Toms Blog

Where I talk about Bitcoin and Technology

Dear Bitcoin Cash: Good news, Fees Will not Rise

2017-08-08 bitcoin bitcoin cash

In a recent unparalleled action, Blockstream employee and thus Bitcoin core dev Rusty Russel admitted that in their strategy Bitcoin fees, unlike Bitcoin Cash fees, will continue to rise.

Bitcoin Cash, or to be more honest, Bitcoin-as-originally-designed is a decentralised system. To really know if a transaction is valid you need to know every transaction that fed into it is valid. You can always retrace a chain of transactions to the point where the coins were originally mined.
To know if the system is working you need to know nobody is faking money out of thin air, and that nobody is simply stealing money from others. To get this level of confidence, you need your own computer to check everything, and so it needs to see everything. This sounds scary, but it actually scales amazingly well.

We see that the software already today can scale to 100 million transactions per day, on a modern machine that any business can own. The capacity of Bitcoin Cash is mostly limited by blocksize, a shackle we shook off just this month and we can see many more ways to help scaling on its way. We will need more serious scaling to on-board more users, and we will see this being added over the next few years as the network of Bitcoin Cash-using people grows. The capacity will scale based on need. Much like it has in all major innovations in the past.

We currently have a blockchain of 0.1TB, which represents 8 years of history. It can be validated on a simple machine in about 2 hours. Hard drives come in 4TB or larger. So the 2.5% you need for the blockchain won’t even get noticed.

  • Bitcoin Cash fees will stay the same, or go down from now on. Count on it.
  • Zero-fee transactions will make a comeback.
  • Zero-confirmation transactions that we need to do standard merchant payments will again reach the levels of risk low enough to allow stores to accept in-person Bitcoin Cash payments.
  • We are free of the over complex SegWit that Rusty admits doesn’t actually help scaling. To not have it speeds up development and increases reliability of the network.
  • Block size of Bitcoin Cash is limited at 8MB. We will work to make it safe to scale up higher without affecting decentralisation.
  • Features like Schnorr are nice, but they don’t have any relation to scaling. We will see them on Bitcoin Cash soon enough.

Back then Satoshi stated that there is no limit to the growth. Transactions are tiny and a modern computer can process tens of thousands a second. We are seeing that the number of what we can process increases exponentially. Bitcoin Cash scales, it really does.