Zhao Dong: 4.2G Blocksize Is The Reason Why We Cannot Rely On OnChain Scaling
In contrast to Visa’s peak of 47,000 transactions per second, Tencent’s average 600 million daily transactions (according to data as of December 2016) and Ant Financial’s 80 million per day (according to data as of January 2017), the maximum number of transactions the bitcoin network can process is quite “small” with theoretical maximum capacity sitting between 3.3 to 7 transactions per second. It is a consequence of the fact that blocks in the blockchain are limited to one megabyte in size.
When it comes to the bitcoin scalability problem, it always brings about heated discussions. Among these, Zhao Dong, a well-known bitcoin whale in China, posted a weibo at Christmas.
Why we cannot rely on OnChain scaling? OnChain transaction is unfit for micropayment. Assuming you have to realize micropayment on the blockchain, take Alipay and WeChat for example, if you want the daily transactions up to 600 million, it is necessary to deal with 6,944 transactions (600 billion / 86400 sec) per second, which is obviously impossible based on the existing blockchain. In this case, each transaction takes up 1K bytes in a block, thus each blocksize required is 4.2GB (every 10 minutes), and the daily data size is 600GB, leading to the annual data size being 220TB and a strict demand for bandwidth, such a system can only be realized in a really big data center, whereas it would be quite inefficient and unnecessary to put it on the blockchain.
Then here comes the question that whether Bitcoin can be used for micropayment. The answer is definitely yes! Since it is impossible to conduct the majority of transactions OnChain, then forget it! In the future there will be numerous companies engaging in bitcoin payment like CoinBase and Bitpay adopting OffChain payment. That is, the payment company where your digital coins deposit would pay and bill when you spend it. If something goes wrong in this payment company, the entire bitcoin system will be safe and sound with little influence!
Reposted for 201 times and received 181 comments, it soon sparked varied opinions, among which the top ones are as follows,
“Then, what’s the point of decentralized transaction? ”
-Zhao Dong: “‘Decentralization’ is not an absolute concept. ‘Decentralization’ does not mean that there will be no bitcoin payment companies in the future. There should be no such an absolute ‘big center’ in the bitcoin world, what matters is nothing goes wrong within the bitcoin network, and any institutions’ malfunction will lead to no failure of the entire bitcoin network.”
-Zhao Dong: “Exchanges are featured by centralization, but have you ever stopped trading in such centralized exchanges for Mtgox’s malfunction?”
“Blockchain is not a solution to productivity problem (which shall be solved by the Internet), but a solution to production relations (blockchain technology is derived from the Internet in certain stage to some extent)”
“My argument here is not saying that “no scaling” of the main chain, but we “cannot rely on” the scaling of the main chain, that is, I do not oppose moderate scaling of the main chain, but it is unlimited blocksize that I’m against, as this would be very bad for decentralization and censorship.”
“This cannot be the reason for Bitcoin Core to block in 1M, OnChain scaling can meet the urgent need, if it fails, the second layer network would naturally come if necessary, rather than bullying as Bitcoin Core Developers, whose act is losing its follower, and that’s why I choose the more open BCH.”
-Comment: SegWit is here to stay, larger than 2M. Wish you happier holding BCH.
-Comment: Better to use Alipay than BCH. The value of bitcoin lies in security and decentralization, but BCH’s going opposite. Alipay is enough for micropayments of buying daily necessities.
“In the long run, OnChain scaling is unreliable; while for the time being, whether it can meet the urgent need is open to discuss, of course, there are other choices.”
-Comment: SegWit has increased the blocksize to 2 megabytes, that’s exactly the right way to boost transaction with SegWit.
Jiang ZhuoEr, CEO of BTC.top, also joined this topic.
“Firstly, it is logically wrong to talk about the transaction volume which can be reached a dozen years from now in the context of current hardware equipment. For the time being, obviously the hardware and developing speed are faster than the speed of transaction increase. Secondly, no one opposes micropayments off-chain or introducing a second layer, and no one says all transactions shall go on main chain, BCH also has LN. The scaling proponents are against Core’s locking-in the main chain, leaving no choices for the market but pushing transactions to process on their own sidechain.”
“Agree with the idea of issuing BCE bills by third party, and reserves, credit derivatives, then broad money with total amount of M2 growing 10 folds. Then BCE’s doomed. Reply to// Personally support BTC off-chain payment, an easier way is to have reserve notes. Off-chain payment companies issue reserve notes and commit to exchange for BTC with the exchange rate of 1:1, in this way, we have reserve notes circulated for transactions without stampeding on-chain.”
On-chain or Off-chain? That is the question…