That makes 3.6667 transactions per second. BTC needs a hard fork in order to increase this dramatically.
So you were actually quite generous with 10 transactions per second...
[0] "Blockchain Charts" https://www.blockchain.com/charts/n-transactions-per-block
Which was proposed, and shot down by core Bitcoiners.
They aggressively do not want to increase the transaction limit.
Miners want transactions to be expensive, because that's where they'll get their money when the mining reward falls again.
It's mind boggling that people will complain about banks conspiring to charge them hypothetical fees, then rush to use a cryptocurrency that has double-digit transaction fees when nobody is really using it for anything other than speculation. The reality is that Bitcoiners don't actually want people using Bitcoin as a currency, they just want you to buy and hold. No selling, no spending, just buying. That's the only thing that drives the price up, and that's the only thing they want you to do.
For example, Lightning is built ontop of BTC:
Once all of these cryptocurrencies and exchanges become fast, the price doesn't actually matter. If I can buy the crypto, transfer it, and exchange back out of the crypto to my target currency in seconds, it doesn't matter if SOL is at $0.01 or $100 per coin. If I'm only in it for a few seconds, I just buy and then immediately sell however many coins are needed to move my value from Point A to Point B.
The reason Bitcoiners don't want larger block sizes is that they don't actually want spending. They want Bitcoin to be an asset that only goes up in price. Spending and selling drive the price down, so those need to have high hurdles to discourage that behavior.
I might be answering the wrong q, but the separate currency represents the cost of a transaction in the network. I.e. the amount you're willing to pay to send a transaction in the network and the amount a staker is willing to receive in exchange for validating your transaction
How else would you represent that cost in a crypto network? Some kind of currency needs to represent the transaction cost.
Unlike enthusiasts they don't see it as a necessary step and haven't been following the long and arduous journey of developments and breakthroughs to get here.
I can't tell you from personal experience if it would be the same if my amounts were a million plus, but they are not insignificant amounts either. I'm quite sure that attempting to deposit similar amounts of physical cash at a bank would be at least somewhat challenging.
Bitcoin needs to be able to handle at least a few hundred transactions per second as a first goal.
* Accept transactions that are in the mempool * Use the lightning network
Accepting mempool transactions obviously has lesser guarantees and unfortunately lightning hasn't seen great adoption even from centralised exchanges.
Also obviously there is a human-imposed "timeout" too. Like, if you buy something with Bitpay they expect your transaction to be included in one of the next 3 blocks. If it's not, they will "timeout" the transaction and it bounces. If it is eventually mined for inclusion, they will voluntarily return it to you minus whatever fees they choose to charge (average transaction fee is $24 right now, so you will lose $24 sending it to them, then $24 for them sending it back to you, and $24 to send it again).
https://ycharts.com/indicators/bitcoin_average_transaction_f...
(of course they don't have to send it back to you, there is no network-enforced mechanism for this, they could bounce the transaction and then if it gets included an hour later they could not pay you back, the money is under their control once you've signed the transaction. They could even maintain a separate mempool of these "dead" transactions and use a friendly mining pool to process those transactions preferentially...)
The entire Bitcoin narrative has become buy and never sell (HODL). The more friction around transacting with your coins (other than buying) the better it is for the asset value.
>The existing Visa credit card network processes about 15 million Internet purchases per day worldwide. Bitcoin can already scale much larger than that with existing hardware for a fraction of the cost. It never really hits a scale ceiling. If you're interested, I can go over the ways it would cope with extreme size.
By the same logic, trucks are useless and inefficient because my moped burns 1/100th of the fuel per km.
> This is not something that can be solved with current crypto approaches. There are information theory constraints regarding how long it would take to reach consensus across a distributed system and in such a way that transactions are serializable.
This is demonstrably false. Newer-generation coins offer better tps, and even bitcoin itself can manage due to things like segwit and lightning.
Ok, I’ll bite.
No, it doesn’t, but what is that actually useful for?
The best answer I can come up with is illegal activities and libertarian fantasies.
Even if one generously frames “illegal activities” in the context of financial freedom from a tyrannical regime, even that has limits.
Any regime with a banking system can implement a KYC-type of policy that will can make interacting financially with anything related to BTC difficult or impossible. Need a modern example? Look no further than online wallets (e.g., Neteller) and online poker sites after the UIGEA.
I will add that if any government views a digital coin as a threat to their fiat currency system, it will be trivially easy for them to make that currency an extremely inefficient store of value. The measures will be draconian towards coin holders, but most people (rightly or wrongly) won’t care.
This fear is greatly exaggerated by people who have bought into the false idea that Bitcoin is the only way to escape inflation.
The definition of inflation is that asset prices go up. You can escape inflation by simply buying assets, or basically anything other than cash.
If someone truly believed massive inflation was coming, they would want to take out USD-denominated mortgages and buy houses. Inflation would increase the value of the houses and reduce the value of your loan repayments.
It's silly that so many people are afraid of the government devaluing their cash that they've decided the best way to escape it is to pile into an asset with an extremely lopsided distribution in favor of early adopters. The average person stands to gain more from recent stimulus than they stand to lose from inflation in their cash accounts. Doubly so if they invest their cash in stocks or assets, which doesn't even require Bitcoin.
The definition of inflation is typically that consumer prices go up due to there being "more money". The only kind of asset that people consume is housing, and even then they don't really - housing as an asset (purchase price) can be disconnected from its consumption price (rent). Besides that, you can't eat stocks so you don't get poorer when the price goes up.
Assets can actually increase in price because of deflation. For instance, technology getting cheaper has made all the stockbrokers drop their transaction fees and add fractional shares, so now everyone can bid up the same stocks.
Ownership. It's the difference between "I own 20 quatloos because the Bank of Endor says so" vs. "I own 20 quatloos". It supports actual ownership instead of representative or proxy ownership.
In the same way that you can have $20 in the bank or $20 in your wallet. When it's in your wallet, it's actually yours and you own it. When it's in your bank account, then you don't actually own it, you must trust that your bank will do the right thing and give it back to you when you ask for it. That level of trust has been wavering for decades.
Remember that Bitcoin was started as a rebellion against the "second bailout for banks".
OK... so what exactly is "ownership"?
A buddy of mine mined ~160 BTC (currently about USD $8.1m) back when it was fairly worthless. He left it on a hard drive on one of his many machines. BTC became worth something. He look for said machine and HD. Couldn't find it. That BTC is effectively gone forever. So... who owns it?
There are a not small amount of stories like the one above for various levels of non-trivial amounts of money (tens of billions). https://www.nytimes.com/2021/01/13/business/tens-of-billions...
Situations like this point to a desire for many/most people to want some sort of custodianship so that they don't accidentally lose something that might be worth millions one day... or even hundreds or thousands one day. At that point, one is looking at banks and banking systems, so we're back at square one.
If one is looking at an alternative to banks, we sometimes/often get stuff like Mt. Gox and Bitfinex -- a situation in which a group of people who want to be independent of the banking system learn the lessons of the value of the banking system the hard way.
So I guess where I am at is that I appreciate a desire to rebel against banks -- they wield way too much power. That said, I don't think that it's particularly prudent (or maybe even possible) to throw the baby out with the bathwater on this matter. The banks definitely do some fairly nefarious stuff, but they also do a metric shitload of very pedestrian-but-useful stuff extremely well on a daily basis. Until a coin can replace that pedestrian-but-useful system with equal grace, I doubt that a coin will be able to replace our current system. Furthermore, somehow if it does, it will be because the current system integrates coins into the current system rather than coins usurping the current system.
So again... what is distributed consensus and verifiable transactions with no central trusted authority actually useful for?
Really? Ignoring the philosophic debate, ownership in terms of BTC deals with the capacity to modify the ledger using an agreed-upon protocol -- but you already know this, and I don't know why you're asking that question. What do _you_ think ownership means in terms of BTC? Do you think you can implement a public system for ownership of digital assets without a distributed consensus system? Or Verifiable transactions? Maybe you can, and if you do I'd love to see it. Good Luck.
>So... who owns it?
The person who has the key.
My point is that most people seem to prefer having a central trusted authority, specifically for custodianship.
That’s why most people put money that is significant to them somewhere in the banking system rather than a shoebox or a tin can somewhere. They want that money to be be traceable, accessible, and recoverable.
There are exceptions, of course, but they are the exceptions that prove the rule, IMO.
Yes. You sign one receipt at the store with a security camera pointing at you, and are handed a second, matching receipt by the vendor.
This defies your assertion that scaling cannot ever be achieved with current crypto approaches.
Not really a change in semantics here. It's still the point that crypto promised a LOT of really cool things for fintech that realistically won't materialize for a long time.
With the recent defi boom and the increased trust and popularity in oracles serving off chain data I'd say that you can find a cryptocurrency project for most promises.
Not being popular or adopted is another issue.
Here's a list of Ethereum nodes that are staking 32 ETH, attesting blocks, getting rewards and slashes: https://beaconcha.in/validators
Roughly $5.6b in value staked, with no particular expectation date for being able to withdraw. That's 2.55% of the total available ETH.
I'm the top 25 market cap there's:
BNB (powering the Binance Smart Chain) DOT (Polkadot) ADA (Cardano) ATOM (Cosmos) EOS TRX (Tron) NEM
Later: data sharding, where you're doing the same thing but each Ethereum node only has to store a portion of that data. That will multiply rollup capacity by 23X.
Details from Vitalik here: https://vitalik.ca/general/2021/01/05/rollup.html
The Internet doesn't have built in mechanisms for regulation or fraud and nor should it. Cryptocurrencies obviously don't solve the problem, but can be used to create a stricter set of guarentees than the current sustem.
https://register.fca.org.uk/s/firm?id=0010X00004U9vVAQAZ
> fraud
Just to name two examples. Cryptocurrency like cash won't stop you from falling to fraud or illegal activity but communities and regulations could enforce a safe subset of projects with stronger guarentees than the current system.
And don't come back with "you shouldn't want to avoid KYC and regulation" as that's a different topic. Others find those properties useful even if you don't.
I'm not a fan of using so much energy, just as I'm not a fan of guns. What does that have to do with discussing how they work and why people use them?
My knowledge of this technology isn’t very deep. From my understanding, mining is essential to facilitate transactions, which in turn makes cryptocurrency a currency. Mining needs computing power, which needs energy. More energy translates to more rewards, which incentivises parties to keep mining and keep the network running. Even if you make the underlying calculations more energy efficient, miners are still incentivised to spend more energy to capture more of the reward(?).
If you actually believe what you're saying, then short it[1]. If you really think that the practical value is non-existent, then put your money where your mouth is, and take out a short.
This isn't some academic theory where the best you can do is throw tomatoes at it, and ridicule it from a distance. This is an economic theory, where if you are correct, and everyone else is wrong, you can profit significantly from it.
Maybe once you're faced with actually taking a stand on a belief like this, you'll come to understand why cryptocurrencies are beginning to dominate the global economy. It's also totally possible that you're right, but I think it's far more likely that you just like to ridicule things you don't understand because you get some sense of power from shitting on people who you consider to be beneath you.
And thinking that bitcoin is a terrible idea is not the same as thinking you can predict its market value. When something is as volatile as bitcoin, shorting it is almost as bad as going long; eventually its value will likely drop but being early is the same as being wrong.
PoW is also the most efficient way to do what Bitcoin is doing. Attempts to displace PoW have all failed, because the required trade-offs are always too high, and detract from the value of the network.
If you can figure out a fair way to seed value on a network that doesn't require burning energy, then please let the people know, and your new magic cryptocurrency will dominate the crypto-ecosystem overnight. No one would love that more than me. I could talk for hours about the various ideas people have had in the past, and why they failed, but I don't think this is the right place for that rant.
It's also important to recognize that there isn't a single watt of PoW power that's wasted. The power utilized reflects exactly amount of value that Bitcoin is providing to the world. Satoshi also made the mining rewards get cut in half every 4 years, so the value to power usage ratio gets better and better over time.
I could also go on about how mining facilities overwhelmingly are using excess power produced almost entirely from clean power sources. If the goal is reducing carbon emissions, there are so many serious offenders that are massively more wasteful.
Don't you mean reverse?
As I've said elsewhere: doing one transaction on bitcoin uses approximately the amount of electrical power that an average US household uses in 2 weeks.
About 700 KwH, far as I can tell. (Based on 76.87 terawatt hours annually in 2020, as an estimate for bitcoin). A house uses ~1000/month, ballpark.
If I could short bitcoin over a 20, 30, 40 year timeframe I absolutely would, unfortunately that's not possible. There might be utility in some cryptocurrencies for some applications, but bitcoin as it currently exists is worse than useless, it's actively harmful.
Maybe I'm willfully ignorant, but I just don't see any practical use outside of massive speculation game. Mind give us some examples? :)
It really doesn't matter if you don't recognize how big of a deal that is, but to A LOT of people, it's a complete game changer. If you don't need a service like that, well that's fine, but obviously a lot of people do, which is why the network is where it is today. Massive amounts of value is being moved through the network daily, and the fees that people are paying to utilize the network are not at all trivial. It's worth it to them though, or they wouldn't be using it.
For reference, Visa does thousands to tens-of-thousands of transactions per second. The cost to run one of these transactions is negligible because it can be handled so quickly. Contrast with BTC, which struggles to hit 10 transactions per second on a good day. I used to work in a facility that monitored debit transactions. Our SLAs were ridiculous. Certain customers had requirements that if a single transaction took more than 100 ms, we were to open a ticket and contact their help desk immediately. This is the type of rigor it takes to maintain a financial payment network that consumers will have confidence in using.
This is not something that can be solved with current crypto approaches. There are information theory constraints regarding how long it would take to reach consensus across a distributed system and in such a way that transactions are serializable.