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The Limits to Blockchain Scalability

vitalik.ca

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Re: The Limits to Blockchain Scalability

#361

Post by asah »

mvzvm wrote: post #26

Scam after scam, that's all blockchain is. Just another way to fleece the average consumer. There has not been a single valuable use, a single product, that actually improves anyone's day / process / life / anything. I am very open to changing my stance if someone presents evidence to the contrary.

1. Instant collateralized loans, e.g. BlockFi, with arbitrary complexity, all enforced in software

2. Fractional ownership and dividends for digital and real world assets, e.g. NFTs, real estate title

3. Tax optimization strategies

4. Hedges against nation-state fiscal policies that e.g. inflation - which in turn allow consumers and businesses to derisk investments

5. 24x7x365 financial transactions

6. tiny financial transactions without crazy fees

7. giant financial transactions without unnecessary paperwork or delays

I can keep going, but each is a multi-billion-dollar a year business.

Re: The Limits to Blockchain Scalability

#362

Post by dmitriid »

n0mad01 wrote: post #184
jeremycarter wrote: post #16

Blockchain, Decentralization and Smart Contracts have had nearly a decade to prove their value and disrupt the marketplace. So far nothing but whitepapers, pipe dreams and exit scams - nothing my mother can use. What's the point? Nobody is using crypto as an alternative to fiat. Prove me wrong.

This is a very limited and short-sighted view on the emergence and development of new technologies. From the first petrol engine (1879) to the Ford Model T (1908), the Arpanet (1969) to the Internet (1990), as also software development (Cyberpunk 2077 was developed over 8 years), these things have one thing in common: they need time. When one day your every breath (and its payment) is recorded on a blockchain then yo…

For some reason bitcoin apologists always use cars, and the internet, and other actual disruptive technologies and inventions. Even though with each passing day it looks more like radioactive health products [1]

[1] https://interestingengineering.com/9-interesting-failed-inve...

Re: The Limits to Blockchain Scalability

#363

Post by tsimionescu »

Dzugaru wrote: post #340
tsimionescu wrote: post #331

Earlier quoted context omitted.

All block chains in practice require trusting central authorities (trust the code, trust the protocol, trust the math behind it, trust the hardware, trust people to honor their off-chain transactions, trust authorities to help when they don't etc.) so this whole fantasy about 'trustless systems' is meaningless anyway. You can't create trustless electronic systems for humans. There is simply too much complexity in eve…

This is blatantly false. Bitcoin doesn't require anything at all besides the idea of a most work chain humanity produced. You just pick it and that's it. You cant pick wrong, there is no chain bigger. All other cryptos are a fantasy and cannot provide any comparable guarantees.

How do you, personally, know that the chain is correct? Have you ever checked the hashes? Have you ever checked the transactions? Have you ever proved that the math they use is correct? Have you ever read the code for any BTC client?

You're trusting an awful lot of assumptions much more complex than 'the longest chain is right'.

Re: The Limits to Blockchain Scalability

#364

Post by lottin »

puranjay wrote: post #195
lottin wrote: post #185

Earlier quoted context omitted.

What do you mean is happening right now? For example, you mention foreign currency exchanges. According to Wikipedia, trading in foreign exchange markets averaged $6.6 trillion per day (April 2019). [1] Is there any indication that foreign exchange markets are moving towards adopting this trading of tokenized currencies that apparently is so much better than the system they're using now? [1] https://en.wikipedia.org/…

You're being disingenuous if you're trying to compare the mature foreign exchange market with a technology that's barely half a decade old and still obscure by most standards. Curve.fi, the example I shared, was launched in Jan 2020 and peaked at a daily volume of $1B. Personally, I can't buy USD without going to the bank and filling out paperwork, submitting ID documents and clarifying why I need the USD and adherin…

But you said it was happening right now... no you say it isn't happening, okay.

> I have no such restrictions with their tokenized variants.

Regulations don't apply because you're trading fantasy money. Once you try to exchange these virtual tokens for real money, then you will be required to comply with the regulations.

Re: The Limits to Blockchain Scalability

#365

Post by wcoenen »

k__ wrote: post #48
jeremycarter wrote: post #16

Blockchain, Decentralization and Smart Contracts have had nearly a decade to prove their value and disrupt the marketplace. So far nothing but whitepapers, pipe dreams and exit scams - nothing my mother can use. What's the point? Nobody is using crypto as an alternative to fiat. Prove me wrong.

I think, it will probably take another decade. I think, BC could go to 5 million before it stablizes.

The dynamics of mining make this impossible. If Bitcoin were worth millions, then miners could spend millions on electricity to find each block and still make a profit. And because they're competing with hashrate, they would do exactly that.

If you do the math, you'll find that basically all electricity would go to mining.

Before we would get to that point, the electricity price would start going up of course. For everybody. And guess what governments will do when the population starts rioting because they can't afford electricity? They'll ban all proof-of-work coins. Maybe all crypto just to be on the safe side.

Re: The Limits to Blockchain Scalability

#366

Post by dmitriid »

Sleepytime wrote: post #134
jeremycarter wrote: post #16

Blockchain, Decentralization and Smart Contracts have had nearly a decade to prove their value and disrupt the marketplace. So far nothing but whitepapers, pipe dreams and exit scams - nothing my mother can use. What's the point? Nobody is using crypto as an alternative to fiat. Prove me wrong.

The internet was around a lot longer than a decade before aol showed up and started pressing CDs.

Nope, it wasn't.

ArpaNet wasn't an internet until at least 1983 when the military network was split off, and commercialisation began.

10 years after that we already had Tim Berners Lee inventing www in a lab that was connected to a global communications network and routinely used by hundreds of thousands of people.

Prior to that, for example, France had Minitel which already had distributed services, email, payments, orders and so on: https://en.wikipedia.org/wiki/Minitel

Re: The Limits to Blockchain Scalability

#367

Post by bottled_poe »

dannyw wrote: post #349
stickfigure wrote: post #337

Earlier quoted context omitted.

> Definitely nothing is permanent, but you can get pretty close to "permanent unless civilization collapses" Let's be honest here and acknowledge that we're talking about "permanent unless your particular fork of one particular blockchain collapses". There's a vast chasm between that and all of civilization.

I disagree. If bitcoin or ethereum gets completely killed today, I'm confident you'll still be able to download the chain in four decades (assuming civilisation still exists) out of pure history and data hoarding.

When the pillars of some derivative blockchain have collapsed, how will we be certain about which download is the untampered version?

Re: The Limits to Blockchain Scalability

#369

Post by mattdesl »

jeremycarter wrote: post #16

Blockchain, Decentralization and Smart Contracts have had nearly a decade to prove their value and disrupt the marketplace. So far nothing but whitepapers, pipe dreams and exit scams - nothing my mother can use. What's the point? Nobody is using crypto as an alternative to fiat. Prove me wrong.

I would argue that many NFT platforms (such as Hicetnunc.xyz[1]) have already successfully "disrupted" traditional artist marketplaces (such as Etsy, Shopify, Bandcamp, etc), despite being only popular for a short few months.

I think many other participating artists would agree, if these decentralized platforms continue to be more profitable for creators than traditional options, there is no need to 'go back' to centralized fiat marketplaces.

I think the real question is whether this will continue long-term, and whether decentralized paradigms (digital ownership, DAOs, trustless execution, etc) can still hold value for the average user even if there was no high economic return.

[1] - https://restofworld.org/2021/inside-brazils-diy-nft-art-mark...

Re: The Limits to Blockchain Scalability

#370

Post by atweiden »

bartimus wrote: post #253
magila wrote: post #29

Not mentioned in the bandwidth section is that residential connections in the US usually have a monthly data cap of ~1TB. Users are unlikely to tolerate a blockchain client using more than half of that. So if a full node sustains much more than 200KB/s then vanishingly few users in the US are going to run one.

But can we expect the future cryptocurrency of the world to be bottlenecked by average users needing to run full nodes on average laptops? Considering Bitcoin only has a total of 27 million addresses, couldn't we introduce some special blocks that consolidate the transaction history during a certain timespan so that nodes don't need to download the entire history?

Or we could simply not use a blockchain for Doritos purchases. If we’re willing to do that — if we’re able to trade off “Fort Knox” security for Doritos — we can get dramatically higher speed and efficiency for those transactions, and the options we have for implementing this significantly widen. Those options also tend to be inherently safer than their on-chain counterparts, because they both operate on an abstract level, and don’t impact the majority of investment capital entrusted to the network, which tends to lie dormant unmoving in cold wallets regardless.

But if we’re only willing to put Doritos purchases on-chain for some reason because we stubbornly refuse to give up Fort Knox security, and demand a permanent record of our Doritos transactions until the heat death of the universe, we end up with a lot less decentralization, and our options for scaling narrow and become increasingly complex (e.g. sharding).

Worse still, Visa does 50,000+ tps — and that’s just one credit card company. Storing every financial transaction every human in the world ever makes on a blockchain requires infeasibly large block sizes well in excess of 1GB. Meanwhile end users already struggle somewhat to keep up with 1MB blocks on consumer hardware with residential network connections.

(Bear in mind most people interested in extreme on-chain scaling like this have historically also wanted on-chain scaling to handle all forms of cash and credit transactions, plus derivatives trading, “NFTs”, “decentralized exchanges” etc etc, which would demand still more transactional capacity).

Bitcoin could conceivably only increase its block size by a factor of 10-100 before nodes become only possible to run in datacenters. Condemning nodes to forever run in datacenters — lest we forget gargantuan blocks can never be discarded by full nodes — would only allow Bitcoin to hit a measely couple thousand transactions per second at best. What’s the point of doing that at all?

(The choice was obvious to highly technical people at the time of the block size debate, but their voices were drowned out by populist appeals. Also sorry, forgot this was a thread about Ethereum.)

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