Subject: Re: [bitcoin-dev] Fees and the block-finding process

From: Thomas Zander <[email-masked]>
Date: Tue, 11 Aug 2015 00:04:52 +0200

On Monday 10. August 2015 16.34.55 Pieter Wuille via bitcoin-dev wrote:
> On Mon, Aug 10, 2015 at 4:12 PM, Gavin Andresen <[email-masked]>
> 
> wrote:
> > Executive summary: when networks get over-saturated, they become
> > unreliable.  Unreliable is bad.
> > 
> > Unreliable and expensive is extra bad, and that's where we're headed
> > without an increase to the max block size.
> 
> I think I see your point of view. You see demand for on-chain transactions
> as a single number that grows with adoption. Once the transaction creation
> rate grows close to the capacity, transactions will become unreliable, and
> you consider this a bad thing.

Everyone in any industry will consider that a bad thing.

There is no doubt that on-chain transactions will grow, absolutely no doubt.
You can direct many people to off-chain systems, but that will not stop growth 
of on-chain transactions. Bitcoin economy is absolutely tiny and there is a 
huge amount of growth possible.  It can only grow.

> And if you see Bitcoin as a payment system where guaranteed time to
> confirmation is a feature, I fully agree.

Naturally, that is a usecase.  But not really one that enters my mind. It 
certainly is not a requirement to have guaranteed time.

The situation is much simpler than that.
We have maybe 0,007% of the world population using Bitcoin once a month. (half 
a million people).  And I'm being very optimistic with that number...
This should give you an idea of how much growth is possible.

There is no doubt at all that the 1Mb blocks will get full, continuously, if 
we get to a higher rate of usage. Even with the vast majority of users using 
Bitcoin off-chain.

As such its not about a guaranteed time-to confirmation. Its about a 
confirmation before I die.

> If you want transactions to be cheap, it will also be cheap to make them
> unreliable.

Its not about transactions being cheap. The fee market is completely 
irrelevant to the block size. If you think otherwise you are delusional.
The reason it is irrelevant is because when the system starts consistently 
dropping transactions when user count goes up, and when that happens the 
Bitcoin network looses value because people don't put value in something that 
is unreliable.

This is simple economy 101.
Look at history; so many great companies made great products that had more 
features, but didn't make it because their competition might have been slower 
to market, but it was actually reliable.
-- 
Thomas Zander