Post
Topic
Board Speculation
Re: Gold collapsing. Bitcoin UP.
by
Peter R
on 07/08/2014, 00:01:25 UTC
If the transaction throughput was not limited in the original design the original design was flawed. Removing the transaction limit from Bitcoin could be it's undoing.

I've always found your posts insightful and I know that you are a very intelligent person; I'm interested in your rationale for keeping the blocksize static.  

The argument that "if the blocksize doesn't really matter, then why was a limit added?" seems valid to me.  A smaller blocksize also limits growth of the UTXO database, which is actually the more critical resource.  I'd like to see a healthy fee market develop along with a push towards off-chain transactions (perhaps using m-of-n Oracle sidechains).  A smaller blocksize would incentivize that.  That being said, Solex recently presented a helpful graphic that showed the increase in internet bandwidth since bitcoin's inception, indicating that 3MB blocks now would represent the same % of typically-available BW as 1 MB blocks did in 2009.  So the argument can be made that "we can safely increase the blocksize in parallel with internet speeds."  The Metcalfe value chart also shows a strong correlation between TXs per day and market cap, so an empirically-based argument can be made that limiting bitcoin's TX bandwidth would also limit its value.  

One point you made that I think is not valid is the notion that a 1 MB blocksize is a core part of the coin's definition (i.e., part of the "Satoshi Social Contract" in the same way the 21 M coin limit is).  There's plenty of evidence that indicates the 1 MB limit was never intended to be permanent.  Of course, this doesn't mean that it's necessarily a good idea to increase it without careful thought and debate either.