The argument I have consistently heard for larger blocks is that it wont greatly damage decentralization because drive space and bandwidth will scale to meet the growing costs of housing and validating the blockchain.
I think this argument ignores a most important reality of the Bitcoin technology. Today we seem to constantly compare bitcoin to VISA, as if it will be the measure of success. In a world of widely used digital currency, I think VISA capacity will look like the stone age.
The best analogy I can make is predicting internet usage by using AT&T call volume from 1980 as a benchmark. Where people once shared a single phone line to make a handful of calls (connections) per week, today most individuals have multiple devices that are always connected to the internet, exchanging millions of bits of information over thousands of dynamically routed connections throughout the day. Right now, sitting at your computer, try to count how many connections you have going. Or better yet, get a sniffer like Little Snitch and watch the endless communications happening behind the scenes.
Computers cannot open bank accounts and get debit cards. They can trade bitcoin. We are talking about the machine-payable web. Computers paying each other without their users even seeing, just like dynamic internet connections today. We will ultimately need a network that can secure 1000x or more than even the capacity VISA manages today.
Main Idea: I truly believe mainstream adoption of the first cryptocurrency will have nothing to do with a short-term 2x or 4x on-chain capacity increase. It will hinge on the first blockchain that manages to secure a 1000x increase without risking the open, decentralized immutability of its core chain.
2mb and 4mb blocks may not result in severe damage to the network's decentralization, but doing so before fixing the quadratic increase of signature-hashing still creates a serious attack vector. In addition, it is a drop in the ocean in terms of mainstream adoption. Amazon receives orders at 35 transactions per second throughout the year, and the 2015 holiday season saw volume spikes of 600 transactions per second. Amazon traffic alone leaves us with a growing mempool all year round even at 5mb blocks.
There is no world where Bitcoin can handle that kind of volume using base layer, on-chain transactions and still remain a decentralized network. Which means it will not be immutable, it will not be secure, and it will be run by only a handful of massive nodes that can be easily manipulated by politics.
TL;DR When the bitcoin community consists of scarcely a hundred thousand hodlers, some dark-webbers, and a few thousand devoted users, on-chain transactions work fine as the payment network. But Bitcoin cannot secure on-chain for a million or more active consumers and their everyday transactions while continuing to grant freedom from government and central bank manipulation. Much less, handle the countless future uses that Bitcoin enables. Amazon alone proves this. Please do not prioritize short-term adoption in hopes that we can all get rich if we just hard fork. Decentralization and security should be our top priorities. I've said this before and I'll say it again, this technology isn't about building a better Paypal, it is about changing the world.
Submitted October 27, 2016 at 10:05AM by Cryptoconomy http://bit.ly/2dMuMXU
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