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Пишет Journal de Chaource (![[info]](http://lj.rossia.org/img/syndicated.gif){kind=small} lj_chaource)@ 2017-11-12 23:13:00 |
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Troubles with Bitcoin II
Troubles with Bitcoin, part I
Because Bitcoin (BTC) requires a permanently running p2p network of powerful computers, each BTC transaction costs about $25-$100 in the consumed electricity. The volume of transactions does not seem to increase quickly, while costs will rise because the amount of computation is increasing with time.
I was recently at a Bitcoin software-related meetup where they mentioned that the BTC "ledger" (the file with all transactions) is currently at about 140GB of data and is linearly growing at about 50 GB per year. Each new "full BTC node" needs initially to load this data and to process it entirely, - verifying all past transactions, - before the new node can become fully operational. (The "full nodes" are the sources of trust that determine the distributed p2p consensus over all the transactions taking place in the BTC network.)
This tells us that the BTC network has a serious problem scaling up. If BTC becomes significantly more widely used than it is today, it will become prohibitively difficult for private persons to add full nodes to the p2p network because each node is required up front to process a very large and permanently growing volume of data.
This strengthens the incentive for miners to abandon BTC and instead to take up mining a younger "cryptocurrency" where the barrier of entry is low because the ledger is still quite small.
At the moment, we see a lot of companies promising that "something valuable" will come from the blockchain technology, without specifying what exactly that value will be. This is similar to the situation during the dot-com bubble, where companies rushed to create "something on the internet" without knowing the details of how they will derive value from an online business. Tech-savvy but economically clueless engineers conspire with pragmatic but mathematically clueless managers to extract funding out of venture capitalists who don't know what to do with their excess money.
One promise of value is to use blockchain for secure, p2p-validated storage of transaction information (or any other information). From a purely technical perspective, I do not see any advantages of using blockchain as a distributed database, as opposed to simply using an off-the-shelf, industrial-grade distributed database software.
Another promise of value is in "smart contracts": blockchain will not only store the information that "A paid $X to B" but will include the details of the contract ("A will pay $X to B unless C pays at least $Y a week before"). These contract details will be supposedly encoded in a specially designed, "secure" programming language and automatically verified by the p2p network. This is what is called a "smart contract".
I see this as a highly problematic direction of development. The main reason is that it is extremely difficult to invent a comprehensive formal language for automatically verified financial contracts. This language has to be both flexible and extensible - to be able to accommodate all kinds of new contracts that people will come up with in the future - and yet strictly limited in formal expressive power, to remain formally and effectively decidable in the mathematical sense, - or else contracts cannot be automatically and quickly verified. No one knows how to achieve that; attempts such as the "Ethereum" project largely failed.
While there is plenty of fundamental uncertainty about the blockchain technology, the different p2p networks are multiplying. The "Bitcoin Cash" has already split from the BTC network, even as BTC exchange rates skyrocketed. Other p2p blockchain networks such as "Ethereum" or "Safecoin" have appeared as well. The business model of these startups seems to be exactly as expected: they open up attractive early mining and automated trading, and compete on user convenience features or on the promise of "smart contracts" while holding true to the essential (and very problematic) features of the original Bitcoin.
Troubles with Bitcoin, part I
Because Bitcoin (BTC) requires a permanently running p2p network of powerful computers, each BTC transaction costs about $25-$100 in the consumed electricity. The volume of transactions does not seem to increase quickly, while costs will rise because the amount of computation is increasing with time.
I was recently at a Bitcoin software-related meetup where they mentioned that the BTC "ledger" (the file with all transactions) is currently at about 140GB of data and is linearly growing at about 50 GB per year. Each new "full BTC node" needs initially to load this data and to process it entirely, - verifying all past transactions, - before the new node can become fully operational. (The "full nodes" are the sources of trust that determine the distributed p2p consensus over all the transactions taking place in the BTC network.)
This tells us that the BTC network has a serious problem scaling up. If BTC becomes significantly more widely used than it is today, it will become prohibitively difficult for private persons to add full nodes to the p2p network because each node is required up front to process a very large and permanently growing volume of data.
This strengthens the incentive for miners to abandon BTC and instead to take up mining a younger "cryptocurrency" where the barrier of entry is low because the ledger is still quite small.
At the moment, we see a lot of companies promising that "something valuable" will come from the blockchain technology, without specifying what exactly that value will be. This is similar to the situation during the dot-com bubble, where companies rushed to create "something on the internet" without knowing the details of how they will derive value from an online business. Tech-savvy but economically clueless engineers conspire with pragmatic but mathematically clueless managers to extract funding out of venture capitalists who don't know what to do with their excess money.
One promise of value is to use blockchain for secure, p2p-validated storage of transaction information (or any other information). From a purely technical perspective, I do not see any advantages of using blockchain as a distributed database, as opposed to simply using an off-the-shelf, industrial-grade distributed database software.
Another promise of value is in "smart contracts": blockchain will not only store the information that "A paid $X to B" but will include the details of the contract ("A will pay $X to B unless C pays at least $Y a week before"). These contract details will be supposedly encoded in a specially designed, "secure" programming language and automatically verified by the p2p network. This is what is called a "smart contract".
I see this as a highly problematic direction of development. The main reason is that it is extremely difficult to invent a comprehensive formal language for automatically verified financial contracts. This language has to be both flexible and extensible - to be able to accommodate all kinds of new contracts that people will come up with in the future - and yet strictly limited in formal expressive power, to remain formally and effectively decidable in the mathematical sense, - or else contracts cannot be automatically and quickly verified. No one knows how to achieve that; attempts such as the "Ethereum" project largely failed.
While there is plenty of fundamental uncertainty about the blockchain technology, the different p2p networks are multiplying. The "Bitcoin Cash" has already split from the BTC network, even as BTC exchange rates skyrocketed. Other p2p blockchain networks such as "Ethereum" or "Safecoin" have appeared as well. The business model of these startups seems to be exactly as expected: they open up attractive early mining and automated trading, and compete on user convenience features or on the promise of "smart contracts" while holding true to the essential (and very problematic) features of the original Bitcoin.
