Block size following technological growth

Summary:

In a discussion about potential risks and benefits of changing the consensus rule to limit centralization in Bitcoin, various hypothetical scenarios were presented. The primary concern is maintaining decentralization, but there may be some risk that people are willing to accept for increased usability and lower transaction fees.One scenario discussed was whether increasing the block size to 4MB would be worth it if it resulted in a 20 cent/tx equilibrium that would last for a year. The risks of moving to 4MB were evaluated and included a probable reduction in full nodes, but not significant hindrance to low bandwidth miners or tx verification issues. The harms of $5 tx fees include preventing people from benefiting from Bitcoin's decentralization and developers from experimenting with new use-cases, among other things. On the other hand, high tx fees could happen soon due to Bitcoin becoming more popular quickly. While a fee market will eventually be needed, there is some concern that insisting on one now could create roadblocks to growth. The writer argues that software changes are complex, and it is unnecessary to add friction for users now. The block size should be adjusted about two years before Bitcoin relies heavily on transaction fees for security purposes. Until then, the focus should be on encouraging low fee use cases to ensure widespread use of Bitcoin. When a fee market is necessary, it should consist of many people paying small fees rather than fewer people paying exorbitant fees. The writer also disagrees with the notion that zero-fee transactions will have to disappear someday. As long as enough people care about fast confirmations, there is no reason to prevent those who pay zero fees from having their transactions confirmed.It is important to be specific and concrete when evaluating hypothetical scenarios and considering the risks and benefits of changes to the consensus rule to maintain decentralization.

Updated on: 2023-06-10T04:30:33.728459+00:00