In some recent discussions it's becoming very clear to me that one of the biggest issues in the ongoing debate about the future of bitcoin (on-chain vs. off-chain scaling), is that the on-chain scaling crowd thinks this is primarily a technical issue when, in fact, it's really a political one.
Is it technically possible for the bitcoin network to function with much larger blocksizes than today? Yes, of course, it is technically possible. Lots of people have fast computers, good bandwidth internet connections, and access to cheap disk space.
Along with various optimizations already being done to the code base, substantially larger blocksizes are probably technically feasible.
What they are not, however, is politically feasible.
There is a war coming. Whether everyone realizes that or not, they need to start realizing it quickly.
To date, every single attempt by a business to create a value transfer network that could operate independent of government regulations has been shut down. Every single one. And many of the people involved in those attempts are sitting in jail.
The only way bitcoin works, is if there is no 'person' or 'business' that the government can attack. Instead, today, the governments focus on the onramps and offramps, where bitcoin is converted to fiat currency and back.
However, as bitcoin continues to grow, eventually, more and more people are going to skip fiat all together. Once a large amount of value is moving through the network that is never converted to fiat and back, and once more organic markets develop, such as Open Bazaar and others, once more people are willing to just accept bitcoin as payment for goods and services without converting it into fiat along the way, then the war will begin in earnest.
The only true defense is to keep the cost of running a bitcoin node as small as possible.
Ideally to run a bitcoin node would require:
- Minimal CPU
- Minimal bandwidth
- Minimal storage requirements
- Capable of operating either hidden over the existing Internet or, ideally, capable of running on a parallel network which can entirely bypass the existing internet itself.
If the State started making a concerted attack on node operators and miners today, the resource requirements are still small enough that a reasonable defense could be mounted. For every person shut down, we could fire up ten other nodes elsewhere. And we would.
However, as the bandwidth, CPU, and storage requirements grow, we create an ever larger, and easier, attack vector for the State. The larger that surface area, the easier it is to attack.
And, what do I mean by 'attack'? Simple. They start throwing people in jail if they don't institute AML/KYC, whitelists and blacklists.
The state may well allow bitcoin to exist, but only if it is neutered and controlled to such an extent it will be unrecognizable.
The primary directive for bitcoin should be to protect the network from attack, not only from hackers, but also by state actors, regulators, and others.
They have not attacked it heavily, yet. Because it is still a manageable problem; with the vast majority of all users operating through onramps and offramps that already have a significant amount of regulations.
However, if the market cap grows much larger and, in turn, people start bypassing fiat entirely, the attacks will be much more profound.
You can't 'undo' a blocksize increase. That's not something you get to 'take back' by hitting control-Z.
The current SegWit change already almost doubles the blocksize as is. The current cautious approach by the core roadmap is prudent and safe.
I'm all for experimentation. I would love to see a value transfer network that has 20mb blocks, fast confirmation times, and low fees. Just don't do that experiment on the bitcoin network, because the risk of killing it in the process is high!