As happens many evenings, I was on Reddit late the other night keeping tabs on the cryptoverse’s comings and goings. I stumbled on this post in /r/Bitcoin on the difficulties of scaling to Visa levels of transactions:
Blocksize would need to become 555 MB in size for bitcoin to scale to VISA levels. +80 GB blocksize, EVERY DAY. This is why we have segwit and 2nd layer, and why BCH is doomed to fail. from Bitcoin
While I understand that this is a post in a highly censored forum attempting to smear one of the two results of Bitcoin’s chain split back in August, it did bring up the elephant in the scaling room: hardware. Everyone loved the romantic idea of everyone running a node and mining some Bitcoin in the early days, but now that the network has grown larger and more industrial, we have to face some hard decisions and realizations.
Immutable and decentralized: worth it?
First, what does a distributed ledger do for transactions that current systems do not? It’s both decentralized and provides a permanent, immutable record of transactions. The immutable ledger means a whole lot of storage, and decentralized means there is no professional service tasked with maintaining this network. The combination of both factors makes this difficult. If we don’t care about decentralization, we can have a highly centralized service or few store the increasingly titanic blockchain of a Visa-level popular digital currency. If we don’t care about immutability, we can carry on as per usual, but regularly delete older transaction history. If we care about both, however, we have some challenges ahead, so we have to decide if it’s worth it. I personally think it is, because the magic combination of both factors is the entire reason I believe cryptocurrency is valuable to begin with.
Massive on-chain scaling has to address this sooner
Coins such as Dash and Bitcoin Cash which are dedicated to scale to mass levels purely on-chain have to face this challenge sooner than others. Sure, technology and hardware keep improving, and a terabyte of data may soon become quite insignificant. However, all this still adds up eventually, especially when you have thousands of transactions per second, and the load on a single node can become too much for an average user to run. It’s not a critical blow, but down the line there will be fewer entities willing and able to run nodes, many of whom may be large companies, nonprofits, or other organizations that may have outside interests at heart. This challenge will face coins like Bitcoin Cash far sooner because of a dedication to mass on-chain scaling. How such problems will be faced is up for much speculation, but all that is in vain until the problem must be faced head-on.
Off-chain scaling coins still have to face it
Proponents of off-chain payment channels and other similar scaling solutions often act as though such an approach will make a coin immune to these issues. Plain and simple, that isn’t true, as even off-chain solutions require on-chain activity. As outlined by the creator of one of the first Bitcoin payment channels, simply opening up a payment channel presently requires several on-chain transactions to complete. Even ignoring for a moment debates over the limited use cases or other challenges of lightning networks and their kind, to scale a network to mass-market size will require massive on-chain scaling to back the even more massive off-chain network of solutions. Eventually, bigger blocks will be needed, and dealing with them will still be an issue to be solved.
Dash has a plan for mass growth, its effectiveness remains to be tested
As one of the few coins with a committed plan to both on-chain scaling and mass-market, everyday use as a digital cash, Dash plans to increase the block size to scale, moving to 400mb blocks and beyond. Unlike other projects, however, Dash has two elements to scale long-term: custom hardware and incentivized nodes. Dash Labs is busy working away at developing custom open-source hardware for masternodes to be able to handle the rigors of a payment network used by the general public. Meanwhile, masternodes are already incentivized, paid directly from the network in order to run. Down the road, this will provide with adequate incentivization for nodes to run without any outside influence or funding.
Will incentivized nodes and custom hardware as per Dash’s plan work for mass-market scaling? That remains to be seen. If so, other coins like Bitcoin and Bitcoin Cash may be able to replicate its successes to achieve similar results.
I think it’s a multi race
First and for most we need to grow big and fast:
Otherwise maybe Governments will put a stop to it with all the things bitcoin core/blockstream did we certainly did, gave them allot more room to prepare. Good think the DASH-core team is growing at an exponentiation speed, maybe dash can catch up for the lost time and energy the bitcoin blockstream.
Than it becomes a question between
User growth, vs technical advancement both in software and in Hardware. Right now Hardware is really not moving forward all that fast, but still has major lead on crypto requirements even with if bitcoin was allowed to scale(well for most coins at least, maybe not for some cryptonote coins, and smart contract coins). But sooner or later Hardware will catch up, to the needs, we can all run a 5000tx/s on a avg pc without any sweat.
One thing I am certain of do, if user adoption is going to explode in the upcoming 2 years, DASH is going blow everyone out the water because dash will be the one with the scaling advantage, In fact I am betting on it that it will happen.
Another 2 coins that would blow everyone’s heads would be NEM and PIVX. NEM is tested to be capable of 3000Tx/s (https://medium.com/nem-distributed-ledger-technology-blockchain/the-nem-blockchain-project-version-2-0-catapult-483e1eca5af8)
PIVX is pretty much PoS Dash.
NEM, works differently, but first need to overcome a very fundamental problem, namely the distribution of the coin. The coin distribution has been manually distributed to a lucky few, and its therefor been very centralized. It in fact it’s truly amazing how a coin with such a large coin supply, and such a low trading volume on exchanges is able to reach such a high marketcap, the ratio is the highest by far of all the coins I checked.
This alone makes me think twice about NEM. The things I have read about there way the reach that 3000tx/s number and how there tech works, I still have my doubts about, but I still need to do more research on that.
As for PIVX, they use a seasaw mechanism (very clever name, it delivered them lots of marketcap, still props for there (very) nasty marketing campaign). But now if you would take a closer look at this you will quickly realize that POS nodes and masternodes, get very similar rewards. This was presented as a great thing, but when you start to think ahead and realize that Masternodes in time will have to work much much much harder than POS node, you start to see that, they will have a major problem on there hands. Because why would masternodes, be masternodes if the reward for being a simple POS wallet, gives the same reward with no effort towards the network ?
I certainly know what I would do, aka not invest 10.000’s of dollars in a MN hardware but run a raspberry pie instead with a POS wallet.
NEM is the #2 crypto in Japan. It’s got great tech behind it. Most importantly the whole project is a USP incarnate. NEM will get more and more decentralized as time goes. It’s been around a while and lots of trading should have happened in that time. Most importantly NEM rewards using the currency with its POI system. The only way to get NEM is to buy on exchange or simply use it for transactions.
PIVX is my #3 because of PoS. They claim to increase masternode reward when the masternode count go down. But my main reason to invest in it is the low market cap. PIVX is objectively better than BTC and BCH.
Where do you base it on that NEM has great tech ?
No you can check the amount of trading done of this coins on various place, including the site coinmarketcap. Personally I think a non-distributed coin is just as worst as fiat currency’s controlled by central banks, and Governments. As a principle I will never use it, but hey if I can make a profit on the exchange sure why not.
I have my own opinion of PIVX, it was very nasty of them to promote there coin against the back of DASH there primary focus was the comparison, in which they beat DASH very time and very time they had a very cool name for ther feature. But perhaps most of all the use instamine meme, which is simply false advertisement, there coin had a 181 mining period with masternodes avaliable for the start, with a provable poor distribution of the coin, aka a much much much worst distribution to DASH even do they claim otherwise.
Further more there claim that they where more private, all the while that there Zero-coin privacy feature is about a year away according to there devs, so if fact they are not yet more private.
Also they had some major bugs in there software, the most important one the Goverance was not working at all, while claiming that there Goverance model was superior to DASH. There wallet has become a bit more quick do, but still allot slower than DASH.
No the less, I will admit, that my own smarts have hurt me, I should have know people would fail for the PIVX marketing, and I should have picked it up just before it pumped, but live and learn. I no longer try to think multiple steps ahead, I also ask myself how many steps can other see(and I am starting to reap the benefits of it 🙂 )
I’ll deal with PIVX first. It’s a Dash ripoff with some modifications. Dash is the Holy Grail. It’s the greatest thing to happen to currency. A ripoff of that can only get so bad. PIVX understand business. They mean business. They piggy back on Dash. Therefor it’s easily one of the best coins in the market. BTC is utter garbage compared to PIVX.
Although centralization is present. NEM isn’t something that can be controlled. When I say great tech, I mean the whitepaper. They’ve got a great product and most people don’t realize that NEM can be used for smart contracts. Coinmarket cap is about tracking the trading. It doesn’t say anything about fundamentals and Tech. Try the whitepaper. I’m still reading it and more I read, more impressed I am.
What’s number #1, is it FACTOM ?
As a major Dash fan, this is the article I’ve been waiting for, because I’ve become disillusioned by this notion of requiring custom hardware and collapsing mining into the MN’s.
Abstractly, the ideal situation for a coin is for its network to be run by excess computing power from its users. Getting people to engage in particular behaviours (purchasing, running and maintaining a piece of custom hardware) is hard. Crypto should “harvest” behaviors its users *already* engage in — running a PC, but with this approach, Dash must essentially “hire employees” (MN operators willing to become “data center operators”). Are we _really_ to believe that thousands of individual entities around the world are going to bring a noisy black box that requires a lot of electricity and maintenance into their home and this is going to capture every financial transaction of the world? Oh, and keep them, ALL of them — every little 15-cent coffee transaction that happened in outer Mongolia from decades ago, occupying space on these thousands of hard drives for all eternity?
It just seems so implausible. Even if the team *could* get a (decentralized) network capable of supporting 400MB blocks up and running with custom hardware, it seems like an unsustainable model, because such machines require maintenance and expansion, and I just don’t see anyone except Dash insiders engaging in such activity.
Now, my understanding from reading the Lightning network white paper is that major merchants will establish a payment-channel to the actual Bitcoin network but only “settle” the final amount in one transaction at the end of the day, after hundreds of its customers had settled THEIR payment-channel (with zero or low fees) to its OWN bitcoin subnetwork. The addresses in the transactions between customers merchant are not ever recorded on the Bitcoin blockchain, just the merchants summary transaction. So customers have a lot more privacy (excluding the merchant).
The savings garnered by Lightning’s hierarchical design totally outweighs the deficiencies of the emergent hub-and-spoke network. No one will care. It will be “good enough” and be a major headwind for Dash’s adoption appeal.
Any reason why BCH price is still higher than Dash ?