Gregory Maxwell & Gavin Andresen Shed Interesting Light on Bitcoin Block Size Debate
One of the main reasons why the Bitcoin block size debate has been attracting so much attention is that there is a growing number of network transactions that need to be validated. By increasing the Bitcoin block size limit, more transactions can be included in every network block. According to Gregory Maxwell, there is no real need to include more transactions per block just yet, as the situation is not as dire as people assumed.
Also read: Crypto-Psychology Initiation Text: Toward Understanding Money Symbolism
Increased Hashpower Makes Current Block Size Viable
Having more Bitcoin transactions on the network is an indication that the digital currency is becoming more and more popular. Granted, not all of those transactions are related to people buying or selling goods or services, but people are using Bitcoin to quickly transfer value between accounts nonetheless.
As a direct result, the discussion of increasing the Bitcoin block size reared its head, and developers have been looking for viable solutions ever since. But it looks like there is no imminent need to increase the current Bitcoin block size limit, as long as the overall network hashpower keeps increasing at a steady pace.
On December 10, 2015, the Bitcoin network saw a very high number in terms of network transactions, as 222,000 transfers were made in a 24-hour period. Unlike previous all-time highs, this event was not part of a Bitcoin network stress test, such as the ones that have taken place in previous months.
Despite what some Bitcoin community members might have expected, the current maximum Bitcoin block size was not reached. This is not because of a more efficient Bitcoin network all of a sudden, but can rather be attributed to an increase in overall hashrate. Both aspects are much closer related than people gave it credit for, until now.
On Reddit, user BIP-101 explained the relationship as follows:
“Currently, blocks are being found at an average of 9 minute intervals. The next difficulty adjustment is a week away. Effectively, we have a 10% increased block size right now, or in other words 1.1 MB. So, while I said a while ago that we are already at capacity, this is still true. The hash rate increase just delayed the effects. We might not see congestion effects until the new year because over the Christmas holidays, transaction volume historically drops. But I’m calling it: In the new year (beginning of January), the effects will be the worse.”
A Different Kind of Threat For The Bitcoin Network
While this explanation makes perfect sense, it is important to keep in mind the opposite of this statement is equally true. If there is no steady increase in the transaction volume, hashrate pointed at the Bitcoin network will most likely start to drop off, due to the decrease in block rewards.
An increased block time would keep the Bitcoin network at a lower percentage capacity-wise, which means an increased block size is less of a worry. The Bitcoin mining difficulty will eventually adjust to this change, but it will take some time to complete the cycle. This scenario could create a vicious circle of reduced network usage due to higher transaction fees, which would further reduce mining revenue and more miners will drop out.
Gavin Andresen shared his thoughts on this scenario:
“There is a real danger of a negative feedback loop– transactions fail to confirm, some people leave, price falls, hash power drops, more transactions fail to confirm……I THINK the miners would be rational enough to break the cycle, but it could get really ugly pretty fast. ALL of this is speculation, nobody really knows what will happen. That’s why I agree with something Jeff Garzik has been saying for a while: running up against the 1MB block size limit is a major change to Bitcoin economics.”
It is safe to say there is no end in sight for the discussion on if — and how — the Bitcoin block size should be increased in the near future. Every option has its advantages and disadvantages, and the final decision will have to be weighed carefully. At the same time, it is good to get some insights into the different trains of thought, and what their possible outcomes could be.
What are your thoughts on the correlation between an increased Bitcoin network hashrate, and the block size debate? Let us know in the comments below!
Source: Linux Foundation
Images courtesy of Shutterstock, Custom Image
