> We very, very much need such a system, but the way I understand your proposal, it does not seem to scale to the required size.
As a simple example, suppose every one of the 7 billion people on the planet make only 1 transaction per day. With a basic transaction size of ~250 bytes, this would require a blocksize of ~12GB per 10 minute block. (check my math)
"But storage is cheap!" I hear some say. Even if you could dismiss the cost of storing an aggregating ~600TB/year, that's not the real bottleneck. Bandwidth and processing power are. You have to broadcast that 12GB block to the entire global bitcoin network as fast as possible to beat other miners to the award. Then all the world's full nodes have to do the work of processing that 12GB of data to validate it. All within an average 10 minute window.
And this is all based on the absurdly conservative assumption that every person only makes 1 transaction per day. It's not even considering the use case that billions of machines might want to transact with each other billions of times a day. Or that you might want to build micropayment systems for metering. e.g. http://andyschroder.com/DistributedCharge/ or https://twitter.com/JackMallers/status/1346869624789463040
And even if you could solve all these problems, it doesn't get around the fact that blockchains as a payment system are a really shitty experience compared to existing solutions. You have to wait an unknown amount of time for your transaction to make it into a block before you're safe from a double spend. That time is 10 minutes on average, but in reality, it could be anywhere from a few seconds to over an hour because mining a valid block is a random search that averages out to 10 minutes based on an ever changing balance of real world hash power and mining difficulty value.
The only way blockchains were ever going to be interesting at scale is as a rock solid, incorruptible settlement layer. Decentralized layer two networks like Lightning are exciting because they have the potential to create a trustless payment network that directly settles to the blockchain. Even more exciting is that lightning can span separate blockchains and sidechains, e.g. BTC<->LTC, BTC<->USDT (and future CBDCs?), or BTC<->lBTC/rBTC. And they can actually scale to an arbitrary number of transactions that don't need to all get recorded forever in the base chain immutable ledger.
You are clearly a core supporter. Obviously any reasonable person is aware that there are technical limitations that prevent infinite scaling.
However, your entire argument is a strawman. This never was about scaling instantaneously to accept all transactions in the entire world. The debate was, and is, about allowing storage, money, markets, network speed, technology in general, and other natural phenomena govern the amount of data the network supports.
This debate is about a small group of people deciding that they were able to make a better decision about the block size than the free market. This is about arrogance, power, and control. Until you can bring an argument relating to scaling that actually acknowledges the reality that the free market can govern things better than you can, you can keep it to yourself.
>>The idea that raw blockchains would ever be a scalable payment network for the world's population was always a completely absurd idea.
Strawman.
Bitcoin could have increased its block size 100X, allowing tens of millions of people to use it every day, and it would still impose lower bandwidth costs on full node operators than streaming Netflix 24/7.
The mental gymnastics used to rationalize keeping Bitcoin transaction throughput limited to 7 per second, instead of allowing it to rise several orders of magnitude to meet more of the immense market demand for p2p transactions, has been very harmful to cryptocurrency adoption.
>>Decentralized layer two networks like Lightning are exciting because they have the potential to create a trustless payment network that directly settles to the blockchain.
The Lightning Network has no chance of gaining mass-adoption. It has high start up and capital lock-up costs, proportional to on-chain transaction fees, which only grow as Bitcoin/LN adoption ramps up. It has high upkeep costs, requiring you to have your LN node online to receive payments, and for your node to have access to the LN funds via a connection to the private keys, which is a security liability.
To monitor for fraudulent channel closes in order to be able to react in time to challenge them, it also requires you to have an always on-line node, or a trusted third party delegated to do that on your behalf. And if you want rapid/automated reaction to fraudulent channel closes, that node needs to have access to the private keys to your LN funds.
Then there are routing issues when the topography of the network changes with every transaction, and where the existence of routes is dependent on sufficient capital being locked up in channels.
There's a reason why there's 100 times more BTC locked up for use in Ethereum dApps than for use in the LN. Ethereum-based scalability solutions could, ironically, provide BTC with the scalability needed to gain mass-adoption as an instrument for peer-to-peer payments.
Anyway, Bitcoin can scale, on-chain, just as Satoshi described. I don't know if it can scale to 8 billion transactions a day, but it can scale to 30 million transactions day, which would make it more effective for every application, including using Bitcoin as a savings account and Bitcoin-based layer two solutions.
>>And even if you could solve all these problems, it doesn't get around the fact that blockchains as a payment system are a really shitty experience compared to existing solutions.
They're a far better solution than cash, and in many cases better than other electronic payment solutions, because they are censorship resistant and can be made very private.
>>You have to wait an unknown amount of time for your transaction to make it into a block before you're safe from a double spend. That time is 10 minutes on average,
You can use Bitcoin with zero-confirmations, as long as miners reject RBF. Satoshi explained this all over a decade ago [1], and zero-confirmations being enough has been amply demonstrated in practice.
In fact, it's so absurd that it was literally the first public comment Satoshi received. https://satoshi.nakamotoinstitute.org/emails/cryptography/th...
> We very, very much need such a system, but the way I understand your proposal, it does not seem to scale to the required size.
As a simple example, suppose every one of the 7 billion people on the planet make only 1 transaction per day. With a basic transaction size of ~250 bytes, this would require a blocksize of ~12GB per 10 minute block. (check my math)
"But storage is cheap!" I hear some say. Even if you could dismiss the cost of storing an aggregating ~600TB/year, that's not the real bottleneck. Bandwidth and processing power are. You have to broadcast that 12GB block to the entire global bitcoin network as fast as possible to beat other miners to the award. Then all the world's full nodes have to do the work of processing that 12GB of data to validate it. All within an average 10 minute window.
And this is all based on the absurdly conservative assumption that every person only makes 1 transaction per day. It's not even considering the use case that billions of machines might want to transact with each other billions of times a day. Or that you might want to build micropayment systems for metering. e.g. http://andyschroder.com/DistributedCharge/ or https://twitter.com/JackMallers/status/1346869624789463040
And even if you could solve all these problems, it doesn't get around the fact that blockchains as a payment system are a really shitty experience compared to existing solutions. You have to wait an unknown amount of time for your transaction to make it into a block before you're safe from a double spend. That time is 10 minutes on average, but in reality, it could be anywhere from a few seconds to over an hour because mining a valid block is a random search that averages out to 10 minutes based on an ever changing balance of real world hash power and mining difficulty value.
The only way blockchains were ever going to be interesting at scale is as a rock solid, incorruptible settlement layer. Decentralized layer two networks like Lightning are exciting because they have the potential to create a trustless payment network that directly settles to the blockchain. Even more exciting is that lightning can span separate blockchains and sidechains, e.g. BTC<->LTC, BTC<->USDT (and future CBDCs?), or BTC<->lBTC/rBTC. And they can actually scale to an arbitrary number of transactions that don't need to all get recorded forever in the base chain immutable ledger.