They state the ip is for defensive purposes only - however that is questionable given that anything they implement, automatically becomes prior-art. It is also contrary to the spirit and practice of the majority of crypto/alt projects.

It is unreasonable to attack miners for having interests, without disclosing that other interests may benefit from the current levels of network congestion that a skeptic would say are caused by having artificially small blocks.

Liquid Network and Lightening Network are different things and work in a different ways. A new version of liquid that uses some of he lightening technology enabled by segwit is probably in Blockstreams plans... but there are multiple competing open source implementations of Lightening Network being worked on.

Please link to the patents on the lightening network. I don't think you can.

There is no current network congestion. Free transactions are clearing after awhile and very low fee transactions are clearing right away.

All of the congestion of the past 3 months was from a spam campaign being run by the people who claim "bitcoin doesn't scale without larger blocks" ignoring that Segwit increases block size AND increases efficiency in using that capacity.

> Today we are excited to announce some important steps we are taking on the patent front, why these defensive steps are necessary, and our hope that others will see merit in our approach and follow our lead.

...

> Our Patent Pledge assures developers and users of our technology that we will not sue them for patent infringement, provided they comply with the terms and conditions of our pledge...

https://blockstream.com/2016/07/19/blockstream-defensive-pat...

Edit: Here is a discussion of Blockstream's patent application for side car design,

> The application, submitted on 9th May and published earlier this week, outlines “systems and methods...for transferring an asset from a parent chain to a sidechain”.

http://www.coindesk.com/bitcoin-blockstream-patent-sidechain...

Here is blockstream talking about Lightening,

> Blockstream’s work on the Lightning protocol began two years ago with the intention of enabling new applications and developing new use cases that could help further the adoption of Bitcoin and related technologies

https://blockstream.com/2015/09/01/lightning-network.html

Also presumably if segwit activates then Liquid is no longer needed?

Edit: The relationship between Blockstream and Lightning is underscored, by the fact that the largest contributor to the specification is a Blockstream employee (Rustee Russell),

https://github.com/lightningnetwork/lightning-rfc/graphs/con...

No, it is not only open source but a healthy mailing list with a lot of interested parties.

> lead by Blockstream

No, Poon and Dryja are not employed by the company Blockstream. The latter seems to be more focused on their sidechain solutions.

> the work is even patent-encumbered

No, there is nothing to suggest this. Patents have to be public at some point.

lighting is designed to be able to farm out channel enforcement to other nodes on the network to prevent cheating while preserving privacy.

lighting does require more block space to operate globally than is available. It still scales better than bitcoin though.

10x the transactions is not much at all. The comparison with the VISA network is not a valid one - with micropayments the volume could be 100x or 10000x - we should be able to accommodate it.

The only solution is to begin handling transations off-chain. But the problem is that there is no one good proposal for it. Until it is clear how off-chain transactions work, we will keep seeing this sort of stuff.

This has nothing to do with the block size. The size of the chain is proportional to the number of transactions. Whether those are sliced-and-diced into small blocks or large ones is completely irrelevant to how big the chain is. The only thing the block size influences is how many transactions can be mined in one block, i.e. the rate at which transactions can be processed.

But yeah - the size of the blocks does depend on the number and size of transactions and if you don't have transactions to fill up the block in full (i.e. so that its size is just under the maximal block size) - then the transactions will be the limiting factor.

Why do you think Satoshi's gave it an artificial 1MB limit if it didn't matter?

I have no idea why Satoshi chose a 1MB limit. Probably for the same reason he chose a 21M BTC limit on the total number of bitcoins that can be mined: both are arbitrary numbers that he pulled out of a hat. But the next time I see him I'll be sure to ask.

The only proposals on the table for off chain storage add profiteering middle men to the system. I'd rather pay for storage.

This is eventually going to be a problem sooner or later regardless. The fundamental decentralization of Bitcoin depends on everyone having the whole blockchain. Any sort of "checkpointing" mechanism inherently relies on trusting authoritative nodes about network state, at which point it's no longer decentralized.

(However this is somewhat of a distinction without a difference. In practice you are trusting the nodes on the network anyway - the network is authoritative because everyone agrees to treat it as authoritative. If everyone agrees to trust some other blockchain as "the real truth" then you can either accept the new authoritative network or be on your own chain that nobody else accepts - which is what happened to Ethereum after the DAO hack.)

This is a fundamental limit to the Bitcoin model and will have to be addressed sooner or later. The data is already past ~100 GB (and totally incompressible) and that's with blocks so small that the network is choking due to lack of capacity. This is only a few years' worth of records, what does the big picture look like in 20 years?

Segwit is absolutely mandatory to allow interfacing other chains in a secure manner. Pretty much everyone agrees transaction malleability is a huge design flaw (apart from some Chinese farms which are abusing it via AsicBoost).

What I specifically have a problem with is the way both sides have drawn arbitrary lines here. It's not SegWit or a larger block, we can have both. And in fact the Core proposal does include a larger block, on a surface level this dispute is over how much bigger it should be (the Unlimited devs want a much larger block right away). Again, pretty much everyone agrees that transaction malleability needs to be fixed except that group of miners.

On a deeper level it's about a power struggle between the Bitcoin Core devs and the Bitcoin Unlimited devs, and between the various factions of miners.

But isn't mining power already consolidated?

Without full nodes validating consensus, miners can (will) force protocol changes (eg. change 21,000,000 coin limit) on users, effectively changing the decentralized leaderless attributes to a centralized dictatorial less-efficient PayPal. At this moment, bigger blocks mean a less-free (as in speech) bitcoin.

I have seen this myself with a production blockchain and blocks that were less than 1mb. Increasing the size increases this effect and gives Chinese miners and artificial advantage.

Plus there's no congestion on the network right now. There's not a scaling problem. It was spam.

Further, segwit increases block size and efficiency so there's no reason to not activate it.

This whole issue isn't about scale, core is still ahead of the curve on what's needed to scale, it's about control, and disabling ASICBOOST and keeping transaction fees high.

Plus there's no congestion on the network right now. There's not a scaling problem. It was spam.

Woohoo! No need for anyone to do anything then. Remind me again why everyone is trying to scale bitcoin?

Everyone is trying to scale bitcoin because bitcoin is growing dramatically... that doesn't mean that the "full blocks" and "high fees" we saw recently weren't due to spam.

Please logic.

Ironically, this has actually become a real Byzantine Generals problem. Guess Bitcoin can't actually solve that problem in the real world.

From what I understand, China isn't too keen on the whole endeavor since it circumvents their (stringent) capital controls. What happens if they turn the baleful eye of their deep packet inspection onto the Bitcoin network? (serious question)

(Background for those who don't know: encryption/etc don't work against the Great Firewall, it knows what a given type of connection "looks like" in terms of packets/activity, so it can identify (eg) a VPN session even if it's "wrapped" or "tunneled" across some other protocol. They use a massive amount of machine learning hardware to profile connections in realtime to pick out "suspicious" activity and those connections will be dropped after a few moments. It's not impossible to run arbitrary connections through the firewall but it's very difficult and getting harder all the time.)

Gas can mean ETH gas, petrol gas, or gas gas.

If there were no technical and economic tradeoffs to increasing the blocksize then yes, it would hard to see how otherwise intelligent people could oppose it. Everybody loves a free lunch. But there are tradeoffs, which you conveniently omit, which are giving those otherwise intelligent people pause, rightfully so.

Currently at 160GB or something with 1MB block, what storage do you think a node will require with 10MB block in the next 5 years when the usage will be growing?

You must remember that Bitcoin transactions are "settled" in that 7 TPS timescale, whereas VISA transactions are merely "recorded" in their 50K TPS rate.

In reality, it generally takes a minimum of 15 days for your VISA transaction to "settle" with your bank account. Thereby the true TPS rate is orders of magnitude lower for VISA.

With regard to latency bitcoin is still worse in practical applications - because VISA confirms a transaction immediately even if as you write it settles after 15 days - while bitcoin more or less settles after and an hour - but the first confirmation you get only after about 10 minutes.

Obviously in any case it will be faster than Bitcoin.

[1] https://usa.visa.com/dam/VCOM/download/corporate/media/visa-...

If we use the 7 TPS number that people seem to be using (even though the real number I think is slightly lower), then we end up with 220,752,000 transactions in a year; three orders of magnitude less than Visa.

Bandwidth != Latency

I think proof of work mining is extremely wasteful. But once it is in place, you can sign a merkle tree of any size. You can add as many transactions as you want. The problem is that the ledger has to grow and grow. It would be nice if something was developed where you didn't need to keep the whole history.

All the practical "here's how lightning's going to work" papers I've read so far leave me very skeptical. Here's an example: http://diyhpl.us/wiki/transcripts/scalingbitcoin/hong-kong/o...

The Q-and-A at the end in particular is interesting:

>Q: On the last slide, one of the assumptions was 3 channels per person. Assuming payment channels wouldn't be useful for retail sales, because you don't want to buy a coffee just to open immediately. Is that correct?

>A: Joseph might expand on this. Let's say you buy a coffee. You're probably buying a coffee only once, right? Well, maybe the coffee is $5, and you put $50 into the channel and leave it open. Then someone else comes to the coffee shop and she does the same thing. But she has a channel with the grocery store. There's me, coffee shop, Alice, grocery store, they all have channels. When I go to the grocery store next time, I don't have to open a channel. Payments are routed.

>Q: It sounded like everybody would have to open new channels.

>A: I am guessing the mean is going to be 3, but it will probably be an exponential distribution. Most people will probably have 1 channel, and then some might have 100s of channels open.

I don't know about you but while on paper that might work I still see a lot of hand waving, guesswork and rather unsubstantiated assumptions. Why would I decide to "lock" $50 worth of Bitcoins when I buy a $5 coffee? What's the incentive for me to do this? Where does this estimate of 3 come from exactly, I see it repeated everywhere but I can't find the maths behind it?

Here's an interesting attempt at simulating a real-scale ligtning network (why aren't there more of these? Aren't we talking about a $40bn market cap currency here?): https://hackernoon.com/simulating-a-decentralized-lightning-...

The simulation is rather unrealistic and I'm not sure how to interpret its conclusions. It seems to kinda work but there are issues:

>133,401 micropayments were attempted and 3461 (2.6%) of these failed. For successful payments the median number of hops was 19 and the median total fees were 2 bits (0.000002 btc) or 32% of the value transferred.

Now it could be caused by a bad simulation rather than a real issue with Lightning network, but frankly I can't tell at this point.

I don't have a horse in this race but as seen from the outside it all looks a bit rushed and amateurish. I don't know the whole story though, maybe I'm just poorly informed.

so if the transaction fee is $0.50, you get to transact at 1% cost

if you paid $0.50 for each coffee it would be 10%

Can you really imagine how this would work IRL?

"-Here you go sir, that'll be $32 please."

"-OK, I'm paying it Bitcoins... Oh, you don't have an open channel, I'm going to create one... Mmh, but how much to I put in? Let's say $100, I'll probably buy here again next week. But will that be enough? What if my total is just above that next time? I'll have to pay the fee twice. I guess I'll just make sure not to go over $100."

"-We also accept cash, Visa and MasterCard sir."

Again, maybe it can work, it just feels so "theoretical" so far, I haven't seen anybody paint a convincing picture of a what a "Bitcoin as Visa replacement" world would look like concretely.

It's much better than a Starbucks app.

And while this is an important feature of lighting, it's not actually a "feature" when compared to Visa or MasterCard and the centralized banking system from the point of view of the user. Ideally this should all be hidden away from the average customer.

People won't want to worry about graph theory when paying for a sandwich at a gas station. Existing payment solutions still wins hands down 99% of the time when it comes to convenience even if we imagine a "perfect" lightning network. I really have a hard time imagining what would drive a mainstream adoption of bitcoin over the current status-quo.

Lightning will work the same way. Nobody needs to worry about graph theory, they can just generally assume that the graph is fully connected, and that their software will be able to find a path from A to B.

What will be bitcoin's "ISPs"? Who makes sure the graph remains connected and usable? Who invests in the "infrastructure", making sure channels remain well balanced? Some say that Lightning will be self-balancing through a clever set of incentives, but that's again extremely experimental and untested.

Also note the big "net neutrality" thing going on in the US right now. What will prevent big players from teaming up and interconnecting with each other to facilitate transactions while leaving out the rest?

I don't have the answers to any of these questions, maybe it's just FUD. I'm just surprised that bitcoin is a couple of weeks from making such a huge jump into the unknown. It's extremely interesting to be sure, but I feel like some people are going to get severely hurt if this whole thing comes crashing down.

I don't see a reason that exchanges couldn't take on the role of ISP/bank in this situation. Essentially you have an account with 1500 BTC at an exchange, and you say that you want to put 500BTC into a lightning network. Then the bank centralizes itself in the lightning network graph by making connections with other large banks and some major companies.

Of course what we've just done is recreated the modern centralized payment processing scheme on top of the bitcoin network (ie. a mom and pop shop connects to square connects to BoA has my money which doesn't actually exist anywhere, and they make ledger changes and top up later).

You might even be able to make such a system work with no additional transaction fees. But I'm not sure of that.

God I wish this was still true. The internet is so fragmented now I have to have IPs in different nations for a unified experience.

It's called a credit/debit card.

Yes. This is basically the exact user experience of the Starbucks app, and it's a fine experience.

You pre-pay an amount, have a balance open, transactions reduce that balance, and you occasionally need to reload your balance with another credit card transaction.

Which is to say I don't think this is an intractable problem if there is good software with good user experiences to help out.

All that said, I'm not current on the block-size vs SegWit debate, so my analogy could be flawed.

Now take amazon, take that small shop on the street where you go twice a year because it's super expensive but it's also opened very late, take your car mechanic, take that guy on ebay you're buying a pair of socks from, take that restaurant in Berlin during your vacation where you'll probably never go back. Will you be willing to "pledge" 10 times the amount while buying there? And if not won't the fee be dissuasive? What's in it for me?

And won't that create negative side effects for competition? For instance if a new coffee shop opens next to Starbucks with your system I have an incentive to keep going to Starbucks since it already has an open channel (exactly what the Starbucks app is about, except I'm paying for it, not Starbucks), so effectively it makes it harder for newcomers to compete. Same thing for, say, amazon vs. some random ebay seller. The more popular a shop, the more likely it'll be to have an open channel pending. Isn't that going against the "completely decentralized currency" ethos? What good is it that the currency is decentralized if I can effectively only use it with a limited number of companies?

It would be pretty amusing to me to see the cyberpunk libertarian cryptocurrency turn into a glorified Costco membership.