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The Bitcoin Blocksize: A Summary

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Re: The Bitcoin Blocksize: A Summary

#51

Post by pstrateman »

paulmd wrote: post #46
wsxcde wrote: post #31

Earlier quoted context omitted.

> My best guess is that the optimal current block size is somewhat larger than 1 MB. I disagree. There's good reason to believe the ideal block size is now smaller than 1 MB because large pools have been caught red-handed not validating blocks. (Which is like their ONE job and the the thing they get paid the big bucks for!) Presumably, the only reason they're doing this is because orphan rates are too high, which in…

Classic tragedy of the commons: for everyone as a whole, it's better to process transactions as fast as possible. But with the way incentives are currently structured, it's better for any individual miner to produce an empty block that propagates faster. Or in other words, to process transactions as slowly as possible. There's two ways you can fix the incentives. One would be to kill the block reward. You don't proce…

> Classic tragedy of the commons

You're absolutely right on that, but you have the issue backwards.

Each individual miner has an incentive to build a block which pays the most in fees.

That means that as long as the transaction rate is less than the absolute limit, fees will tend towards zero. (Any fee is marginally better than nothing).

The size of the block and propagation time are no longer strongly correlated thanks to the hard work of Matt Corallo on the relay network ( http://bitcoinrelaynetwork.org/ ).

Re: The Bitcoin Blocksize: A Summary

#52

Post by pstrateman »

maxerickson wrote: post #8
kardos wrote: post #5

Earlier quoted context omitted.

If the pending transactions fit in a block, there's not much incentive to not include them -- it doesn't cost much, so miners can include them all in order to maximise fee revenue. But when there are more pending transactions than fit in a block, miners will sort by fee and include the biggest fees and reject the lowest fees. By growing blocksize, you avoid the situation where there are more pending transactions than…

Miners will likely omit transactions that offer a fee that is lower than their cost of mining (at least eventually). This sacrifices some small amount of revenue on the current block, but should lead to higher revenue over the long term (assuming their cost levels make bitcoin an attractive transaction system).

> Miners will likely omit transactions that offer a fee that is lower than their cost of mining (at least eventually).

The marginal cost of each transaction in the block is approximately zero.

The only effort is from propagation speed, however thanks to the relay network that effect is almost nothing.

http://bitcoinrelaynetwork.org/

Re: The Bitcoin Blocksize: A Summary

#53

Post by pstrateman »

DennisP wrote: post #48
kardos wrote: post #6

Earlier quoted context omitted.

For the same reasons that they made it 10 min rather than less to begin with [1] [1] http://bitcoin.stackexchange.com/questions/1863/why-was-the-...

Right, bigger blocks take longer to propagate so you get more forking with a block that's too big compared to the time interval. This might change if Gavin's IBLT proposal [0] gets implemented. Basic idea is that the miners have most of the transactions already (otherwise they couldn't mine), so you don't have to transmit them again in the block itself. You just need a small fixed-size data structure that lets miners…

> This might change if Gavin's IBLT proposal [0] gets implemented.

Such a thing already exists, blocksize has little to no effect on propagation time to other miners.

http://bitcoinrelaynetwork.org/

Edit: not that this is not IBLT but another actually implemented setup

Re: The Bitcoin Blocksize: A Summary

#54

Post by pstrateman »

DennisP wrote: post #45
maaku wrote: post #24

Earlier quoted context omitted.

> Bitcoin will die the moment someone figures out how to build a decentralized crypto-currency that doesn't need a stupid idea like "mining" to be functional and secure. Yup. But I wouldn't hold my breath. No one has ever created a decentralized consensus algorithm with the properties bitcoin has, before or since. And since bitcoin achieves its unique properties as a result of the economic costs of mining, asking for…

Well there are several altcoins using proof-of-stake. Whether they'll be as secure in the long term is an open question, but I wouldn't go so far as to call it a perpetual motion machine.

Proof of Stake does not work.

https://download.wpsoftware.net/bitcoin/pos.pdf

Re: The Bitcoin Blocksize: A Summary

#55

Post by pstrateman »

nly wrote: post #32
t0mbstone wrote: post #9

The problem with bitcoin is the idea that it even requires a mining pool or transaction fee. Bitcoin will die the moment someone figures out how to build a decentralized crypto-currency that doesn't need a stupid idea like "mining" to be functional and secure.

Federated cryptocurrency isn't new. If you're willing to tie it in to to the traditional banking system then you can build a way more scalable and liberating digital currency than Bitcoin. The incentives just aren't there for banks to do so. It'd be great for us though.

> Federated cryptocurrency isn't new.

Links? (seriously I'm interested)

Re: The Bitcoin Blocksize: A Summary

#56

Post by michaelt »

paulmd wrote: post #46
wsxcde wrote: post #31

Earlier quoted context omitted.

> My best guess is that the optimal current block size is somewhat larger than 1 MB. I disagree. There's good reason to believe the ideal block size is now smaller than 1 MB because large pools have been caught red-handed not validating blocks. (Which is like their ONE job and the the thing they get paid the big bucks for!) Presumably, the only reason they're doing this is because orphan rates are too high, which in…

Classic tragedy of the commons: for everyone as a whole, it's better to process transactions as fast as possible. But with the way incentives are currently structured, it's better for any individual miner to produce an empty block that propagates faster. Or in other words, to process transactions as slowly as possible. There's two ways you can fix the incentives. One would be to kill the block reward. You don't proce…

If you required each block to be at least 75% full, what's to stop miners padding out the blocks with trivial transactions?

Re: The Bitcoin Blocksize: A Summary

#57

Post by Andrew_Quentin »

Bae8anoh wrote: post #33
jackgavigan wrote: post #26

What's really interesting for me about the Blocksize Debate is what it reveals about Bitcoin's governance. Most of the people involved agree that the blocksize limit should be increased (with the notable exception of Peter Todd) and the main disagreement seems to be about how (and how quickly) and the increase should happen. There also seems to be a hint of power struggle in the backlash against Gavin's push to incre…

Read up on the history of Mike Hearn, he has wanted to fork Bitcoin into his own governance for years, this is just an excuse. In 2011 he was proposing to Satoshi that he should take over the project[0], in 2013 he was trying to pitch the concept that development was stagnant and that a fork was needing to fix it[1][2], and now in 2015 it's again come about that he has found an excuse to attempt it (this time with so…

I was ready to be persuaded by your first statement: "In 2011 he was proposing to Satoshi that he should take over the project[0]", but then I actually clicked through the link you provided and, while expecting some shocking revelation, I instead found what seems to be a solitary email sent to the ether so to speak and a very reasonable email too at that.

This "attack" on someone who worked for google as a network engineer, who has contributed to bitcoin for years, who has given us SPV wallets and a million other things, in this forum out of all places, sounds desperate.

Re: The Bitcoin Blocksize: A Summary

#58

Post by maxerickson »

pstrateman wrote: post #52
maxerickson wrote: post #8

Earlier quoted context omitted.

Miners will likely omit transactions that offer a fee that is lower than their cost of mining (at least eventually). This sacrifices some small amount of revenue on the current block, but should lead to higher revenue over the long term (assuming their cost levels make bitcoin an attractive transaction system).

> Miners will likely omit transactions that offer a fee that is lower than their cost of mining (at least eventually). The marginal cost of each transaction in the block is approximately zero. The only effort is from propagation speed, however thanks to the relay network that effect is almost nothing. http://bitcoinrelaynetwork.org/

The cost of mining a single transaction is approximately the electricity cost to mine a block divided by the number of transactions in the block.

Say it is $0.15. A miner can make extra revenue at ~0 cost by filling a block with $0.10 offered fee transactions, but if there are many of them, they may choose not to, from the belief that enough of them will turn into $0.16 offered fees in the future (the cost is clearly ~0 in the short term, it's harder to say what it costs them in the long term to propagate the impression that low fee offers will still eventually clear).

Re: The Bitcoin Blocksize: A Summary

#60

Post by pstrateman »

maxerickson wrote: post #58
pstrateman wrote: post #52

Earlier quoted context omitted.

> Miners will likely omit transactions that offer a fee that is lower than their cost of mining (at least eventually). The marginal cost of each transaction in the block is approximately zero. The only effort is from propagation speed, however thanks to the relay network that effect is almost nothing. http://bitcoinrelaynetwork.org/

The cost of mining a single transaction is approximately the electricity cost to mine a block divided by the number of transactions in the block. Say it is $0.15. A miner can make extra revenue at ~0 cost by filling a block with $0.10 offered fee transactions, but if there are many of them, they may choose not to, from the belief that enough of them will turn into $0.16 offered fees in the future (the cost is clearly…

> they may choose not to, from the belief that enough of them will turn into $0.16 offered fees in the future

Another miner will pickup those transactions and mine them.

Blocks are either full and there are fees or blocks are not full and fees are approximately zero.

Unfortunately the block size cannot be limited by individual miners.

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