Bitcoin block size change of magnitude

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Content:

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• Ethereum’s New 1MB Blocksize Limit
• Cryptocurrency: "The Digital Tulip"?
• Elon Musk Explains DOGE Edge Over Bitcoin, But Where Is He Wrong?
• Settling the Block Size Debate
• Are Bitcoin and other digital currencies the future of money?
• Bitcoin’s Energy Usage, Explained

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The purpose of this proposal is to make the second layer Layer 2 expansion solution Rollups more economical and feasible.

Therefore, in order to reduce the large amount of block space that these Rollups may consume, a new block size data limit has been introduced. We will explain the basic principles of the work of Rollups and discuss some of the challenges that Ethereum may face due to the new block size limit, which we believe may even undermine some of the advantages brought by EIP EIP proposes to reduce the cost of one byte of transaction call data calldata in the Ethereum blockchain from 16 gas to 3 gas, further reducing the second-level gas fee.

The purpose of this is to reduce the cost of Rollups. Rollups on Ethereum will take up a lot of space, which is the key to expansion. It is said that this will prompt users to switch to alternative systems such as Solana or Avalanche. Many of the DeFi projects under development that we have talked to have switched to Rollups during the construction phase, and exchanges like Binance will accept Rollup storage.

However, the possible reduction in Rollups fees is only about 10 times, and some users still need to pay quite high fees. Therefore, EIP is proposed as a quick solution, at least in the short term, it is possible to reduce these costs to another order of magnitude.

If the gas cost of transaction call data is reduced, the Ethereum block may become larger, which may cause too much centralization pressure. The current gas limit is 30 million units, and the target is 15 million. Therefore, the maximum block size is 1. The Gas fee is reduced to 3 and the maximum block size is increased to 10 MB, which is already too big.

Therefore, it is recommended to propose a new limit, which is a 1 MB transaction call data block size limit. This new 1 MB limit is a bit ironic because Bitcoin has been arguing about the old 1 MB block size limit for years. Of course, the target block time in Ethereum is much less than 10 minutes now about 13 seconds, about 12 seconds after the transition to Ethereum 2.

With Rollups, transactions are processed and executed off-chain, but transaction data is still contained on the Ethereum main chain, so the results of Rollups do not significantly save block space. Therefore, Rollups is a side chain system.

It is the latest version of the idea originally proposed by Bitcoin developer Johnson Lau in , and it may also be the most advanced iteration. Therefore, blockchain is needed to get all the functions of Ethereum. The advantage of this is scalability. The side chain does not have the strict calculation gas limit of the main chain, so the throughput is higher and the transaction is cheaper.

The disadvantage of Rollups is that the side chain requires new consensus agents, and these agents have the ability to order transactions. There is also the problem of transferring funds from the side chain to the main chain. For security reasons, the transaction speed must be slow.

The most exciting type of Rollups produced on Ethereum is Optimistic Rollups. The way it works is that the user assumes that the Rollups status is valid, but if the Rollups is deemed invalid, the sidechain verifier can submit a fraud proof to the main Ethereum chain.

Then, the proof can be verified by all main chain Ethereum nodes. Putting the original Rollups transaction data into the entity of the Ethereum chain also requires the Ethereum bond as collateral. If they submit an invalid status, this proves to lose their bond. This incentive structure is designed to ensure the safety of the Rollups side chain.

This has some similarities with the equity certificate system and the punishment for bad behavior. This bond type mechanism may seem complicated, unnecessary, or even a little weak. For example, how can a system designer ensure that bonds have sufficient value to prevent fraud, while ensuring that the entity has sufficient liquidity?

Given the large scale and volatility of capital flows in this area, this can be challenging. Assume the following to prove that such a mechanism is necessary:. In this case, this complex bond mechanism may be meaningful, and the side chain itself is considered insecure, but due to the fraud proof and bond mechanism, the side chain is sufficiently secure.

There is an irony called evaluating Rollups in the context of Bitcoin. They claim that this process should happen off-chain, and only the data and results of these calculations should appear on-chain, which is exactly what Rollups does.

At the same time, we have not seen many Ethereum developers thank Bitcoin for promoting this idea over the years. In theory, Bitcoin can do it. In fact, if someone tries to execute these types of smart contracts on Bitcoin, then it must perform Rollups, because there is no way for existing Bitcoin full nodes to verify these complex smart contracts.

Therefore, the only way is to put the smart contract data on the Bitcoin blockchain and let other node software running the side chain execute and verify smart contract transactions. However, in Bitcoin, through this type of sidechain construction, almost anything can still be achieved, including enabling the system Ethereum Virtual Machine EVM to use Solidity smart contracts.

Of course, such a system may not be effective or efficient on the basis of Bitcoin, but it is theoretically feasible. Unlike Ethereum, one disadvantage of creating this sidechain Rollups type system on top of Bitcoin is that you will never be able to implement fraud proof and Optimistic Rollups type systems. However, we do not know whether this is necessary or desirable. The purpose of building these Rollups on top of Bitcoin is to add smart contract functions such as Ethereum on top of Bitcoin.

In contrast, the purpose of Rollups on Ethereum is to increase capacity, not to improve smart contract capabilities.

Therefore, in this theoretical Bitcoin construction, users can choose whether to verify side chains outside the main chain, without the need for a fraud proof system. Storage on Bitcoin is not cheap, and we did not assume that the side chain needs very high throughput at the beginning, so the degree of centralization is too high, so that we will face major security risks due to the lack of validators.

In our opinion, for Ethereum, Optimistic Rollups are meaningful, but this obvious advantage may not last long. Therefore, the Ethereum block has two restrictions, the gas limit and the transaction call data calldata limit.

The construction of blocks may now become more complicated, because block producers need to consider multi-dimensional issues when choosing profit-maximizing transactions. Due to factors such as miner extractable value MEV , block production has become very complicated.

The problem of these two block constraints is far simpler than the problem of how to extract MEV when producing blocks. Therefore, it is believed that these two constraints will not increase the complexity of block creation for block producers.

However, we still believe that these two restrictions may increase the complexity of users and wallets because they need to determine the fees for their transactions. This is even more ironic when comparing it to Bitcoin. SegWit is a solution to the Bitcoin scale problem.

Its upgrade allows more transactions in Bitcoin blocks, but it limits the number of transactions that can be processed by chain Bitcoin. The maximum block size of the main protocol is 1 MB. It will limit the potential growth of Bitcoin and prevent Bitcoin from becoming a usable large-value payment system, so it has been criticized by the market. The new block size limit may also weaken EIP to some extent. EIP introduces block gas limit targets and basic fees.

The basic fee is adjusted according to the gas usage being higher or lower than the target. As far as we know, there is no adjustment mechanism for this new transaction call data limit. Therefore, if the calldata restriction comes into play, the fee market may again fluctuate, and the advantage of EIP may be weakened. However, when it comes to synchronizing Ethereum nodes, the size of the block is never the point. Comparing the size of the blockchain of Ethereum and Bitcoin, the blockchain of Bitcoin is actually larger than Ethereum.

However, this does not mean that Bitcoin is more difficult to synchronize or verify than Ethereum. In fact, Ethereum is more difficult to verify. According to our recent experience, it may take about 10 times longer than Bitcoin on similar machines. Our view is that the Ethereum problem has never come from block size. If Rollups improve, the situation may change. As for the two block limits and the complexity of the fee market, a simpler solution may be considered, such as reducing the gas cost of a byte of transaction call data to 8 instead of 3.

EIP is not meant to be a long-term expansion solution, but it is a quick repair solution. Optimistic Rollups by itself cannot solve the expansion problem of Ethereum, it will only make the blocks bigger until their size becomes the next new problem.

At present, more technologies will need to be deployed to expand Ethereum, which is a huge challenge. Users are expected to carefully screen and prevent risks.

EIP overview EIP proposes to reduce the cost of one byte of transaction call data calldata in the Ethereum blockchain from 16 gas to 3 gas, further reducing the second-level gas fee. The basic principle of Rollups With Rollups, transactions are processed and executed off-chain, but transaction data is still contained on the Ethereum main chain, so the results of Rollups do not significantly save block space. Fraud certificate and bond mechanism bonds The most exciting type of Rollups produced on Ethereum is Optimistic Rollups.

Assume the following to prove that such a mechanism is necessary: The throughput on the side chain is so high that not many entities run fully verified side chain nodes, and the side chain system is too centralized and insecure; It is cheap to store data on the main chain, but the capacity of the system is limited during calculation.

Rollups in the context of Bitcoin There is an irony called evaluating Rollups in the context of Bitcoin. Gas limit and transaction call data calldata limit A potential issue with EIP is the creation of a new 1 MB transaction call data limit.

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Ethereum’s New 1MB Blocksize Limit

Scalability is an ongoing field of research and a challenge in blockchain technology. Without scaling the speed of many blockchains today — Bitcoin achieves around transactions per second, Ethereum about 15 transactions per second — widespread adoption of the technology by businesses and private individuals all around the world cannot happen. Blockchain Layers to Scale There are two approaches to blockchain scaling — scaling the protocol layer layer 1 scaling or scaling using solutions on top of the protocol that do not require changes to the core code of the blockchain layer 2, or L2 scaling. Scaling one of these layers offers multiplicative benefits when combined with the other one, meaning a 10x improvement in the first layer or base layer and a x improvement in the second layer could easily compound to an overall x throughput enhancement.

Cryptocurrency: "The Digital Tulip"?

The Bitcoin network is now regularly producing blocks over the 1MB block size limit that was in place prior to Segregated Witness SegWit. Bitcoin 00 has been growing in popularity since it was created almost a decade ago. It is used by more and more people each day — and more transactions mean bigger blocks forming the block-chain. The blocks produced by the Bitcoin network approximately every 10 minutes are now exceeding the 1MB limit that was in place before Segregated Witness was introduced in August of last year. The issue of raising the 1MB block size limit came to the forefront as Bitcoin transactions fees were hitting record highs at the end of last year. SegWit, however, was implemented via soft-fork and was thus an optional upgrade. But with the drop in price, and with SegWit transactions now comprising almost half of all Bitcoin transactions, the cost of sending BTC has dropped to record lows. It is now not uncommon to see fees of 1 satoshi per byte, the smallest possible on-chain fee in Bitcoin. Indeed, people are still using Bitcoin as the latest data shows that the average block size is now 1.

Elon Musk Explains DOGE Edge Over Bitcoin, But Where Is He Wrong?

Lombrozo is also a founding member of the CryptoCurrency Security Standards Steering Committee and has been a longtime contributor to the open source Bitcoin core development effort. In the last few months, a contentious debate has arisen surrounding the issue of a hardcoded constant in the consensus rules of the Bitcoin network. When the Bitcoin network was in infancy, several assumptions had to be made regarding what kind of computational resources a typical Bitcoin node would have. Among these resources were network bandwidth, storage space and processor speed. If blocks were allowed to grow too big they would swamp these resources, making it easy to attack the network or discourage people from running a node.

Settling the Block Size Debate

Bitcoin Stack Exchange is a question and answer site for Bitcoin crypto-currency enthusiasts. It only takes a minute to sign up. Connect and share knowledge within a single location that is structured and easy to search. Can someone give a quick point by point list, what arguments the proponents and opponents of increased blocksize have for their case? Please note, this answer was written in Februar

Are Bitcoin and other digital currencies the future of money?

When it comes to traditional assets, such a rapid rise in the value of an asset typically indicates the emergence of a financial bubble. But, what about cryptocurrencies? Is this time different? Well, we don't know the answer. Since the famous "tulip mania" bubble in economists have not yet found reliable tools for forecasting bubbles. Super -easy monetary policy and expansionary fiscal policies in the US and around the world coupled with the accessibility of financial instruments and stock exchanges for a wide range of non-professional investors may make this "digital tulip" bubble different than bubbles of the past.

Bitcoin’s Energy Usage, Explained

And, at core, I think it might come down to three issues: 1 fear of two different types of failure, 2 a clash of visions and 3 no process for reconciling the first two issues. I find it immensely helpful in keeping up with much of the day-to-debate debate. What becomes clear when you read it is that there are at least!

Bitcoin transaction fees — financial rewards for adding certain records to a blockchain ahead of others — keep the cryptocurrency functioning, but may threaten its long-term viability and contribute to its energy waste, according to a first-of-its-kind study from Cornell researchers. As bitcoin has grown over the past 10 years, users must wait longer for their transactions to be added to the blockchain — a constantly updated list of records distributed among a network of computers. This lag spurred the emergence of fees, which users pay to move to the head of the line. But it also created all kinds of problems.

He focuses on infrastructure software and open source. More posts by this contributor Lack of leadership in open source results in source-available licenses The crusade against open-source abuse. A recent rift amongst the developers of Bitcoin, which originally started with a question over increasing the so-called block size so that throughput of transactions can be increased , exposed deep divides about distributed governance; and has now ironically led to entrenched positions, flared tempers, public insults, accusations and disparaging remarks. The opposing views of those advocating for preserving the current implementation of Bitcoin Bitcoin Core , and those who believe that the block size needs to be increased immediately to overcome scalability challenges, has balkanized the Bitcoin developer community into mainly two camps. It has failed because the community has failed. Worse still, the network is on the brink of technical collapse.

Are you interested in testing our corporate solutions? Please do not hesitate to contact me. Additional Information. The numbers provided were originally reported in megabytes and have been converted to gigabytes.