FEATURED FEATURED Health LIFE TECH

Why limit the block size limit is dangerous for bitcoin and about segwit2x / SurprizingFacts

In November 2017, there will be a really important bitforce of bitcoin, and not a garbage heyp-fork bitcoin cash (the whole point of which is the principle not support for segwit and 8mb Limit of the side), which took place on the first of August, the only purpose of which, in my opinion, was to divert attention and community forces from the real problem. The number of the segwit2x start block has become known precisely – it will be block 494,784.

In February 2016, significant participants, including bitcoin core, signed the Bitcoin Roundtable Consensus in Hong Kong agreement, which described the process of implementation step-by-step A new transaction format segregated withness and an increase in the block size limit to 2mb but not more than 4mb.

Regardless of who is to blame, I think both sides behaved more than unreasonable (I think most of the fault is on miners), conditions This agreement was not met on time, and a year later – in May 201 On the 7th, already without the participation of bitcoin core representatives, a new agreement was signed – Bitcoin Scaling Agreement in New York, which in fact implies the same but in an order inconsistent with the plan conducted by the bitcoin core team.

Attempt to weaken the management and coordinating functions of the bitcoin core team.

Let me remind you that thanks to the decentralized nature of bitcoin, namely the technology of consensus, the real reins of government lie not only on the developers / keyholders of the corresponding account on github but also on most miners (Mining pools). And it does not matter who is right and who is not, just does not matter who has more influence – it's important who has more capacities. So far, participants have been able to keep pace with each other and no noticeable conflicts have arisen. But now the miners (and in fact they have Chinese pools with an aggregate capacity of more than 80%) have a desire and an opportunity to do something in their own way.

The last two years, news sites, forums and platforms for discussion, at the break, created confusion around The problem of expanding the block-size limit, it all came down to banal censorship. As a result, the community, or rather the "unreasonable majority" (people who want to use but do not want to understand the intricacies and peculiarities, because these are not banks where you can approach the clerk and you will be blown out and the erroneous transaction will be rolled back) a persistent conviction That the development of bitcoin is either segwit or an increase in the limit. Such projects as bitcoin xt, bitcoin unlimited and later bitcoin cash have shown this perfectly, and the whole point of their creation seems to be exactly this – to lay people in this stupid idea. But between these technologies there is no sign of inequality, they are completely compatible.

The blockade is too big!?

Why is the limit on the size of the block so important? In fact, this restriction of the speed of the work of the block, it determines the requirements for the gland that supports the work of the network-complete nodes for storing blocks and devices for mining. The larger the block size limit, the more transactions can be stored in the blockroom and the faster the growth rate of the full node database, which already occupies about 160 gigabytes.

Let me remind you that there are already a lot of solutions that reduce the requirements for the size of the block that It is necessary to store with end users, and different tools are suitable for different categories of users – miners, payment gateways and users. Even the very first bitcoin-qt wallet has been set up for a long time (key -prune), which allows to automatically reduce the size of the stored block on the disk, up to 512mb.

In theory, there is a danger that as the block size increases, Between nodes will rise significantly, especially for places and countries with a limited connection, which is the same China, with its "Chinese firewall", which limits the channel outside the country to a few hundred kilobytes. But in fact, while the changes in the block size limit do not significantly affect this indicator, the same bitcoin cash has already passed blocks of 6mb in size, and the root of the discussed problem is to increase the limit to only 2mb.

The low transaction speed and

One of the most interesting technologies for increasing the speed and the number of transactions in the bitcoin network and its direct forks is the lighting network technology. This technology in theory will increase the network capacity by several orders, transferring and smearing the load on the processing of transactions from the miners to the full nodes of the 'normal' network users. Technology is not the silver bullet, it has limitations and nuances of use, but it is clear to any sane person that this technology should be implemented and implemented everywhere. This technology was presented as the main justification for the implementation of segwit, which in fact will allow us to use contracts in the bitcoin network in general and create your own tokens, by analogy, as it is done in other altcoys, such as for example ethereum.

Previously, bitcoin networks already had successful Attempts to implement a token such as the popular tether.io, a USDT ticker, equal to $ 1. Just recently, the bitfury team successfully implemented and tested the work of lighting network on the current non-test bitcoin blocking system, without using segwit.

Ie. Segwit is not a panacea, but its implementation is preferable, any fork without this support is sooner or later doomed to oblivion, because the bulk of developers will be guided by it. Plus, this is a theoretical increase in the number of transactions for the same block limit in the blockroom up to 2.5 times.

What is the danger of a limit on the number of transactions in the blockbuster?

The limit of the number of transactions directly determines their cost. This is what we have seen in the bitcoin network over the past three years, when the value of a typical transaction easily goes up to $ 7, thanks to the growth of the rate and the almost constantly filled pool of transactions awaiting confirmation, reaching up to 200 thousand (now, for example, it's 60 thousand), and this price does not depend Of the amount being transferred. Users of some wallets can independently issue a commission, and with the right approach it is possible to pick it up such that its cost is reduced several times by increasing the time it passes.

Transactions can take up to 3 days, later, an unconfirmed transaction Almost is always removed from the pool and it can be re-sent, as in the network for two years there is a technology that prohibits ordinary users to use double spending directly, but it is possible to mark their transfer as replaceble in advance and After sending the transaction before its placement in the block, it must be sent again with another commission. The solution is controversial, it does not always work (in the sense that double waste is possible without this option), but confusion and incomplete support in wallets very much hinders ordinary users of the network to optimize their operations a little.

For example, The miner throughout the year received hundreds of transfers to his purse, dust, worth more than $ 400, but when trying to make a transfer, he received a commission of $ 500. If the commission was commissioned itself (the purse blockchain.info is horrible in this respect, compared to the same electrum), the user received a suspended transaction for a week and could do nothing, even in other wallets it appeared, the situation was resolved by a typical transaction of a double card using One of the inputs with a significantly higher commission cost per byte, such a transaction became more priority than the dangling one and got to the block, which in turn removed the first, and the transaction cost $ 20.

And here we approach They are to the main problem of the bitcoin network – the number of transactions will only grow with the growth of popularity, namely with the increase in the number of users.

Even technologies like lighting network can not cope if the block size limit is kept at current 1mb.

The reason lies in the peculiarities of the technology itself, in order to connect its purse to the LN network, at least two blocking transactions – opening the blocking facility and closing, which can be delayed almost to infinity, plus clearing transactions Balances balancing the purses of network users, this is necessary when the user has significant changes in the account, higher than the amount of blocked funds at the time of connection to the network.

What is most dangerous is that the increase in the cost of transaction blocking will be an avalanche (Now we see only short-term peaks in the number of transactions, at the time of the downturn, the network is unloaded, with the increase in popularity of this luxury may not be), and the time that something can just not be fixed, because until now an adequate technology for increasing the block size limit has not been proposed bitcoin unlimited offers have been rejected, which means any increase in the limit is again hard fork .

At In the current example, we see that the organizational fuss with the hard fork about the block size limit can drag on for years.

Why is the high cost of blocking transactions dangerous? I'm not talking about the $ for the transfer, but tens and hundreds of thousands of times more expensive, when such a transaction can pay only large lighting network nodes that serve a large number of users. The danger in the complexity of connecting new users to the network, namely in the first blocking transaction that opens the connection. To connect to the LN network, the user should already have a certain amount (already a transaction) on the address in the locker and must block this amount (another transaction).

The LN network's feature is that it will not be possible to open the payment channel with anyone, Since each connection between the nodes requires the blocking of the same means on both sides. This is especially true for large nodes, with a large number of connections, they must be financially interested in blocking such large funds.

All this means that if users can not do something themselves, they will do it for them Centralized services, of course, not for free, but most importantly, users will not have adequate ways to serve a purse independent from anyone.

First of all, LN exchange nodes will be exchange of crypto-currencies, online wallets and pools of ma

And if the mining pools traditionally work outside the sphere of state regulation, then the exchanges and online wallets (future banks) are forced to work within the legal regulations of the issuing countries of the currency currencies with which they operate.

The Crypto-currencies have already shown themselves as A financial instrument that poses a threat to the fin-regulators of different countries, which means that it will fight with freedom and independence, and the first successful tool of this struggle will be taking control of large LN nodes.

Each LN node is full It controls and determines which and at what price of the transaction it will miss, and if the fin-controller requires the exchange to skip transactions only from users of the same BitLicense, this will turn the entire network into another regulated bank, whose shortcomings are now visible to any naked eye. And it would not be so terrible if ordinary transactions were available to everyone, and blocking such an LN network would require the user to simply wait longer, but the block size limit will make this alternative inaccessible and, more precisely, very expensive.

Summary – Yes, the current situation with the block size limit and the introduction of segwit looks like the usual removal of the management mechanisms of one group from the other, in any case the transactions will go on, and financial interest will not allow you to get very stupid of any of them. But the danger of losing bitcoin as a tool independent of third parties and in particular from the financial regulators of countries is not illusory.

Think about this when you choose your wallet and standard.

Remember, although bitcoin core is not directly Stated that they intend to keep the block limit to 1mb, but repeatedly stated that the blocking account should be used mainly for LN transaction clearing at the limit of its capabilities, which is virtually the same.