Bitcoin Cash – Why Bigger Blocks are Problematic

Bitcoin Cash split from Bitcoin a while ago in an attempt to solve the scaling debate in their own way. In their case, the idea was to leave Bitcoin as it originally was, aside from one big difference: larger blocks. They ended up also altering how difficulty retargeting works as well, but the main focus has always been on allowing more data into each block. While this may seem like a great idea on the outside, it brings about its own problems.

Storage Woes

One issue is how much storage the blockchain takes up. With an 8MB block size, that increases the storage requirements by up to that much every 10 minutes in perpetuity. Instead of 100 GB for Bitcoin, for example, Bitcoin Cash could have already been up to 800 GB. It’s argued that hard drives are cheaper now than ever before, and while that is true, the simple fact is that it still requires full nodes to have large drives for the data, and not everyone wants to go through that just to keep a copy of the blockchain available for the network.

It’s also worth noting that there are a lot of nodes that are run on VPSs, and this raises their storage costs, therefore increasing the overall monthly costs of running them. While not an issue to everyone, there are many that are cautious about their spending, and this can push them out from taking part.

Bandwidth and Syncing

Syncing a full blockchain can take some time. For Bitcoin, it can take a day or longer, depending on the system it’s being done on. If the blockchain were 8x as large, that would then take 8 days or longer, which is a massive amount of time. It’s not unheard of for a blockchain to be corrupted locally and force a re-download of the entire thing, and that can already be painful.

On top of the syncing, there are also bandwidth concerns. Many ISPs have limits on how much a user can download or upload in a month before being throttled, cut off entirely, or charged extra. Downloading 100 GB and 800 GB are in two vastly different ballparks when it comes to bandwidth usage, and there are also speed concerns, where many have already complained about simply not having a fast enough connection to get caught up.

Moving Towards Centralization

We haven’t seen the full effects of bigger blocks yet because Bitcoin Cash is still going through adoption and is a small niche at the moment (much like its big brother was), but as it becomes costlier to run full nodes, more people will stop doing so. As this happens, it ends up getting to the point where there are mostly people using lite clients, allowing the centralized parties to handle the rest. While anyone can still take part, the simple fact is that there is a huge difference between a day and $5 per month to run one and a week and $20+ per month, and that will be seen over time in the number of nodes. It’s also true that Bitcoin will be going through the same situation, but at a much slower rate.

The Takeaway

Bitcoin Cash looks to be here to stay. It’s being adopted by more and more people, and the number of services that accept it is still growing. Its bigger blocks can definitely become a hindrance in the future, and it will be interesting to see just what the development team has in store for alleviating those problems. As for now, note that due to not having full blocks as it is, the overall effect is yet to be seen.

Written by Eric Grisholm for CrushTheStreet.com 2018-01-26