On Bitcoin "Scaling" and the need for "Changes" \ stacker news ~bitcoin

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On Bitcoin "Scaling" and the need for "Changes"

2920 sats \ 26 comments \ @028559d218 14 Nov bitcoin

Bitcoin doesn't need "changes" it needs better "education." Recently here on Stacker News and since forever on Twitter... there have been proposals for 'forks' and 'upgrades' and 'new features' and quite frankly they're 99% a 'solution in search of a problem' in my opinion.

I read over and over about how the population of the world will 'share' UTXOs and how UTXOs will "need to scale"... so that everyone (Billions of people?) will be able to custody their own UTXOs. Otherwise Bitcoin doesn't "scale" and it's relegated to the 'lesser' and it 'will have failed'.

And all I have to say is that I have news for you - you're absolutely right Bitcoin does not "scale" on its base layer and no blockchain can that's worth anything.

The future of Bitcoin is through scaling solutions (like lightning) and the vast majority of "On-Chain" Bitcoin will rarely move. Let's say that again - in the future, it's logical that the vast majority of On-Chain Bitcoin will rarely move.

On-Chain isn't fast enough, seamless enough, or inevitably cheap enough for cups of coffee or small daily purchases for many, many People... and believing otherwise is an absolute fantasy. This fantasy does not help Bitcoiners or members of the public who might become Bitcoiners in the future.

If somehow, maybe, people were clamoring, tripping over themselves to make on-chain transactions, to send money around the world, to make purchases and send funds from address to address.... spending and saving, spending and saving...

Then I would agree OK let's talk about scaling and solutions and the risks of changing protocol and "soft-forks."

But precisely none of that has happened.

We need to get real:

How many people in your actual day to day lives do you know that use Lightning... much less know what it is? Much less know the basics of Bitcoin or who have made any serious effort to study it?
What percentage of Bitcoiners (people who "own" Bitcoin) actually self-custody? VS leaving it on an exchange like Bitcoiners have recommended against...
And to the extent that self-custody is more available today than ever through Sparrow or smartphone apps or inexpensive hardware wallets (that you can build yourself)...

Why the hell don't more people self-custody? The actual percentage of those who do (from the data available) is very small.

"Oh but the fees are too high." "It's too complicated." "People will never use the hardware-wallet thing..."

To which I call bullshit. Are people stupid? Do they not drive cars? (Hi-speed, heavy vehicles for which they are responsible?) Do they have everything handed to them all their lives? Does the grocery store give out tomatoes, onions, and potatoes to consume for free?

Transaction fees periodically come down to the 2-3 sats/vb range (as the Runes Enjoyeers run out of money frequently) at which point withdrawal from exchanges is economical. And I can't tell you the number of forum posts out there complaining about "30$ exchange withdraw fees..." positing about "how expensive Bitcoin is" to use at "30$ per transaction" (at which point someone inevitably says 'buy my shitcoin bro it's cheap...')

My brothers and sisters, this is not a Bitcoin problem this is an exchange problem and an education problem by which users don't tell exchanges to go fuck themselves and hold them accountable.

Had users purchased their Bitcoin on FTX, promptly withdrew it and kept it themselves in a shoebox at home (WAY safer than FTX) they wouldn't have been burned by criminals.

And let's suppose that all these tools were seamlessly and readily available right now: vaults, UTXO sharing, Arc, channel factories, the conditional spending of UTXOs all of it available to the masses in smartphone apps on your favorite platform...

Would it meaningfully move Bitcoin adoption today? No. No it wouldn't.

And no-one (relatively speaking) would probably necessarily them.

And the adoption of the real, meaningful kind that's good for the ecosystem we want to see - self-custody, individually-opened lightning channels, coinjoins, coin control, the spending of Bitcoin on goods and services...

These things no matter the ease of use of a tool require the user to approach Bitcoin with an open mind and give a shit and with 8 dollar$ lattes and 30$ lunches in most American cities...

Users just don't give a shit. And the "cope" of how expensive using Bitcoin is, is absolutely not convincing.

Look at all the plane tickets spent on dumb vacations.
The Uber rides from drunken nights out (at 5$ a beer, 10+$ a cocktail in cities)
The expensive gifts and toys people finance to keep in their front yards keeping up with the Joneses that they can't really...
and all the obscenely depreciating crap people buy at Costco and The Home Depot that gets stuffed into a drawer and forgotten about...

[12-foot tall Halloween skeletons for 300$ plus tax] https://www.businessinsider.com/guides/home/home-depot-12-foot-skeleton-review#:~:text=The%2012%2Dfoot%20skeleton%2C%20affectionately,stock%20due%20to%20its%20popularity.

And people can't afford to open one lightning channel once to have it available for weeks or months? Really?

To have an almost unlimited number of transactions, sending and receiving the world's Greatest Money? Thermodynamically sound? Really?

This is a piss-poor, unconvincing cope pushed by developers that is, in my opinion not reflective of the real world. With the costs of things so high that people routinely purchase junk (those 300$ Giant Skeletons at The Home Depot are sold out) the cost-prohibition of opening a lightning channel once or twice is not convincing, sorry.

For the cost of a McDonald's meal (5$) or a Chick-Fill-A meal (10$?) or a beer in Chicago (I've paid around 8$!) or the junk people throw away... think of how many lightning channels could be economically opened and how much transacted (especially with Bitcoin's appreciating exchange rate)!

And to the extent that prices have 'gone-up' and the Dollar has depreciated 20-30% the last several years...

Doesn't saving in thermodynamically-sound, economically-sound, technologically-sound money actually pay for itself?

In summary: Bitcoin doesn't need more 'forks' or 'soft-forked-tools' or 'features added'. It needs more 'time', education, and the benefits of saving in Bitcoin apparent to the Public. From someone who spends Bitcoin on Lightning daily (for example on Stacker News or Bitrefill) I touch on-chain maybe once every 6 weeks.

And the rest of the time it's Lightning and any future mass-adoption of Bitcoin will look similar in my opinion.

Let's pop the bubble, look at the big picture and not let the perfect be the enemy of the good. A horse can be forced to water but not made to drink.

I apologize if I sound testy or judgemental (I don't intend to!) but too often folks don't see the forest-for-the trees, and there is a lot of bullshit proposed that is not reflective of the real world, its risks, or the phenomenal improvement on the world that Bitcoin already is.

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339 sats \ 16 replies \ @BTCNautilus 14 Nov

Not sure I want to wade into this one fully, but, I think you misunderstand the capability of the Lightning Network to provide scale.

Yes, it can provide an "unlimited" number of transactions. Lightning does an amazing job scaling the number of payments between parties that have a UTXO. Also yes, it's conceivable that the cost of opening a Lightning channel will be worth the cost, even on an individual basis, for quite awhile longer.

The problem isn't about cost, exactly (though the issues are related). The problem is throughput. It is the sheer number of UTXOs required to use the Lightning Network this way. We simply cannot make enough Lightning Channels for individuals, at scale, to have ownership over their bitcoin with a self-custody Lightning UTXO.

Arguing about cost isn't going to change that fact. You may be fine with this, and it's an arguable point, but what you're really saying is that custodial solutions are the way most people will use bitcoin going forward.

30 sats \ 2 replies \ @028559d218 OP 14 Nov

If i understand what you're saying... You're saying that 1 person = 1 lightning channel And even if that channel is opened once (or very infrequently)

there still won't be enough 'utxos' to open enough 'channels' for each and every individual.

I would agree with this. But even if this were the intention... why should each person have a channel? What about a channel per family? Or a channel for an entire business (for employees to use, kind of like a business credit card, or debit card).

And I still believe that some people will use custodial solutions regardless, no matter the cost or efficiency of scaling because they don't want to take custody or 24 words (for example).

So between the number of people wanting to use Bitcoin the number of individual 'groups' (businesses, families, etc that constitute those groups) the number of channel opens and closes and the infrequency with which people can open and close those channels (generally choosing to keep them open)...

I believe we can scale lightning much, much more. It's not unlimited but if people were really interested in it there's a lot more we could do.

Right now there isn't much in the way of demand... and most people running their own lightning nodes/even using lightning at all are enthusiasts

100 sats \ 1 reply \ @BTCNautilus 14 Nov

I would agree with this. But even if this were the intention... why should each person have a channel? What about a channel per family? Or a channel for an entire business (for employees to use, kind of like a business credit card, or debit card). And I still believe that some people will use custodial solutions regardless, no matter the cost or efficiency of scaling because they don't want to take custody or 24 words (for example).

I think we're on the same page with this, at least in that custodial solutions are inevitable, and that in our current state, we'll fine equilibrium somewhere between sovereignty and custody that makes the most economic sense.

My individual concern is that if we are not able to find a way to move the slider more toward self sovereignty being possible for more people, bitcoin ends up no better than gold in terms of being "sound money."

If you're a fan of Lyn Alden (or even if not), this is one of the ideas I've internalized most from her writing. Why did gold fail, and why was it replaced by paper and eventually fiat? The demand and velocity of payments required a different technology. This force centralised gold into the hands of fewer and fewer, and the paper promises into the hands of more and more. All that remained for fiat to take over was to sever the redeemability of the paper to the gold. That dynamic can play out with Bitcoin too if we're not careful.

0 sats \ 0 replies \ @028559d218 OP 15 Nov

I agree.

I think how Bitcoin is different to gold... is that it's just so far superior. Try explaining that to a 'no-coiner' though. And I'm not judging 'no-coiners' at all, the vast majority of people are that way, but it is how it is.

0 sats \ 12 replies \ @SimpleStacker 14 Nov

Lightning may not be the only way to scale though. Hal Finney predicted that there'd be private bitcoin banks that would issue notes backed by Bitcoin. I think that may be quite likely too.

0 sats \ 3 replies \ @pakovm 15 Nov

So... Exchanges with Lightning support and custodial Lightning wallets... How does that scale censorship resistance and real ownership? How's that different to the banking system we have today?

0 sats \ 2 replies \ @028559d218 OP 15 Nov

at least it's still sound money.

You could provide people easy to use, cheap effective self custody and 'censorship resistance'. And I'm not sure that everyone would use it however it's still a big improvement.

0 sats \ 1 reply \ @pakovm 16 Nov

It's a big improvement for sure, but it won't be even close to realizing Bitcoin's full potential and world changing money.

0 sats \ 0 replies \ @028559d218 OP 16 Nov

We'll get there eventually, in my opinion.

0 sats \ 0 replies \ @028559d218 OP 15 Nov

I agree. I'm not sure that Bitcoin's fate is really for 'small daily' payments for candy bars cigarettes and chocolates. I mean maybe it is and I'm wrong!

But those things lose value very quickly... and Bitcoin doesn't.

It would make sense that Bitcoin is traded for other commodities, oil, gold, soybeans, property... even using the lightning network depending on the type of trade.

Trading Bitcoin for a candy bar to go and immediately eat it... unless you are out of everything else doesn't make as much sense honestly.

0 sats \ 6 replies \ @BTCNautilus 14 Nov

Not only is it likely, it's definitely going to happen. But as I said the reply below, if we end up in a situation where you either own your own UTXO, or someone else does, and most people are in the "someone else" camp, I think we have a chance to the entire value bitcoin could bring to the world slip away.

0 sats \ 0 replies \ @028559d218 OP 15 Nov

this is an interesting idea.

If the demand for Bitcoin and holding Bitcoin (specifically in self-custody where this becomes an issue anyway) is so great that 'we are running out of UTXOs' despite being able to willing to pay much much more for them....

then wow we have far more Bitcoin adoption than today.

0 sats \ 4 replies \ @SimpleStacker 14 Nov

I don't necessarily agree with that.

There's still two huge differences between Bitcoin and fiat, even if most people hold Bitcoin in custodial accounts:

It's actually possible to self custody if you want to. With the current fiat system, this is almost impossible (or very inconvenient and unsafe) to do in large amounts.
The money supply is fixed and not controlled by governments.

These two features already bring much benefit, even if most people hold bitcoin custodially.

21 sats \ 2 replies \ @BTCNautilus 14 Nov

Right. I'm not comparing bitcoin to fiat though, I am comparing bitcoin to our previous iteration of sound money, Gold.

Yes, it is possible to self custody, but will it be possible forever? Maybe for you and I, because we already own nice and shiny UTXOs.

Again, if most people only interact with bitcoin through custodians, we risk the slippage into the same situation. Sound Money held by few > Paper Promises > Paper Promises eroded > Paper Promises revoked.

0 sats \ 0 replies \ @SimpleStacker 15 Nov

I agree with that. I suppose it will depend on how and when it becomes too expensive/difficult to self custody. I still would argue that Bitcoin offers some advantages over gold in this regard; less difficult to self custody, more secure, more portable. But only time will tell how an actual bitcoin based economy materializes.

0 sats \ 0 replies \ @028559d218 OP 14 Nov

this is an interesting point. perhaps one way to think of Bitcoin... is as a digital property. Property is 'finite'... that's why it's valuable.

Folks with the UTXOs (even small ones) are the property owners, property holders. And folks with lightning channels and their own utxos own that property but it's like a condo of sorts. The owner of the building has some say in the future and any given state of the property.

And the people using custodial services (which will be some people no doubt) are like renters. They don't own the property at all... they just rent property and us it for their own purposes while they can.

Is this a perfect system? No. But it gives people options and maybe that's the best we can hope for.

0 sats \ 0 replies \ @028559d218 OP 14 Nov

I agree with that.

I think most folks would have an issue... only to the extent that rehypothication could and would occur. Banks and institutions 'saying' they had the Bitcoin, when they really didn't.

338 sats \ 1 reply \ @Scoresby 14 Nov

The benefit of saving in Bitcoin becomes apparent to the public when number goes up.

The benefit of holding your own keys becomes apparent when exchanges rug and banks tell you how to use your money.

NGU may be happening, but most nocoiners seem fine with an ETF or MSTR. I wonder how many new Bitcoin holders have been minted this time around.

The FTX and Celsius rugs of the last bear market should have convinced a lot of people to hold their own keys. I wonder how many.

It is possible that a tool of Bitcoin adoption stronger than the carrot of NGU and stronger than the stick of getting rugged is simply convenience.

Right now Bitcoin does not easily solve problems in most (western) people's lives. The most obvious problem it solves is being a better means of savings and that message doesn't seem to have gotten through. But as far as other problems, I don't think it is obvious to Normie's what it does to make life better and so it isn't something they are interested in.

Which brings me to soft-fork proposals: is it the case that some combination of changes to Bitcoin will tip it into the obviously useful category for the masses? In the same way that there was a point where smart phones suddenly became essential to daily life. There may be an argument for changing Bitcoin a little if it gets us closer to undeniably useful (and doesn't degrade censorship resistance). Thoughts?

261 sats \ 0 replies \ @028559d218 OP 14 Nov

If it meaningfully helps I'm all for changes... But like my write-up suggests, I'm not sure that 'changes' (soft-forks) will actually help adoption.

With new soft-forks and new 'tools' who will actually use them? My guess is that it's the same people who use Bitcoin now... who would use Bitcoin with or without a soft-fork.

I went to a cafe a few months ago that according to BTCMap took Bitcoin... and they didn't. They said it had been over a year since anyone wanted to pay in Bitcoin, and so their employees didn't know how to accept it. How would a soft-fork change this? What, a better implementation of Phoenix Wallet (with soft-forks) would somehow change this? I am very skeptical.

As far as Westerners are concerned... Bitcoin is an imperfect, but obvious improvement on current government money. It's not perfect... but it is a huge improvement and that's why I'm here. I don't know what else to say other than that.

18 sats \ 1 reply \ @OT 14 Nov

I agree that education needs to be prioritized. But I still think its OK for devs to work on scaling solutions. My personal view is if we can get a more stable LN network then we won't need much else. Still LN needs to improve, and for that to happen we might need something like a covenant.

0 sats \ 0 replies \ @028559d218 OP 14 Nov

I agree.

36 sats \ 1 reply \ @SimpleStacker 14 Nov

Academic support for ossification in Bitcoin: #764363

(shameless self plug)

21 sats \ 0 replies \ @028559d218 OP 14 Nov

I read this post before +1 Thank you!

111 sats \ 0 replies \ @Lux 14 Nov

0 sats \ 1 reply \ @jk_14 15 Nov

but too often folks don't see the forest-for-the trees

Fully agree, so why have you dedicated so much effort to these two points:

"Oh but the fees are too high." "It's too complicated."

Average Joe is simply lazy AF.

0 sats \ 0 replies \ @028559d218 OP 15 Nov

because when people complain enough... they 'get what they want' Or what they think they want at least.

We should be aware of unintended consequences and move cautiously that was another point I was making