5 ms·

What renders this whole calculation wrong is that it doesn’t account for transaction fees AND transaction fees growth which was also supposed to be growing expo

What renders this whole calculation wrong is that it doesn’t account for transaction fees AND transaction fees growth which was also supposed to be growing exponentially, had Bitcoin not been artificially limited to ~ 2 MB blocks every ten minutes. On an actually uncapped Bitcoin instance, Blocks (Block size) and transaction fees will grow exponentially, rendering all such “Bitcoin is environmentally terrible” and “Miners aren’t profitable” calculations absurdly wrong. Other instances exist that are chugging along flawlessly and are set to help miners grow their revenue with on-chain transaction fees growth: DYOR. Of course, BTC Maxis lead by companies set to profit from such an artificial limit on Bitcoin (hint: they often peddle L2 solutions) would hate for you or anyone to understand and study those facts.

mdoms 4y ago
So in a fantasy universe that doesn't exist this analysis doesn't make sense. Ok?
- intabli 4y ago
  These uncapped forks do exist, they’re the reason the whole community split in 2017; so when those “analysis” articles ignore them and ignore the fact that the white paper and Bitcoin’s creator explicitly called for on-chain growth and scaling, they’re being either dishonest or ignorant. It’s like someone saying “Look at how wasteful this car limited to 20MPH is! All cars are wasteful!”. No, not all cars, especially that the original design explicitly said to scale the engine as more speed is needed.
  - DanHulton 4y ago
    No, not all cars, sure, but like, the vast, vast majority of 'em. You're still ignoring the practical for the theoretical.
  - paulgb 4y ago
    I don't see how any of this undermines the post. What “uncapped fork” could these big miners switch to that would give them anywhere near the revenue they have today?
    - intabli 4y ago
      I won’t point you to any, but you should dig deeper into the 2017 block size wars and understand why the community forked then and how, avoid the commercially appealing answers and the laser eyes.
      - paulgb 4y ago
        I assume you're alluding to bitcoin cash. I don't see what it has to do with any of this, given that the aggregate transaction fees are not enough for big fish like the ones my article to migrate to at scale.
        intabli 4y ago
        When you discuss miners, on a network DESIGNED to emit less Bitcoin and change to transaction fees down the line, it’s ultra important to note that this actually working vehicle exists and the same miners protecting the speculative vehicle are also protecting the actually working one. And when calculating for the working one, miners are set to be some of the richest businesses on the planet, even when ALL Bitcoin has been already mined, a 100 years from now, because of transaction fees. Crypto is still very, very, early. I assure you of that.
        paulgb 4y ago
        This article is about bitcoin miners. What I'm struggling to understand is, what does any of that have to do with bitcoin miners? Are you just wishing I'd pump BCH or something?
        intabli 4y ago
        You mentioned it before that I did. And no I don’t want you to pump it, but answer the following yes/no questions please: -) Did your article discuss miner profit from finding Bitcoin? -) Did you mention that Bitcoin’s emission halves and will eventually end? -) Did you mention that miners profit from including transactions? -) Did you mention that transactions become the SOLE source of income once all Bitcoin is mined in around a century from now? -) Did you mention that BTC is a version of Bitcoin which allows only for a maximum of 200k transactions every ten minutes? -) Did you mention that the original design should allow for millions (and billions 30 years from now) of transactions every ten minutes? -) Would such a huge number of transactions processed render miners more profitable than your calculation? -) Would revenue from fees be much higher than the 1-2% you mentioned miners currently do? -) Does omitting the above facts render your article possibly half-factual?
  - WJW 4y ago
    > they’re the reason the whole community split in 2017 This makes it seem like it was some sort of 50/50 split, but in reality it was more like 99/1. A tiny group split off to do their own thing while "normal" bitcoin is just chugging along with unchanged block size. It's all fine and well that Satoshi may have wanted something different for block sizes, but he hasn't been involved in bitcoin development for over a decade now so his wishes are pretty irrelevant. Right now, the vast majority of "bitcoin" value is in the original one and speculating about how things could be different is just the crypto version of "world peace is easy if we all could just get along".
    - intabli 4y ago
      But you make it seem as if it’s a done tale, as if there were no bad actors, no companies set to profit from selling their own “Layer 2” solutions, no censorship, etc. Reality is, even if the whole planet (not only the 99% of the community you claim) were set on a broken vehicle which they can barely drive but just speculate on, it won’t be long before most realize that this is just that, a broken vehicle meant for speculation and has nothing to do with peer to peer electronic cash, you know, Bitcoin. So when you discuss miners, on a network DESIGNED to emit less Bitcoin and change to transaction fees down the line, it’s ultra important to note that this actually working vehicle exists and the same miners protecting the speculative vehicle are also protecting the working one. And when calculating for the working one, miners are set to be some of the richest businesses on the planet, even when ALL Bitcoin has been already mined, a 100 years from now.
      - WJW 4y ago
        Perhaps, if and only if bitcoin manages to win out against the traditional banking system AND the governments of the world do not regulate miners into oblivion. Even if some form of cryptocurrency does win out against the combined might of traditional banking and governments, let's hope for the sake of these mining companies that the winning currency is one that both depends on Proof of Work (I can stake PoS chains just fine from a raspberry pi, after all) and also requires hashing of the type supported by the current equipment of the miners. All in all, the chance that a crypto mining company becomes one of the richest businesses on the planet is slim and the chance that that company will be one of the mining companies already existing is slimmer still. Buyer beware when investing in the current crop.
- kelseyfrog 4y ago
  I've seen this pattern play out online and offline countless times. A perennial favorite is dialog patterned like so "Ethereum is ok because proof of stake will solve problem X." "Is proof of stake currently in use?" "Well, no, but it will be soon/someday/eventually." I call it crypto-wishful thinking, but only for lack of a better name.
cowtools 4y ago
>What renders this whole calculation wrong is that it doesn’t account for transaction fees AND transaction fees growth which was also supposed to be growing exponentially, had Bitcoin not been artificially limited to ~ 2 MB blocks every ten minutes I agree that bitcoin should use an adjustable block size, but I'm not exactly sure that this logic follows. Can you explain this to me? If the network could handle more transactions per block, wouldn't the fees per transaction just decrease?
- intabli 4y ago
  Correct, the fees would decrease, but when when you can only process 200k transactions every ten minutes, there’s an upper limit of how much people are willing to pay before it becomes absurdly expensive. This reached almost $100 in the 2017 rush. It’s unsustainable and renders the network unusable for most of the planet. When you on the other hand can process millions of transactions every block (and scalable as needed), you’ll charge far less per transaction while still allowing miners to generate a huge (and ever growing) revenue, while also enabling most of the planet to transact next to free. From an environmental perspective, if you divide the hash rate environmental impact on a mere 200k transactions every ten minute, the carbon foot print per transaction would seem absurdly high. Do the same calculating for millions of transactions every ten minutes, and you’ll arrive at a far better environmentally friendly figure.
  - wmf 4y ago
    Why wouldn't fees go all the way to zero? Zero times a zillion transactions is still zero.
    - shawabawa3 4y ago
      ...because miners choose whether to include a transaction or not. Obviously they have no incentive to include a zero fee transaction There would be an equilibrium where the fee is worth the marginal cost of mining it
      - 4y ago
FabHK 4y ago
> Blocks (Block size) and transaction fees will grow exponentially Currently, the blockchain is 405 GB and grows by about 5 GB per month. In your proposal, that will go up exponentially?
- intabli 4y ago
  My proposal? I won’t take credit for Satoshi’s work, it was his proposal: https://satoshi.nakamotoinstitute.org/posts/bitcointalk/485/ https://satoshi.nakamotoinstitute.org/posts/bitcointalk/485/
  - FabHK 4y ago
    Strictly speaking it wasn't his, it was the originator of that thread, jgarzik, and satoshi replied "We can phase in a change later if we get closer to needing it.", which doesn't strike me as a ringing endorsement. At any rate, the suggestion was for one increase, not an infinite sequence of increases, which your suggested exponential growth amounts to.
    - intabli 4y ago
      One increase every time its theoretical limit is approached, which becomes exponential as transaction growth becomes exponential.
  - stickfigure 4y ago
    You either misunderstood the parent or are being deliberately disingenuous. He/she asked, in effect: How do you plan to deal with the blockchain growing exponentially instead of linearly? And how much acceleration do you think is reasonable?
    - intabli 4y ago
      I needed to clarify that it wasn’t my proposal, as to how to gradually approach this, test nets are already deployed on many of the uncapped networks, I believe you’ll enjoy this great presentation by Peter Rizun and Andrew Stone, they’re far smarter than I’ll ever be: https://youtu.be/5SJm2ep3X_M https://youtu.be/5SJm2ep3X_M
PragmaticPulp 4y ago
> On an actually uncapped Bitcoin instance, Blocks (Block size) and transaction fees will grow exponentially, rendering all such “Bitcoin is environmentally terrible” and “Miners aren’t profitable” calculations absurdly wrong. This doesn't make any sense. If anything were to make mining more profitable, we would see even more miners come online. There is no scenario in which Bitcoin mining becomes less environmentally terrible by paying more money to miners. Those payments incentivize more miners to come online and, if significant enough, would encourage miners to bring older, less efficient equipment online relative to today's rates.
- intabli 4y ago
  If transactions scale enough for you to be able to shut down most bank branches, end commutes for all banking and central banking employees, shut down all credit card companies and their offices and terminals, turn off ATMs, end printing physical paper money and minting money, just to mention a few, I think the environment will be way, way better off. That’s the argument behind unlimited on-chain transactions.
  - nradov 4y ago
    There's no evidence that any of that would be technically feasible. And hypothetically even if it was technically feasible, the nation states which have taxing authority and hold an effective monopoly on violence would never permit it.
    - intabli 4y ago
      Most world governments and taxing authorities work for their populace, they could be easily voted out if people saw what other nations are benefiting from such innovation. As for what’s feasible and evidence on it, I assure you, Edison had no clue that the internet will one day be born out of his electricity inventions and that it will be mostly used for porn, so sit back, relax and enjoy the next 100 years of untold human history.
      - 4y ago
brian_cloutier 4y ago
It's not possible to have an uncapped block size. As blocks get larger they take longer to propagate through the network. Longer propagation means more forks, which means more work is wasted on forks which do not become canonical, which lowers the effective hash rate of the network and therefore the threshold for a 51% attack. 2MB is far too small, but it would be a gross mistake to overcorrect by removing the cap entirely. See, for example: https://www.gsd.inesc-id.pt/~ler/docencia/rcs1314/papers/P2P2013_041.pdf https://www.gsd.inesc-id.pt/~ler/docencia/rcs1314/papers/P2P... > On an actually uncapped Bitcoin instance, Blocks (Block size) and transaction fees will grow exponentially Transaction fees would drop to zero. The fee is a bid in an auction for scarce block space. If block space is not scarce then the winning bid is always zero.
- intabli 4y ago
  Uncapped is a pseudo name for “capped just in time”. It’s never really uncapped. If you’re interested in some work being done on such larger blocks, you’ll enjoy this presentation: https://m.youtube.com/watch?v=5SJm2ep3X_M&feature=youtu.be https://m.youtube.com/watch?v=5SJm2ep3X_M&feature=youtu.be

mdoms 4y ago

So in a fantasy universe that doesn't exist this analysis doesn't make sense. Ok?

intabli 4y ago
These uncapped forks do exist, they’re the reason the whole community split in 2017; so when those “analysis” articles ignore them and ignore the fact that the white paper and Bitcoin’s creator explicitly called for on-chain growth and scaling, they’re being either dishonest or ignorant. It’s like someone saying “Look at how wasteful this car limited to 20MPH is! All cars are wasteful!”. No, not all cars, especially that the original design explicitly said to scale the engine as more speed is needed.
- DanHulton 4y ago
  No, not all cars, sure, but like, the vast, vast majority of 'em. You're still ignoring the practical for the theoretical.
- paulgb 4y ago
  I don't see how any of this undermines the post. What “uncapped fork” could these big miners switch to that would give them anywhere near the revenue they have today?
  - intabli 4y ago
    I won’t point you to any, but you should dig deeper into the 2017 block size wars and understand why the community forked then and how, avoid the commercially appealing answers and the laser eyes.
    - paulgb 4y ago
      I assume you're alluding to bitcoin cash. I don't see what it has to do with any of this, given that the aggregate transaction fees are not enough for big fish like the ones my article to migrate to at scale.
      - intabli 4y ago
        When you discuss miners, on a network DESIGNED to emit less Bitcoin and change to transaction fees down the line, it’s ultra important to note that this actually working vehicle exists and the same miners protecting the speculative vehicle are also protecting the actually working one. And when calculating for the working one, miners are set to be some of the richest businesses on the planet, even when ALL Bitcoin has been already mined, a 100 years from now, because of transaction fees. Crypto is still very, very, early. I assure you of that.
        paulgb 4y ago
        This article is about bitcoin miners. What I'm struggling to understand is, what does any of that have to do with bitcoin miners? Are you just wishing I'd pump BCH or something?
        intabli 4y ago
        You mentioned it before that I did. And no I don’t want you to pump it, but answer the following yes/no questions please: -) Did your article discuss miner profit from finding Bitcoin? -) Did you mention that Bitcoin’s emission halves and will eventually end? -) Did you mention that miners profit from including transactions? -) Did you mention that transactions become the SOLE source of income once all Bitcoin is mined in around a century from now? -) Did you mention that BTC is a version of Bitcoin which allows only for a maximum of 200k transactions every ten minutes? -) Did you mention that the original design should allow for millions (and billions 30 years from now) of transactions every ten minutes? -) Would such a huge number of transactions processed render miners more profitable than your calculation? -) Would revenue from fees be much higher than the 1-2% you mentioned miners currently do? -) Does omitting the above facts render your article possibly half-factual?
- WJW 4y ago
  > they’re the reason the whole community split in 2017 This makes it seem like it was some sort of 50/50 split, but in reality it was more like 99/1. A tiny group split off to do their own thing while "normal" bitcoin is just chugging along with unchanged block size. It's all fine and well that Satoshi may have wanted something different for block sizes, but he hasn't been involved in bitcoin development for over a decade now so his wishes are pretty irrelevant. Right now, the vast majority of "bitcoin" value is in the original one and speculating about how things could be different is just the crypto version of "world peace is easy if we all could just get along".
  - intabli 4y ago
    But you make it seem as if it’s a done tale, as if there were no bad actors, no companies set to profit from selling their own “Layer 2” solutions, no censorship, etc. Reality is, even if the whole planet (not only the 99% of the community you claim) were set on a broken vehicle which they can barely drive but just speculate on, it won’t be long before most realize that this is just that, a broken vehicle meant for speculation and has nothing to do with peer to peer electronic cash, you know, Bitcoin. So when you discuss miners, on a network DESIGNED to emit less Bitcoin and change to transaction fees down the line, it’s ultra important to note that this actually working vehicle exists and the same miners protecting the speculative vehicle are also protecting the working one. And when calculating for the working one, miners are set to be some of the richest businesses on the planet, even when ALL Bitcoin has been already mined, a 100 years from now.
    - WJW 4y ago
      Perhaps, if and only if bitcoin manages to win out against the traditional banking system AND the governments of the world do not regulate miners into oblivion. Even if some form of cryptocurrency does win out against the combined might of traditional banking and governments, let's hope for the sake of these mining companies that the winning currency is one that both depends on Proof of Work (I can stake PoS chains just fine from a raspberry pi, after all) and also requires hashing of the type supported by the current equipment of the miners. All in all, the chance that a crypto mining company becomes one of the richest businesses on the planet is slim and the chance that that company will be one of the mining companies already existing is slimmer still. Buyer beware when investing in the current crop.
kelseyfrog 4y ago
I've seen this pattern play out online and offline countless times. A perennial favorite is dialog patterned like so "Ethereum is ok because proof of stake will solve problem X." "Is proof of stake currently in use?" "Well, no, but it will be soon/someday/eventually." I call it crypto-wishful thinking, but only for lack of a better name.

cowtools 4y ago

>What renders this whole calculation wrong is that it doesn’t account for transaction fees AND transaction fees growth which was also supposed to be growing exponentially, had Bitcoin not been artificially limited to ~ 2 MB blocks every ten minutes I agree that bitcoin should use an adjustable block size, but I'm not exactly sure that this logic follows. Can you explain this to me? If the network could handle more transactions per block, wouldn't the fees per transaction just decrease?

intabli 4y ago
Correct, the fees would decrease, but when when you can only process 200k transactions every ten minutes, there’s an upper limit of how much people are willing to pay before it becomes absurdly expensive. This reached almost $100 in the 2017 rush. It’s unsustainable and renders the network unusable for most of the planet. When you on the other hand can process millions of transactions every block (and scalable as needed), you’ll charge far less per transaction while still allowing miners to generate a huge (and ever growing) revenue, while also enabling most of the planet to transact next to free. From an environmental perspective, if you divide the hash rate environmental impact on a mere 200k transactions every ten minute, the carbon foot print per transaction would seem absurdly high. Do the same calculating for millions of transactions every ten minutes, and you’ll arrive at a far better environmentally friendly figure.
- wmf 4y ago
  Why wouldn't fees go all the way to zero? Zero times a zillion transactions is still zero.
  - shawabawa3 4y ago
    ...because miners choose whether to include a transaction or not. Obviously they have no incentive to include a zero fee transaction There would be an equilibrium where the fee is worth the marginal cost of mining it
    - 4y ago

FabHK 4y ago

> Blocks (Block size) and transaction fees will grow exponentially Currently, the blockchain is 405 GB and grows by about 5 GB per month. In your proposal, that will go up exponentially?

intabli 4y ago
My proposal? I won’t take credit for Satoshi’s work, it was his proposal: https://satoshi.nakamotoinstitute.org/posts/bitcointalk/485/ https://satoshi.nakamotoinstitute.org/posts/bitcointalk/485/
- FabHK 4y ago
  Strictly speaking it wasn't his, it was the originator of that thread, jgarzik, and satoshi replied "We can phase in a change later if we get closer to needing it.", which doesn't strike me as a ringing endorsement. At any rate, the suggestion was for one increase, not an infinite sequence of increases, which your suggested exponential growth amounts to.
  - intabli 4y ago
    One increase every time its theoretical limit is approached, which becomes exponential as transaction growth becomes exponential.
- stickfigure 4y ago
  You either misunderstood the parent or are being deliberately disingenuous. He/she asked, in effect: How do you plan to deal with the blockchain growing exponentially instead of linearly? And how much acceleration do you think is reasonable?
  - intabli 4y ago
    I needed to clarify that it wasn’t my proposal, as to how to gradually approach this, test nets are already deployed on many of the uncapped networks, I believe you’ll enjoy this great presentation by Peter Rizun and Andrew Stone, they’re far smarter than I’ll ever be: https://youtu.be/5SJm2ep3X_M https://youtu.be/5SJm2ep3X_M

PragmaticPulp 4y ago

> On an actually uncapped Bitcoin instance, Blocks (Block size) and transaction fees will grow exponentially, rendering all such “Bitcoin is environmentally terrible” and “Miners aren’t profitable” calculations absurdly wrong. This doesn't make any sense. If anything were to make mining more profitable, we would see even more miners come online. There is no scenario in which Bitcoin mining becomes less environmentally terrible by paying more money to miners. Those payments incentivize more miners to come online and, if significant enough, would encourage miners to bring older, less efficient equipment online relative to today's rates.

intabli 4y ago
If transactions scale enough for you to be able to shut down most bank branches, end commutes for all banking and central banking employees, shut down all credit card companies and their offices and terminals, turn off ATMs, end printing physical paper money and minting money, just to mention a few, I think the environment will be way, way better off. That’s the argument behind unlimited on-chain transactions.
- nradov 4y ago
  There's no evidence that any of that would be technically feasible. And hypothetically even if it was technically feasible, the nation states which have taxing authority and hold an effective monopoly on violence would never permit it.
  - intabli 4y ago
    Most world governments and taxing authorities work for their populace, they could be easily voted out if people saw what other nations are benefiting from such innovation. As for what’s feasible and evidence on it, I assure you, Edison had no clue that the internet will one day be born out of his electricity inventions and that it will be mostly used for porn, so sit back, relax and enjoy the next 100 years of untold human history.
    - 4y ago

brian_cloutier 4y ago

It's not possible to have an uncapped block size. As blocks get larger they take longer to propagate through the network. Longer propagation means more forks, which means more work is wasted on forks which do not become canonical, which lowers the effective hash rate of the network and therefore the threshold for a 51% attack. 2MB is far too small, but it would be a gross mistake to overcorrect by removing the cap entirely. See, for example: https://www.gsd.inesc-id.pt/~ler/docencia/rcs1314/papers/P2P2013_041.pdf https://www.gsd.inesc-id.pt/~ler/docencia/rcs1314/papers/P2P... > On an actually uncapped Bitcoin instance, Blocks (Block size) and transaction fees will grow exponentially Transaction fees would drop to zero. The fee is a bid in an auction for scarce block space. If block space is not scarce then the winning bid is always zero.

intabli 4y ago
Uncapped is a pseudo name for “capped just in time”. It’s never really uncapped. If you’re interested in some work being done on such larger blocks, you’ll enjoy this presentation: https://m.youtube.com/watch?v=5SJm2ep3X_M&feature=youtu.be https://m.youtube.com/watch?v=5SJm2ep3X_M&feature=youtu.be