Bitcoin Q&A: Block capacity and embedded data

“What can you put on the Bitcoin blockchain?” “Andreas, how many transactions can fit
in a block, with and without SegWit?” “In addition, what kind of other data
can you include in a block? Thanks.” Great question. I can’t give you an exact number
because it depends on the nature of transactions. Transactions can vary greatly in their size. The most basic transaction, a single input / single
output pay-to-public-key-hash (P2PKH) transaction, if I remember correctly, is 266 bytes. The average transaction with one input and two outputs
is a bit bigger than that because it has change. If it uses a more complex construct, perhaps a
pay-to-script-hash (P2SH), it’s going to be a bit longer. If it uses and is paying out of a multi-signature, it’s going
to have some redeem scripts; that is a bit longer too. So the transaction size can vary. On average, a one megabyte block can fit about
1,800 transactions, maybe up to 2,000 transactions. Now that we have Segregated Witness (SegWit) on
the Bitcoin main chain, that can expand [the capacity] to about 4,500 transactions in a single block. You can look at the statistics; I haven’t looked at them
recently to see exactly how many transactions. But certainly we’ve seen an almost doubling of
the block capacity in order to fit more transactions. I think the factor was 1.7x the last time I looked. The second part of the question is also interesting. “What kind of other data can you include in a block?” Keep in mind that blockchains are the world’s
most expensive and inefficient form of data storage. They’re structured [like that] intentionally… because decentralisation requires us to make
some sacrifices in terms of efficiency. That means you can’t store a lot of data. When you
try to store a lot of data, it gets very expensive. However, one of the interesting things you can do
with a blockchain is, instead of storing the data itself, you can store a hash or fingerprint of the data, and then store the data in a secondary network
such as the InterPlanetary File System (IPFS). Or any other form of storage. You could even store your data on a Google Drive
if you wanted to use a centralised service. With that, what you can do is have the
data stored outside [the blockchain], but you can take a fingerprint or hash of your data
and embed that in the blockchain. What good does that do? It gives you the ability to prove that a certain
piece of data existed on or before a certain time. That’s called proof-of-existence. That’s been a useful service for legal purposes;
you can do notarisation for a variety of uses. There is a protocol that allows you to compress hashes (thousands, hundreds of thousands, millions of them) into a single transaction that timestamps every [hash]. That protocol is called OpenTimestamps. It allows you to timestamp all kinds of data
into the Bitcoin blockchain. Similar protocols exist for other blockchains,
which can be used to timestamp data too. “What exactly is meant with ‘metadata’?
Are metadata visible and useful?” Yes. Metadata is data that refers to something
external to the system in which it is stored. In Bitcoin, only data that is about bitcoin is data. Any data that is not about bitcoin, but about something
else that’s stored “inside” Bitcoin, is metadata. That’s one of the ways to look at it. Of course, the term is probably a bit
more flexible and vague than that. “How could I upload a hash of a document
in an OP_RETURN field myself?” “Is there a special command on
Bitcoin Core which allows me to do so?” I don’t believe there is. There are
a number of other applications. There’s a couple of good ones. One is called ‘Proof of Existence’ and I believe
it is at, which allows you… to upload the hash of a document and
put it in an OP_RETURN for a small fee. Another one is a more developed protocol called
OpenTimestamps, which is a project by Peter Todd. It’s really interesting because it scales
the ability to do proof-of-existence… for billions of documents by aggregating
all of this information in Merkle trees, putting only the root of the tree in the OP_RETURN [field],
while storing most of the metadata off-chain on OpenTimestamps servers. It’s a good compromise solution.
OpenTimestamps is what you’re looking for there. “In the same manner, could I upload any text I want… on the Bitcoin blockchain,
as long as it’s less than 80 bytes?” Yes, you can. “Could Ethereum be used more efficiently for storing
hashes of documents instead of Bitcoin? Why?” Yes, Ethereum could be used more efficiently for storing
hashes of documents instead of the Bitcoin blockchain. The primary reason is that Ethereum
will allow you to store a lot more data. As a result, it has bigger scaling issues
than the Bitcoin blockchain. On Bitcoin, you can store 80 bytes in each OP_RETURN
and it will cost you a fee to include that in a transaction. With Ethereum and smart contract,
you can store quite a lot of data. You still have to pay a transaction fee, but there’s no
80 byte limit. It’s a matter of metering that with gas. There is a particular type of contract
called a “deed” or non-fungible token, which is basically storing hashes of things. These can be deeds like real-estate titles,
CryptoKitties hashes, and various other things that are non-fungible unique items. Storing those hashes inside a tokenised contract allows
you to transfer these tokens from person to person, or from owner to owner. That’s called ERC-721.
It’s rather interesting. “Can a block with hashed data stored in
OP_RETURN, such as an academic certificate, also have regular mine-able transactions and
therefore be treated just like any other block?” Yes. The transaction that has the OP_RETURN in it
can also have other things like regular payments. Only one of the outputs needs to be an OP_RETURN. The other outputs in that transaction could
be payments, so you can embed it in a transaction that does other things as well as the OP_RETURN. That can be among many other transactions,
and the block is just like any other block.

19 thoughts on “Bitcoin Q&A: Block capacity and embedded data

  1. I have question about segwit. So is block size now 2-4mb? Or is that Max? All miners do not fill the blocks up all the way? Does that slow down confirmation times?

  2. John McAfee's said the chart for Bitcoin will surely reach 1million USD before 2030. If said thing is to happen, like his past predictions happened, IT will be very very unwise for you not to know how to Increase your Btc instead of Just Hodling. I lost 8Btc to Bitconnect in January and i was left with 2Btc , I started looking for ways to increase my Bitcoin and make more money. One day on Altcoin Buzz channel, someone Recommended anybody that cares to listeeen to reach out to a man named Alfred Churchill , who has made a great impact in teaching young crypto investors a reliable method to Increase their Bitcoins, Its just 5 weeks since I reached out to Him, I can Proudly boast of increasing my Portfolio from 2Btc to 18Btc . Y'all can reach out to him through His Whatsapp +1(951)380-3828*, *HANGOUT and Mail *([email protected] com)

  3. Proof of existence, also known as "proof by newspaper" used by kidnappers to prove that someone is still alive up to a given time. Satoshi itself used proof by newspaper for the genesis block. Not completely trustless as the Bitcoin blockchain but still very effective

  4. I do not agree that block systems are the most expensive and inefficient form of data storage in the world.

  5. Interesting about hashing a document and storing the "fingerprint" on blockchain while storing the document elsewhere. I want to know how that helps with tamper-proof though. If the document itself is changed or stolen from its (for example) cloud database, it sounds like there is no proof as to what was on the original document. The only thing known would be that it is not the same thing as originally put on the blockchain. I don't really understand how that is of any benefit to anyone.

  6. Ok, so I've been computing since the early 90s. 1400 baud, BBS's, disconnected and changing ISP's every 2 months. So I know a little bit about computers and the Internet. But I even though I took a couple of programming courses some time ago, I found that I have very little talent in that area.
    So all this being said: An idea just popped into my head that is probably very easily shot down by any beginner programmer but I don't know for sure so here it is.
    Is it possible to make some small change to the Bitcoin Blockchain that does not sacrifice security, just enough so that it is on it's own blockchain and then create as many "Bitcoin Blocckchains" as necessary in order to solve the transactions per second problem
    Bitcoin1, Bitcoin2, Bitcoin3, etc….

  7. I'm still censored from viewing ur content on Twitter from what I can tell blicked for pointing out a fake account pretending to be you

  8. Bitcoin Core Bug CVE-2018

    Dubbele spending bug(miners) , upgrade to 16.3V

    Hi Aantonop ,

    Is this Heck in the Bitcoin protocol its self , or in a Wallet?
    And is this a vunerable spot for Bitcoin?

    Greetings Harm ,
    PS: is there a channel for asking these questions?

  9. Bitcore block size is significantly larger. The blockchain can handle over 300TX/sec and over 500TX/sec with Segwit

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