Subject: Re: [Bitcoin-development] Tree-chains preliminary summary

From: Peter Todd <[email-masked]>
Date: Wed, 26 Mar 2014 06:58:02 -0400

On Tue, Mar 25, 2014 at 08:40:40PM +0000, Ricardo Filipe wrote:
> 2014-03-25 13:49 GMT+00:00 Peter Todd <[email-masked]>:
> > On Tue, Mar 25, 2014 at 08:45:00AM -0400, Gavin Andresen wrote:
> >> On Tue, Mar 25, 2014 at 8:28 AM, Peter Todd <[email-masked]> wrote:
> >>
> >> > Bitcoin doesn't scale. There's a lot of issues at hand here, but the
> >> > most fundemental of them is that to create a block you need to update
> >> > the state of the UTXO set, and the way Bitcoin is designed means that
> >> > updating that state requires bandwidth equal to all the transaction
> >> > volume to keep up with the changes to what set. Long story short, we get
> >> > O(n^2) scaling, which is just plain infeasible.
> >> >
> >>
> >> We have a fundamental disagreement here.
> >>
> >> If you go back and read Satoshi's original thoughts on scaling, it is clear
> >> that he imagined tens of thousands of mining nodes and hundreds of millions
> >> of lightweight SPV users.
> >
> > Yeah, about that...
> >
> > https://blockchain.info/pools
> >
> 
> On-topic:
> This argument is quite the fallacy. The only reason we have that few
> pools is because each of their miners doesn't find it feasible to mine
> "on their own". if you count the individual miners on those pools you
> will get to the scale Gavin was trying to point out.

Yeah, that's part of my fundemental disagreement with him: I draw a
sharp line between mining - the act of validating and constructing new
blocks - and hashing - the act of solving proof-of-work problems. The
latter definitely has incentives to decentralize due to simple physics:
it's cheaper per unit hashing power to get rid of a small amount of
waste heat than a large amount. The former requires a full node, and
that full node is a fixed cost overhead related to the number of
transactions per second. Any fixed cost overhead discourages
decentralization, and encourages centralization.

> Nevertheless i think that is just a minor disagreement, since tree
> chains help decentralization.

Yup. Quite importantly, the model is for any one miner to be able to
fully participate at the same level as any other miner by mining some
section of the tree. As your reward is linked to blocks mined, there
will always be some level at which you are mining blocks at a reasonably
low variance and you don't need to join a pool to achieve that low
varience. Equally your resources to keep up with that part of the tree
can be made reasonably low, and that cost only grows at the log of the
total transaction volume.

-- 
'peter'[:-1]@petertodd.org
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