edit: I forgot to say I edited my post with more background.
That's true, but there's a fundamental difference between the fee structure when blocks are full vs not full.
When not full, and I believe the way the system was intended to work, the tendency is for miners to compete for users fees; hence the fees will tend to the actual cost of mining. Just enough for miners to stay in business and secure the network, with all extra value being captured by the users.
When full, users compete for mining space, and as such fees tend to the value of a bitcoin transaction. Which means all extra value is captured by the miners, and the users eventually have no incentive to use bitcoin as their transactions tend to be as expensive as they're worth.
Another troubling side effect of that is because of the zero-sum nature of mining, the extra fees will eventually just cause difficulty to increase to match, slowly pushing bitcoin's cost to match its value, providing very little (really almost no) incremental decentralization/security to the network.
The artificial barrier to the number of transactions essentially causes the world to waste electricity while at the same time slowly killing bitcoin. If the barrier were always kept just slightly above the demand for transactions however, bitcoin would operate completely healthily and the (nice low) fees would always provide just enough incentive for miners to continue to mine... by definition!
On the other hand I don't respect the political moves made by some other people in this whole fiasco. They've damaged bitcoin horribly.
Edit: just repeating - I don't think most core developers have anything to do with this.
* not trying to appeal to authority, but you can go compare across all competing clients and see who is contributing the most meaningfully _to you_ and contrast that with who listens to gmaxwell and sipa.
For the benefit of anyone taking your comment at face value, I'm here to say:
Your response is total garbage.
edit:
More details, my response was written slightly in haste...
1. I'm a (non-blockstream) core dev, I've worked on patches for the last release which sped up validation up to 40% with more efficient caching algorithms. To imply that Core isn't scaling flies in the face of those improvements (and the many others, developed by blockstream and others!)
2. I also co-founded the MIT DCI, which employs several bitcoin core developers (non-blockstream). Historically, DCI also employed ex-lead maintainer Gavin Andresen (he resigned to focus on other things). DCI employs the current lead maintainer.
3. I also co-founded the Scaling Bitcoin conference (I was the first program chair). You can see the archives of research presented at the workshop https://scalingbitcoin.org
4. Blockstream isn't imposing any constraints: Bitcoin has fundamental scaling concerns, and they can't be addressed quickly (e.g., increasing blocksize) without significant drawbacks for the future of the platform.
5. here's some point by point refutation
> They want to change the protocol away from a decentralized blockchain...
Mining is actually highly centralized right now. There are a handful of people with a lot of control. If you simply "follow the hash power", these miners could implement whatever they want, e.g., "I get a million coins per day extra". Validating against Bitcoin's predefined rules keeps it decentralized.
> Now they're following an agenda to deliberately prevent the blockchain from scaling in the way it was originally designed to.
Many of the algorithms in Bitcoin would/will fail spectacularly with really large blocks, so that wouldn't work. The way Bitcoin is "designed" to scale, I would argue, is through crypto (e.g., snarks/Mimble Wimble), which allow you to compress O(n) transactions to O(1).
> Why? To make the blockchain look ineffective
Actually, many of the features added with SegWit make bitcoin more functional than ever; txn malleability was a major woe for users of the software.
> and now we have high fees and slow confirmations as a result. Bitcoin is badly affected by the congestion and so people are becoming desperate and clamouring for Blockstream's forthcoming off-blockchain scaling solution.
Bitcoin was always going to need fees -- otherwise why would they be in the protocol from the start? You need to pay for the bandwidth and permanent storage costs one way or another. If Blockstream has a commercialization strategy for off-chain, so be it, but fundamentally they can't be a gatekeeper to that.
> This would have worked out pretty well for them except that there has inevitably been opposition to these political games.
You can spin the game theory whatever way you like... what if the miners want to have larger blocks that they exclusively fill with their own garbage transaction, centralizing the network, while still charging high fees for real users in light of this artificial demand?
> A couple of other development teams have sprung up with forks which are more closely aligned to Satoshi Nakomoto's original scaling vision. These groups have been vociferously attacked by Blockstream and Blockstream has generated terribly misleading FUD about them in order to try to retain their control of the ecosystem.
I've looked at their designs. Sometimes you have to call a fig a fig and a trough a trough. Emergent consensus has a number of fatal flaws, a lot of other people have gone into good detail on how.
> Blockstream has failed.
Not yet :p
> One of the alternate implementations "Bitcoin Unlimited" has all but won the war because the majority of miners are worried that the ecosystem is being damaged by Blockstream.
Do you have a source on this? When you say majority of miners, do you mean by hashrate or by "noses"? Theres a high degree of centralization; so it's hard to truly judge.
> The miners appear to be moving to Unlimited and it will most likely take over as the standard "Bitcoin" implementation at some point.
Miners may be signalling for support but not actually running the code. Signalling (and getting other smaller miners to try to switch) and not actually switching is a great strategy to get a mining edge.
> The whole "chain split" thing is mostly more FUD. A hard fork isn't a big deal if handled sensibly. The minority chain will quickly die off naturally because it'll be uneconomic to mine on it. This is just as it was designed to work by Satoshi Nakomoto.
A chain split is indeed a big deal. When the ethereum chain split, a lot of exchanges lost a serious amount of money with both tokens having replay attacks. This means that it's difficult -- nigh impossible -- for users to have a sane outcome using many of the ecosystem platforms following a hardfork.