Block size limit controversy

Introduction

Blocks are limited to 1MB in size. Miners can mine blocks upto the 1MB fixed limit. Any block larger than 1MB is invalid.

The blocksize limit has the dual purpose of discouraging economically frivolous transactions from flooding the blockchain and encouraging transactions fees to incentivize miners.

The fixed blocksize limit cannot be modified without a hard fork.

Hard forks require adoption by virtually all of the bitcoin participants.

Arguments in favor of increasing the blocksize

• More transactions per second

Unclear Arguments

• Increased blocksize will leave space for extensibility like Mastercoin, Counterparty, etc.
  • Neutral: Bitcoin competitors will have lower fees
  • Negative: Bitcoin full nodes are forced to use more resources that don't support Bitcoin
• Faster confirmation times with lower fees required
  • Positive: Bitcoin users pay lower fees
  • Negative: It will continue to be cheap to spam as companies like Satoshi Dice are already doing
  • Negative: Fees cannot be zero eventually in order to secure the mining ecosystem

Arguments in opposition to increasing the blocksize

• A hard fork requires waiting for sufficient consensus.
• However an emergency hard fork can achieve consensus for deployment on a short time period if needed.
• Risk of catastrophic consensus failure
• Orphan rate amplification, more reorgs and double-spends due to slower propagation speeds.
• European/American pools at more of a disadvantage compared to the Chinese pools^[why?]
• No amount of max block size would support all the world's future transactions on the main blockchain (various types of off-chain transactions are the only long-term solution)
• Fast block propagation is either not clearly viable, or (eg, IBLT) creates centralised controls.

Damage to decentalization

• Bitcoin is only useful if it is decentralized because centralization requires trust. Bitcoins value proposition is trustlessness.
• The larger the hash-rate a single miner controls, the more centralized Bitcoin becomes and the more trust using Bitcoin requires.
• Running your own full node while mining rather than giving another entity the right to your hash-power decreases the hash-rate of large miners. Those who control hash-power are able to control their own hash power if and only if they run a full node.
• Less individuals who control hash-power will run full nodes if running one becomes more expensive.
• Larger blocks leads to more expensive full nodes.
• Therefore, larger blocks lead to less hashers running full nodes, which leads to centralized entities having more power, which makes Bitcoin require more trust, which weakens Bitcoins value proposition.

Entities positions

Positions below are based on a suggested fixed block size increase to 20MiB. Positions against these larger blocks do not necessarily imply that they are against an increase in general, and may instead support a smaller and/or gradual increase.

Entity	Supports Larger Blocks	Supports Hard Fork
Bitcoinpaygate	No: "We do NOT support the blocksize increase"
Bitrated	No "At this time, I oppose increasing the block size limit as per Gavin's proposal" - Nadav Ivgi (founder)
F2Pool	No: "We do support bigger blocks and sooner rather than later. But we cannot handle 20 MB blocks right now. ... I think we can accept 5MB block at most."
GreenAddress	No: "In our mind increasing the block size like this is just pushing the problem a little further at potentially unfixable costs."
MPEx	No
Paymium	No: "[allow] a sane transaction fee market to emerge, by letting the blocks actually fill-up." - CTO David Francois
Ethereum	Neutral: "If [the niche of digital gold] is what Bitcoin users want, then they should keep the limit, and perhaps even decrease it. But if Bitcoin users want to be a payment system, then up it must go." - Vitalik Buterin (founder)
Armory	Yes "This *is* urgent and needs to be handled right now, and I believe Gavin has the best approach to this." - CEO Alan Reiner
BitcoinReminder	Yes: "BitcoinReminder.com also supports 20MB blocks (or even more?"
BitHours	Yes: "We support @gavinandresen and his proposal for 20mb blocks"
BitPay	Yes "Agreed (but optimistic this will be the last and only time block size needs to increase)" - CEO Stephen Pair
Bittiraha.fi	Yes: "We are supporting increasing #Bitcoin max block size to 20MB." "I'm strongly in favor of the block size cap increase to 20MB." - CEO Henry Brade	Yes "And I'm in favor of releasing a version with this change even with opposition." - CEO Henry Brade
Blockchain.info	Yes "It is time to increase the block size. Agree with @gavinandresen" - CEO Peter Smith "Scaling #bitcoin is a big deal. Increase the block size." - Nic Cary
Breadwallet	Yes "[...] in support of the Gavin's 20Mb block proposal." - CEO Aaron Voisine
BTC Guild	Yes "Needs to happen, but needs future expansion built in at a reasonable rate." - Eleuthria
BX.in.th	Yes: "http://BX.in.th will support the 20MB block size"
CoinBase	Yes: "Coinbase supports increasing the maximum block size" "Why we should increase the block size" - CEO Brian Armstrong
Dr. Adam Back	Yes: "For the record I am not aware of a single person who has said they do not agree with scaling Bitcoin. Changing a constant is not the hard-part. The hard part is validating a plan and the other factors that go into it. It's not a free choice it is a security/scalability tradeoff. No one will thank us if we "scale" bitcoin but break it in hard to recover ways at the same time."	No "I strongly urge that we return to the existing collaborative constructive review process that has been used for the last 4 years which is a consensus by design to prevent one rogue person from inserting a backdoor, or lobbying for a favoured change on behalf of a special interest group, or working for bad actor" - Dr. Adam Back
Kryptoradio	Yes "#Kryptoradio dev @zouppen supports 20MB block size in #bitcoin." - Joel Lehtonen
OKCoin	Yes: "OKCoin's tech team believes it's the right decision"
Third Key Solutions	Yes "Gavin is right. The time to increase the block size limit is before transaction processing shows congestion problems." - CTO Andreas Antonopoulos
Xapo	Yes: "One meg is not enough: Xapo supports increasing the maximum block size" - CEO Wences Casares