You raise a very valid point. If you break down a public blockchain by resources used you find those transacting on the network are getting a phenominal deal on storage and compute resources. In the case of bitcoin your data is being backed up and verified on thousands of machines forever for just a few cents. The economics of this are not sustainable which can be verified by a simple comparison to any other storage cost such as s3 or even just the raw spinning disk cost.
We at present are seeing the Bitcoin network saturate and the average cost per transaction has climbed as it should continue to if it is moving towards optimal economics. Ethereum's scaling problem is even more conplex than Bitcoin's considering the state information held in the chain and scripting capabilities.
There are a few approaches being built to handle these issues. One is payment channels like lightning where the public chain is only used for settlement. Another is private blockchains like consortiums which would allow limited access and abuse of the ledger. Yet another factor is sidechains that could create a way to keep information off of the main public chain.
If you break down the necessary costs (storage, bandwidth, CPU cycles for verification), it's actually very low, at about $0.001 (a tenth of a cent) a transaction:
The only reason Bitcoin transactions cost so much is artificial scarcity of block space, which increases the proof of work generated per transaction. The absence of a static limit in Ethereum is one of its major advantages over Bitcoin.
That kind of napkin math is both dangerous and misleading. The block size limit is a security parameter, and the math above assumed that nobody was trying to attack the network. In attack situations, a larger block size is more expensive and more dangerous.
Also, the resource requirements for running a node are a lot higher than most people are willing to tolerate even at 1mb blocks. Huge portions of the incentives, security, and decentralization of the network depend on people running full validating nodes. A big misconception in cryptocurrency is that miners can set the rules of the network. That's only true if you aren't running a full node.
The dynamic block size in ethereum is an easy attack vector that can be exploited by a large miner. The miner simply increases the blocksize as much as possible, and fills blocks with autogenerated transactions to make verification more expensive for small nodes. Once you get it high enough, your competition will start dropping off the network. If home users stop running full nodes too, now it's a lot easier to change the rules of the network - instead of convincing everyone, you only need to convince everyone willing to pay for a full node. And if that's tens of thousands per month, it's not going to be many people.
>That kind of napkin math is both dangerous and misleading. The block size limit is a security parameter, and the math above assumed that nobody was trying to attack the network. In attack situations, a larger block size is more expensive and more dangerous.
The costs under an attack scenario were not what the parent comment was making a claim about. The defence costs per transaction actually decrease with each marginal increase in the number of transactions, because the number of parties worldwide with the resources capable of attacking a blockchain diminishes as the cost of a successful attack increases.
>Also, the resource requirements for running a node are a lot higher than most people are willing to tolerate even at 1mb blocks.
Again, not relevant to the issue at hand, which is the cost of the computing resources used per transaction in a distributed network.
>The dynamic block size in ethereum is an easy attack vector that can be exploited by a large miner.
We at present are seeing the Bitcoin network saturate and the average cost per transaction has climbed as it should continue to if it is moving towards optimal economics. Ethereum's scaling problem is even more conplex than Bitcoin's considering the state information held in the chain and scripting capabilities.
There are a few approaches being built to handle these issues. One is payment channels like lightning where the public chain is only used for settlement. Another is private blockchains like consortiums which would allow limited access and abuse of the ledger. Yet another factor is sidechains that could create a way to keep information off of the main public chain.