I'm still skeptical of blockchain as a whole and hoping someone can help explain this to me.
Blockchains (and cryptocurrencies that ride atop them) keep track of all the transactions going back to its inception. Those blocks get passed around the chain. Some nodes archive them, but don't old blocks still circulate? How far back do blocks get circulated before they're no longer circulating (2, 3, 4, 5, 10 tranactions back, I'm sure it depends on the currency)?
I've heard right now BTC is running at like 3 transactions a second. Astronomically far from the same number of transactions in fiat currency. What happens if crypto was to ever reach parity with fiat transactions? Every pack of gum, every donut, every Starbucks transaction gets circulated through all nodes the same way that every hedge fund movement, real estate closure, or business acquisiton does? It seems like all the history blocks would gum up the network traffic of circulating current/real-time transactions. The amount of overhead to process 3 transactions per second isn't enough to delay those 3 transactions, but as more traffic enters the chain it seems like the amount of supporting chatter will grow even faster.
How do cryptocurrencies offload the administrative/archival overhead from the transactions in order to process transactions so you're not standing around waiting for your BTC to process payment before your coffee gets cold?
In network terms, we don't all rely on root DNS servers. Those are there for other DNS servers to pull from a trusted source. Hitting up the root DNS servers is still bad etiquette, right?
The local mirroring DNS servers are faster and provide lookups for the here-and-now. If it doesn't know, the DNS server will query the roots to locate the authoritative record keeper for the domain in question (and cache it for future reference).
I see blockchain like that DNS but it requires all DNS servers to agree with the resolution before providing the results to the user. That seems like it will be incredibly slow and at some point all that administrative chatter will outstrip the capacity to process a transaction or "query".
With fiat currency, we have localized transactions. Sometimes a credit card processor may go down, sometimes your bank cannot be reached. In those cases you can resort to paying with cash or gasp a check. Those transactions get processed at the lowest local level and there's no need to concern some bank in Pakistan or the US Federal Reserve that you just paid $3.50 for an overpriced soda at Jersey Mikes (which they are!) from your checking account.
I'm very keenly interested in how these problems are to be solved when/if the dream of crypto being a truly global alternative to "cash"/fiat.
Gotcha. The only thing I saw there that got close to addressing my curiosity is this:
Lightning is a layer on top of bitcoin that can handle an arbitrarily high transaction throughput over time, while still basing itself on bitcoin’s underlying security. It works by opening multi-signature channels between nodes, so that a user can send coins from one node to another, using a series of interconnecting nodes along the way.
So how does doing this exchange bypass the blockchain "administrative" traffic? Do transactions in Lightning get priority while non-transactional details get lower priority?
She says BTC is the "final settlement layer", which I understand better since she words it like that. So that means that all transactions will be between apps and those apps abstract the actual transactions between accounts? So it's not that end users will be using the blockchain any more than bank customers use the SWIFT network, right? Such transactional exchanges will go through a clearinghouse to settle transactions?
You’re on the right track, although in contrast to traditional finance Bitcoin provides the option for anyone to participate directly (in addition to the option of outsourcing that to a custodial service).
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I'm still skeptical of blockchain as a whole and hoping someone can help explain this to me.
Blockchains (and cryptocurrencies that ride atop them) keep track of all the transactions going back to its inception. Those blocks get passed around the chain. Some nodes archive them, but don't old blocks still circulate? How far back do blocks get circulated before they're no longer circulating (2, 3, 4, 5, 10 tranactions back, I'm sure it depends on the currency)?
I've heard right now BTC is running at like 3 transactions a second. Astronomically far from the same number of transactions in fiat currency. What happens if crypto was to ever reach parity with fiat transactions? Every pack of gum, every donut, every Starbucks transaction gets circulated through all nodes the same way that every hedge fund movement, real estate closure, or business acquisiton does? It seems like all the history blocks would gum up the network traffic of circulating current/real-time transactions. The amount of overhead to process 3 transactions per second isn't enough to delay those 3 transactions, but as more traffic enters the chain it seems like the amount of supporting chatter will grow even faster.
How do cryptocurrencies offload the administrative/archival overhead from the transactions in order to process transactions so you're not standing around waiting for your BTC to process payment before your coffee gets cold?
In network terms, we don't all rely on root DNS servers. Those are there for other DNS servers to pull from a trusted source. Hitting up the root DNS servers is still bad etiquette, right? The local mirroring DNS servers are faster and provide lookups for the here-and-now. If it doesn't know, the DNS server will query the roots to locate the authoritative record keeper for the domain in question (and cache it for future reference).
I see blockchain like that DNS but it requires all DNS servers to agree with the resolution before providing the results to the user. That seems like it will be incredibly slow and at some point all that administrative chatter will outstrip the capacity to process a transaction or "query".
With fiat currency, we have localized transactions. Sometimes a credit card processor may go down, sometimes your bank cannot be reached. In those cases you can resort to paying with cash or gasp a check. Those transactions get processed at the lowest local level and there's no need to concern some bank in Pakistan or the US Federal Reserve that you just paid $3.50 for an overpriced soda at Jersey Mikes (which they are!) from your checking account.
I'm very keenly interested in how these problems are to be solved when/if the dream of crypto being a truly global alternative to "cash"/fiat.
Can someone fill me in?
Lyn Alden has a lot of great content, start here: https://www.lynalden.com/bitcoins-network-effect/
Gotcha. The only thing I saw there that got close to addressing my curiosity is this:
So how does doing this exchange bypass the blockchain "administrative" traffic? Do transactions in Lightning get priority while non-transactional details get lower priority? She says BTC is the "final settlement layer", which I understand better since she words it like that. So that means that all transactions will be between apps and those apps abstract the actual transactions between accounts? So it's not that end users will be using the blockchain any more than bank customers use the SWIFT network, right? Such transactional exchanges will go through a clearinghouse to settle transactions?
You’re on the right track, although in contrast to traditional finance Bitcoin provides the option for anyone to participate directly (in addition to the option of outsourcing that to a custodial service).
The Lightning Network has progressed a lot in 5 years, but this article is still an excellent intro to the basics: https://www.coincenter.org/education/key-concepts/lightning-...