Miscellaneous Bitcoin Disputes FAQ

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Are current "SPV" nodes not actually the kind of SPV nodes that Satoshi talked about in the whitepaper?

It's often claimed that when Satoshi said that he was OK with regular users using SPV wallets, he was actually referring to a type of SPV that doesn't exist today, which included "fraud proofs", or an ability for full nodes to prove to an SPV client that a transaction was fraudulent. Those making this claim cite the SPV section of the whitepaper as evidence.

Toward the end of the two paragraphs in the SPV section, Satoshi writes:

While network nodes can verify transactions for themselves, the simplified method can be fooled by an attacker's fabricated transactions for as long as the attacker can continue to overpower the network. One strategy to protect against this would be to accept alerts from network nodes when they detect an invalid block, prompting the user's software to download the full block and alerted transactions to confirm the inconsistency.

Those saying that current SPV nodes are not the kind Satoshi described in the whitepaper are making two claims:

  • When Satoshi says "One strategy to protect against this..." he is describing a necessary feature of an SPV implementation, without which it can't be considered SPV. He is not just offering an optional idea.
  • When Satoshi talks about alerts, he is specifically talking about cryptographic proofs of fraud, not any other kind of alert.

Both of these claims seem implausible. The second claim is not only implausible because Satoshi never mentions cryptographic proofs, but also because it is unknown whether such a proof of technically possible.

Doesn't the fact that people are willing to pay high fees mean keeping block sizes small is a good approach?

Often people who express concern that high fees are driving away Bitcoin users are met with the reply "saying that Bitcoin isn’t useful anymore because fees are too high is like saying that nobody goes to that restaurant anymore because it’s too crowded."

This sounds kind of clever, but the underlying reasoning is flawed. Given any constant level of demand for Bitcoin transactions, a low block size will lead to relatively high fees, and a higher block size will lead to lower fees.

When Taylor Swift performs at a small venue, ticket prices will be higher than when she performs at a stadium. This doesn't mean that Taylor is delivering more overall value or earning more money when she performs at small venues.

Similarly, high Bitcoin fees are not evidence that the current block size is producing more value to users than a larger one would.

To make the error even more clear: if we reduced block size to 10kb, fees would be even higher (at least temporarily, until users migrated elsewhere). Does this mean that a version Bitcoin with 10kb blocks would be even more valuable than one with 1 MB blocks?