On Tue, Mar 25, 2014 at 8:28 AM, Peter Todd <pete@petertodd.org> 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.

Scaling is a problem if every person is a fully validating node; then, indeed, you get an O(n^2) problem. Which can be solved by extending some tentative trust to your peers, but lets put all those possible solutions aside.

Given tens of thousands of fully validating nodes, you get O(m*n), where m is the number of fully validating peers and is a large constant (10s of thousands).

We don't know how large m can or will be; we have only just started to scale up.

"Bitcoin doesn't scale" is pure FUD. It might not scale in exactly the way you want, but it WILL scale.

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Gavin Andresen

Chief Scientist, Bitcoin Foundation

https://www.bitcoinfoundation.org/