Re: [bitcoin-dev] The need for larger blocks

[Owen Gunden <ogunden@phauna.org>]

On 06/26/2015 02:23 PM, Jeff Garzik wrote:
> Failure to plan now for a hard fork increase 6(?) months in the future
> produces that lumpy, unpredictable market behavior.
>
> The market has baked in the years-long behavior of low fees.  From the
> market PoV, inaction does lead to precisely that, a sudden change over
> the span of a few months.

Which market participants are you referring to?

I entered the bitcoin market with open eyes, aware that it faces hard 
scalability challenges by design. I was also aware that because of these 
challenges, eventually transaction fees would have to rise.

Nevertheless, I made the decision to invest because of the utility I 
gain from the anti-censorship, privacy, control, store of value, and 
security aspects of bitcoin -- many of which stem from 
decentralization, which others have demonstrated to be linked to the 
block size.

On the other hand, there are undoubtedly other market participants who 
heard hype about "zero fee transactions to anywhere in the world", 
believed it would scale, and made (mal)investments as a result.

As for how many market participants of each flavor, and how deep their 
respective pockets, who knows? My experience in markets has lead me to 
realize that it's never wise to assume I know what "the market" does and 
doesn't know. If Jeff Garzik is right about what the market has priced 
in, then yes, filled blocks will be rocking the boat. But who's to say 
that the smartest, biggest investors and traders don't already see this 
scaling problem, and have already priced it in? In this case, a sudden 
large increase in the block size is actually rocking the boat. The point 
is, you can't know either way, so trying to pre-empt the market in this 
way is erroneous.

Regarding entrepreneurial investment specifically, why should we favor 
the entrepreneurs who require a more centralized bitcoin over those who 
were more considerate of the possibility of rising transaction fees when 
making their business models?

In my mind, we should favor neither, which is why I'm basically in 
agreement with Pieter that this sense of "emergency" shouldn't really be 
a part of the debate.

Not that I'm taking a stand on the specific block size issue either way. 
I just think this particular line of reasoning (presupposing what 
information the market has and has not already baked in) is unsound.