If bitcoin tx rate is ever a limiting factor, we could always have multiple bitcoin networks.. bitcoin_1,2,3 etc. which are just forks of each other at a specific point in time. I wonder how that would be stable or unstable over time..
Discussion
They wouldn't be stable, the smaller chains would be susceptible to 51% attacks that rewrite the block chain to allow double spends. The more risk that there is for this to happen the lower the price of the forked coins, which corresponds to lower mining rewards. The lower mining rewards pushes miners onto the main chain, making the forked chain yet easier to attack.
There have been a few issues with transaction volume over the years, we are just coming out of one now caused by ordinals hogging block space. Ultimately, more important transactions push the transaction fees up encouraging layer 2 scaling solutions like lightning, and discourage users from wasting block space on jpegs and small transactions that can be done on L2.
So the idea here if I understand it is that the security of any one chain would be lower, and that could cause people to flee to chains that aren’t having issues… yeah that makes sense as a destabilizing factor 🤔
I want there to be a way to stabilize it, but it seems like there won’t be a way to make them trustlessly interoperable, and no obvious way to make users and bad actors unable to target a specific subnetwork…
This is going to be a wall of text, I apologize in advance, maybe consider a copy of "the block size wars" on audible instead, its a great listen!
You might get some hate for asking questions like this, but its a good exploration into the very early game theory of bitcoin, and you might find people that enjoy a reprieve from the geopolitical and macroeconomic talk.
There are other proof of work chains that have survived and are basically copy paste bitcoin with tweaks to things like block production times (litecoin), block size (BCH), block rewards (doge). These would represent the closest analogue to having multiple bitcoin blockchains, though in these cases it also implies having separate currencies too, which opens the door for Gresham's law. Gresham's law implies that people will sell their weaker currencies (alts, or silver) for harder currencies (bitcoin or gold).
I think you are referring more to "sharding", where the network is fragmented into multiple pieces. Sharding is an attractive idea to networks like ethereum because there is too much data for any single node to understand the state of the entire network. Ethereum isn't constrained by a software limit like bitcoin, it is constrained by the physical ability of any single computer to be able to process the massive amounts of altcoins, smart contracts, NFTs etc. on the ethereum network; this massive amount of data was bottlenecked by proof of work because of the limited vram of graphics cards used for mining. To bypass this bottleneck they switched to proof of stake, causing a massive shift towards centralization, where very few entities are capable of writing to the ethereum block chain; while the ability of a compute cluster at AWS to create blocks has increased the limit for data that can be added, it still is not enough because even professional servers are only capable of operating at limited scale.
Introduce, sharding, where there are multiple interoperable ethereum block chains. The key point to take away from why ethereum is moving to sharding is that they are trying to cram far too much junk on the block chain in the first place; this is why its so important that we prevent this behavior through meticulous screening of new code, and point out the logical flaws inherent in thinking art is "scarce" just because it is on the block chain. Preferable to sharding, which would create a massive "attack surface" for bitcoin, would be a simple increase in the block size (don't flame me!).
The block size was introduced to ensure the network is secure and decentralized by making full nodes cheap to run and offering plenty of time for downloading and verifying new blocks, satoshi had expressed that he believed this block size limit would grow as technology became more accessible, but due to its implementation it would require a hard fork and that means there are even more preferable solutions.
Segwit and taproot are like, a beta and a version 1.0 respectively. They were intended to build towards even higher goals of on chain throughput and transaction types without requiring a hard fork and without changing the block size. Version 2.0 would be graftroot, still in development and... I lost any hope of understanding this shit past segwit, but it would allow an incredible increase in the number of transactions and types of transactions allowed on bitcoin. This still requires a softfork, and after the ordinals debacle there might be a lot of scrutiny before anyone adopts this change, but
1. It couldnt possibly increase the attack surface as badly as sharding
2. It wouldn't pose the risk of the network splintering like a hard forked block size increase would.
Finally, the most preferable solution for near term use, is layer 2! You can send a technically unlimited number of transactions instantly with essentially the same security guarantees of layer 1! Here, have a zap, and know that it wouldn't even be realistic to send this amount of bitcoin over layer 1 because of the transaction fees!
I hadn’t heard of Graftroot. Yeah i really need to dig into the block side wars. Seems like Ethereum’s (classic) bottleneck isn’t so much the proof of work, but the actual validation right? With so much stuff shoved in there, the nodes need to do a relatively large amount of computation to validate each block. I think that’s still true of proof of stake but I agree they have a much stronger overall centralizing effect.
The current L2 footprint I think will have a long term centralizing effect on bitcoin..
In addition to that book I need to learn about managing Lightning in/out liquidity. Seems like that will help inform my intuition
I would definitely not trust my analysis of the ethereum centralization. I wish the big bitcoin podcasts paid a bit more attention to this stuff because it stands as excellent examples of what we want to avoid. I'm not exactly worried about the current state of bitcoins L2, I think there's just a lack of utility; if I was receiving my paychecks on lightning you are damn straight I'd have my own lightning node, but for zapping plebs I'm sticking with WoS.