Scaling is more than big blocks

This post originally appeared on ZeMing M. Gao’s website, and we republished with permission from the author. Read the full piece here.

My previous article BSV is the original Bitcoin and the only genuine Bitcoin caused a bit more scaling debate. Some BTC supporters say that BTC can always scale when needed, implying that BTC can always scale by relaxing the block size limitation in the future. After all, isn’t it just a matter of lifting an artificial restriction?

But the very idea of “big blocks” contradicts BTC’s foundational narrative. Besides, scaling is more than just big blocks.

You’d be correct if you recognized that the original 1M block size limitation was not part of the base protocol. It was a provisional parameter set under the circumstances. Satoshi said the base protocol was locked from v0.1, but at the same time (in fact, in the first reply in the cryptography list) said Bitcoin would scale with large commercial nodes (implying an unlimited number of transactions in a block).

Further, if you believe that BSV’s level of transaction space supply (i.e., the maximum available TPS) is too high for the current usage, implying that BSV is pushing high TPS unnecessarily while BTC is taking a wiser, conservative approach, you’d be making a reasonable argument but still ignoring the history and the business reality.

The business reality dictates that scalability cannot be merely theoretical but must be actually demonstrated to persuade commercial and enterprise-level adoption, regardless of the current usage level. Even the demonstration of 100K TPS isn’t persuasive enough. 1M TPS might do, but we will see.

Some say, “BTC can always scale in the future because the block size is not perpetually fixed.” This at least shows a good attitude because it acknowledges the absurdity of BTC’s insistence on limited block size.

But that does not make the statement true or even fair. Those who say that simply borrow light from BSV and shine it on BTC’s darkness.

BTC did not choose a 1 MB block size out of prudence for a measured approach. That was Satoshi’s rationale in the beginning, but BTC subsequently developed an entirely different philosophy and rationale, which is to ensure that every home node can always host an incidence of the entire chain.

For that, the 1 MB block size was a result of calculated calibration, not only for the present time but for the future as well. The calculation took into consideration the fact that the total size of the blockchain continuously increases with time and thus would eventually exclude home nodes and other small nodes unless the single block size is restricted to be under a safe threshold, which turned out to be 1 MB. It could be slightly higher or even a few times higher, but there is a very hard cap over it as mandated by the BTC’s mandate that every home PC can be a full node if it chooses to (“everyone a node” in abbreviation).

‘Big blocks’ contradicts the ideology of ‘everyone a node’

The “everyone a node” ideology is the foundation of BTC’s law-resisting narrative. The BTC Core and promoters took this seriously. Even if BTC increases the block size in the future, the size must be limited because it is ideologically bound by the limitation of the home PC storage size and home node Internet bandwidth.

Some argue that because the home PC storage and bandwidth continue to grow, BTC can also be unlimited. But this argument ignores a very basic reality: if Bitcoin blockchain is widely adopted, its transaction capability will need to increase many times faster than the underlying IT technology for at least a few decades. This is because the blockchain has a pre-existing deficit of at least a million times in terms of transaction capacity as compared to the existing Internet capacity. That is a lot to catch up.

Home nodes can never catch up to make up that deficit. The discrepancy is too large. A 10x deficit would be already too large, let alone a deficit of 1 million times.

Besides, the economics of requiring a high level of redundancy of storage and transaction work performed by home nodes is inherently inefficient and unscalable. Wishful thinking is not going to make these fundamental problems disappear.

But what if BTC goes bigger blocks regardless?

However, as reality pressures in, is it possible that BTC will reluctantly decide to remove the block size limitation in the future despite its core narrative?

One can’t say “no” for sure because, when it comes to future and human behavior, absurdity alone does not always prevent something from happening.

But it would be unnatural for BTC to do that. It would be equivalent to BTC acknowledging that its narrative’s ideological foundations were all wrong from the beginning.

If BTC eventually chooses to go with big blocks, it would mean the following:

(1) admitting that Lightning Network and L2 do not work;

(2) admitting that they fooled the enthusiastic and loyal home nodes (telling them, “Sorry, but we really didn’t think you were that meaningful at all; we just pretended you were so that you could join the social bandwagon”).

(3) admitting that Bitcoin cannot derive its “digital gold” status by virtue of “hodling” rather than being actually useful.

The above would be telling the truth (see for example, Lightning Network on BTC is a Dead-End, and The Idea of ‘Digital Gold’ – The Fundamental Elements).

However, for BTC, admitting the above truth not only looks bad but would also destroy its law-resisting “digital gold” narrative. It would tell the world that the law-resisting digital gold was only a pretense from the start and that BTC, like BSV, has found it must earn its value through usefulness.

I wonder how the market will react to that admission. It is no small matter because, for BTC, coin price is everything, while the price is circularly supported by its clever narratives, not by the actual utility. This is in stark contrast with BSV, in which utility is everything.

Can BTC continue to sustain the circular logic of price when the narrative has collapsed? I don’t know. This points to the realm of social engineering and psychology, which BTC has demonstrated the ability to do.

Personally, I couldn’t choose something that I knew was wrong in the beginning. But people are different and may have different understandings and different choices.

Scaling is more than big blocks

But here is an even more important point that few understand:

Unlimited block size is only a necessary condition for scalability but not a sufficient one.

Scaling is hard because it requires every element or component of the entire system to be scalable. There are many such elements or components. Block size is just one of them. Others include node network propagation and synchronization, network architecture and communications bandwidth, and a variety of services to the user end, such as SPV (Simplified Payment Verification).

SPV, for example, is proven to be critical for any scaling beyond 100K TPS, and absolutely necessary when it reaches 1M TPS and beyond. BTC has done nothing on SPV, despite the fact that the Bitcoin whitepaper clearly described the importance and necessity of SPV. Not only that, BTC deliberately rejects the idea of SPV. On the surface, it does that because it believes SPV is unnecessary, but in reality, it does because it knows that SPV would kill BTC’s two-layer architecture from which the BTC Core (including Blockstream) derives its business model. The model has proven to be extremely lucrative on two simultaneous fronts: (1) pumping the BTC price using the digital gold narrative and (2) providing L2 services that profit because of, not in spite of, the disablement of the base blockchain.

Only BSV understands the importance of SPV and has further made an extensive effort to design and implement it.

Not just SPV. BSV has had a team of several hundred researchers and engineers, over $500 million invested over the last eight years, tens of millions of dollars spent on testing alone, and accumulated several thousands of patents, all focused on scalability. Implementation of SPV and the architecture of Teranode are among the fruits of this effort.

In contrast, all of BTC’s efforts on scalability have been on Lightning Network and Layer-2. It has made zero effort and investment in the Layer-1 scaling so far. In fact, all the BTC Core effort has been on denigrating Layer-1 scaling (because L1 scaling negates the base narrative-see above) while promoting an intentionally unscalable Layer-1 with the question of scalability shifted to Layer-2 solutions. I wonder how BTC is going to steer that train to turn 180°.

Besides, even if BTC overcomes all that and decides to do what BSV has been doing, will BSV license its patents to a repentant BTC?

Having been focused on anti-scaling for a decade or longer has consequences.

Conclusion

BTC will need to persist in its current philosophy and business model centered on the law-resisting digital gold narrative. There is always a market for that. The model may coexist with BSV’s utility model, even peacefully. However, for the real-world utility that requires unbounded scalability, high efficiency, and low transaction cost, BSV is the only viable candidate at the present time.

Watch: Teranode is the future of the Bitcoin network