Scale, limitation, consequences, what? What am I mumbling about? We can all agree that everything we do and every choice we make have consequences, cause and effect, right? Today I want to share a perspective on the consequences of the block size limitation. You probably heard about big blocker and small blockers, whatever you want to call them. To understand the debate, we will look at what both choices leads to and the consequences. First, a bit of Bitcoin fundamentals.
If you have been reading some of what I shared, you should know that Bitcoin was a global scale ledger. It is secure digital space that users demand and miners supply for a fee. The original design intended for all economic activities to be on chain. But, the thought of limiting the block size and keep the size of the chain small so that everyone could run a node and keep the requirements low was cool. But, what were the consequences?
Limitations lead to less options simple logic right? With a 1MB block, our options become limited too. So, what can we do with a chain that can’t scale and a limit block size? We can do side chains. Cool. We can maybe do some limited smart contracts. Cool. But, that’s it, we can’t do anything that is commercially viable because we’re stuck with about 7TPS on chain. Our options become few, and that was one of the reasons why developers went off on their own to create Ethereum. They went off to create other chains because of the simple fact that you can’t do much with a limited Bitcoin. We’ll use an analogy here to better represent the principle of being closed off limited versus open and unbound.
Take a look at Japan and China in the early 19th century. For those unfamiliar with Chinese history, the country is commonly known to be more closed off, not very open to outside worlds. By closing its doors, China was limited, it couldn’t trade with others much, it couldn’t learn new technologies. Japan on the other hand, it was open to trade and new ideas. Naturally, Japan became dominant in the east because it was open and unbound to grow and prosper. As the result, during world wars Japan dominated the entire Eastern Asia. Even today, Japan is recognized as world economic power. This same principle applies to Bitcoin system too. When it is limited, it limits our ideas for how we can build on it. But, when we remove the chains and open the doors, it’s a whole new world of possibilities out there.
By allowing the chain to scale, suddenly we have Bistagram simple photo upload and sharing platform that runs on chain. We can now look at storing files of all sizes, movies, videos, contracts, intellectual properties of all kinds because suddenly, Bitcoin was unbound to be able to host world data. We can use Bitcoin as the security layer for IOT devices because we can now handle unlimited transaction capacities. Imagine that alone billions of IOT devices could transaction securely on Bitcoin! We can now literally build the world economy on Bitcoin. This is just like the frog sitting at bottom of the well looking at the sky. But, once you get out of that well, you see a world of difference.
In conclusion, Bitcoin was designed for the world. It is global scale in that it can host world data much like the tech giants. The Google, Face Book, Microsoft, and their data centers that are capable of storing world data. Bitcoin is no deference, it is capable of hosting global scale data based on demand from users and supplied by miner. By allowing Bitcoin to scale up, we open up endless potentials. The only limitation then is our own imaginations.