Quote from: iCEBREAKER on September 07, 2015, 02:30:53 AM

Bitcoin began as a cheap payment network, but its destiny is gradual transition via marginalism to expensive (relative to ~free) high-value settlements and storage of value. IOW, as blocks fill up, Layer 2 (payments) must be separated from Layer 1 (settlements) if Bitcoin is to scale rather than simply bloat until something breaks.

You edited out my topical response, leaving only the introductory color commentary. I'll replace it (in bold), so everyone can admire your skill at misleading the public, which is after all the favorite activity of Gavinistas everywhere. Cheesy

Bitcoin tx fees must be sufficient to replace declining block subsidies. That can only happen with full blocks, as davout demonstates in BIP000.

Tx fees should be "expensive" in that sense, and eventually should be much higher than the sub-trivial currently ~free subsidized prices.

Full nodes must be "cheap-to-use" so ~everyone has the option to 1) be their own financial institution and 2) contribute to a diverse/diffuse/defensible/resilient network (especially during the inevitable crackdown(s) by the desperate dying Fiat Empire).

Mass adoption by currently enfranchised/banked consumers (who can just use their iphone paypal app instead) is not nearly as important as System D penetration. As Justus famously declared, "only black markets matter; if you aren't helping build them you are wasting your time."

All of the above considerations' practical degrees of freedom are constrained by Nash's NSA Conjecture:

Quote

Why is Nashs NSA Conjecture Significant?

The relevance and significance here is that from the view I have described there is a conjecture that although bitcoins core principles THEORETICALLY can be changed, that the actuality of it is they cannot.

Ossification at 1MB (and 21e6 coins, and 10 minute blocks, and SHA256 PoW) is a feature, not a bug. Cool

I don't think we really have different design goals in mind here. I agree that there's no point to Bitcoin without censorship-resistance.

Some points:

Blocksize vs. miner rewards. I don't see the link here as strongly as you do. It seems to me it's demand that will drive miner fees, not supply, whatever the blocksize. With an infinite maximum blocksize, anyone mining for profit would simply set their fee requirement to the whatever level they see fit. The differences between full blocks enforced by design and blocks with room to spare seem to me to be:

- resource usage, with the accompanying repercussions. To me, Blockchain bloat is more of an issue than the resources it takes to transmit a single block.
-transaction rate, obviously. Directly related to maximum potential userbase for direct on-chain transactions. Full blocks sets an arbitrary cap on this, and 1 mb was chosen pretty much at random.
-full blocks push out miners not motivated by direct profit. Potentially, those with large stakes in BTC success might see fit to mine even at a loss to secure the network, allowing for a larger amount of transactions. We won't know if there's no space for those transactions.

Total miner fees absent subsidies = (average TX fee) * (# of TX), right?

Full blocks caps # of TX in hopes the fee will rise. Non-full blocks hopes number of #TX will rise so fee doesn't have to.
I don't think you can say offhand that one of these clearly cannot happen.

Incidentally, and this is a bit of a digression but it worries me:
Absent block subsidies, Total miner fees = cost to secure network.

Cost to secure network / x = cost to profitably attack network.

What is the optimal "x" for network security? How much should we be spending on securing the network? Currently the cost is pretty high thanks to the block subsidy. I'll admit to illiteracy here, an estimate for optimal network maintenance cost as % of market cap must have been hashed out at some point. I don't think aiming for current levels is desirable. Actually, if it turns out the security cost can't be lowered I think I'll have to take a much dimmer view of Bitcoin's prospects.

As for why I think mass adoption is necessary, I should probably qualify that a bit. I think it's important that the network not consolidate into the hands of a few large players very early on. I'd prefer it never did but that's likely a pipe dream. Currently, the hypothetical big players of crypto in the future are still small, because they require crypto to build the businesses that will make them big. Big players right now, in turn, are not likely to do anything very interesting at all with crypto, because they're already successful even without it, and are too entrenched in the financial system to risk upsetting it. So in a nutshell, my worry is that capping userbase too low too early will lead to a situation where the only parties with the clout to use the system are those with no interest in running it.

Finally, 2nd layer transactions - in principle I have no problem with these, it's the accompanying reduction in trust that worries me. Not trustworthiness when it comes to single transactions, I worry about cascading failures. The risk would depend on the particular off-chain solution used, but overall I worry that for convenience's sake, pushin most users off the blockchain will result in them choosing convenient, centralized options. I worry we'll end up with most users of crypto actually transacting in IOUs or other nontransparent assets. I worry about linchpins in such systems - what if mt gox had been the Paypal of BTC?

With on-chain transactions, you can prove holdings. It's not done enough but at least it can be done. IMO we need to increase the real trustworthiness of payments in BTC, not decrease them. Otherwise we risk cascading defaults, with people accepting as payment, and passing on again, assets whose backing they're not able to assess.

Solve that for off-chain transactions, I'm all for them. However then I'd ask what we need Bitcoin for if this problem can be solved for a lower resource cost.