So what can be done, aren’t blocks already full?

Yes, with a series of $0.05 transactions. Miners are paid 50x more for mining an empty block, than one with only transactions — and this is a problem. Miners are unconcerned about processing transactions, only cranking out more blocks. This leads to a host of issues, including miners denying Segwit transactions and miners possibly colluding to spam the network.

Credit cards charge $0.50 to process $10 transactions, why can’t Bitcoin? Unless we raise our standards soon, our blockchain will become unusable in the generations to come… with a 20 year outlook from today Bitcoin blockchain would be 2.5 Terabytes to initial sync, destroying all but supercomputers for hosting explorers (txindex).

The softfork solution that I recommend is two-fold. I want to 1) Drastically reduce subsidy, and 2) Marginally reduce block size (and weight).

The issue with only reducing block size is congestion. $0.05 transactions is just too cheap. Then once you get the network clogged, fees escalate to ridiculous levels, like $50 per transfer. Also, power users, like Binance, still use “1” addresses, because moving to Segwit just isn’t worth it to them. Coinbase for several months refused to batch, costing them pennies but destroying Bitcoin.

So I recommend we start by increasing the value of Bitcoin, and to do that we must to decrease the rate of subsidy. I propose a subsidy decrease from 12.5 BTC to 0.25 BTC per block, with a target of changing the maximum BTC count from 21 Million to 17.76 Million (personal reasons). This can be done as a softfork, following the continued regular schedule for subsidy halving.

The advantage here is multifaceted, however all dust transactions would stop, Binance would instantly move to Segwit, and anyone not batching would become severely punished through a huge loss of near impossible to replace Bitcoins — value would skyrocket.

However, there is the other advantage of disenfranchising miners who refuse Segwit. Today, they lose 2% or less of their income by making political statements, or ‘terrorism’, whichever you prefer to describe it. Once transaction fees are inline with block subsidies, refusing Segwit creates a loss of 50% or more of their total revenue — processing transactions becomes the priority, not empty blocks.

But won’t this increase Rewind Attacks, making our blockchain insecure?

Bitcoin Cash already has a solution for that, which is to implement a check point system at the wallet level. Using a wallet level check point creates no change to the protocol, BUT prevents miner initiated reorgs beyond 10 blocks deep (in their system, which I agree with). Altering BTC history beyond 10 blocks is frankly a bug in the orphan system, IMO — which rarely extends beyond 1 or 2 blocks today.

So while miners may become increasingly centralized (they already are), they CANNOT refuse transactions without serious losses of income, and HUGE benefits to competitors. Nor could they alter historical transactions, to make BTC insecure. Lastly, as values of BTC rose, so would the total overall payout to miners.

If BTC increased its market dominance from 55% to 99%, miners would likely be making more then than they do today through transaction fees, increased rates of adoption, and simply holding on to 1 or 2 Bitcoins as price sustainably skyrockets.

Now you have a Bitcoin blockchain with relatively low throughput (most would hold, as opposed to spend), everyone motivated to minimize transaction costs, miners prevented from causing the most severe forms of disruption, and total and utter market dominance — pathing the way for Lightning and other Tier 2 systems.

All the while being able to send anyone anywhere any amount of Bitcoins for $0.50 to $5 depending upon valuation (a million dollar valuation creates a minimum transaction cost of approximately $5 via Bitcoin).

With this reduced throughput block size would naturally decrease — and if it ever did increase, miners would be getting paid SUBSTANTIALLY more per block processed.

I agree with Luke, we need to reduce the size of our blocks. The softfork proposal I am suggesting to discuss is a way to do this using economic incentives to better everyone (even the miners). While some think miners lose here, so long as their assets are 1% actual Bitcoins, then they hugely profit, along with everyone else who holds Bitcoins — every other blockchain and financial system would go to shit, however, virtually overnight.

In the interim, while this is being considered, I agree with Luke’s plan for a sliding scale soft fork to keep node size from growing by over 200% in the next 3 years.

I suggest the following metric:

4 mb -> 1 mb ~ Now until May, 2019

1 mb -> 2 mb ~ May, 2019 to May, 2021 (period of high adoption) ~ 1 yr prior to halving & 1 yr after

2 mb -> 1 mb ~ May, 2021 to May, 2023 (period of low adoption) ~ 2 years in-between havlings

And to continue along in a similar rotating cycle.

Each of these changes can be implement as softforks (per Luke) or at wallet level. Thoughts?

Google Hangout discussion tonight at 8pm to 9:30pm EST (Thursday), to discuss and share. To get an invite, email:

jfkbitcoin1776@gmail.com

The group will be limited to eight, but your voice is the one we want hear!