask you to stay in topic?

Well, firstly, you introduced the example of the first car travelling from Cork to Dublin in comfort, can you explain how a measure of comfort relates to transaction volumes? You went on to suggest the issue preventing comform was that the roads were not good enough, in your analogy, do the roads represent the network and its bandwidth, and if so, perhaps you might explain the relevance to current transaction volume limits?

Secondly, the title of the thread is 'the problems with bitcoin'. If you wish to limit discussion just to the transaction volume challenge, you may be better starting your own thread rather than dictating the course of someone else's.

 

[Gus1970]

your tone suggest this is a trivial matter

As a software engineer of more than 25 years experience, it''s not trivial, but I have no doubts in my mind that with the incentives that exist and with the amount of smart people working on it it will be resolved. 100%. The BCH solution works on testnet already BTW, I'm sure you'll find the result of the study they have done if you dig a bit.

Whether it is 2nd layer, bigger blocks it will be resolved. And let's not forget that IT IS NOT A PROBLEM YET. It will be, if ever a problem when we will require a different order of magnitude of tps. We are now future-proofing, not resolving a problem, it is a very important distinction for an engineer and for users.

The debate on increasing the block size has been going on for more than 7

It started in 2015 but not really different, it has been a very taxing period for anybody involved in crypto. But the great thing in my opinion is that the crypto ecosystem demonstrated a form of antifragility (as in Taleb's Antifragile), in fact the more the infighting and lack of consensus, the more the ecosystem grew with BCH being born.

How likely would any adopted change be to getting us into the thousands of tps?

To me 100%, but that's only my opinion based on my experience as a software engineer and my knowledge of the architecture and codebase.

Well, the block size required to deliver 20k tps is also a challenge. But there are also vested interests within the bitcoin community that like the higher fees that the current low transaction volume limits attract.

You are absolutely right. The ecosystem is evolving. Governance is a challenge. What authority do the developers have? What about the miners? etc. We are discovering the impacts of this as we speak and the ecosystem is reacting creating the antibodies to survive. Look at how when the transaction fees went up, the developers didn't want to use bigger blocks and BCH was born. That's a sign of antifragility, not of one single coin but the crypto ecosystem.

It's not a matter of what you believe, but what authorities such as the Gardai believe and what they can convince a judge of. If they obtain the appropriate warrant, you are obliged to hand them over.

What if I have lost them? Or I had them memorised and I have forgot them. What do we do? Please explain, this is important.
Again, I would like to restate that i am not a criminal and i have no interest in protecting criminals interests

As I said earlier also, it's still not clear how the Feds managed to obtain Ulbricht's keys when he clearly wasn't cooperating or making any kind of deal.

There just about a million other ways they could have done it, being infosec you should know very well about it.

Do you now see how this is not the case, and governments are actively seizing these assets?

No I don't, I lost my keys. Or I never had them. pick one

I fully understand that, but surely you understand that high-volatility assets are really only suitable for speculation, and it would be ill-advised to place a significant amount of any portfolio into such assets?

Did I ever mention people should invest a significant amount of their portfolio in bitcoin? I didn't hear myself say that. So why are you telling me this now?

 

[Gus1970]

Look, if you reread my answer you will see that it is under YOUR question on tps, I staid in topic and answered that.

I have answered every question you've thrown at me and accusing me of not wanting to talk about the problems is not correct.
Come on man, let's be civil

 

[Leo]

Look, if you reread my answer you will see that it is under YOUR question on tps, I staid in topic and answered that.

I have answered every question you've thrown at me and accusing me of not wanting to talk about the problems is not correct.
Come on man, let's be civil

So it's OK for you to go off topic and introduce car analogies in answer to my question, but then you tell me I need to stay on topic if I respond directly to a point you made?

Where did I accuse you of not wanting to talk about the problem?

I am trying to be civil, you need to be fair.

 

[Gus1970]

So it's OK for you to go off topic and introduce car analogies in answer to my question, but then you tell me I need to stay on topic if I respond directly to a point you made?

The analogy was perfectly on topic and it describes how technology removes obstacles through experimentation, same experimentation that has been done as we speak on numerous crypto that want to scale up.

Where did I accuse you of not wanting to talk about the problem?

Here:

Secondly, the title of the thread is 'the problems with bitcoin'. If you wish to limit discussion just to the transaction volume challenge, you may be better starting your own thread rather than dictating the course of someone else's.

I mean, you said it. I don't know if I am going mad or if my command of the English language is not good enough for this conversation.

I am trying to be civil, you need to be fair.

Likewise

 

[Leo]

I mean, you said it. I don't know if I am going mad or if my command of the English language is not good enough for this conversation.

Perhaps. It was you who initially suggested that I limit the discussion to transaction rates:

We were talking about transaction rate, the parallel was for transaction rate. Can I ask you to stay in topic?

My response that you quoted above clearly indicates that this thread should remain open to discussion of any and all challenges. The suggestion is clear that if you wish to limit discussion to a single element, you should open a new thread to specifically focus on transaction rates and that issue alone so as not to limit the broader focus of this thread. It's patently clear from the above and my other posts that I'm open to discussing any or all challenges to the best of my knowledge (which I'll readily admit is far from comprehensive). My 30 years in computer hardware design, software engineering, networking and security, and my more limited knowledge of bitcoin and the lightning network in particular suggest bitcoin will not succeed and the crypto world will move forward with an alternative and completely separate solution.

We were talking about transaction rate, the parallel was for transaction rate. Can I ask you to stay in topic?

Still no explanation on how a measure of comfort, or road quality relates to transaction rates?

 

[Gus1970]

Best of luck Leo, I am out of this thread. Like they say you can bring the horse to the water...