Bitcoin, Blockchain Forks & Lightning – Computerphile


So over the past year the Bitcoin network has reached his maximum
Capacity all the blocks are becoming full and as a result there’s been a lot of debate about how we can scale
Bitcoin in the future
So i’m gonna talk a little bit about some of those proposals, and what they could mean and what’s the trade-offs?
Some of the technical solutions being proposed to improve the scalability of Bitcoin are so that it can handle more and more users
because if Bitcoin was to become mainstream then it needs a lot more scalability that it has right now and
The problem is that when Bitcoin was first created the founder of Bitcoin who originally published the code
About a year after he published a code. He inserted a block size limit well
What’s called a block size limit in the code which means that each block has a maximum block size of one megabyte
So to give a quick recap of how the Bitcoin network works
The Bitcoin network is a decentralized system
where anyone can run their own node and these nodes will have a copy of what’s called the blockchain and
The blockchain is essentially a series of blocks
That contain all the transactions in the system this creator of Bitcoin realized that there’s a potential problem here of
What’s called a denial of service attack
someone could potentially spam the network with transactions and make blocks that are very big and
so he
Created a limit that each block should be no bigger than one megabyte and this limit is hard-coded in all of the
Software that you use to run a Bitcoin client or node on your own computer so that means
your software will automatically reject any block that is bigger than one megabyte and
Now we’ve reached a point. Where blocks are becoming full
They’ve reached a maximum capacity of one megabyte and so no new transactions can be put in in the blocks so
That gives us a capacity of around three to seven transactions per second which isn’t very much
Because there is now more demand for more transactions per second in the network as a network has grown
Is it a simple case of if we were able to make these blocks bigger you could fit more transactions in?
Sure, yes, you can do that if you make the blocks bigger
It’s a naive and very simple way of increasing scalability, but the main
Argument against it from its critics has been that
if you increase the block size
Then the block chain itself would get bigger and that means
Every single person who runs a Bitcoin node on their computers,
What’s called a full node,
Has to have all the data of the above the whole blockchain in order to verify the whole blockchain correctly
If we increase the block size
you would need more and more storage to store a copy of the blockchain and this is a problem because
The all point of Bitcoin is that as a decentralized system
Anyone should be able to run their own node when this limit was first added in 2009 2010
The Bitcoin wasn’t as popular so it was much easier to modify the code and insert
new changes and
uncontroversial, or you know
Protocol rules like that. Now, It’s a much bigger space so now each change needs a lot more
Consensus if you’d like because if you were to if you wanted to increase the block size this would create what’s called a hard fork
You would essentially create a blockchain that’s incompatible with all the existing nodes that run on the Bitcoin network
Because the existing nodes, they will reject any block that is bigger than one megabyte and everyone will have to upgrade all the
Software so this is the kind of change that requires every single person to agree to it or the majority of the ecosystem
To agree to it. People who want, who are thinking about how to scale
Bitcoin kind of really fit into two camps
Camps of the people who are advocates of what’s called on chained scaling and people who are advocates of what’s called off chain scaling
The idea of on chained scaling is that we want to increase the capacity of the Bitcoin network
by increasing the number of transactions that we actually put in the blockchain itself and
you and you would do that by increasing the block size and
Yes, that would make it more expensive to run a Bitcoin full node
but argument is that the majority of Bitcoin user they’ll run Bitcoin anyway if you have a Bitcoin wallet on your
On your phone, or if you use a web wallet
It’s not a proper Bitcoin node if your wallet
Trusts a different node or some centralized service to some extent
to get information about the Bitcoin network and get information out of blockchain so
one of the original things that the original creator of Bitcoin said is
that he expects that as the blockchain grows in size and
Ultimately people will no longer be able to run nodes and nodes will become super nodes
you will have to have access to data center to run nodes, and that was kind of part of the plan
But one of the things that the creator of Bitcoin anticipated was that Moore’s Law
would catch up with the blockchain size
So that’s regardless. It wasn’t mega expensive for someone to store a copy of blockchain. But unfortunately Moore’s law
hasn’t, has been somewhat dead for the past few years. Hard drive storage
Has largely remained at roughly the same cost for the past few years
It’s kind of stopped, and that’s kind of created a problem
So that’s what on chained scaling is about.The idea of off chain scaling is that let’s move the transactions out of the blockchain
Do we really do we really need to put every small
Transaction like if you go to a coffee shop and buy coffee
Do we really need to put it on the blockchain and do we really want
Every single person who runs a Bitcoin node to have a copy of that little transaction
so the idea of off chain scaling is let’s only put big or
important transactions on the blockchain and let’s put all of those micro transactions off the blockchain and
One of Percival’s for doing that is a system called the Lightning Network and the Lightning network is basically
using something called payment channels between different individuals
to facilitate off chain payments for example Alice might send Bob ten dollars
And then Bob sends at least five dollars in the next day
So what they do is instead of having every single payment on the blockchain?
They just keep a balance sheet between them and they put all the payments on their balance sheet and then for example after a month
They say let’s see what is the final balance and let’s set all that balance on the blockchain
So you only need to put that final payment on blockchain rather than every single payment in between
and
You can extend this at least as a payment channel with Bob and Bob has a payment channel with Charlie and let’s suppose Alice wants
To pay Charlie Alice kind of route that payment through Bob, which would then send a payment charlie
And this is the idea of lightning network, you use a route or a network of payment channels
And you would find the route
between person-to-person that you can make that payment of the blockchain and
In theory it sounds like a really great idea, but there are some
controversies around it so
some people don’t think that it would be very feasible if
This would be able to be used by millions of users, for every single person to find a route between
any other person in a decentralized way because one of the
Things with that network is that
In order to establish a payment channel you have to deposit a
certain amount of money, which is at least a minimum amount of money of how much you expect to
go through that payment channel and
That some people just don’t have the upfront capital so people expect
What’s called large payment hubs to facilitate that so you would have a large payment hub
That has a large amount of deposit inside of it, and yo you would route your payments to that so in some way
There’s a bit of centralization involved with that if you have on chain scaling we have super nodes
But if you have off chain scaling we might have large centralized payment hubs
So it is still bit of centralization involved in both
Bitcoin cash when Bitcoin cash forks off from Bitcoin the value of Bitcoin cash on the first day was something like 500 dollars
So people were 500 dollars per coin for free out of thin air when this fork happened
So it’s possible that some people but the value of Bitcoin has risen

100 thoughts on “Bitcoin, Blockchain Forks & Lightning – Computerphile

  1. Both on-chain and off-chain scaling cause centralization. Both in a different manner (miner centralization or payment channel centralization). Therefore we should have both a bit, so that neither type of centralization gets the overhand. Segwit2x should have been accepted, but now the payment channel centralization gets the overhand. I'm afraid that if this continues, somebody with lets say 1 BTC in his/her wallet can not move that 1 BTC anymore in the future, because it costs maybe 0.8 BTC in fees to get that transaction being picked up by miners. This would be really bad for many people! A few days ago I did a withdrawal from an exchange, and saw that the exchange payed more that 0.15BTC in fee! That transaction consisted of many transactions, combining >100BTC in value, so that's kind of ok, but nobody can compete with that if you want to transfer your bitcoin p2p to for example a friend. Bigger blocks must therefore happen in the future in my opinion. Its too bad it didn't happen today. Hummm… what if Bitcoin Cash is going to integrate Segwit? ;-p

  2. the size of the blockchain will increase anyways, a transaction will take the space of a transaction, regardless if it happens now or 3 blocks onwards. Blockchain space is NOT an argument against increasing the block size.

  3. Offchain scaling defeats the purpose of the blockchain. The blockchain gives trustless safety.
    If you remove transactions from the blockchain, you might as well toss it away too, since you can't trust or verify a 'balance sheet' transaction

    Edit: Well, if there is some way to verify the balances, then I guess it's ok

  4. These scaling problems is one of the reasons why I find IOTA really interesting. No transaction fees is also a nice feature.

  5. the fundamental problem of scaling through blocksize increase is that this will lead to a lack of a "fee market" which will result in a very insecure chain in the long run due to the fact that the block reward will go to 0 over time

  6. The more I learn about BItcoin, the less I trust it. I t really irritates me that I have to pay for some services in this currency whose exchange rate is more volatile than Zimbabwe dollars at the moment. All I wanna do is pay a damned bill not spin a roulette wheel.

  7. What about hierarchical blockchains?

    When a specific blockchain gets full, it splits into two chains, with a shared parent chain to combine/reconcile the sub-chains. This will increase latency when users in separate chains need to process transactions, but will reduce latency between transactions within a given chain. End-users would migrate between chains as needed based on their evolving behavior, the goal being to minimize the number of cross-chain transactions.

    Another approach is for each user to have multiple accounts, where they may allocate their total balance between accounts in any way desired. Each account would be on separate blockchains (perhaps one per retailer, such as Amazon), and the total balance would be managed by a bank blockchain (perhaps your Credit Union or PayPal). This would separate "net" transactions (purchases) from "zero-sum" transactions (inter-account transfers). In essence, it would permit multiple independent blockchains to be federated from the perspective of individual users, much like independent GNU Social (Mastodon) instances are federated to form the global social network.

    Having multiple smaller blockchains would mean that "local" transactions would be blindingly fast, while chain-crossing transactions would take longer. This would push much of the overall management (And control) off the network of blockchains and onto each individual user.

    Miners could work as many or as few blockchains as desired, primarily limited by miner capacity and blockchain transaction rates. Hierarchical blockchains would also incentivize users to mine the chains they use, increasing the number of miners.

  8. make the fork, but do it in such a way that allows for future forks/forking to not cause such a problem with between forks

  9. What do we expect the ledger size to be in 2 years ? 100Gb ? 1Tb ? About the argument: raising the storage size would make it more difficult for EVERYBODY to be a node is kind of bad. Storage quite inexpensive and the base storage requiered already implies that your device has a high storage capacity, so doubling it doen't seem to be an issue.. unless double it doesn't solve the issue and i needs to triple… decuple to be useable..

  10. Most on-chain scaling people support off-chain scaling as well, they just accept a decent solution while a perfect one is not yet available. Limiting transactions in the current state hurts Bitcoin irreversably. Luckily many cryptocurrencies are available that all attempt different scaling methods.

  11. In my opinion they should accept Bitcoin as the gold equivalent that it is and not adapt it for microtransactions. If you want to buy a coffee, use Litecoin, IOTA or other more suitable cryptos.

  12. Either you want to scale or you don't. Block(the)Stream's Core group is not scaling in any measurable way, and fees are off the charts. The currency is unusable – in a panic, people won't be able to move their Bitcoin. Get out now, the writing is on the wall.

  13. @2:15 "The main argument against [bigger block size] …is storage" WRONG. Bandwidth dummy. Storage is not the issue.

  14. Side chains sound like you're pushing trust off the chain, doesn't seem like it makes sense to me. Why not just create a new blockchain and move value off that main chain to the side chain. That side chain has an address where the value transfers to.

  15. With the latter solution, the "off-chain" solution. Don't you have a problem tracking everybody's balances if some ledges won't even know about certain balances?
    How do you verify that somebody has the funds?

  16. Why not just have it make snapshots of the current balance and make it so that the full blockchain lives on the super nodes for verification, but the snapshot chains are used for day to day use?

  17. holoCurrency (Ħ) feat. AI-specific scaling/scoring of bloch-chain-sphere diagramming and cross block-chain interaction/tesserAction is the entangled future.

    A future with quantum computer/server, Internet/Neuronet, hosted holomedia such as geo-located holograms or interactive holo interfaces or holographic game content, holographic environment, or environmental holographic mApping.

    ::

    Ħ displaces $, or reassigns scanned $ or hardCurrency into replaced Ħ values.

  18. Lightning is cool, but another scaling technology we can use is the RSK sidechain (which should launch in 2-3 weeks). We can also achieve scale (and better privacy) for bitcoin by using a mimblewimble blockchain.

  19. Extra layer payment channels is definitely the solution for scaling. The 1st layer acts as the "clearing house" and is still the ultimate source of trust. Anyone arguing for bigger blocks is impatient and unnecessarily worried.

  20. Now they just to make it so full nodes can actually earn something, i have a microserver sitting at my feet doing nothing, it can't mine but it can run a full node, there just isn't any incentive for me to do this

  21. How does segwit fit in to this? My understanding is that it is an on-chain solution that allows for increase in transaction capacity without having to increase block size.

  22. So basically it's kind of like NAT (Network Address Translation) for blockchains instead of network addresses. hmmm… nice!!!

  23. The blocksize limit or 1MB has already been removed months ago. We now have a block weight limit of 4 million units or 4MB maximum with segwit activation.

  24. Bitcoin Doesn't Exist.
    Not real money.

    If the premise of Bitcoin is to have enough people believe that it's real money then anything can become money

  25. Just like roads, increasing size will only make people fill it faster. I've seen statistics that show credit card transactions are upwards of 100 billion a year (more than likely more), which puts it at about 3200 transactions per second…..current bitcoin maximum is about 10 transactions per second. This means we would have to scale to 320MB per block just to meet the present demand of credit cards. The blockchain would go from 20GB to 6.2TB in a week for miners to be forced to keep on system for the merkle root pruning…..and it would increase to nearly 12TB easily. This is a highly inefficient method and bitcoin will eventually implode on itself.

  26. Very disappointed with Computerphile for posting this without a counterbalancing view point!! This is not helpful. Please look at Craig Wright's explanations. The bigger blocks sizes were always envisioned. Lightning is controlled by banksters. Love to see this man debate Ryan X. Charles or Craig Wright. BCH works. Fast, cheap, secure. No segwit… EVER.
    Just look at nChain developments. On-chain scaling is the future. Despite the critics, they will build a global network of peer to peer value exchange.

  27. Off-chain scaling is about creating external markets that can be monetized and regulated and controlled outside of the pure bitcoin blockchain itself. It defeats the purpose of the original ideas and goals of a decentralized currency – becasue while off-chain scaling might incorrectly seem decentralizsed to you, it is centralizing the control of the transactions into that off-chain third party that is ultimately NOT bitcoin.This is not good for bitcoin as a result

  28. So basically they want blockchains to have the same functionality as git, with branches, merging squashed commits, and push/pull with remotes

  29. Any solution that causes the system to take one or more steps towards centralization will be, by definition, undermining the very philosophy and point of the system: to a decentralized system.

    Decentralization implies the users remain under control. The more centralized the system, the less control the individual user has. Consider how much control you really have over your YouTube, Google, Facebook, and/or any other "social media" account you have..

  30. Sorry computerphile, but now you are back to featuring people whose accents are too thick for such public speaking. Only got 77 seconds into this before giving up trying to listen to some random unknown (not a star) trying to summarize something he didn't invent. You could have chosen lots of experts to explain this, no need to use someone who doesn't speak clearly.

  31. The problem is already solved Bitcoin Cash can scale. Off chain happens anyway as private agreements and private services it has nothing to do with bitcoin development.

  32. Sooo… basically this ‘marvelous amazing decentralised’ system is slowly moving to the exact same topology as normal banks? slow clap

  33. Thanks for the video.
    I would like to see a video about Sidechains implementations. This is another way to scale bitcoin outside blockchain.

  34. I agree with most of what was said but the blocks aren't really full unless the network is being spammed for political purposes. The great news is that spamming Bitcoin costs money unlike email spam so at least the attackers are paying something. We know these transactions are spam because the mempool sometimes empties to a couple thousand transactions and other times it spikes to 100k transactions. Where is this spike coming from? It's not like a large number of people suddenly started using Bitcoin at the same time.

  35. This could hurt bitcoin if people want more widespread adoption. It might incentivize people that are using bitcoin for illegal purposes; where you would send just a large quantity of off blockchain transactions, so as to not have a trail. The argument could be made that It can be extremely difficult for you to trace bitcoin with the blockchain so it shouldn't matter. But this could lead bitcoin to not being a more largely adopted.

  36. The conclusion of the main argument of this video seems to be that decentralized crypto-currency is unfeasible.The end.

    Can anyone tell me I'm wrong and why?

  37. Bitcoins were invented to provide an alternative to Banks, but now Banks (Payment hubs and Supernodes) have crept in Bitcoin itself.

  38. This might seem like a really naive solution, but what would happen if say you developed a solution whereby you get the nodes to create and agree on a data dump, essentially one big file that says that this person has x amount, this person has y. You could have it linked to the previous blocks in the same way, but then the average person doesn't need to store the entire blockchain and essentially start from scratch. If this type of thing is agreed in the same way as normal transactions, then there should be implicit trust that it is correct, right?

  39. 2:45 The problem is not only with storage, the main problem is transmitting the block though the entire network. If we increase keep increasing the limit, we would need more and more bandwidth. So it will end up centralized. Instead of increasing the Blocksize, Bitcoin Core wants to implement Segwit which can increase the capacity to almost (2MB), implement Schnorr signatures and LN. Eventually we will need to increase the limit, but now right now.

  40. How safe are my bitcoins in Blockchain.info if I have all the security features turned on and I won't lose my passwords? Can the Blockchain.info servers be hacked?

  41. This dude just explained the problem of blockchain scalability simply.

    Something that I watched several "experts" bumble about without really saying much.

    This makes me wonder about some guys in the Blockchain/crypto space. If they can't explain a concept plainly to a non technical person, they probably don't understand it well enough to be explaining.

    All in all, great job Sir… Hats off to you.

  42. I think the "bigger block size -> bigger chain -> less full node" argument is not very sound: another possibility is: "bigger the chain -> more people using Bitcoin -> more full nodes".

  43. I think the problem of chain size bloat is due to no block is ever finalized (e.g., theoretically fork can happen on any block), a blockchain that has finalization property can simply keep only the merkle tree root of the finalized block, discarding the block content.

  44. I think LTN is not very good because it requires the client to be online all the time, or the client has to tell some third-party service to be online for him – way too complex. And many other problem…

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