Quote from: rpietila on August 03, 2014, 12:18:22 PM

...

Quote

block size limit is simply too small for Bitcoin to maintain reasonable growth, and it will hit a bottleneck just trying to process normal business.

If it's about 260,000 transactions per day, it is indeed too small. If it can be increased, I favor increasing. And also setting in stone the increasing schedule so that no further vote or community decision is needed ever concerning this matter.

Yes 260,000 transactions per day, 3 transactions per second, is the practical limit. The maximum theoretical limit assuming all transactions were ideally optimized is closer to 600,000 thousand per day or 7 transactions per second. Is a technical solution that meets the above quoted requirements possible? Yes there are many including getting rid of the limit altogether as Gavin has proposed. Furthermore a solution very close to above that meets the above quoted requirements is part of the implementation of the CryptoNote alt-coins including its leader XMR (Monero); however virtually all other alt-coins suffer from this very same limitation. The problem is social. There is a significant and influential point of view within the Bitcoin community that is opposed to or at best very resistant to making this change. Furthermore this debate is very old. Here is a post from 2010 that addresses this issue and is in many respects highly prophetic.

Quote from: caveden on November 20, 2010, 11:33:48 PM

Hello all,

Recently I just posted on another thread to express my concern about this subject, but I thought it might deserve a topic of its own.

This block size rule is something really "dangerous" to the protocol. Rules like that are almost impossible to change once there are many clients implementing the protocol. Take SMTP as an example. Several improvements could be done to it, but how? It's impractical to synchronize the change.

And, well, if we ever want to scale, such limit will have to grow. I really think we should address this problem while there is only one client used by everyone, and changes in the protocol are still feasible, because in the future we may not be able to.

As far as I understand, one of the purposes of this block size limit was to avoid flooding. Another purpose as well, as mentioned here, is to keep the transaction fees not "too small" in order to create an incentive for block generation once the coin production isn't that interesting anymore. (if only a limited number of transactions can enter a block, those with the smallest fees won't be quickly processed...)

So, if we really need a block size limit, and if we also need it to scale, why not making such limit so that it adjusts itself to the transaction rate, as the difficulty of generation adjust itself to the generation rate?

Some of the smart guys in this forum could come up with an adjustment formula, taking in consideration the total size of all transactions in the latest X blocks, and calculating which should be the block size limit for the next X blocks. Just like the difficulty factor.This way we avoid this "dangerous" constant in the protocol.
One of the things the smart guys would have to decide is how rigorous will the adjustment be. Should the adjustment be done in order to always leave enough room to all transactions in the next block, or should blocks be "tight" enough to make sure that some transactions will have to wait, thus pushing up the transaction fees?

Okay, I do realize that it would allow flooders to slowly increase the limit, but, what for? As long as generators aren't accepting 0-fee transactions, a flooder would have to pay to perform his attack.

So, what do you think?

I take the point of view that the 1 MB blocksize limit in Bitcoin makes no more sense than limiting the RAM in a personal computer to 640K http://quoteinvestigator.com/2011/09/08/640k-enough/ for the very same reason: Moore's Law. As a baby boomer, I happen to remember that debate well and had to deal with its aftermath.

The time for endless arguments and debates on this issue is over, since we are fast approaching this limit. The time for action is now. This brings me to my next point since this is after all a thread in Speculation: How can Bitcoin investors profit from this and / or protect their XBT investment? There are two sides to consider here:

First (XBT bull) if one takes the 1 MB blocksize limit out of the equation the fundamentals for Bitcoin are otherwise very bullish. Furthermore the most likely scenario, although not certain is that the Bitcoin community will finally get its act together and deal with the 1MB blocksize limit. This would make moving out of XBT into fiat or precious metals a very risky move for a long time XBT investor. The second case (XBT bear) is that the Bitcoin community does not get its act together, we get close to the limit and fees start to rise as a result. It is here where a coin not encumbered by this limit will become highly desirable, and XMR (Monero) is the leading candidate. Now and this is critically important XMR must stand on its own merits with good reasons to appreciate in terms of XBT for reasons completely unrelated to the to the 1MB blocksize limit issue. It is for these reasons that after reviewing this thread https://bitcointalk.org/index.php?topic=624223.0 and after performing my own independent due diligence on XMR that I have moved approximately 15%, by market value, of my XBT holdings into XMR. This is to both protect my XBT position and potentially profit not only from XMR making bronze or silver on its own merits, but from also the small chance of it actually making gold as a result of the turmoil associated with Bitcoin reaching the 1MB blocksize limit.