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15 comments
#1 is not false. They say:
> their capacity is largely fixed... Bitcoin has an estimated maximum of 7 transactions per second vs 24,000 for visa
Yes, Bitcoin could raise their artificial transaction cap. But they haven't recently, despite fees and delays getting quite large. So clearly there are significant difficulties in increasing the throughput meaningfully, and it is unclear how high it can go. To a user used to pre-existing transaction mechanisms, that's a "largely fixed" capacity.
> their capacity is largely fixed... Bitcoin has an estimated maximum of 7 transactions per second vs 24,000 for visa
Yes, Bitcoin could raise their artificial transaction cap. But they haven't recently, despite fees and delays getting quite large. So clearly there are significant difficulties in increasing the throughput meaningfully, and it is unclear how high it can go. To a user used to pre-existing transaction mechanisms, that's a "largely fixed" capacity.
Yet people upvote articles like this. Goes to show how supposedly people of "reason/logic" are as much influenced by "monsters" (ref to Goya's The sleep of...) as anybody else. :/
> Bitcoin has an artificial transaction cap because it's conservative. It's been raised before and will be raised in the future.
I thought one of the founding principles is that new money will not be created?
Unrelated to your comment, but re: #3 and #5 ...why shouldn't Bitcoin's value be the cost to mine it?
I thought one of the founding principles is that new money will not be created?
Unrelated to your comment, but re: #3 and #5 ...why shouldn't Bitcoin's value be the cost to mine it?
I'm confused by your first comment; the transactional throughput of Bitcoin is completely unrelated to money creation.
On the latter - I think it's more up to you to show that it would be. The value of most things is unlinked from their cost of production. A really obvious example would be a five pound note.
That said, yes, in the stable state, miners should only expend 1BTC-epsilon of 'effort' to produce 1BTC. So if a block contains 1BTC of transaction fees, you'd expect them to spend a maximum of 1BTC (currently ~$6000 USD) to produce a block.
In reality it's a bit more complicated than that because the value fluctuates far more quickly than mining operations can or will scale up or down.
So really, it's the opposite - 1BTC isn't worth the amount of effort miners put in, the amount of effort miners put in should be approximately 1BTC worth. Sort of.
On the latter - I think it's more up to you to show that it would be. The value of most things is unlinked from their cost of production. A really obvious example would be a five pound note.
That said, yes, in the stable state, miners should only expend 1BTC-epsilon of 'effort' to produce 1BTC. So if a block contains 1BTC of transaction fees, you'd expect them to spend a maximum of 1BTC (currently ~$6000 USD) to produce a block.
In reality it's a bit more complicated than that because the value fluctuates far more quickly than mining operations can or will scale up or down.
So really, it's the opposite - 1BTC isn't worth the amount of effort miners put in, the amount of effort miners put in should be approximately 1BTC worth. Sort of.
Imagine that I am trying to convince you to buy some cookies I baked. Are you going to care about the effort I put into making the cookies when I ask you to pay me for them?
How are the `transaction cap` and `new money will not be created` related? A block can contain more transactions, but the block reward stays the same.
Also, new bitcoin is created all the time (since that's what mining is).
Also, new bitcoin is created all the time (since that's what mining is).
Both the "congestion" and "storage" paradoxes fail to even mention Lightning Network (LN):
http://lightning.network
LN operates on a different kind of network from the Bitcoin P2P mainnet. More users with more open channels means in principle faster routing, lower fees, and fewer dropped transactions.
There's a big caveat, however. LN security degrades in the event of mass channel closure in which the mainnet P2P network can become flooded with transactions that fail to confirm quickly enough, leading to loss of funds.
http://lightning.network
LN operates on a different kind of network from the Bitcoin P2P mainnet. More users with more open channels means in principle faster routing, lower fees, and fewer dropped transactions.
There's a big caveat, however. LN security degrades in the event of mass channel closure in which the mainnet P2P network can become flooded with transactions that fail to confirm quickly enough, leading to loss of funds.
I've been hearing about the Lightning Network for many years, but is it a real thing that can actually be used to solve a problem (high transaction fees/long confirmation times/?) yet?
It's been about three years since the original release of the whitepaper.
It is getting there slowly.
One thing that's frustrating in the Bitcoin ecosystem is that it turns out barely anyone actually wants to fund development of the lower levels of the protocol.
Most work in "blockchain" is either on complete fluff like ICOs or other white collar scams, or on the exchange side, where you're mostly building fast centralized databasey stuff (trading backends).
It is getting there slowly.
One thing that's frustrating in the Bitcoin ecosystem is that it turns out barely anyone actually wants to fund development of the lower levels of the protocol.
Most work in "blockchain" is either on complete fluff like ICOs or other white collar scams, or on the exchange side, where you're mostly building fast centralized databasey stuff (trading backends).
So what you're saying is that Lightning has showstopper failure modes? And you wonder why it wasn't mentioned!
Crypto is not just tech. So newer tech wouldn't eliminate it. I solved the innovation paradox.
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Runs out of steam at valuation paradox. I wrote a little bit about the sources of value here coinward.substack.com
How to spell “cryptocurrency” properly, for one.
#1 is false.
Bitcoin has an artificial transaction cap because it's conservative. It's been raised before and will be raised in the future.
#2 is false, though a different concern is present.
Bitcoin doesn't require a user store the entire chain, older transactions can be pruned. It does need to be sent over the network and processed which _is_ a concern.
Ultimately it shouldn't be the case that every single transaction has to pass through every node but only settlements. Solutions for this are being worked on.
#3 is false.
Transaction fees pay for mining.
I got bored at that point, though it does seem to get more reasonable, because BofE staffers' likely know more about economics than technology. Their comments on the distribution possibly have some merit (but then, I think the 'traditional' wealth distribution is probably far worse than we think it is; it's difficult to know because it's more opaque).